Shasun Pharma Gets Facility Approval From USFDA and Brazilian ANVISA

While companies like Wockhardt and Ranbaxy Labs are facing compliance issues with the USFDA, Shasun Pharma has received a USFDA approval for one of its manufacturing facility.

This facility went through an inspection because its customers in the USA have commercially launched the products which are being manufactured from this facility.

The company's CFO Hariharan told us that it intends to file around 10 customer ANDAs from this facility each year going ahead. The products filed from this facility are quite significant and are likely to positively impact its revenues. He, however, has denied giving out any information on the number of ANDAs filed so far from this facility.

Besides USFDA, the Brazilian drug authority (ANVISA) has also said that it is satisfied with the manufacturing facility. The ANVISA inspection was for the pre-approval of one of the New Drug Application (NDA) of a customer of Shasun Pharma.

Currently, due to the vast business opportunities in the US generic pharmaceuticals, many companies are entering the US market on their own or through custom research. There are more opportunities in the emerging markets and hence Shasun Pharma will benefit from this move.

The pharma company, in FY13, had reported a topline of Rs 1103 crore and net profit of Rs 53 crore. At the price of Rs 74.65, the stock is available at a price to earnings multiple of 7.7x of its FY13 EPS of Rs 7.61. The stock has actually under-performed in the last few days due to the strike at one of its manufacturing plant. We believe that some gains can be pocketed at such a lower valuation, also with the upcoming US and Brazil opportunity.