Gland Pharma share price: Sharekhan initiates Buy recommendation - price target of Rs 3040

Gland Pharma Limited (Gland) is an established player in the injectables space, which is one of the fastest-growing drug delivery formats across markets. Injectables are being preferred over oral delivery formats due to certain benefits offered such as convenience of administration. Gland Pharma share price closed at Rs 2401.65 in last session, down Rs 10 or 0.4%.

Hence, Injectables find applications in treatment of new ailments/chronic diseases, thus pointing to possibilities of robust demand traction for Gland Pharma products. Further, the sterile nature of injectables warrants adherence to relatively stringent compliance norms and higher investments, which act as entry barriers and could keep competitive pressures lower.
 

See Zee Business Live TV Streaming Below:

Gland Pharma follows a unique B2B business model (96% of FY20 sales) across global markets, which comprises an IPled model(69% of B2B revenue) and the technology transfer model (27% of B2B revenue). The B2B model helps the company achieve economies of scale at the product level, leading to cost leadership and enables market share gains.

This coupled with a strong compliance track record,(reflected in zero observations from the USFDA for all plants) augurs well for Gland’s growth. Consistent shortage of Injectables in the US offers substantial growth opportunities. Further, entry in the Chinese generic injectable markets is expected to be a key growth driver, as Gland Pharma plans to file 60 products in China going ahead (already filed 6 dossiers).
 
Gland Pharma's strong capabilities (reflected in commercialization of various niche products) are well supported by a sturdy R&D muscle, which alludes to a robust product pipeline. Cumulatively, this points at the company’s ability to consistently commercialise its product pipeline and gain market share. Geographically, the US forms a strong base for the company’s growth while RoW markets are expected to grow at a sturdy pace. Further, Gland has a higher degree of vertical integration across its product categories, which would enhance operational efficiencies, leading to margin expansion. Gland Pharma expects sales and PAT to report a 23.7% and 25.7% CAGR over FY20 to FY23.
 
Gland Pharma Key risks:
 
Any adverse change in the regulatory landscape and delay in procuring product approvals can impact growth prospects.
 
Product concentration risk exists as top 5 products constitute around 45% of US sales. 
 
Adverse forex movement