Short Note on Medicament Biotech Limited Date:- 17/5/2022

Sister Company - Shivalik Rasayan - Agro chemical and API Producer

P/e 50 Book Value 116 EV 837 Crores

ROCE 12.7% ROE 9.73% Promoter Holding 43.6%

About the Business

Established in 1993, and headquartered at New Delhi, Medicamen Biotech Limited (referred as ‘MBL’ or ‘the
Company’), develops and markets wide range of branded and generics formulations. The Company primarily
manufactures tablets, capsules, liquid syrup, dry syrup (beta lactum and non-beta lactum) ointment and Oral
Rehydration Solution (ORS). The Company has two state-of-the-art manufacturing facilities for Beta Lactum &
Non- beta Lactum pharmaceuticals, located at Bhiwadi an update facility for Australian markets
(Rajasthan) and Haridwar (Uttarakhand) (both the facilities are approved by WHO, ANVISA (Brazil),
NAFDAC, MCAZ, DACA) respectively. The company has an upcoming oncology formulations plant its third
facility at Haridwar which is almost complete and expected to operational during financial year 2020-21.
Medicamen has a team of 45 R&D personnel, 48 skilled industrial Pharmacists, 19 expert quality assurance
Pharmacists and 100+ technicians in their core team. Its key therapeutic areas are antibiotic, antimalarial,
antidiarrheal, antituberculosis and general pain management. The business has presence in South East Asia,
Africa, Brazil, South Asia, CIS countries, Australia. With 71% market share, generic drugs form the largest
segment of the Indian pharmaceutical sector. Company is focusing on Cardiovascular, Diabetic and lifesaving
medicines. The country accounts for the second largest number of (ANDAs) and is the world’s leader in Drug
Master Files (DMFs) applications with the US. The global pharma CMM (Contract manufacturing market forecast
from 2021 to 2027 is to reach 124.7 Billion $. The focus is on API Manufacturing and FDF (Finished Dosage
Form) manufacturing. India’s domestic pharmaceutical market is estimated at USD 42 billion in 2021 and likely
to reach USD 65 billion by 2024 and further expand to reach ~USD 120-130 billion by 2030. India’s drugs and
pharmaceuticals exports stood at USD 24.44 billion in 2020-21.

What is Pharma / API’s / Intermediaries / Oncology

The main ingredient in Pharmaceutical is API [Active Pharmaceutical Ingredient]. It is the main drug which cures
the disease. There are many companies which produce and are specialist in only producing APIs. In producing
APIs the companies either purchase intermediates from different players and mix them to produce a final API or
they themselves produce all the intermediates and mix at their own place. These are the companies which deal
only in API. They sell their produced APIs to different formulation players who then further process it to make it
a consumable drug. The companies who produce and sell APIs need their product to get registered with US FDA
by filling a Drug Master File [DMF] which makes sure that the facilities of the API manufacturing company are in
proper shape and are safe. Most chemical reaction are step wise, that is they take more than one elementary
step to complete and the intermediary formed in the process of making an API is called an intermediate. It is
the form in which the drug is consumed by us. A dosage form of a drug is usually composed of two
things: The API, which is the drug itself; and an excipient, which is the substance of the tablet, or the liquid the
API is suspended in. Oncology deals with the prevention, diagnosis, and treatment of cancer.

Value Chain
DMF- Drug Master File :-

API manufacturers need to file a document known as Drug master File (DMF) with regulatory bodies. A Drug
Master File (DMF) is a submission to the FDA that may be used to provide confidential detailed information
about facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of one or
more human drugs.

New Drug Application

The final step formally taken by a drug sponsor, wherein it applies to the Food and Drug Administration (FDA)
for the approval required to market a new drug in the U.S. An NDA is a comprehensive document with 15
sections that includes data and analyses on animal and human studies, the drug’s pharmacology, toxicology and
dosage, and the process to manufacture it. When an NDA is submitted, the FDA has 60 days to decide whether
to file it for review, or reject it because some required information is missing. The goal of the FDA’s Centre for
Drug Evaluation and Research (CDER) is to review and act on at least 90% of NDAs for standard drugs within 10
months after the applications are received, and six months for priority drugs.

ANDA (Abbreviated New Drug Application)

Abbreviated New Drug Applications are “abbreviated” since they do not require the applicant to conduct clinical
trials and require less information than a New Drug Application. If an ANDA is approved, the generic drug will be
listed in the Orange Book, which lists all medicines the FDA has found to be safe and effective. An ANDA contains
all the information the it needs to evaluate on how safe and effective a proposed generic drug is compared with
its brand-name equivalent. The FDA will not approve the generic unless it is equally safe and effective.

Bio Similars

Bio similar is an approved drug that it is highly similar to an FDA-approved biologic product, and has no clinically
meaningful difference in safety or effectiveness from the originally approved product. However, bio similar is
not chemically identical to the drug they refer, and may include slight differences. Medical practitioners or
pharmacists don’t have the liberty to give a bio similar drug in place of the biologic.

PARA 1 Fillings

A Para 1 filing is made during the launch of a generic drug when the innovator has not provided the required
information in the orange book.

PARA 2 Fillings

Para 2 filing is made when the drug is already off patent.

PARA 3 Fillings

Para 3 filing is made when the applicant does not have any plans to sell the generic drug until the original drug
is off patent.

PARA 4 Fillings

A Para IV filing for the launch of generic drug is made when the applicant believes its product or the use of its
product does not infringe on the innovator patents or where the applicant believes such patents are not valid
or enforceable.

Generic Drug

A generic drug is a drug that is not branded but is similar to a branded or reference listed drug in terms of dosage,
administration and performance.
(Source:- Alpha Invesco)
Trigger’s for Growth:- Entry in Oncology segment. The 3rd plant in Haridwar will manufacture oncology tablets,
capsules, injectables and lyophilizes. The new faciality is USFDA approved and EU compliant. The faciality is
under product validation stage and the management has soft launched 15 oncology products from the same.

(Key highlights from Q3 Fy21-22 results)

Management’s vision / motto for this plant is to

“Out of Pocket Expense” in getting “Quality
Cancer Care” with affordability. We are entering
in domestic market with our focused approach in
Oncology space with novel targeted therapy in
treatment of Solid Tumors, Breast, Lung and
Hematology Cancer in the month of January 2022.
We see our next leg of growth coming from
oncology segment from regulated markets where
we shall be filing at least two ANDA next year.
Apart from this, we have developed 10 products in
R&D for regulated market specially for Australia
and EU. Supportive care in Oncology is also one
of our focus areas to develop and manufacture pro-
Mr. Rahul Bishnoi
-ducts for managing side-effects caused by chemo-therapy drugs treatment. We have established a state-of-the-art
R&D in the year 2018 by spending `15 crores in 6000 sq.ft. area at our Bhiwadi campus. Today we have a team
of 60 experience scientist under the leadership of Dr. Akshay Kant Chaturvedi. Dr. Chaturvedi has experience of
working with Shilpa Medicare, Granules India and Dr. Reddy’s Lab. During this current financial year, we have
spent another `15 crores in R&D by expanding it into 12000 sq. ft area. We have got the best-in-class equipment’s
in our R&D which is approved by DSIR. The R&D team in fully capable of handling para-4 filing.

Rahul Bishnoi

(Source: Jan 22 DSJI Interview)

The oncology market was valued at USD 143 billion in 2019, and is expected to witness a CAGR of 12% between
2020 and 2025 to reach to USD 250-260 billion. The growing prevalence of cancer around the world
will spur opportunities for this market. Through our state-of-the-art plant in Haridwar, we are committed
to meeting the growing needs of patients in this niche segment. Though our schedule was pushed back due to
the pandemic-induced lockdown, we have now completed the plant setup and are in the process of validating
it. The WHO-GMP upgrade of Haridwar Unit 1 is underway and will be completed by the middle of FY 2021-22.
The Bhiwadi (Beta Lactum) unit has been upgraded. We are now prepared for the EU and Australian markets
with our new products. In addition, a UN audit is scheduled for 2021-22.

(Source: - Chairman’s Letter AR 2021)

Targeting the “Biosimilars” markets which is one of the fastest growing segments in pharma sector. A biosimilar,
or biosimilar drug, is a medicine that is very close in structure and function to a biologic medicine. A biologic, or
biologic drug, is a medicine made in a living system, such as yeast, bacteria, or animal cells. Biologics used in the
treatment of cancer can work in many ways.

(Biosimilar update:- www.cancer.org)

The company (Medicamen Biotech) is backward integrated for API’s procurement with impressive pipeline
and chemistry capability with Shivalik Rasayan. Shivalik will be a key raw material supplier to Medicamen. This
guards Medicamen from supply chain and pricing issues.

Focus area for the Business

• Antibiotic
• Antimalarial
• Antidiarrheal
• Antituberculosis
• General Pain Management Oncology formulations

Medicamen Product Portfolio

Tablets, Capsules, Liquid syrup and Dry syrup (beta lactum and non-beta lactum) Ointment and Oral Rehydration
Solution (ORS). It has two world-class formulations plants at Bhiwadi (Rajasthan) and Haridwar (Uttarakhand)
and recently commissioned 3rd Oncology plant in Haridwar with soft launch of 15 oncology products for domestic
markets.

Financials:-

The management has been able to increase the sales of the business from 101 Crores in 2012 to 123 crores to 110
crores in last 10 years. The sales growth rate has not been linear. The sales in 213 dropped to 64 which again had
a drop down to 67 crores in 2016 and third time the sales dropped in 2020 and 2021 to 117 and 110 from 123 in
2019. The business has seen erratic operating profit margins from 3% in 2012 to 9% in 2014 to 6-8% from 2014
till 2016 which got a boast up in 2017 to 2020 in the range of 14% - 15% and moving towards 18% in 2021 and
in last 4 quarters the company has reported 21% operating profit margins. The net profit for the business jumped
to 5.16 crores from 48 lakhs in 2 years when Shivalik Rasayan the new promoter took over the business in late
2016. This was the year 2017 where the business saw a good jump in operating profit margins from sub 6-8% to
14%. It’s the sa me 2017 when the company got enhanced exports from 20 to 25 countries and the new
management filed 100 donaries which increased the donaries from 100 to 200. The business got better operating
margins in 2017 from higher penetration in Latin America and South America and repeat orders because of
established relations with customers. The management is focused to increase the product registration in new
countries across both Latin America and ROW. 280 employees of MBL who persisted with their efforts to provide
cost effective drugs to needy patients in one of the most challenging environments. The reason for sales dip by 18
crores in FY 2020 was given by the management in their investor presentation as under.

Due to ban on exports and rise in the prices of API, the Company had to forgo sales order
worth ~INR 1,800 lacs in Q4, FY20

The company has tie up’s with Mission Pharma. Mission Pharam is a private company and has large presence
in pharma products across value chain. Eurapharma (Mission Pharma) is a French company with 3,200
employees worldwide and an annual turnover of EUR 1.6 billion. Eurapharma is one of the leading
distributors of branded-originator pharmaceuticals to the private market in Africa and a part of the
French company CFAO.

Production Capacities

(Source: Investor Presentation Q4 Fy 20)

Management: - R S Bishnoi (Director Growel Remedies Limited) acquired Shivalik Rasayan in 2000. The new
management (Rahul Bishnoi chairman of Shivalik Rasayan Limited) took over the company on 4th Jan 2016. Mr.
Rajesh Madan (CEO & Advisor for SRL) having 34 years of experience in Pharma Industry. Mr. Vimal Kumar
Sherawat (COO of Shilpa Medicare, and has more than 31 years of experience with other pharma companies, vast
experience working with large Pharma industries such as Fresenius Kabi Oncology Limited (Formerly Dabur
Pharma Ltd), Ranbaxy Laboratories Ltd and VAM Organics Ltd., spanning across activities of R&D, pilot and plant
productions, QA/QC, administration, CRAMS, and project management), Mr. Ashwani Kumar Sharma (also
holding a post of director in Shivalik Rasayan Limited). Mr. Klaus Snej Jensen has over 25 years of experience
in the fi eld of Biotech and Pharmaceuticals. Mr. S K Singh (Director + COO at Shivalik) was working with
Shivalik Rasayan for last 29 years and was MD of Shivalik Rasayan in 1997. Mr Singh developed Quality
Management Systems across the Company to ensure best possible products. Mr Harish Pande having 30 years of
experience in the field of Agro Chemicals, Technical Formulations and Industrial Chemical. Mr Sanjay Bansal
having 27 years of experience in finance, investment and taxation. Mr Ashutosh Gupta with 7 years’ experience
in marketing distribution of pharmaceuticals.

Curious Case of Opal Pharma

The new management bought OPAL Pharma in Sept 2019 for 2.06 Crores.

The business was acquired for 42000 AUD (INR to AUD in Sept 2019 was 49.08. i.e., approx. 2.06 crores plus).
Immediately with the acquisition the company sold 25% of OPAL Pharma Baxryan Healthcare Pharma Limited
for 51.53 Lakhs. In the same note the management disclosed the revenue of OPAL Pharma was 695494 AUD i.e
Rs 3.4 Crores and how they can scale that up to 3 to 5 million AUD in next 3 years (likely 15-25 crores turnover).

The performance of OPAL Pharma is as under.

Opal Pharma

Erratic sales and no sales in last 3 reported quarters with hardly any profitability. Some inputs from OPAL Pharma
Annual reports as under
The management does not write down the investment even if its reporting losses and its value has gone down in
due course of time.

Management stated in Q2 investor presentation FY 20 that Australian subsidiary has 14 products but alas these
14 products were not able to do any good for the company for reasons stated above.

The management issued 3.06 lakh CCW (compulsory convertible warrants to the promoters and non-promoters
at a price of 546 a share) in Nov 2020 to fund the 3rd upcoming oncology plant in Haridwar.

Growel remedies holding 50.32% in Shivalik Rasayan (as promoter) also holds 1.64% in Medicamen Biotech as
promoter. Growel Remedies is the promoter of Shivalik Rasayan holding 50.32%

and Shivalik Rasayan is promoter of Medicamen holding 41.96% stake and 1.64% stake by Growel Remedies
directly. Growel direct stake has been reducing since June 2020 reportable quarter from 5.25% down to 1.64 as
per march 2022 reportable data.
Medicamen biotech is the step-down subsidiary of Growel Remedies.

Similar address of all the group companies as under

NSE LISTING: - The Shares of the company were only traded on BSE. They got approval to get listed on nse
and started trading on nse from 27.10.2021 only.

Oncology Portfolio

Company is poised to launch novel oncology products in the FY 2021- 2022 in Indian region and South East
Asian markets.
Market Size of some of the above products

Temozolomide- Brain Cancer: US Sales: $ 69 Million.

Bortezomib- Bone marrow Cancer: US Sales $ 646 Million.
Busulfan – Treat CML Cancer for white blood cells: US Sales $ 16 Million
Bendamustine HCL - Treat chronic lymphocytic leukaemia: US Sales $ 539 Million USD
Linalidomide: small molecule in oral solid oncology products: US Sales $ 10 billion.
Pomalidomide: Global sales $ 3.75 billion USD.

Working Capital: - The company has had a high debtor days (attributes of most pharma companies). But
Medicamen has face slower payment cycle from its debtors. The company has entered, commissioned new
oncology facility and the trend is expected to improve in near future once they get the approvals and do business
in full flow. The company gets higher payment terms from its vendors / suppliers / creditors. The business has
been able to significantly lower its inventory days from 85 in 2020 to 28 in fy 21 which has lead to significant
improvement in turn over from 4.71 times to 6.28 times.

Industry Comparison

\There has been a drop in fixed asset turns for Medicamen vs its peers. This is due to the new Oncology facility
setup which still has to give output in full flow. The permissions are awaited for the same.
Valuation: - With the launch of 15 oncology (high margin) products and many more in the pipe line which the
company would be launching once they start getting the FD approvals, the topline and bottom line would pick
up speed of growth. Currently the business is available at 50 P/e (which is not at all cheap), P/B 5.85 and
return on assets are sub 7%. It’s the future growth potential (Oncology Division) which counts: -

2022 2023 2024 2025

Current Business
Revenue 128 173 220 260
Ebidta 19.2 27.68 39.6 46.8
Margin 15% 16% 18% 18%

PAT 13.4 20.76 29.7 35.1

Oncology
Revenue 40 90 135 220
Ebidta 8 19.8 33.75 55
Margin 20% 22% 25% 25%
PAT 6 14.85 23.6 41.2
Opal Pharma
Revenue 8 18 36 60
Ebidta 1.2 3.24 6.84 10.2
Margin 15% 18% 19% 17%
PAT 0.9 2.43 5.13 7.65
Cumulative
Topline 176 281 391 540
PAT 20.3 38 58.4 84

Total Estimated Pat for FY 25 is 80-85 Crores. With today’s market cap of 828 crores it gives the business
10-11 Price to earnings on FY 25 3year forward basis.

Key Reported Financials Statements