>Pfizer India Ltd (Hem Securities)

Company Snapshot
Pfizer India Ltd has a market share of 2.2%, and is currently ranked 14th (ORG-IMS MAT Dec. 2008) after the divestment of 4brands of the Consumer Health portfolio to M/s. Johnson & Johnson Ltd. The company has reported earnings results for the full year ended November 2008. For the year, the net sales grew marginally from Rs.6726.6 million in the previous year to Rs.7006.1 million. The company has achieved growth despite the sale of four Consumer Healthcare Brands to M/s. Johnson & Johnson Limited. The Com-pany has achieved a net profit of Rs. 2991.2 million as compared to Rs.3389.3 million for the previous year showing a decline of 11.75%. This decline is due to the impact of other income and exceptional items in the pre-vious year and the year under review respectively.

Q1FY09 Performance Highlights

The company posted excellent financial figures for the quarter ended Febru-ary 2009. The net sales for the company gone up by 26.51% to Rs 1902.40 million for the Q1FY09 as against the net sales of Rs 1503.70 million for the Q1FY08. The company posted the EBITDA of Rs 436.40 million for the Q1FY09 as against the EBITDA of Rs 315.70 million for the Q1FY08 with the growth rate of 38.23%. The operating profit margin for the company stood at 22.94% for the Q1FY09 as against the operating profit margin of 20.99% for the Q1FY08, clearly showing the strength of the company. The net profit for the company rose to Rs 390.10 million for the Q1FY09 in comparison to net loss of Rs 192.90 million for the Q1FY08. The net profit margin stood at 20.51% for Q1FY09. The EPS for the company stood at Rs 13.07 for the quarter ended in February 09 versus the negative EPS of Rs 6.46 for the quar-ter ended February 08. The EPS on TTM (Trailing twelve months) stood at Rs 48.67 for the company.


INVESTMENT RATIONALE

Pfizer India plans to set up 600 smoking cessation clinics across the country in the next two years. The company has already tied up with 150 clinics in 17 cities, including Max Healthcare, and is in talks with more hospitals for partnerships. The company is also in talks with the government to use this as a treatment op-tion in the 600 clinics that they plan to set up. Pfizer is also in talks with Masina Hospital for a possible partnership.

Pfizer targeting off-patent medicines for the growth has signed a series of agreements with Aurobindo Pharma to market medi-cines that are no longer patent protected and do not have market exclusivity in the US and Europe. The company expects to gar-ner revenues up by US\$200 million till 2014. Pfizer's deal with Aurobindo is its first in-licensing deal where the US-based pharma company takes on licence, products from Aurobindo.

The world's biggest drug maker -Pfizer Inc has acquired rival Wyeth for around US\$68 billion in a cash-and-stock deal. The company’s US\$68-billion acquisition of Wyeth is all set to get the operations rolling in India within 2-3 months after the global guidance is received. The deal seems to be an ideal merger as the two companies are complementary and there seem to be no major product overlaps. Acquisition of Wyeth would rope in interesting products in the animal health and vac-cine segments besides a very strong consumer healthcare divi-sion that has the popular hair-removing cream Anne French, among other products. This would be a boost to Pfizer's con-sumer division that had some time back sold a clutch of con-sumer products to Johnson and Johnson.

Pfizer is in a fray to acquire substantial stake in Wockhardt's biotechnology business in a strategic business tie-up estimated at around Rs. 250 crore. Wockhardt with a market cap of Rs. 780 crore possibly would have to hive off its biotech business into a separate company for another company to pick up stake.

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