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Alivus Lifesciences Ltd: A Rising Star in the Pharma Industry?

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Alivus Lifesciences (formerly knows as Glenmark Lifescience Ltd) is primarily engaged in Active Pharmaceutical Ingredient (API) manufacturing, serving both generic and innovator pharmaceutical companies. The company has a portfolio of high value, non-commoditized APIs in chronic therapeutic areas, namely Cardiovascular (CVS) disease, Central Nervous System (CNS) disorders, Pain Management, Oncology, Diabetes and Urology.

History

The company’s journey began over 22 years ago when Glenmark Pharmaceuticals (GPL) established its API (Active Pharmaceutical Ingredients) business. Initially, Glenmark acquired the Kurkumbh site to support its API needs. Over time, the API division expanded its R&D and operations to serve both Glenmark and external customers.

In 2019, Glenmark Life Sciences became an independent company, separating from Glenmark Pharmaceuticals. This transition allowed GLS to focus solely on APIs, making it a trusted global supplier. The company began building a strong API portfolio and establishing itself as a leader in the pharmaceutical ingredients market.

Glenmark Life Sciences went public in July 2021, launching an Initial Public Offering (IPO). It set a record for the highest number of retail applications in over a decade for a pharmaceutical company. In FY24, Nirma Limited acquired a majority stake in Glenmark Life Sciences from Glenmark Pharmaceuticals.

Current Business

Alivus Life Sciences (GLS) is a leading developer and manufacturer of Active Pharmaceutical Ingredients (APIs), catering to global generic and innovator pharmaceutical companies. The company specializes in high-value, non-commoditised APIs, with a focus on regulated markets like the US, Europe, Japan, Canada, and Latin America. The company has a portfolio of 151 APIs across key therapeutic areas which are Cardiovascular (CVS) disease, Central Nervous System (CNS) disorders, Pain Management, Oncology, Diabetes and Urology.

The company is also engaged in CDMO business and developed business with innovator and specialty pharmaceutical companies in the area of CDMO in the last four years. This segment is a key growth driver, supporting both generic and innovator drug companies. The company is also expanding manufacturing capabilities to support CDMO clients.

Global Presence

The company has a strong international presence, exporting its Active Pharmaceutical Ingredients (APIs) to 75+ countries. The company serves leading global generic pharmaceutical companies, with a focus on regulated and emerging markets. GLS operates in both regulated and emerging markets, ensuring diversified revenue streams.

Company supplies APIs to over 700 customers worldwide in 75+ countries and partnered with the top 20 global generic pharmaceutical companies. In FY 2023-24, exports contribute 49% of the total revenue of Rs 11,679 million and domestic market contribute 51% of Rs 11,664 million.

Financial Performance


Revenue Growth

  • The company has shown impressive revenue growth from ₹0.3 crore in 2018 to ₹2,283.2 crore in 2024.
  • The highest growth was in 2019 (354,468%), due to the company's initial scale-up.
  • However, after 2021, growth has slowed down to single digits (5.64% in 2024), indicating a stabilization phase.
Profitability
  • Gross Profit has steadily increased, reaching ₹1,038.5 crore in 2024.
  • EBITDA Margin remains strong at around 30%, indicating efficient cost management.
  • Net Profit Margins have fluctuated, peaking at 21.61% in 2023 but slightly falling to 20.62% in 2024.
Cost Structure
  • Cost of Goods Sold (COGS) has increased over the years, but its growth has slowed in 2024 (-4.06%), improving gross margins.
  • Employee Benefit Expenses have risen significantly in 2024 (₹258.16 crore, 11.31% of sales), impacting profitability.
Earnings and Dividends
  • Earnings Per Share (EPS) jumped 60% in 2020 but saw a sharp decline in 2021-2022 due to an increase in equity shares.
  • Dividend Payout Ratio has been high in recent years (110.23% in 2023, meaning more dividends than profits), which might affect future growth.

Future Outlook

Company is focusing on expansion, innovation, and diversification to strengthen its position as a leading global API (Active Pharmaceutical Ingredient) supplier. The company is making strategic investments in manufacturing, CDMO services, and high-growth therapeutic areas to drive long-term growth.

In API business, the company has target to increase the capacity from 1,198 KL to 2,650 KL by FY27. Company will build the greenfield API facility in Solapur (600 KL capacity) by FY26. To reduce dependency on Key Starting Materials (KSMs) and intermediates, the company will made investment in backward integration. This will help the company to meet the growing demand for APIs in regulated markets (US, Europe, Japan) while reducing supply chain risks.

In CDMO business, the company is increasing partnerships with global pharmaceutical companies for custom API development and investing in new R&D capabilities for complex molecules. This is because the CDMO is a high-growth, high-profit sector, and global pharma companies are increasingly outsourcing API production to specialized players.

To strengthen the global presence, the company is increasing DMF filings in the US, Europe, Japan, and Canada to expand API sales and also expanding its presence in Latin America, South Korea, China, and the Middle East. The company is also entering new markets in Asia & Africa to diversify revenue streams.

Valuation

As on 21 February, 2025, the PE Ratio of the Alivus Lifescience Ltd is 26.45 whereas the Industry PE is 47.00. This shows that the share is undervalued in respect of its earnings. So, the intrinsic value of the share price would be Rs 1,243.15, whereas the current market price (CMP) is Rs 1016.35. This shows that the share is undervalued by Rs 226.80. It is to be noted that the intrinsic value is determined on the basis of the company’s earnings and its CMP. There are many other methods to calculate the intrinsic value of a share price like Discounting Cash Flow (DCF) Method, Dividend Growth Model, etc.

Will it become the STAR of Pharma?

Alivus Lifescience deals in the API (Active Pharmaceutical Ingredient) sector, which is likely to expand exponentially. The global API market was valued at ₹19 lakh crores in 2023 and is likely to reach ₹35 lakh crores by 2033. This is a growth rate of 6.08%, which is amazing. The US market was ₹3 lakh crores in 2023 and will be ₹6 lakh crores by 2033 at a growth rate of 6.86% per annum. The Asia-Pacific market will be growing at a high rate in the coming years at a growth rate of 6.37% per annum.

The industry is expected to perform very well in the coming years, but will Alivus Lifescience Ltd. be able to grow along with the industry, or will it remain limited?

The company's market cap is ₹12,000 crores, which means it is a small-cap company. It is well known that small-cap companies have higher growth potential compared to large-cap companies, as they have more opportunities for expansion. 

Alivus Lifescience's Revenue-to-Market-Cap Ratio is 0.19. Industry leader Divis Laboratories has a market cap of ₹1,50,000 crores and a Revenue-to-Market-Cap Ratio of 0.05 only. This means that Alivus earns 19% of its market cap as revenue, while Divis earns only 5%. Alivus' revenue growth has been at a rate of 20.95% per annum for the last five years, while the industry average revenue growth is a paltry 9.04%.


Divis Laboratories has slightly superior margins compared to Alivus. Divis Labs recorded an EBITDA margin of 31% in FY24, while Alivus recorded 30%. That is a margin difference of 1%. Divis Labs and Alivus recorded a margin of 20% each in FY24 in terms of Net Profit Margin, so their profit margins are on par. Alivus may be a small company, but it is matching a large company when it comes to margins.

Alivus is performing better than the  giant, Divis Laboratories, when it comes to free cash flow. Alivus is maintaining a free cash flow of ₹285 crores in FY24, whereas Divis Labs maintains a free cash flow of ₹258 crores. Although Alivus is a relatively smaller company, it is retaining more cash than a large player in the industry.

Overall, small firm Alivus is performing very well compared to the leader in revenue, margins, and cash flows. In some parameters, it is nearly as good as Divis, and in others, it is better. However, this does not necessarily mean that Alivus will be the STAR of the Pharma sector in the future. There are many unknown factors, like drastic changes in the industry. For example, digital pharma is very popular, and its use demands a lot of money for investment, also known as capex. Large companies are able to cope with these changes, but smaller ones may have problems since they have less at their disposal. However, if Alivus can adapt to these industry changes, it has the potential to become a STAR of the Pharma sector.

 

Disclaimer: The information provided in this blog is sourced from the company's Annual Report for FY24, newspapers, and other publicly available news sources. The details about the company's business, financial performance, and future plans are based on these references. This blog is for informational purposes only and should not be considered as investment advice, a buy or sell recommendation, or financial guidance. Investors are advised to conduct their own research, analysis, and due diligence before making any investment decisions. Neither the author nor this blog assumes any responsibility for any financial decisions made based on the information provided.













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