AGP: Acquisition of Sandoz brands to boost revenues significantly

November 5, 2021 (MLN): The recent acquisition of Sandoz brands is likely to increase consolidated revenues along with profitability of AGP Limited to Rs10bn in the next 12 months, says management of the company while holding a corporate briefing session with investors.

To recall, during 3QCY21, AGP acquired a portfolio of 22 pharmaceutical brands from Sandoz AG, a company organized under the laws of Switzerland, which were commercialized in Pakistan under the Sandoz brand.

Out of 22 brands, 4 are market leaders namely Azomax, Zatofen, Clomfranil and Lectrum.

As per the management, transfer of Marketing Authorizations is under process after the completion of which significant increase in the consolidated revenues is expected.
Supplies for the first 6 months for Sandoz are covered by Novartis. AGP also plans to manufacture majority of the products and only around 20% of the products will be arranged through vendors.

Speaking of recent financial performance, the domestic sales of the company rose by 13.5% for 9MCY21. However, exports to Afghanistan were adversely impacted due to the recent political developments in the Country. Institutional sales were also depressed during the period. As a result, net sales of the Company only grew 4.1% to Rs5.1bn. During 3QCY21, the company achieved revenue and net profit of Rs745mn and Rs 387mn, respectively with gross margin clocking in at 52% for the quarter.

Highlighting the key performances of the company during 2016 to 2020, the management said that the company witnessed 64% YoY jump in Sales from Rs4.2bn in 2016 to Rs6.9bn in 2020 with CAGR of 13.4%.
During that period, AGP has launched 18 brands and 9-line extensions in different therapeutic classes. The company also acquired its 3rd plant for the manufacturing of Nutraceutical products.

In terms of IQVIA ranking, AGP had moved to 19th position post acquisition of Sandoz Portfolio from 25th position.

With regards to the challenges that company had to face include depreciation of the rupee which had a direct impact on the cost of production as major raw materials are imported. However, this is expected to be partially offset by CPI linked prices from Nov’21. Furthermore, worsening freight situation due to container shortages and rising oil prices also resulted in cost pressures. Power cuts in few provinces of China caused unpredictability in transit times.

On the export front, company disclosed that it is planning to increase footprint in the export market and identify news regions to tap. Also, the management expects to further penetrate in Afghanistan’s market.

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