Gland Pharma makes decent debut, shares end at 21% premium vs issue price

The Rs 6,480-crore IPO of Gland Pharma managed to sail through solely on the back of institutional investor demand.

Shares of Gland Pharma made a decent debut on the bourses on Friday. On BSE, the stock opened at Rs 1,701, 13 per cent higher against its issue price of Rs 1,500 per share. Later, it moved higher to Rs 1,850 in the intra-day trade before settling at Rs 1,820, a 21 per cent premium against the issue price. A combined 12.9 million shares changed hands on the counter on the National Stock Exchange (NSE) and BSE. In comparison, the S&P BSE Sensex was up 0.65 per cent at 43,882 points.

The Rs 6,480-crore initial public offering (IPO) of Gland Pharma managed to sail through solely on the back of institutional investor demand. The qualified institutional investors' portion was oversubscribed by 6.4 times. The retail and non-institutional investor portions were subscribed just 24 per cent and 51 per cent. The price band was set at Rs 1,490-1,500 per share.

Gland Pharma is one of the largest and fastest-growing injectable-focused B2B companies, with a global footprint across 60 countries, including the US, Europe, Canada, Australia, India, and other markets. It is a niche player in sterile injectables, oncology, and ophthalmic solutions with a focus on first-to-file, 505(b) (2) filings, and NCE- 1s.

Along with its partners, Gland has 267 ANDA filings (101 owned) in the US as of Q1FY21, of which 215 were approved. The company has seven manufacturing facilities in India, comprising four formulations facilities with 22 production lines and three API facilities. In 2017, Shanghai-based Fosun Pharma had acquired a 74 per cent stake in the company for US$1.09 billion.

“With benefits of being an out and out integrated injectable/ophthal manufacturer and B2B functionary combined, Gland offers a compelling proposition with its unblemished regulatory track record and customer stickiness besides long-standing manufacturing pedigree, justifying premium valuation,” ICICI Securities had said in the IPO note.

Analysts at KR Choksey believe that Gland Pharma has a unique business model of B2B nature, aided by vertical integration & R&D expertise. Moreover, the company has expansion plans in terms of geographical and capacity expansion and is open to inorganic opportunities as well. It also has a strong balance sheet with negligible debt and strong cashflows.

However, the pharma industry is heavily regulated, and the company’s business activities require various approvals, licenses, registrations, and permissions. If there is any change to such regulations or failure or delay in obtaining necessary permits or approvals, or if such permits or approvals are revoked or not renewed for any reason, the company’s business, financial condition, cash flows and results of operations may be adversely affected, the brokerage firm said.