Indies Pharma sees big spike in year-end profit

D r Guna Muppuri, CEO of listed pharmaceutical development and distribution company Indies Pharma, was concerned that media reports on a November advisory to the market, on the impact of the COVID-19 pandemic on its operations, may have somewhat spooked investors, unjustifiably so, in his view.

The stock price fell from $2.64 on the eve of the November 19 announcement to $2.55 the day after, and further to $2.47 by November 24, before revaluing to $2.62 at the end of trading on Wednesday this week.

In its final-quarter financials filed this week, the company made a strong statement through its accounts, recording its best three months this year, with a profit jump of 78.5 per cent and revenue growth of more than 33 per cent on the corresponding quarter last year.

Indies Pharma’s revenues grew to more than $200 million in the fourth quarter ending October 31, from $150 million in the same quarter last year and $165 million in the third quarter 2020 – its lowest quarterly earnings this year at a time when it would have felt the brunt of the pandemic effects, including disruptions in its supplies.

The last-quarter revenue bounceback sufficiently corrected the fall-off from the previous three months, leading the company to record a modest five per cent growth in yearly revenue over 2019. The company had earned revenues of approximately $194 million and $207 million in Q1 and Q2, respectively.

Muppuri credits the restoration of logistics, such as air and sea cargo lines, and timely delivery to Jamaica of its drugs made in India among the reasons for the earnings boost.

“There is also an uptick in the purchase pattern and increased loyalty to our product line in the retail sector,” the Indies Pharma CEO told the Financial Gleaner this week.

The Montego Bay-based company’s net profit numbers tell a similar story, with the $39.6 million in the final quarter equalling pre-COVID profitability at January this year, although not achieving the net profit heights of $69.2 million in the second quarter to April 30 or the almost $51 million in the third quarter to July. Current full-year net profit of almost $200 million is also a sweet spot for Indies Pharma, having grown 46.3 per cent over the $136 million made in year 2019.

The company also has a significantly healthier asset base, boosted to $1.7 billion, a 128 per cent improvement over last year. This was aided by the acquisition of three acres of prime real estate along the North Coast Highway at Ironshore in Montego Bay, part of the so-called ‘elegant corridor’, where the pharma firm plans to build its new headquarters and a multipurpose complex, slated for completion within the next three years. Some $400 million was invested in the land acquisition earlier this year with funds raised from a $805-million, five-year private bond placement.

The bond funds, which Muppuri says is targeted at growth projects, is also being invested in intellectual property assets by way of the development of two generic drugs and their submission next year for approval by the United States’ Food and Drug Administration, FDA, for launch by 2023, in the US market, which is said to account for 48 per cent of global pharma sales.

Indies Pharma is banking on huge gains from this foray into the lucrative US pharmaceutical market for select generic drugs, estimated to be worth some US$740 million. The total US pharmaceutical market earned some US$490 billion in 2019.

“Instant realisation of the capital gains, along with the cash reserves from the recent bond proceeds that we set aside for the FDA approvals of our two niche drugs in the pipeline for commercialisation in the United States, tentatively in 2023, falling in line with the third anniversary of the recent successful bond,” also contributed to the assets growth, according to Muppuri.

“The value of the undeveloped land alone is inching close to half a billion dollars,” he said.

In October, former financial services executives Lissant Mitchell and Kevin Donaldson joined the board of Indies Pharma to replace retired directors Aubyn Hill and Dr Norman Dunn, who both joined the government. Mitchell, the former CEO of Scotia Investment, is the new board mentor for the listed junior company. Donaldson, the former CEO of Sagicor Investments, has also taken an equity stake of more than 660,000 shares in the pharma company.

“They just came on board and are learning our business model and culture, albeit they were associated with us for many years prior to this engagement. Their critical thinking and approach will certainly catapult our growth,” Muppuri said of the board additions.

huntley.medley@gleanerjm.com