Orchid Pharma Ltd

My estimate of Orchid pharma’s earnings in the next 4-5yrs

PAT per year from:

1. Current Biz – 100cr
2. Exblifep – 80cr from International Royalties + 70cr from sales in India (conservatively)
3. Cefiderocol – 100cr (conservatively)
4. (Growth of existing products + Ceftazidime Avibactam + other new launches in India/abroad) – 100cr
5. Benefits of 7ACA in terms of external sales (if any) + margin improvement due to captive use – 70cr

So, there is a clear line of sight of PAT reaching ~500cr in 4-5 yrs.

What is not included in the above estimates are the following upsides which can be really big as well:

1. Any future partnership enhancement with Shionogi wherein Orchid manufacturers products such as Cefiderocol (and perhaps other as well) for sales throughout the world including for OECD countries ( and not just Low-Medium Income Countries)
2. Any future partnership enhancement with Allecra wherein Orchid is contracted by Allecra to manufacture Exblifep for sales throughout the world. Currently, Orchid manufactures and sells only in India and gets 6-8% royalty for global sales.
3. Any new partnerships with innovators such Shionogi
4. Any new CRAMS/CDMO opportunities

So in a nutshell, Orchid stands at the cusp of something really big – and its difficult to even fathom how big it can be at this stage.

I would expect the stock to trade at a PE multiple of at least 40-60x forward earning, so in 4yrs it could easily reach a valuation of 20,000cr – 30,000cr. Hence, we are witnessing such an explosive move and re-rating in the stock.