Sequent Scientific, Viyash Life Sciences announce Rs 8,000 crore merger

Sequent Scientific and Viyash Life Sciences have announced a merger, creating a platform with leadership in animal pharmaceuticals and integrated capabilities across the global pharmaceutical market. The merger will expand Sequent’s capital base and is expected to enhance marketing presence, facilitate backward integration, and create procurement synergies.

The combined entities will have 16 manufacturing plants out of which 10 are US Food and Drug Administration approved plants.

People who got excited for an IPO, and have applied for it but did not get allotted buy on the listing day, not necessarily for fundamental reasons or owning the shares for longer periods, but due to the created hype, and want to get a piece of the action, FOMO included. These days, a lot of people know and talk about GMP, so my opinion is that, it has no weight, I could be wrong.

Manipulation is a loose word, it has no exact meaning, and is thrown around a lot, as it has become quite popular. I don’t know if it is a term used in law, in the context of markets. Manipulation or not, when everyone is so excited and pumped up, and is talking about an IPO, the price can see highs even after listing until the sellers take a decision. And, of course, occasionally there might come a business which can be looked at from a long term view, and can be participated in.

When people are talking about buying the parent company so that they can apply as shareholders in addition to applying in retail category, and if they can apply as HNI, via UPI, netbanking and what not, there sure is a frenzy. And this can go on until the excitement withers away and liquidity dries.

Not applied for any IPO recently, although the little excitement of applying for a newly listed business and getting allotted so as to ‘feel’ like an early bird does occur from time to time, despite knowing that it does not move the needle

You can check this thread for some perspective.

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A few points from the FDC AGM yesterday whatever I could recollect (E & OE):

1. Domestic growth – Low growth in FY24 result of NLEM price reduction, especially on Zifi range of products.

2. Rs.250 crore odd amount lying in capital WIP – a) For new Corporate Office. All the teams sitting scattered at various places and be brought together which will improve efficiencies. b) Also, there is capex for ophthalmic ear and nasal drop business. It has already gone live by now.

3. Capex – Annual maintenance capex is Rs.70 – 90 crores across all facilities, no other plans for major capex as of now

4. Growth break up in FY24 – (Something like volume growth – 0.3 %, Price growth – 6.4 %, New product introduction – 1.1 % = Total 7.7 %)

5. Prescription base increased from 58 % in FY23 to 60 % in FY24

6. Filings in USA – Current no. of Approved ANDAs – 8, new ANDA filed during the year – 1, plan to submit 2 more before Q3 this year

7. Not impacted by recent fixed dose combination ban in India

8. Ad spend – Has increased in recent years but Increases are limited to Electral and Enerzal brands

9. FY25 – Price hike not expected due to NLEM portfolio, have shifted strategy to volume and new product introductions. Results are already visible from April onwards

10. Capex – New ophthalmic line is commissioned this year

11. Capacity Utilization – across locations is around 70 to 75 % currently

12. Top 10 brands – Contribution in FY24 was 64 %, in FY23 it was 66 %

13. ORS – Market is expanding, growth is higher in liquid. Enerzal is no.1 brand as per IQVIA

14. Buyback – Will decide what is the most suitable mode of capital allocation (given that buybacks have become less tax efficient now)

15. No plans to monetize land

16. No comment on holding quarterly concall

(Disc.: Holding)