I think this company is due for rerating based on following observations
- US FDA issue is now 2.5 years old (started in May 2013) . Average time taken to resolve US FDA issues with other pharma companies is around 2 years. Wockhardt has data integrity issues so they are taking longer.
- Management started receiving US FDA approvals for individual drugs after gap of almost 2 years. In June 2015, it received approval of analgesic drug Oxycodone Hydrochloride. In Sept 2015, it received approval for Memantine Hydrocholride (for alzheimers’). This shows positive bias of US FDA towards the company
- Management continues to spend one of the highest spend on R&D in the industry. % of R&D Spend to Sales for Q1 FY 16 was 13.3% vs 11.5% for FY 15, 9.3% FY 14.
- Promoters stake is around 75% and they did not reduce it in last 2 years, although interest shown by companies like Lupin. This shows their confidence about their future.
Disc – Invested from lower levels.
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