Trident Lifeline coming with an IPO to raise upto Rs 35.34 crore

Trident Lifeline

• Trident Lifeline is coming out with an initial public offering (IPO) of 3499200 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 101 per equity share.
  
• The issue will open on September 26, 2022 and will close on September 29, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 10.10 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Beeline Capital Advisors.
  
• Compliance Officer for the issue is Kunal Amrishbhai Chauhan.
  

Profile of the company

The company is engaged in the pharmaceutical business ethical marketing in domestic as well as inernational market. It is also engaged in distribution of pharmaceutical products through third party distribution network. It offers wide range of pharmaceutical formulations and products manufactured on contract manufacturing under loan lisence. It operates in India as well as African, Latin American and East Indian Countries. It has its presence through registered products or products under registration in countries like Bolivia, Cambodia, Cameroon, Chile, Ghana, Kenya, Myanamar, Nigeria, Peru, Sudan, Tajikistan, Uzbekistan, Venuzela. The company deals in Capsules, Tablets, Liquid Ointment, Gel, Ice Gel, Mouthwash, Paste, Solution, Suspension, Drypowders and Toothpaste. Its product portfolio comprises of vide range of drugs like Anti Bacterial, Anti Diarrheal, Anti Fungal, Anti Malerial, Anti Diabetic, Dental Cure, Proton Pump Inhibitor, Anti Protozol, Anti Histamine, Anti Hypertensive drugs, Anti Lipidemic Drug, Anti Parasitic, Multivitamin, Multimineral Nyteraceutical and Non-steriodal anti-inflamatory drug (NSAIDS). Its product portfolio consists of 832 products, as on May 31, 2022. It operates under different brand names across the globe. As on May 31, 2022, it has 267 products registered in total 8 countries. As on May 31, 2022, total 565 products are under process of registration in 11 countries, which shall boost the growth of the company.

The company is engaged in the business of marketing pharmaceutical products. For which it has obtain necessary approvals from FDA for getting the formulations manufacture from contract manufacturers on Loan License or on principle-to-principle basis. It also takes the necessary Trademark approvals & registrations wherever required. Its Pharma business operations are supported by various contract manufacturers having facilities which are approved by FDA/WHO and other relevant authorities. It typically works on contract manufacturing basis or at times purchase order basis, depending upon customer’s requirement, with manufacturer of pharma products. Presently the company operates with one contract manufacturer. The company has maintained relationship with the regular supplier, having FDA and WHO approved plant to supply pharma formulations. These units manufacture tablets, capsules, dry powder, syrup under its own brands.

Proceed is being used for:

• Meeting working capital requirements.
  
• Product registration in international markets.
  
• General corporate purpose.
  
• Meeting public issue expenses.
  

Industry overview

Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value. The domestic pharmaceutical industry includes a network of 3,000 drug companies and 10,500 manufacturing units. 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 likely to reach $65 billion by 2024 and further expand to reach $120 billion by 2030. The Ayurveda sector in India reached $4.4 billion by 2018 end and grow at 16% CAGR until 2025. In November 2020, the government dedicated two future-ready national premier Ayurveda institutions to the country to mark celebrations of the ‘5th Ayurveda Day’. Also, World Health Organization (WHO) announced the setting up of the Global Centre of Traditional Medicine in India. In terms of overall revenue, the Indian pharmaceutical market increased by 13.9% in January 2022. In the global pharmaceuticals sector, India is a significant and rising player. India is the world's largest supplier of generic medications, accounting for 20% of the worldwide supply by volume and supplying about 60% of the global vaccination demand. The Indian pharmaceutical sector is worth $42 billion and ranks 3rd in terms of volume and 13th in terms of value worldwide.

India is the world’s largest provider of generic medicines; the country’s generic drugs account for 20% of global generic drug exports (in terms of volumes). Indian drugs are exported to more than 200 countries in the world, with the US as the key market. India is the 12th largest exporter of medical goods in the world. The country’s pharmaceutical sector contributes 6.6% to the total merchandise exports. Exports of Indian pharmaceuticals, including bulk drugs, intermediates, drug formulations, biologicals, AYUSH & herbal products and surgical products, reached $16.28 billion in FY20. India’s drugs and pharmaceuticals exports stood at $24.44 billion in FY21 and $22.2 billion Between April 2021- February 2022. In FY21, North America was the largest market for India’s pharma exports with a 34% share and exports to the U.S., Canada and Mexico recorded a growth of 12.6%, 30% and 21.4%, respectively.

Pros and strengths

Strategic location of contract manufacturing facilities: The company’s Pharma business operations are supported by various contract manufacturers having facilities which are approved by FDA/WHO and other relevant authorities based at Gujarat. It typically work on contract manufacturing basis or at times purchase order basis, depending upon customer’s requirement, with manufacturer of pharma products. Presently the company operates with one contract manufacturer. The company has maintained relationship with the regular suppliers having FDA and WHO approved plant to supply pharma formulations. These units manufacture tablets, capsules, dry powder, syrup under its own brands.

Diversified business operations: The company’s business is diversified in terms of geographies and therapeutic areas within the pharmaceutical industry. In terms of geographical diversity, it has marked its presence in India and international markets. It has exports of Formulation to countries like it has its presence in countries like Bolivia, Cambodia, Cameroon, Chile, Ghana, Kenya, Myanamar, Nigeria, Peru, Sudan, Tajikistan, Uzbekistan, Venuzela. Its brands across various therapeutic areas in pharmaceuticals industry. Its diversified revenue base enables it to mitigate the risk of income concentration by spreading revenue across multiple sources and opens opportunities to new prospects of growth.

Scalable business model: The company’s 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 basically due to development of new markets and products both domestic and international by exploring customer needs, marketing expertise and by maintaining the consistent quality output.

Risks and concerns

Operate in highly regulated and controlled industry environment: Being a pharmaceutical company, the company operates in an industry which is highly regulated and controlled. There are stringent and restrictive norms in relation to quality standards. Further, entry barriers in regulated markets in which it currently operate and seek to expand are very high and have extensive regulations pertaining to research, testing and manufacturing, selling and marketing of pharmaceutical products. In most regulated markets, pharmaceutical products must be registered after being tested for safety, efficacy and environmental impact and the regulations differ from country to country. Some of its customers operate in such highly regulated markets and liaise / do business with the company based on the company being the approved source of supply. Also, some of its existing registered products need to be renewed after their expiry. There is no assurance that it will be able to obtain the necessary approvals / renewals for all its products, which could adversely impact its ability to sell some of its products in certain markets.

Rely on third parties for manufacturing products: The company rely on one third party for manufacturing its products. At present it has entered into Contract Manufacturing Agreement with Mars Remedies, which manufactures its products as per its order. The company must schedule manufacturing plan, as it cannot enforce such manufacturing companies to manufacture as per its schedule. Any decline in the quality of medicines manufactured or delay in delivery of products by such parties or rise in job work charges may adversely affect its operations. Further there can be no assurance that such parties shall continuously provide their services or would not cater to demand of competitors. Any withdrawal of services from such manufacturers or supply of services to competitors at better rates may adversely affect its result of operations and future prospects. Further it is also exposed indirectly to the risks these manufacturers faces.

Requires significant amount of working capital: The company’s business requires significant working capital, part of which would be met through additional borrowings in the future. In many cases, significant amounts of working capital are required to finance the procurement of branded products before payments are received from customers. Its working capital requirements may increase, under certain conditions, where payment terms do not include advance payments or include delayed payments from customers. Additionally, its working capital requirements have increased in recent years due to the general growth of its business. All these factors may result, or have resulted, in increases in its working capital needs.

Outlook

Established in 2014 as a pharmaceutical company engaged in the manufacturing and marketing of quality finished dosages, Trident Lifeline is one of the fastest growing pharmaceutical companies in the SME segment providing unprecedented quality of healthcare products. Since the inception of its journey, it has made a phenomenal progress in the healthcare industry with its efficient and unique network of supply chain across the globe buttressed by the efforts of highly dedicated management team and employees who relentlessly strive to serve its customers worldwide. It deals in Capsules, Tablets, Liquid Ointment, Gel, Ice Gel, Mouthwash, Paste, Solution, Suspension, Drypowders and Toothpaste. Its product portfolio comprises of vide range of drugs like Anti Bacterial, Anti Diarrheal, Anti Fungal, Anti Malerial, Anti Diabetic, Dental Cure, Proton Pump Inhibitor, Anti Protozol, Anti Histamine, Anti Hypertensive drugs, Anti Lipidemic Drug, Anti Parasitic, Multivitamin, Multimineral Nyteraceutical and Non-steriodal anti-inflamatory drug (NSAIDS). Its management team is experienced in the industry in which it is operating and has been responsible for the growth of its operations and financial performance. On the concern side, while, the company maintains insurance coverage in amounts consistent with industry norms. If any or all of its facilities are damaged in whole or in part and its operations are interrupted for a sustained period, there can be no assurance that its insurance policies will be adequate to cover the losses that may be incurred as a result of such interruption or the cost of repairing or replacing the damaged facilities.

The company is coming out with a maiden IPO of 3499200 equity shares of Rs 10 each at a fixed price of Rs 101 per share to mobilize around Rs 35.34 crore. On performance front, the total revenue from operations for the year ended on FY 2021-22 was Rs 2176.79 lakh as compared to Rs 962.23 lakh during the FY 2020-21 showing an increase of 126.22%. Profit after Tax (PAT) increased from Rs 63.23 lakh in the FY 2020-21 to Rs 227.32 lakh in FY 2021-22 showing increase of 259.54%. Meanwhile, the company intends to continue to enhance scale in existing products and introduce new products across high end and mid segment to capitalize on the opportunity to cater rising acceptance and demand of new products. Its wide product range provides competitive edge over its competitors. In order to maintain its competitive edge, it will continue to add newer products to its products portfolio.