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Mono Pharmacare

• Mono Pharmacare is coming out with a 100% book building; initial public offering (IPO) of 53,00,000 shares of Rs 10 each in a price band Rs 26-28 per equity share.
• The issue will open for subscription on August 28, 2023 and will close on August 30, 2023.
• The shares will be listed on NSE Emerge.
• The face value of the share is Rs 10 and is priced 2.60 times of its face value on the lower side and 2.80 times on the higher side.
• Book running lead manager to the issue is Unistone Capital.
• Compliance Officer for the issue is Krupali Thakka.

Profile of the company

Mono Pharmacare is engaged in the business of marketing of pharmaceutical products and also, it is distributors of various pharmaceutical companies. It works with various contract manufacturers who manufacture pharmaceutical products on its behalf based on compositions given by it and subsequently it sells those products under its brand ‘DLS Export’. It is also distributors to various pharmaceutical companies. As on February 28, 2023, it is dealing with (distributors and stockists) many pharmaceutical companies and also, it is connected with many customers/vendors who are a mix of retail pharmacy stores as well as wholesalers. It promoters have a combined experience of more than a decade in the pharmaceutical industry. Its Promoters have been the pillars of its Company’s growth since beginning and with their enriching experience and progressive thinking, it aims to continue to grow in the pharmaceutical industry.

The company is a distributor and supplier of a wide array of Pharmaceuticals products and medicines. As a leading provider in the pharma industry, it is committed to delivering high-quality products and services that meet people’s healthcare needs. With its expertise and dedication. The company offers Health Care products, Antibiotic medicines, Cough Cold Anti Allergic medicines, Antifungal medicines, Nutraceutical medicines, Analgesic & Antipyretic medicines, Antacid & Antiemetics medicines, Cardiac-Diabetic medicines, and cosmocare products. At Mono Pharmacare, it prioritize quality in every step of the pharmaceutical solution process. It understands that health is of utmost importance, and therefore, it adheres to strict quality control measures to ensure that its products meet the highest standards. From sourcing raw materials to conducting rigorous testing, it leaves no stone unturned to deliver safe and effective medications.

Proceed is being used for:

• Meeting the working capital requirements
• General corporate purposes
• Meeting the issue expenses

Industry overview

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry growing at a CAGR of 9.43% since the past nine years. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. India has the most number of pharmaceutical manufacturing facilities that are in compliance with the US Food and Drug Administration (USFDA) and has 500 API producers that make for around 8% of the worldwide API market.

According to the Indian Economic Survey 2021, the domestic market is expected to grow 3x in the next decade. India’s domestic pharmaceutical market stood at $42 billion in 2021 and is likely to reach $65 billion by 2024 and further expand to reach $120-130 billion by 2030. India's biotechnology industry comprises biopharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics. The Indian biotechnology industry was valued at $70.2 billion in 2020 and is expected to reach $150 billion by 2025. India’s medical devices market stood at $10.36 billion in FY20. The market is expected to increase at a CAGR of 37% from 2020 to 2025 to reach $50 billion. As of August 2021, CARE Ratings expect India's pharmaceutical business to develop at an annual rate of around 11% over the next two years to reach more than $60 billion in value.

The pharmaceutical industry in India is a significant part of the nation's foreign trade and offers lucrative potential for investors. Millions of people around the world receive affordable and inexpensive generic medications from India, which also runs a sizable number of plants that adhere to Good Manufacturing Practices (GMP) standards set by the World Health Organization (WHO) and the United States Food and Drug Administration (USFDA). Among nations that produce pharmaceuticals, India has long held the top spot. Medicine spending in India is projected to grow 9-12% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending.

Pros and strengths

Asset-light business model and competitive products: Its business model relies on its ability to seek products that are of good quality and effective through a suitable manufacturer based on its relationship with its manufacturing partner. This allows it to scale its operations quickly and the products are manufactured as per its specifications at a predetermined cost and as per its quality standards without incurring any capital expenditure on manufacturing facilities. It operates on an asset-light business model which does not require it to invest heavily in physical assets such as plants and machinery etc.

Scalable business model: Its business model is customer centric and order driven and requires optimum utilisation of its existing resources, assuring quality supply and achieving consequent economies of scale. The business scale generation is due to its established relationships with various pharma manufacturers, some of whom are among India’s leading pharma manufacturers and also due to development of new markets and products by exploring customer needs and expanding distribution network.

Wide and diverse range of product offerings: The company has wide range of product portfolio comprising of categories such as Antibiotics, Antifungal, Anti Cough- Cold & Anti-allergic, Antacid and Antiemetics, Analgesics and Antipyretics, Nutraceuticals, Skincare, Antiseptic, Cardiac and Diabetic & Cosmetics etc. It gets products manufactured through contract manufacturing on the basis of its demand estimation and needs and requirements of the clients.

Risks and concerns

Geographical concentration: It presently operates its entire business through its registered office and warehouses located at Ahmedabad, Gujarat. The company faces potential vulnerabilities as it becomes highly dependent on the economic conditions, regulatory environment and market dynamics specific to Ahmedabad. Adverse developments such as economic downturns, regulatory changes, or shifts in consumer preferences in Ahmedabad can significantly impact the company's business operations and financial performance. Geopolitical risks, such as political instability or natural disasters, also pose threats to its business. Further, it generate its sales through its customers situated in Ahmedabad. Such geographical concentration of its business in this region heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in this region, which may adversely affect its business prospects, financial conditions and results of operations. 

Face competition: Its products face competition from products commercialized or under development by competitors in all of its product portfolios. It competes with local companies, multi-national corporations and companies from the rest of world. If its competitors gain significant market share at its expense, its business, results of operations and financial condition could be adversely affected. Many of its competitors may have greater financial, manufacturing, research and development, marketing and other resources, more experience in obtaining regulatory approvals, greater geographic reach, broader product ranges and stronger sales forces. Its competitors may succeed in developing products that are more effective, more popular or cheaper than any it may develops, which may render its products obsolete or uncompetitive and adversely affect its business and financial results.

Depends on top ten customers: Its top ten customers for the period ended March 31, 2023, have contributed to 72.07% of its revenue from operations. However, its top customers may vary from period to period depending on the demand and thus the composition and revenue generated from these customers might change as it continues to add new customers in normal course of business. Since its business is concentrated among relatively few significant customers, it could experiences a reduction in its results of operations, cash flows and liquidity if it loses one or more of these customers or the amount of business, it obtains from them is reduced for any reason.

Outlook

Incorporated in 1994, the company is engaged in the business of marketing of pharmaceutical products and also, it is distributors of various pharmaceutical companies. It works with various contract manufacturers who manufacture pharmaceutical products on its behalf based on compositions given by it and subsequently it sells those products under its brand ‘DLS Export’. On the concern side, its products face competition from products commercialized or under development by competitors in all of its product portfolios. It competes with local companies, multi-national corporations and companies from the rest of world.

The issue has been offered in a price band of Rs 26-28 per equity share. The aggregate size of the offer is Rs 13.78 crore to Rs 14.84 crore based on lower and upper price band respectively. On performance front, the company’s total income for the financial year 2022-23 stood at Rs 5,847.64 lakh whereas in Financial Year 2021-22 the same stood at Rs 3,698.30 lakh representing an increase of 58.12%. Profit after tax is Rs 123.37 lakh for the Financial Year 2022-23 in compared to Rs 35.09 in Financial Year 2021-22. Going forward, the Company’s intend to cater to the increasing demand of its existing customers and also to increase its existing customer base by enhancing the distribution reach of its products. Enhancing its presence in additional regions will enable it to reach out to a larger market.