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About the Company

Windlas Biotech Ltd is amongst the top five players in the domestic pharmaceutical formulations contract development and manufacturing organization (CDMO) industry in India in terms of revenue. The company has over two decades of experience in manufacturing both solid and liquid pharmaceutical dosage forms and significant experience in providing specialized capabilities, including high potency, controlled substances and low solubility. It operates under three distinct strategic business verticals i) CDMO Services and Products; ii) Domestic Trade Generics and over-thecounter (OTC) Brands; and iii) Exports.

In FY20, their market share was ~1.5% in terms of revenue in the domestic formulations CDMO industry. To provide services and products in the CDMO market, they also sell their own branded products in the trade generics and OTC markets as well as export generic products to several countries. Further, they have developed relationships with various leading pharmaceutical companies including Pfizer Ltd, Sanofi India Ltd, Zydus Cadila Healthcare Ltd, Emcure Pharmaceuticals Ltd, Eris Lifesciences Ltd, Intas Pharmaceuticals Ltd and Systopic Laboratories Pvt Ltd. In FY20, they provided CDMO services to 7 out of the top 10 Indian formulations pharmaceutical companies.

Objects of the Issue

* Purchase of equipment required for

(i) capacity expansion of existing facility at Dehradun Plant – IV; and

(ii) addition of injectable dosage capability at their existing facility at Dehradun Plant-II; 

* Repayment/prepayment of certain of our borrowings;

* Funding incremental working capital requirements;

* General corporate purposes;

Valuation

The global formulations outsourcing market is expected to reach USD 28-32bn by 2025 owing to the growing demand for generics and biologics, rise in the number of drug approvals, end-to-end service & technical specialties of contract manufacturers and increase in off-patent products. In the past five years, the Indian formulations CDMO market has grown at a higher rate of ~13% compared to the growth rate of ~ 8.6% of the domestic formulations market. Going forward, domestic formulations CDMO is projected to grow at a CAGR of ~14% by FY25 driven by strong demand from outsourcing by big pharma companies both Indian as well as MNC and rising demand for generic products in the chronic therapeutic category. Besides, India is becoming a preferred destination for outsourcing pharmaceutical activities across the pharma value chain which will benefit CDMO players like Windlas, etc.

Windlas is one of the leaders in the domestic pharmaceutical formulations CDMO industry. We believe the company is well placed to grab the opportunity arising from the industry given its strong product portfolio, relationship with its customers, R&D capabilities and efficient & quality compliant manufacturing facilities. Further, the company has a strong product portfolio (920 products in 2021) in chronic segments such as anti-diabetic, cardiovascular, neuro and respiratory therapies and its entry into the high growth injectable segment would help in scaling up operations as well as gain better margins. In addition, their focus on developing and launching new complex generic products supported by robust R&D capabilities will continue to boost sales. On the financial front, the company’s performance has been steady. We have a positive view on the company from the long term perspective.

Key risks:

* i) Operates in a highly competitive market.

* ii) Requires a significant amount of working capital.

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