IN FOCUS Ferozsons Laboratories Ltd (FEROZ): Be Healthy, Be Wealthy, Be Wise Ferozesons Limited (FEROZ), the sixth largest publicly listed pharmaceutical company (in terms of sales), recently came into limelight after it announced that it entered into an agreement with an American company, Gilead, for the distribution of its new revolutionary Hepatitis-C treatment drug “Sovaldi” in Pakistan. This agreement has finally been endorsed by the country’s drug regulation authority (DRAP) which will allow Ferozesons to start the distribution of the drug by Dec’14. As per news reports, the complete treatment is going to cost ~PKR330,000 per patient alongwith a success ratio significantly higher than the other treatments currently available in the market. We have presented a sensitivity analysis to assess the impact of “Sovaldi” sales on FEROZ’s earnings. As per WHO’s reports, ~5% of the country’s total population are carrying the disease (or ~9.0mn individuals) and roughly 250,000 new patients join the list every year. Our preliminary analysis shows that if 30,000 patients take the new treatment, the annualized impact on company’s bottom-line is of PKR33/sh (assuming Net margin of 10% against current margin of 16%). The stock has outperformed the benchmark index by 113% during last 3-months following the aforesaid development. Given the phenomenal impact of the new drug on company’s earnings, we believe the stock still offers an attractive upside of 86% based on our tentative estimates. Report by: Jehanzaib Zafar BMA Capital Management Ltd. (9221) 111 262 111 This report produced by BMA Capital Management Ltd. contains information from sources believed reliable; we do not guarantee that the matter is accurate or complete. Our Research Analysts compile this memorandum based on opinions and judgments, which may vary and be revised at any time without notice. This report is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned. It is published for the use of our clients may not be reproduced, distributed or published by any person for any purpose whatsoever. Action will be taken for unauthorized reproduction, distribution or publication. The views expressed in this document are those of the BMA Research Department and do not necessarily reflect those of BMA or its directors.
Posted on: Tue, 25 Nov 2014 07:35:27 +0000
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