Business

For the price of a tablet, Indies Pharma offers shares in its business

BY ANTHONY LEWIS
Observer writer

Sunday, July 15, 2018

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MONTEGO BAY, St James — Indies Pharma Jamaica Ltd, a local pharmaceutical distribution company based in St James, on Thursday opened its initial public offering (IPO) on the Jamaica Stock Exchange (JSE) Junior Market.

The company plans to raise $387.21 million for working capital needs and for continued expansion. The offer closes on July 19.

The Jamaica Observer spoke with President and CEO Dr Guna Muppuri on Wednesday during an investor briefing for potential investors held at the Grand-A-View Restaurant and Event Place in Montego Bay.

“The difference between us and the other companies that are listed on the Jamaica Stock Exchange as drug distribution companies is we don't just do distribution. We also try to retain the manufacturer's share of profit within Jamaica, and we will declare that as dividends going forward from our profits,” explained Dr Muppuri.

“For example. If you compare the market comparable in the pharmaceutical industry, the net profit is about five per cent. If you look at our revenues, and our profitability, we are in the range of 30 per cent. That means a lot to investor community. That means where we are standing today, let's say if our revenue goes up by 1/3, I am very confident that our profits will go up by 50 per cent. If our revenues can go up by 2/3, it is no surprise that we will be growing profits by 100 per cent.”

According to the company, Indies Pharma plans to sell 266.5 million ordinary shares at $1.50 each. This reflects a price less than the cost of a simple tablet. After a successful IPO it would take the total issued ordinary shares to 1.332 billion units. The company made audited revenues of $620.3 million for its full year ending October 2017 or six per cent more year-on-year. The growth in revenues was also reflected on the bottom line with $172.3 million net profit before tax in 2017 when compared to $110.3 million in the prior year.

The company's total shareholders' equity was $319.9 million as at October 2017, an increase of 21 per cent or $265.4 million over the prior year.

Unaudited results for the first six months to April 30, 2018 show continued business growth with revenue surpassing $301 million from $274.1 million or 10 per cent year over year. Also, net profit before tax increased to $72.5 million in April 2018 from $68.6 million a year earlier.

Business partners Steven Serrao and Vivek Acharya, who own the SV Shoppers Mart in St James, told Sunday Finance they will be investing in the pharmaceutical company.

“I have known Mr Guna for almost 10 years, and tonight was an occasion to come and listen to the different speakers. I saw the ad in the Observer that Muppuri is coming out with an IPO and I decided to be a part of it,” stated Serrao, who added, “I know Mr Muppuri to be a man of great integrity and medicine is always something that people will always need, so I know this company has great potential, so we decided to invest in it.”

Indies Pharma Jamaica was incorporated in December 2003 by the medical doctor Dr Guna and his wife Vishnu Muppuri and sold its first third-party pharmaceutical on April 18, 2005. The company transitioned to sale of products under the Bioprist brand in 2010, and two years later acquired Trident Pharmacy.

Currently, the company distributes over 150 prescription and non-prescription or 'over the counter' generic pharmaceutical products for Bioprist Holdings Ltd under the Bioprist brand. The company services customers across the island, including over 400 pharmacies, private and public hospitals and government agencies including the National Health Fund, as well as medical practitioners, and directly to individual end users.

GK Capital Management which has been advising Indies Pharma for the last three years and is leading the transaction playing the dual roles of lead arranger and co-broker. Sagicor Investments has been engaged as co-broker.

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