Mankind Pharma Explained: Will it Rise with BSV?

Have you heard of Mankind Pharma? At some point or another, almost everyone has used its products or seen its advertisements on TV.

Mankind gets its products endorsed by celebs like Amitabh Bachchan, Sunny Leone, Anushka Sharma, and Ranveer Singh to name a few!

It is counted among the top pharmaceutical companies in India, with 23 brands in its portfolio. What’s more interesting is that each of these 23 brands, including Manforce, Moxikind-CV, and Prega News, is valued at over ₹100 crore. 😲

Recently, Mankind Pharma acquired a 100% stake in Bharat Serums and Vaccines Limited (BSV) to further up its game in the market.

I have so much more in store for you about the acquisition, the company and the pharmaceutical industry. So strap in and get ready to learn!

What's Going on With Mankind Pharma?

Given the fact that it’s ranked first in prescriptions over the last five years and is the youngest of the top five companies in the Indian Pharmaceutical Market, it’s safe to say that the company is doing great.

But maintaining a top position in the market is hard without "strategic growth and innovation". So, in the spirit of growth, Mankind shook a few hands. It acquired a 100% stake in BSV Limited and entered into in-licensing agreements with:

• AstraZeneca (Symbicort)
• Novartis (Crenzlo and Vonalong)
• Takeda (Vonolang and Vonoprazan)

The company already has a very extensive distribution network, and now, with its agreements and acquisition of BSV, it might grow even more.  
Wondering why this acquisition makes so much sense for Mankind? Here’s the answer!

BSV is a top specialty pharma platform, and it has done some pretty amazing things:

1. Introduced the world's first and only Anti Rho(D) Recombinant Antibody.
2. Launched India's first Anti thymocyte Ig, r-FSH, High Pure HMG, and r-HCG.

Coming to the heart of the matter, BSV operates in some segments with high entry barriers, like women's health, fertility, and critical care. Now that Mankind has acquired BSV, it has a better foothold in these segments. Think of this as Mankind taking a shortcut.

This acquisition also makes sense because BSV’s brands have been ranked in the top two in terms of how fast they are growing as compared to the products of its peers. Hence, BSV’s strong market position will prove to be a competitive advantage for Mankind.

Additionally, BSV has strong financials. In FY24, its revenue stood at an impressive ₹1,723 crore, with year-over-year growth of 20% 🤯. Women's health sales were the top performer, contributing to 76% of domestic and 55% overall sales. BSV also achieved an adjusted EBITDA margin of 28%, topping its reported margin of 23%.

There’s more!

Mankind is set to gain a lot from this acquisition:

• It can take advantage of BSV’s fertility portfolio, which is set on a highway of growth.
• It can earn better revenues by taking advantage of cross-selling in fertility clinics and institutions.
• It can potentially manufacture BSV’s prescription portfolio in-house, which will reduce costs, leading to better profit margins.
• It can take advantage of BSV’s speciality R&D platform, which is highly capable in recombinant technology, niche biologics, novel delivery systems, and immunoglobulins.

But BSV also stands to gain from this deal. Mankind can use its operational expertise to improve the productivity of BSV's medical representative (MR). You can say that it's a good deal for both the parties involved.

Mankind Pharma's Foundation & Business Model

Mankind’s foundation story is quite inspiring. Most people don't have the courage to do what founder Mr Ramesh Juneja did. He quit his job at a leading pharma company to help people, especially those from small towns and villages, whose medical needs were being overlooked.

So, he founded Mankind Pharma in 1991. Inspired by his dedication, Rajeev Juneja (Ramesh Juneja’s younger brother) also joined Mankind.

Fun fact: Rajeev actually wanted to join the Indian Army, but he decided to serve mankind in another way. He followed in the footsteps of his elder brother (Mr Ramesh Juneja), his brother-in-law (Mr P. K. Arora), & his nephew (Mr Sheetal Arora), and joined the family business.

Would you have ever guessed that Mankind Pharma is a family business? Let me know in the comments!

Anyway, together, they have completely reformed the shape of India’s pharmaceutical industry. Mankind Pharma commenced its operations in 1995, four years after its foundation.

Here are some of the milestones it has achieved:  

• In 2004, it stepped into the chronic pharmaceutical segment.
• From 2007-10 it focused on launching Manforce and Prega News, effectively stepping foot into consumer healthcare.
• 2012 was a big year for Mankind, as the company set up its first R&D centre at IMT Manesar, Haryana.
• In 2015, the company went international, incorporating subsidiaries in the US and Singapore.
• In 2023, Mankind was listed on the NSE and BSE.

Mankind's journey began with a man, a resignation letter, and a dream to help people. T and today, it has become a leader in the pharmaceutical market.

Mankind Pharma's Business Model

Mankind Pharma's business model primarily revolves around three key revenue streams:

1. Product Sales:

Mankind Pharma business model is primarily focused in manufacturing, packaging, and marketing of its products. Here's a bifurcation in its kinds:

a. Prescription Drugs: The company develops, manufactures, and sells prescription drugs to healthcare professionals, such as doctors and pharmacists. These drugs are often used to treat various medical conditions and ailments.

In case of Mankind Pharma (and now BSV), the company usually caters to the women's health and fertility sector. Both the pharma companies hold a leadership position in the sector. That's right, Mankind Pharma holds a number 1 rank in prescriptions over the last seven years.

b. Over-the-Counter (OTC) Products: Mankind also produces a range of OTC products that are available directly to consumers without a prescription. These products typically address common health concerns like pain relief, cold and flu symptoms, and digestive issues.

Well-know products like Prega News, Gas-o-Fast, AcneStar, Manforce Condoms, Ring-Out, etc. are part of Mankind Pharma's OTC section.

2. Licensing and Partnerships:

Along with its product sales, Mankind Pharma also forms partnerships with other companies and allow in-licensing. Licensing means that the company grants or acquires rights (licenses) to use its intellectual property such as patents, trademarks, or copyrights, under specified terms. And it also collaborats with other pharmaceutical companies to develop new drugs, conduct research, or share marketing resources.

a. Intellectual Property Licensing: Mankind Pharma often licenses out its intellectual property to other pharmaceutical companies. This means that other companies can obtain the rights to manufacture and sell Mankind's products in specific territories or markets. In return, Mankind receives licensing fees.

Example: Symbicort (2024), Nobeglar (2023), Neeptaz (2022), etc.

b. Joint Ventures and Partnerships: The company may also form joint ventures or partnerships with other pharmaceutical companies to develop, manufacture, or market new products. These collaborations can help to pool resources, share expertise, and reduce risks.

Example: Panacea Biotech (2022), Upakarma Ayurveda (2022), Daffy (2022), Cobihale (2022), etc.

3. Contract Manufacturing:

Mankind Pharma offers contract manufacturing services to other pharmaceutical companies. This means that other companies can outsource the production of their drugs to Mankind's facilities. In exchange, Mankind receives fees for providing these manufacturing services.

Although as per Mankind Pharma's future plans, the company is planning on reducing this sector and focusing more on in-house and licensing/partnerships.

The pharma industry is well known for having complicated business models. Read here to know why.

Mankind Pharma's Operational Structure

A pharma company's drug manufacturing is an entire journey in itself.

a. Research and Development (R&D)

It all begins with some extensive R&D, with the aim of coming up with new medicines. That's not all; there are several phases in the R&D process, and they are all critical.

• Phase 1: Drug Discovery: In this stage, scientists take on research and screening processes to find new potential medicines.
• Phase 2: Preclinical Testing: After finding a potential medicine, it goes through the testing phase, involving three stages.

Stage 1: The medicine is tested in the laboratory and on animals.
Stage 2: It is then tested on a small group of humans who volunteer for clinical trials, and the right dose is assessed.
Stage 3: Then, it is tested on a larger group of people suffering from the disease the medicine is supposed to cure. This stage is about seeing how efficient the medicine is and if it has any side effects.

• Phase 3: Regulatory Approval: If the medicine successfully passes the clinical trials, the next step is to get approval from regulatory bodies to launch it into the market.
• Phase 4: Submission for Approval: In this phase, all the data from clinical trials is submitted to regulatory authorities like the Food and Drug Administration (FDA) USA, European Medical Agency (EMA) Europe, or Central Drugs Standard Control Organization (CDSCO) India.
• Phase 5: Approval and Licensing: If the authorities are satisfied with the submitted data, they approve the medicine, so it can be launched in the market.

b. Manufacturing

Next, the medicine moves to the manufacturing stage. Mankind Pharma has 30 manufacturing facilities where it makes multiple forms of medicines, including capsules, tablets and injectables in-house.

Very strict quality control measures are maintained throughout this process to make sure all medicines meet safety and efficacy standards.

c. Marketing and Distribution:

The medicines are now ready to be marketed. Mankind Pharma makes sure that its products are widely available through extensive distribution networks. It also employs aggressive marketing and promotional strategies such as advertisements, educational programs, and collaboration with healthcare providers to make sure its products are accepted.

d. Supply Chain Network

Mankind Pharma’s supply chain network is very extensive and inclusive of many different parts:

• Field Force: Its products are distributed all over India, thanks to over 16,000 field representatives who promote them.
• Stockists: It has over 13,000 stockists all over the country to make sure that its products are easily available.
• Clearing and Forwarding Agents (CFAs): It has 75 CFAs who make sure that the distribution and delivery are smooth and timely.
• Doctor Connections: It has built strong relationships in the medical community, engaging with over 5,00,000 doctors across India.
• Chemists and Pharmacies Collaboration: Mankind Pharma collaborates with a vast number of chemists and pharmacies to ensure products are easily accessible.
• Logistics and Transportation: The company ensures smooth logistics and transportation to maintain the timely delivery of goods.

e. Growth Strategy

Below pointers showcase the strategy that the company uses for growth:

• Increasing Chronic and Value-added Medicines (CVM) share: The company is focusing on launching new products and diversifying them. This has led to a rise in its CVM share, which has reached 69% in FY24 from its previous 62% in FY18.

CVM Share	69% in FY24	62% in FY18
Volume (FY24)	150 crore+ medicine strips sold	60 lakh+ prescriptions added
Chronic Share	36% in FY24	33% in FY22

• Focus on volume growth: The company has had success in volume growth with its focus on surpassing competition and overcoming limits set by regulatory authorities. In FY24 alone, it sold over 150 crore strips of medicine and added more than 60 lakh prescriptions.
• Growth of chronic share: The company has seen a rise in its chronic share, which has gone up to 36% in FY24 from 33% in FY22, thanks to the addition of new divisions and the launch of innovative products.
• Brand scaling: The company is focusing on scaling up its brand families with an increase in sales. It has successfully expanded its brand families with over ₹50 crore, ₹100 crore, and ₹200 crore in sales.
• Improved productivity & efficiency: The company has been trying to boost its efficiency by digitising and automating all its processes, from choosing vendors to serving customers.

f. Post-Market Surveillance

Pharma companies are responsible for keeping an eye on the safety and efficiency of a medicine after it is released for public use. Mankind Pharma has surveillance and compliance departments to do the same. If the medicine shows any side effects, it has to be reported to the regulatory bodies to make sure it is in continuous compliance with all regulations.

Now that you understand the basics of Mankind Pharma’s business model, let's move on to the pharma industry.

Pharmaceutical Industry Overview

The pharma industry is doing well on a global level thanks to factors such as:

• Advancing medical sciences,
• lifestyle changes, and,
• a rise in incidences of chronic diseases.

In these market conditions, India, aka the ‘pharmacy of the world', is bound to see some growth in the pharma sector. India is a major exporter of pharma products, holding a 4% share of the global pharmaceutical economy. It also holds an 8% share of the Global API manufacturing industry and contributes to 20% of the supply of generic medicines globally.

As you can see from the infographic above, In the last 5 years, India’s domestic pharma market has increased with a Compound Annual Growth Rate (CAGR) of 10%. In the same time period, pharma exports have risen by 11% CAGR. Other segments of the industry, including Ayush and herbal products, drug intermediaries, drug formulations, etc., have also seen healthy growth.

The industry has faced many challenges in the last decade, like NLEM, FDC ban, GST, demonetisation, and the COVID-19 pandemic. However, it has shown true resilience with a growth of 10.4% CAGR.

The growth of the industry can be attributed to many things, such as:

• Emerging trade channels like e-commerce
• Increasing consumer awareness
• Rise in lifestyle-associated diseases
• Poor dietary habits

Additionally, India’s population is expected to grow by 25% in the next 2.5 decades, with a 37% rise in urbanisation. This growth is a good thing for the pharma industry as more people means more demand for healthcare.

The Nation Policy on Research and Development and Innovation has been launched by the Indian government in the PharmaMedTech sector. With this policy, the government wants to support R&D in the pharma industry in both traditional medicines and medical devices.

This policy is a step in creating a bridge between the pharma and medical technology industry, ultimately leading to enhanced exports, attracting foreign exchange inflows, and increasing India's pharmaceutical market share globally.

Mankind Pharma's Financials

Let’s look at how the company is doing financially, shall we?

As you can see from the table above, Mankind’s revenue has nearly doubled from FY20 to FY24, showing a growth of 15% CAGR. The company has also managed to maintain a steady EBITDA as well as PAT margin.

The company’s domestic revenue grew at a CAGR of 13% in the past 5 years, and its export revenue grew at a CAGR of 81% in the past 5 years.

If we compare the company’s exports from Q1FY24 and Q1FY25, we see a huge 62% Y-o-Y growth.

• Q1 FY24: ₹160 crore
• Q1 FY25: ₹259 crore

This is because, in the past 12 to 18 months, the company has increased its base business. It launched 2 new products in the US during the last quarter, bringing the total of new products to 41.

All in all, Mankind is doing pretty well when it comes to its finances, and the acquisition of BSV is going to be a plus. It is expected that the addition of BSV will lead to double-digit top-line growth with an over 30% EBITA margin. The deal is also expected to enhance shareholder value with increased EPS (Earnings Per Share) accretion.

The company has many opportunities for growth with BSV, especially in the fertility sector, which is projected to grow from $6.2 billion (₹ 51,460 crore) in 2022 to $9.9 billion (over ₹82,000 crore) by 2027.

Peer Comparison: Mankind Pharma's Competitors

Mankind, when compared to its peers, holds the seventh-largest market cap in India.

As you can see from the infographic above, the company has a PAT margin of 23%, exactly the same as the industry average.

It has the lowest employee cost among its peers, which means it has a better cost structure leading to potential cost savings. It also has the shortest cash cycle, which means that the company’s inventory management is efficient. It gives the company the advantage of better liquidity and operational efficiency. Its raw material is 31% which is slightly above the industry’s 29%. This means that the company can do better when it comes to controlling its raw material costs.

The Bottom Line

Now, you are all caught up. Mankind Pharma is one of the biggest pharma companies in India, and it might just get bigger and better with its latest acquisition: BSV.

Who knows what new milestone Mankind will achieve when you read about it next? For now, this acquisition has opened doors to new markets for Mankind. The company has many opportunities for growth with the industry booming, especially in the fertility sector.

It still surprises me that Ramesh Junega had the courage to leave a good (and well-paying, I assume) job and created Mankind Pharma from the ground up. Not everyone has the strength or the conviction to leave their comfort zone to pursue a dream.

Now, before you jump to any conclusions about the industry, remember that its future is still unpredictable, so be careful with any investment decisions. Do your own research and practice due diligence before putting your money on the line.

*Disclaimer: The stocks and companies discussed above aren't a recommendation from Finology Insider and shall not be construed as a replacement for professional advice. Consult a professional or conduct the necessary research before making investment decisions.