Freeze-Drying and Botox: Gufic Biosciences’ Prescription for Success

Gufic Biosciences

Research Report

About the Company

• Gufic Biosciences is engaged in the business of manufacturing of pharmaceuticals, medical chemicals, and Botanical Products.
• Gufic is one of the companies that has been doing lyophilised Injectables which is their main business since 40 years now.
• Gufic has the capabilities to manufacture 4 million lyophilised vials per month

Segments

• Gufic currently has 4 verticals contributing to its sales, the 4 verticals are as follows –

1. Domestic Branded Business
2. Contract Manufacturing Organisations (CMO)
3. International Business
4. API

Lyophilisation

• Lyophilisation is a freeze drying technology in which water is removed from a product after it is frozen and placed under a vacuum, allowing the ice to change directly from solid to vapor without passing through a liquid phase. Basically it is a way of converting a liquid into a solid form using the process of Freeze Drying
• Why is lyophilisation done?

1. Enhanced Product Stability in the solid dry state.
2. By converting Liquid into Solid Dry Powder state, this increases the self life of the product.
3. There is an ease of handling the liquid in the dry state, and easy to convert it into liquid and use it.

• Lyophilisation is a very complex process and has to be done with utmost care, hence getting arrivals to manufacture lyophilised products is very difficult
• Market of Lyophilisation is likely to grow at a stable 8-10%. In the last 5 years, 25-30% of the injectables were in the form of Lyophilised Injectables
• A forecast report expects 50% of the new upcoming injectables to be in lyophilised form

Segment 1 – Domestic Branded Business

• Gufic’s domestic branded business has over 100 products, 200 SKU’s and a retail reach of 1,10,000 doctors.
• 80% of the tertiary market is covered by Gufic and also has presence in government institutions
• Field force of 1000+, which was about 200-300 5-6 years ago
• Domestic branded Formulations have 6 brand vertices under which Gufic operates: –

• Gufic now in planning to Venture into Biologicals and Immune-Oncology

Segment 2 – CMO Business

• Gufic offers CMO services of India and Global markets
• Gufic has a client base of more than 70 Companies in the CMO space, and registered for CMO for more than 150 products
• They are one of the largest suppliers for

1. Doxycycline
2. Tigercycline
3. Gonadotropins
4. Liposomal Amphotericin B
5. Micafungin
6. Remdesivir

• Gufic also boasts of some esteemed clients / Partners

Segment 3 – International Business

• Currently Gufic has presence in 15 + Countries with 130+ registered products, and the plan is to expand the reach to another 15 countries making the reach to a total of 30 countries, with a a total registered products of 150 +
• Currently present in Canada, Costa Rica, Panama, Columbia, Latvia etc

Segment 4 – API

• For all these years, most of the manufactured API’s were used in house
• Now Gufic is present in 25 countries focusing on developing infringing, novel and cost effective API’s Peptides and Cyclopeptides
• The Categories Gufic operated under in API’s are

1. Anti Fungal
2. Anti Bacterial
3. Anesthetic
4. Intermediates for Anti Fungal

• Currently Gufic has 70 customers in India

Partnerships and License Deals

• Over the years, Gufic has entered in to some strong partnerships and License Deals
• Some of the Partnerships and licensing deals are

1. Prime Bio – Gufic have entered into a partnership of tech transfer and formulation development. The main breakthrough has been Botolnium Toxin, using Prime Bio’s technology was Indigenously developed in India
2. CinnaGen – CinnaGen and gufic have entered into a deal for Technology transfer in the therapy area of Infertility, tech transfer and Clinical development (Phase 3) of products at Gufic
3. LucasMeyer Cosmetics – Technical collaboration and Product development of Dermo – Cosmetics
4. BrightGene – Collaboration and development of API’s in the field of Recombinant products and Anti incentives.

Research and Development (R&D) Infrastructure

• Gufic has State of the Art R&D facility in Navsari, Gujarat
• This Facility has the expertise in Formulation Development, Technology Transfer, API Development
• A total of 5 Patents have been granted and there are 8 others in the pipeline filled and to be filled
• New projects in the pipeline are for product as well as Special / New Drug Delivery Systems (NDDS) Projects

Sales Distribution and IT Infrastructure

• Gufic has 2 central ware houses in North Delhi and West Bhiwandi
• They also have 23 C&F agents pan India, with 1200 + stockists
• Field Force pan India is 1000 + which cover 1,10,000 retailers and 1,20,000 + doctors
• Gufic has a integrated IT system with Sales and Distribution infrastructure, with SAP S4 HANA implemented in all Deparments
• Tools like Tablets, Sales Force Automation for effectiveness

Botulinum Toxin

• Gufic is one of the 5 companies in the world to be able to manufacture high quality botulinum toxin. Gufic’s Botulinum Toxin is branded at “Stonnox” which is India’s first indigenous botulinum Toxin.
• Trials were concluded on 100 patients.
• Gufic plans to widen the product portfolio by getting into different types of botulinum toxin
• Gufic is the only Indian company to manufacture this with the help of Director Balram Singh
• The total market of botulinum toxin is $6.5 Billion market i.e 47,000crs market, but in India it is at a very nascent stage and still developing and is at 123 crs
• Allergan’s Botulinum toxin branded at “botox” is the closest competitor to Gufic
• Gufic has built a state of the art manufacturing facility for Botulimun Toxin in Navsari
• Further Prime Bio and Gufic want to develop several innovative formulations with Botulinum Toxin in the field of Dermatology, Neurology and Pain Management

Capacities

Revenue Breakup

• In the Domestic Branded Business, Critical Care Division contributed 50%+, followed by Infertility division 25%, and the remaining divisions contribute 25%
• The total Revenue break up of Gufic is

1. 50% Domestic Business
2. 25-30% CMO
3. Remaining split between API and international business, international business having the greater edge

Investment Rationale

• The company has the 2nd largest Lyophilisation capacity and is adding newer lyophilised products like dual bag, dual chambers etc
• Considering Lyophilisation is commoditised, Gufic’s real Moat or USP is getting first time products in India and having the capability to manufacture them
• Gufic is also known for it’s partnerships which global pharma leaders like Prime bio with botilinium Toxin
• New R&D facility focused on developing new API and increasing the API share a % of sales. Currently API contributed less than 10% and 50-60% of it is used for internal consumption, Hence the New R&D facility will help and improve revenue and margins going forward
• Domestic Branded business picking up and a long way to go. Gufic has invested a lot in Domestic Branded business by venturing into many vertices like Gufic Spark and Gufic Astraderm. Going forward all the new ventures should start yielding good revenue to the company.
• Gufic tries and comes up with their own solutions and launches them in their branded business, for eg, Gufic had launched lyophilised vials for Immunocin Alpha as per innovator. Later on Gufic launched their one way of Pre filled syringes for the same Immunocin Alpha in India for the first time.

Financials

Thank You For Reading

Note – This is the basic research we have done and will continuously be updating this as we further do our detailed research

Regards ,

Bhavya Sonawala

Samaasa Capital

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