SPC Life Sciences Ltd IPO

About SPC Life Sciences Limited IPO

SPC Life Sciences Limited IPO is an IPO of TBA. It consists of an offer for sale of up to 8,938,870 equity shares and a fresh issue aggregating up to ₹300 crores. The shares will be allotted on TBA. The credit of shares to the demat account will take place on TBA and the initiation of refunds will take place on TBA.

Objective of SPC Life Sciences Limited IPO

• Re-payment/Prepayment of certain outstanding borrowings availed by the company.
  
• Funding of capital expenditure requirements of the company towards setting up Phase-2 at the Dahej Facility to expand the product offerings of pharmaceutical intermediates.
  
• Funding the working capital requirements.
  
• General corporate purposes.
  

Industry Outlook

India has been playing a key role in contributing to the global markets with respect to Specialty chemicals, Pharmaceuticals and Active Pharmaceutical Ingredients. Some examples of which are the Theophylline Market, Xanthine derivatives like caffeine which is a key ingredient in many prescription and non-prescription drugs, NBPR (used majorly in pharma and non-pharma sectors), Ethyl 2 bromobutyrate (Agro-chemicals & dyes and pharma sectors), Isopropyl-2-bromoisobutyrate, DMPC, an intermediate used in manufacturing of several APIs in the antipsychotic and antispasmodic drugs, and many more.

The Indian pharmaceutical industry is the world’s third largest in terms of volume and fourteenth largest in terms of value in FY2022. It is the increasing incidence of chronic diseases, along with growing importance of generics that drive the growth of the Indian APIs market. Advancements in active pharmaceutical ingredient (API) manufacturing and growth of the biopharmaceutical sector is also driving the market growth. The Global API market has shown steady growth of ~ 7.0% from FY2018 to FY2022 and is expected to further expand at 6.8% till FY2027 due to an increased focus on developing geographies.

Company Information

SPC Life Sciences Limited is one of India’s leading manufacturers of advanced intermediates for certain key active pharmaceutical ingredients (APIs), including Pentoxifylline, Amiodarone HCL, Cilostazol, Trazodone, Tramadol and Paroxetine (Source: F&S Report). The company is a research and development (“R&D”) driven chemical manufacturing company focused on chemistries involving long-chain multi-stage reactions. The advanced pharmaceutical intermediates (Pharma Intermediates) which are manufactured by the company are used in certain growing therapeutic areas including cardiovascular, vasodilator (anti-platelet), anti-psychotic drugs and anti-depressants.

Risks of SPC Life Sciences IPO

• The company depends on the success of their relationships with their customers. They derive a significant part of their revenue from their major customers and they do not have long term contracts with these customers. If one or more of such customers choose not to source their requirements from SPC Life Sciences, their business, financial condition and results of operations may be adversely affected.

• The business is dependent and will continue to depend on their manufacturing facilities, and it is subject to certain risks in its manufacturing process. Any slowdown or shutdown in the manufacturing operations or strikes, work stoppages or increased wage demands by their employees could interfere with the operations and could harm the business, financial condition and results of operations.

• All of the company’s manufacturing facilities are located in Gujarat exposing it to regulatory and other geography specific risks such as labour unrests, terrorist attacks, other acts of violence and occurrence of natural and man-made disasters.

Anchor Investor Information

The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/ Offer Opening Date.

IPO Registrar and Book Running Lead Managers

• Ambit Private Limited
• HDFC Bank Limited

Registrar for the IPO is Link Intime India Private Limited

Business Model

• The company is the manufacturer of advanced intermediates for certain key active pharmaceutical ingredients (APIs).

• It is a research and development (R&D) driven chemical manufacturing company focused on chemistries involving long-chain multi-stage reactions. The company invests in R&D activities to create a differentiating factor and sustainability vis-à-vis their competitors.

• The advanced pharmaceutical intermediates (Pharma Intermediates) which are manufactured by the company are used in certain growing therapeutic areas.

• Equipped with a US FDA approved facility for 6-Chloro-Hexane-2-One, the company can develop Pharma Intermediates and work with pharmaceutical companies who seek US FDA-compliant manufacturing facilities as a part of their supply chain.

Company Growth Trajectory

The revenue from operations grew from ₹120.926 crores as of 31st March 2020 to ₹145.641 crores as on 31st March 2022. The PAT also grew from 10.383 crores to 19.233 crores in the same period, thus confirming the company’s status as a growing company.

Company Market Position

• The company is the world’s largest manufacturer of 6-Chloro-Hexane-2-One (an intermediate for cardiovascular (hemorheological) drug Pentoxifylline in Fiscal 2022 with 93% market share. (Source: F&S Report)

• The company is the only supplier for 2-N-Butyl-3-(3,5-Diiodo-4-Hydroxy Benzoyl) Benzofuran (which is a key structural component of Amiodarone HCL) and associated sub-products in India with 20% global market share in Fiscal 2022. (Source: F&S Report)

• The company is a manufacturer of 2-Di Ethyl Amino Ethyl Chloride Hydrochloride (which is also a key structural component of Amiodarone HCL) with 13% global market share in Fiscal 2022 (Source: F&S Report). Such intermediates manufactured by the company (which are used in the manufacturing of Amiodarone HCL) are categorised as import substitutes. (Source: F&S Report)

• Globally, the company is one of the major manufacturers of all the key intermediates of Central Nervous System (CNS) anti-depressant, anti-psychotic drug Trazodone, and is the second largest Indian supplier in Fiscal 2022 of two key intermediates of Trazodone, namely, 1-(3-Chlorophenyl)-4-(3-Chloropropyl) Piperazine Hydrochloride with an 18% global market share and 1,2,4-Triazolo[4,3-A] Pyridin-3(2H)-One with a 11% global market share. (Source: F&S Report)

• The company captured 4-5% of the market by substituting imports from Chinese suppliers in its first year of manufacturing (Source: F&S Report).

• Further, with the inclusion of 5-(4-Chlorobutyl)-1-Cyclohexyl-1h-Tetrazole, the company is expected to have 10-15% global market share in the overall Cilostazol intermediates market. (Source: F&S Report)

How To Check Allotment Status of SPC Life Sciences IPO?

You can check the allotment status of shares either on the website of the Bombay Stock Exchange (BSE) or on the website of the registrar Link Intime India Private Limited. To check the status on the BSE website:

• Visit the BSE website
• Click on “Investor Services” and choose “Application Status Check”
• Choose the issue type — Equity or Debt (Equity in this case)
• Select the Issue Name from the drop-down. The issue name is the company’s name, which is SPC Life Sciences Limited
• Enter your application number or PAN number
• Check the box which says “I’m not a Robot” and click on “Search” to know the allotment status

Follow these steps to know the allotment status on the registrar’s website:

• Visit the Link Intime India Private Limited website
• Choose “Public Issues” from the “Investor Services” drop-down
• Select SPC Life Sciences Limited from the drop-down
• Enter your PAN number or Application number
• Click on “Submit” to know the allotment status