Friday, May 13, 2011

BUY VENUS REMEDIES - TOP PICK IN INDIAN PHARMACEUTIAL SECTOR - PRICE TARGET INR 800

VENUS REMEDIES, a super specialty injectable company. Sterile injectable business has high entry barriers and the company is well established in this segment with a turnover of more than 300 crores.  Venus has received MHRA approval for its gemcitabine formulation, which deserves applaud as oncology injectable has the highest regulatory hurdles. Venus has recently expanded sales force by 1300 people and we shall see the fruits in coming years.  An expanding portfolio of product patents, should support superlative growth in the longer term. Our survey of distributors suggests that the recently introduced nnovation portfolio of the company has been well accepted in the Indian market.

Growth Drivers -
  1. Expanded field force
  2. New innovation products recently introduced  are being well accepted - Sulbactomax (Peak sales - $50m), Vancomycin (NE), Etimicn (Peak sales $100m), Potentox (Peak sales - $10m)
  3. Expanding geographic reach
  4. Growing list of regulatory approvals

Valuations- Trading at  a dismal 0.45x Revenue and 4x earnings, the stock is highly recommended. Peer group companies in the same space (sterile injectable) globally trade at premium valuations. Recently a sterile injectable company in the US was listed at 4x Revenes.  Globally there is a dearth of good sterile companies and Venus is one among them.