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Citi Pharma: Calling the Shots

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June 4, 2021 (MLN): Pakistan Stock Exchange has always been an attractive marketplace for investors, both at home and abroad, for all the right reasons. Worldwide bourses showed a jittery performance amid the Covid-19 Pandemic. However, PSX resisted this negative impact on the back of apt intervention of government which safeguarded the interests of investors and kept their sentiments upbeat.

The companies could not resist getting listed on PSX despite the period of economic slowdown. During the past year, capital markets witnessed 4 IPOs, all of which allowed corporates to raise nearly Rs8.4billion through the stock markets. Similarly, there were a number of Right Issues witnessed throughout the year, 14 to be precise, which helped the companies to raise a cumulative amount of Rs27bn. 

Cashing in on the same opportunity, Citi Pharma Limited (CPL), a major raw material supplier of GlaxoSmithKline Pakistan and Abbott Laboratories, is all set to go public as it plans to raise up to Rs2.8 billion by issuing 72.6 million shares at a floor price of Rs28 per share through Initial Public Offering (IPO).

The company had applied for listing on PSX in April 2021 whereby it had submitted a draft prospectus for issuance of shares to individuals, investors. As per the notice, Topline Securities is the Lead Manager and Book Runner for the Issue and Faysal Bank Limited is the banker to the Book Building portion of the Issue.

According to preliminary reports, the company seeks to issue 54.5mn shares with 75 percent of total post-IPO paid-up capital through book building processes and the remaining 25 percent through a public offering.

The company seeks to utilize the IPO funds in three projects related to API Segment, Formation Segment, and Healthcare.

According to a research report by Pearl Securities, CPL intends to expand its existing capacity of 3,600 tons per annum of Paracetamol to 6,000 tons per annum. Furthermore, CPL plans to add new APIs to its existing product line, i.e. Ascorbic Acid (1,200 tons p.a.), Chloroquine Phosphate (50 tons p.a.), and Hydroxychloroquine Sulfate (50 tons p.a.).

Presently, there are no listed pharmaceutical companies that deal in API manufacturing. However, some unlisted competitors of CPL that deal in API i.e; Pharmagen Limited, Saakh Pharma (Pvt.) Limited, and Zafa Pharma (Pvt.) Limited.

With regards to the formation segment, the company aims to build three manufacturing facilities undertaking a total capacity of 200,000 vials/injectables 35 per day, dry powder/suspension 60,000 bottles per day, capsules 4,200,000 per day, and tablets 4,500,000 per day. These include dedicated lines for Penicillin, Cephalosporin and Psychotropic & Narcotics drugs.

On the healthcare front, the IPO will support the company to establish a 50-bed state-of-the-art healthcare facility in Lahore. For this purpose, the CPL has already acquired a 4- Kanal plot at Hali Road, Lahore, for consideration of the price of PKR 264.2mn. As part of the plan, the hospital facility will cater to the segments that include Out Patient Department (OPD)- Consultancy Clinics, General Operations, and Diagnostic Services (i.e., X-rays, Laboratory, MRI/CT scan).

To expand its manufacturing capacity, the research report highlighted that CPL acquired Askari Pharmaceuticals (Private) Limited (APPL) with a total sum of Rs429mn, along with all its licenses and manufacturing rights through a business sales agreement.  APPL was primarily involved in manufacturing pharmaceutical products, medical chemicals and botanical products. Presently, CPL’s manufacturing facility is spread over 46.2 acres of land at 3.5 KM, Head Balloki Road, Phool Nagar, Kasur 65 KM outside Lahore.

Going by the financial statement of the company, CPL’s performance is quite robust as the topline income of the company stood at Rs2.63bn in 1HFY21 despite the economic slowdown, the report highlighted.

This IPO is being considered one of the largest that the country has ever witnessed by a pharma company, with expectations that it will surpass the record Rs2.8bn raised by AGP Limited in 2017. This will allow the company to not only manufacture branded drugs but also make medicines for other companies.

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Posted on: 2021-06-04T22:32:00+05:00

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