Ajanta Pharma Ipo, Pvt Placement To Fund Spread

The Rs 120 crore Ajanta Pharma Ltd (APL), known for brands like Thirty Plus and Pinkoo gripe water, is exploring the twin options of an initial public offering (IPO) and a second tranche of private placement to fund expansion plans.

Top company sources said they were getting offers from TCW-ICICI, a US-based offshore equity fund, for picking up more equity through private placement.

The fund already holds 11.13 per cent of APL's equity bought recently at Rs 68 per share. Along with the contribution from promoters, the APL equity had risen to Rs 8.9 crore from Rs 6 crore.

Details of the proposed IPO are not known but the firm is looking for a high premium in view of its present performance, future brand expansions, and also the performance of the pharma stocks in the secondary market. Sources say the company is waiting for the market to improve to justify the premium on its offer. Though a late comer in the domestic ethical product market, APL plans to launch 3-4 new products and 4-5 line extensions every year. Its entry into domestic ethical market started only in July, 1997. Till 1991, APL was mainly into OTC products.

 

With its expanding business in the CIS over the years, the firm expanded into ethical drugs meant specifically for these countries.

In October, APL will launch a globally patented anti-oxident based on natural carotinoid which will have other nutrients along with vitamins A, C and D.

This will be a prescription drug and a co-prescription drug in chronic disease. The total market for the drug is estimated to be about Rs 35 crore. Since APL will be offering the drug with a clear USP, it is expecting a premium of atleast 10 per cent over the existing brands since they are based on synthetic carotinoids. The company is expecting to carve out a five per cent marketshare within a year.

While APL plans to consolidate its strong OTC segment through line extensions under Thirty Plus, Pinkoo Gripewater and Trimol, it is scheduled to launch a new product, Livoplus - a herbal-based protection offer for alcohol-induced liver disorder - this month.

The market is expected to grow as the number of alcohol consumers is estimated to grow at 40 per cent per annum. The estimated market size for this drug is about Rs 130 crore.

In the bulk drug section, APL plans to start producing omeprazol, a high value and fast moving anti-ulcer product. According to company sources, APL will complete the development stage in omeprazole, and it will be taken up in the pilot plant at Waluj, constructed as per US FDA specifications, by end-December.