Alkem Laboratories' IPO soon, to dilute 10.75 per cent stake

Drug major Alkem Laboratories is planning to launch its initial public offering (IPO) by December and will dilute 10.75 per cent shares for public.

Basudeo N. Singh, Executive Chairman, said the IPO is to create visibility for the company for future growth and help some relatives and friends of the promoters monetise riches of the 43-year-old company, than mobilising public funds for expansion. "We are a zero debt company and have cash reserves and investments worth Rs 472 crore as of March 2015," said BN Singh.

Founder and Chairman Emeritus, 85-year-old Samprada Singh and family holds 31.75 per cent holding of Alkem Labs. His younger brother, the 74-year-old B.N. Singh and family holds 31.75 per cent stake. Collectively, the promoter and promoter group holds about 70 per cent and the remaining stake is with friends and relatives of Samprada Singh, who moved to Mumbai from Bihar four decades ago to start a pharma company.

Sources said the Rs 3,800-crore turnover Alkem Labs, which has one of the best portfolio of drug brands and a sales force of 5,856 people, should have a valuation in excess of Rs 12,000 crore. Both B.N. Singh and chief executive Prabhat Agarwal declined to comment on the valuation.

About 75 per cent of the revenues of Alkem are generated from domestic sales. The company has five brands in the top-50 largest selling drugmakers in the country. Its main drug Clavam (mainly anti-infective amoxicillin) sells Rs 215 crore a year. The other major brands are anti-infectives like Taxim and Taxim-O (both Rs 151 crore each), Pan 40 (Rs 145 crore) and Pan D (Rs 128 crore) for the 12 months ended March, according to IMS, which tracks drug sales in the country. Alkem is the fifth largest domestic drug company in terms of domestic market share, with 3.6 per cent share.

The company has 16 manufacturing facilities, including two in the US.

Agarwal said the company had a net profit of Rs 460 crore in 2014/15 and a five year compounded annual growth rate (CAGR) of 22 per cent in the past five years, well above the industry average of 14-16 per cent. In the past five years, Alkem is also the third fastest growing company in the domestic market, after Macleods Pharma and Mankind.

He said the company is now expanding business in the US and international revenues contribute one fourth of the revenues. The company has filed 66 ANDAs (marketing applications) with the US drug regulator and has got approval for 20. Currently the company sells 12 drugs in the US.