Gufic BioSciences Ltd 

• Gufic Biosciences is an Innovation focused Pharma company involved in CMO, Branded Generics, Herbal Formulation and Critical Care & Treatments.
• Gufic was in the business of manufacturing and marketing injectable products since late 1970s. The group had earlier exited its API and formulations manufacturing division by selling its six major brands such as Mox (Amoxycillin) Injection, Zole (Miconazole Nitrate) etc. to Ranbaxy in 1997. The promoters then re-entered pharmaceutical formulations segment through incorporation of Gufic Biosciences Limited in 2000.
• Gufic Biosciences has been manufacturing lyophilized injectables (their main business) for 40+ years. It started with small base of 50,000 vials back in 2007-08 to right now almost 4 million vials per month.
• M. Cap- 2220 Cr, P/E-27, P/B-7.1, P/S-3.3, D/E-0.6, NPM-12.3%, 5 Yr Sales Growth- 26%

    Business Segments:-

    1. CMO(Contract Manufacturing Organisation)

• Gufic Biosciences offers Contract Manufacturing Services to Indian as well as the global pharma Companies like- Lupin, Sun pharma, Serum Institute, Zydus, Alkem, etc.
• The company is one of the largest manufacturer of Lyophilized Injectables, It serves over 70 Companies worldwide and Manufactures over 150 Different products
• It manufactures Formulations like- Doxycycline, Tigecycline, Gonadotropins, Liposomal Amphotericin B, Micafungin, Remdesivir.
• During Covid Last year, It had manufactured Remdesivir at large scale for Hetero Labs, one of CMO partner.
• Gufic main strength is their capabilities in lyophilization and they provide over 170 lyophilized products to over 70 companies in India. They are one of the largest suppliers of Doxycycline, Tigecycline, Gonadotropins, Liposomal Amphotericin B, Micafungin to Indian companies in the branded generic space.

    2.  Branded Generics

• The Company manufactures Branded generics like Gufic Criticare, Gufic Ferticare, Gufic Spark, Gufic Spark, Gufic Healthcare, Gufic Stellar, Gufic Asthaderm and various other products.
• The company currently provides over 100 products and with over 200 SKUs.
• The Company have a retail reach of over 1.1 Lakh and doctors reach of over 1.2 Lakhs.
• Its products serving majorly in tertiary care, (>80%), with presence in Govt Organisations.
• Gufic Criticare :- In the Criticare division the company has products in Antibacterial, Antifungal, Gastrointestinal, Pain and Blood products.The products in this division are used for critically ill patients like patients suffering from life threatening conditions who are kept in the ICU. This is Gufic’s largest division and contributes to more than half of its domestic revenues. Gufic’s USP in this division is that most of the drugs that are used in critical care treatment are from MNC pharma companies so they end up being very expensive. Gufic provides a cost effective alternative to hospitals by providing the same quality drugs at a fraction of the price.
• Ferticare:- his division consists of drugs used for the treatment of infertility. The major product categories are Hormones, Recombinant Products, Infertility Supplements. Their key products in this segment are Puregraf, Cetrofirst, Puretrig and Gufigest which are hormones used in the treatment of infertility.
• Healthcare: Under Gufic Healthcare, they market and sell various Herbal Products and Nutraceuticals which are extracted from natural products. These products are mainly used for Bone Health, Pain Management, Immunity, Gastro, Stress and Wound care. Their flagship brand in this division is known as Sallaki which is a product made from a plant known as Boswellia Serrata. Boswellia Serrata has historically been used in Indian Ayurveda to treat ailments like arthritis, ulcerative colitis, coughs, sores and asthma.
• Spark: Gufic Spark caters to the Anti Infective, Gastro, Gynaec, Pediatric, Respiratory and Nutraceutical areas. They have a field force of over 180 in this division and market the drugs to General Practitioners, Physicians, Gynecologists and Pediatricians. The flagship brand in this segment is Stretch-Nil - which is a product used to reduce stretch marks during pregnancy.
• Aesthaderm: Gufic Aesthaderm is primarily focused in Aesthetic Dermatology. The product categories they are involved in are Neurotoxins, Anti Aging, Hyperpigmentation, Sunscreens, etc. They have a field force of over 40 in this segment. They are the first Indian company to launch a Botulinum toxin product in India under the brand name Stunnox. Apart from Botulinum toxin, they have a range of other skin care products that complement Stunnox in the Aesthaderm division.
• Stellar: The products in this division are used in Bone Health, Pain Management, Fractures, Arthritis, Pregnancy, Post Menopausal segments. The division has a field force of over 60 and is primarily focused on orthopedic and gynecology products.
• The company is entering in two new segments:- Biologicals & Immuno-Oncology.

     Botulinum Toxin :- 

• Botulinum toxin is a neurotoxin which is one of the most poisonous substances on earth. It is produced by a bacteria called Clostridium botulinum and one teaspoon of the substance can kill the entire human population. It causes muscle paralysis by blocking the connection of the muscles to the nerves that are responsible for the contraction of these muscles. However, when used in very very small doses, it can be used to treat various conditions. 
• Gufic has launched their brand of Botulinum Toxin in partnership with Prime Bio. Their product is priced at a lower price point than Botox and management says that the quality is comparable. In their agreement with Prime Bio, Gufic has purchased the cell line outright and has full ownership of the cell line. They produce the toxin at their Navsari facility and also have a profit sharing agreement with Prime bio. 
• The market for botulinum toxin is very small in India currently with management indicated it is anywhere between 60 to 120 crores but in next 5 yrs it can go to over 2000 Cr.

     Dual Chamber Bags:- 

• Gufic collaborated with Technoflex - a European company which is a leader in IV drugs to launch Dual Chamber Bags. Dual Chamber bags are basically polypropylene bags that have a seal which separates the powdered drug and its diluent. 
• By just squeezing the bag, it will break the seal separating the drug and diluent which can then be administered to the patient. The drug is packaged in the exact dosing quantity which eliminates reconstitution error, the bag is sealed which prevents contamination and it saves a lot of time for medical professionals. Previously, Dual Chamber bags had to be imported which made them very expensive to use. Gufic is producing them in a cost effective way to make it affordable to the Indian public.

      API business:-

• In the API business, they mainly manufacture Antifungals, Antibacterials, Anesthetics and intermediates for Antifungals. So the company is fully integrated for manufacturing antifungals. They have a dedicated facility to manufacture APIs at their Navsari Plant. API is currently their smallest division but it is strategically a very important division for them. Gufic is majorly a formulation manufacturer and are dependent on imports to meet their API needs. 
• The API business provides them with backward integration for their APIs and reduces their dependence on imports for their key products. Currently, about 50% of the APIs produced are used for captive consumption and the remaining 50% are sold.
• They have over 70 Costumers Pan India, and presence in 25 Countries Worldwide.

       Growth Triggers:- 

• Launching of Botulinum Toxin is a major step in the field of Dermatology, It was a very costly earlier in market, supplied by Allergan, with name as Butox, but with this Launc by Gufic at very afforadble price it will revolutionize the Dermatology and Faical treatments, as the current size of Industry is small but it is growing with much higher pace.
• Dual chamber bags is another big achievement by Gufic Bio. Earlier it was being Imported at a higher cost but now Gufic is supplying at relatively cheap price, it separates lyophilised (or powder) drug and its diluent. It reduces risk of bloodstream infections and thereby ensures patient’s safety.
• Strategic focus on Healthcare division with entry into Ortho Gynecology products through a new division Stellar.
• The company has State-of-the-art R&D Facility in Navsari, Gujarat with expertise in Formulation Development, Technology Transfer, API Development. The company got grant of over 5 patents in various therapy areas, and over 8 patents are in pipeline. 

     Capex:- 

• The company has already world class manufacturing capabilities at Navsari(Unit-1 & 2), Belgaum, & Indore and it is doing capex at Indore & Navsari plant.  
• Company is undergoing a 320 cr. capex for a greenfield facility in Indore (240 cr. in fixed assets and 50-60 cr. in working capital)
• At Indore plant, it has Capability to manufacture products like Lyophilized – 36 mn vials p.a., PFS – 15mn PFS p.a., Liquid Injections – 60mn units p.a. and can cater to regulated markets such as US & EU. Capex is being done on the site and it is near completion, Expected to commercialized by Q1 FY24
• At Navsari Plant, It has Capability to manufacture Botulinum Toxin, Lyophilized/Powder Injectables, Natural Products (Topical/Liquid), APIs. Liposomal Amphotericin B and Depot Injections. Capex is recently done at this site too to move the penem block,  to Navsari to reduce the time to market, efficiency & cost.

      Financials:-

• The company has a strong financials, Revenue is growing at a 5 yr CAGR of 26%, EBITDA with 40%, PAT with 55% with PAT margin of 12%.
• For FY22, Revenue was 780 Cr, up from 488 Cr past yr, PAT was 96 Cr, up from 44 Cr past yr.
• Borrowings has increased this qtr from 60 Cr to around 180 Cr this can be resulting in slightly decreasing of PAT, However it is not that significant to be considered as a big risk. Debt/Equity stands at 0.6. The main reason was for the capex of Navsari plant.
• A good growth of 2 digit(Late Teen) is expected in the company in coming qtrs after the commencment of production at new capex.
• R&D expenses are in the range of around 8% to 10% of the turnover
• Promoter Holding grew from 65% to 75% in Sept 2021
• Valuations is favouraable as it had shown growth, If it continues to and most probably it will grow by similar pace, it can become 3-4 fold in next couple of years.

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