Buy Elder Pharma; target of Rs 508: Sharekhan

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Buy Elder Pharma; target of Rs 508: Sharekhan

Broking house, Sharekhan is bullish on Elder Pharmaceuticals and has recommended buy rating on the stock with a target of Rs 508.

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Elder Pharma BSE | NSE 25/05/12 Are Mutual Funds betting on Elder Pharma?

Broking house, Sharekhan is bullish on Elder Pharmaceuticals and has recommended buy rating on the stock with a target of Rs 508.

Sharekhan report on Elder Pharmaceuticals:

Elder Pharmaceuticals enters into in-licencing deal for anti-thrombotics

Elder Pharmaceuticals (Elder) has entered into an in-licencing alliance with M/s. Laboratorios Farmaceuticos Rovi, S.A. (Rovi) of Spain to market advanced heparins   (anti-thrombotics) in India for treatment and prevention of thrombo-embolic venous   diseases like deep vein thrombosis and pulmonary embolism.  

Established in Spain in 1946, Rovi is a Euro-100-million research-backed   pharmaceuticals company selling its products in more than 20 countries. Rovi invests 18% of its turnover in research and development (R&D) and also exports science & technology to over 30 countries. It pursues two very specialised lines of research, concentrating its efforts on the prevention and treatment of venous thrombo-embolic   disease and contrast agents for image diagnosis. 

As part of the in-licencing deal, Elder will introduce in India a patented, US Food and   Drug Administration approved product Bemiparin, which is a second-generation low   molecular weight heparin (LMWH) for the prevention and treatment of thromboembolic   venous diseases. Bemiparin has consolidated its position in the antithrombotic   market as the second most sold LMWH in Spain with a market share of   25% during 2006. In India, Elder will launch Bemiparin with the brand name of HIBOR.   The total anti-thrombotic market in India is worth Rs130 crore with products mainly   from the multinationals like Sanofi, Aventis, Knoll, Pharmacia and Novartis. Elder   hopes to garner between 8% and 10% market share in the first year of launch itself.  

Valuation & view  

The above deal is another positive initiative undertaken by Elder. With a widespread   sales force of over 2,000 medical representatives and a reputation of protecting   patent rights, Elder has positioned itself as a partner of choice for global multinational   companies to market their products in the Indian market. Elder has more than 25  such in-licencing alliances with foreign companies for marketing their products in   India. These alliances provide a fresh pipeline of products to the company for the   domestic market, which assumes greater importance in view of the new product   patent regime, which is likely to slow down new product launches by domestic   companies. Further, such alliances also have the potential to develop into contract   manufacturing agreements in the long term.  

Elder has been delivering a strong performance quarter after quarter. In view of its   strong growth potential through in-licencing agreements with foreign firms, continued   launch of new products, scale-up of business in the lifestyle, skin care and paediatric   areas and effective cost-cutting measures, we remain positive on Elder's future growth prospects. At the current market price of Rs 372, the stock is trading at  12.4x its FY2007E earnings and 9.3x its FY2008E earnings. We maintain our Buy recommendation on Elder with a price target of Rs 508.