PANACEA BIOTEC LTD - REPEAT

No introduction about Panacea Biotec is necessary to my regular readers.We have discussed more than once about the reasons for a sharp fall in its share price from  Rs.400 level to below Rs.100 level. Panacea Biotec – the second largest vaccine maker in our country – passes through  some tough business environment   during past 3-4 years.Earlier many of its vaccines excluded from  the WHO per-qualification criteria  and debt related issues resulted in erosion of more than 50% of its peak net worth. Now ,after many quality related inspections  UNICEF permitted the company to resume the supply of vaccines. (  Read details HERE) . On the other side company is in the process of reducing its debt burden and already admitted for a CDR.I believe ,this is the turn around time for Panacea Biotec and the right entry point too .Company is expected to report better numbers from this quarter onwards and strongly recommending to enter in Panacea at CMP of Rs.107 with a medium to long term view. Stock listed in both exchanges .

Link to Company Website HERE

Disc : I have vested interest in Panacea Biotec 

PANACEA BIOTEC - UPDATE

Panacea Biotec recommended @ Rs.108 ( Old Posting HERE) , currently trading  @ Rs.95 .Today company reported its December quarter  numbers - excluding other income result is poor .But ,now company informed exchanges that they are going to re start supply of  pentavalent vaccine for  UNICEF projects and received order from them to supply the same for 2014-2016 period ( Read it HERE). This is very significant for the company and expecting better performance going forward .Recommending to HOLD the stock.

PANACEA BIOTECH - WORST IS OVER

Panacea Biotec was darling of Investors till 2008 .This is the first  pure biotechnology based pharma company listed in Indian stock exchanges in 1996. Company along with its subsidiary Chiron Panacea  is the second largest vaccine maker in India next to Serum Institute of India. In addition to vaccines  company also present in formulations. In the formulation segment company concentrating in pain management, cardiovascular disorders, diabetes management and organ transplant. Company having a strong R&D with more than 200 scientists and it introduced many ‘firsts’ in India. In the vaccine segment company introduced vaccines for Polio,H1N1 and Hepatetis B and company’s products were best sellers in the past. Its misfortune starts with the banning of its many vaccines by WHO . The combination vaccines EasyFive, Ecovac4 and EnivacHB were de-listed by WHO  due to some quality issues found during their routine inspection. This issue noticed in bulk drugs sourced from one of its subsidiaries  PanERA Biotec for manufacturing final products .Due to this issue company disqualified from supplying these vaccines to UN’s world Health programmes .For the past many years about 40 % of company’s income was from WHO supply and Easyfive was the highest margin product for the company. Due to this setback ,in the past few years company concentrated in other segments to develop their business . Last year company started a new production unit in Baddi ( Himachal Pradesh) exclusively for manufacturing medicines for oncology segment. During September 2012 ,company signed an agreement with US based Osmotica Pharmaceuticals for developing high entry barrier generics and branded formulations for US market. ( Interview of MD on this subject  HERE).During November 2012 Company signed another similar agreement with Kremers Urban Pharmaceuticals Inc (subsidiary of Belgium-based UCB) and launched its first product ‘Tacrolimus Capsule’ in US market. In a strategic diversification into related fields ,Company is going to start a hospital –Panacea New Rise Super Specialty Hospital – in  Gurgaon.This facility is expected to start full fledged operations  during the first half of 2013.

Now company claiming that they have sorted out all quality related issues connected with their vaccine facility . After a long gap of many years, in December 2012 company received a Rs.182 Cr order from Government of India for supplying Oral Polio vaccine. This order will be executed between December 2012 to May 2013 period .In an important development , now it is known that the WHO delegates will again inspect company’s facilities by next month. There is every chance to enlist company again in WHO ‘s qualified suppliers list ,post inspection. If it happens it will be a game changer for the company. Promoters are holding close to 75 % stake in its  Rs.6 Cr equity company and not pledged a single share so far. It is an interesting point to note that ,ever since its share price started its down trend in October 2008 ,India’s largest vaccine maker and Panacea’s arch-rival  Cyrus Poonawalla led Serum Institute of India acquiring Panacea’s shares from open market . Serum Institute’s stake in Panacea Biotech  increased from less than 4% in 2008 to the highest level of 13.39 % in latest September quarter.They started accumulation even at a price range of Rs.220+.I believe ,this is clear indication that even the main competitor who know the industry very well is fully  confident about the come back of  this company in near future .I think worst will be over for the company by this December quarter result . Since its floating stock is very low ,there is every chance for sharp appreciation once it back on track.It is a high risk high profit kind situation ,hence suggesting only for those with high risk appetite.Stock listed both in NSE and BSE and trading around Rs.108/-


 Link to Company website HERE

Link to latest annual report HERE

Disc : I have vested interest in PBL