Asston Pharmaceuticals

• Asston Pharmaceuticals is coming out with an initial public offering (IPO) of 22,41,000 equity shares in a price band Rs 115-123 per equity share.
• The issue will open on July 9, 2025 and will close on July 11, 2025.
• The shares will be listed on SME Platform of BSE.
• The face value of the share is Rs 10 and is priced 11.50 times of its face value on the lower side and 12.30 times on the higher side.
• Book running lead manager to the issue is Sobhagya Capital Options.
• Compliance Officer for the issue is Vandana Mishra.

Profile of the company

Asston Pharmaceuticals is engaged in the manufacturing and export of both pharmaceutical formulations and nutraceutical products in domestic and various African markets. The company operates under brand “Asston”. Presently, the company is involved in the business of manufacturing and marketing of Tablets, Capsules, Oral Liquid, External Preparations (Ointment, Cream, Gel and Lotion) and Oral Powder (Sachet, Dry Syrup) etc. Apart from manufacturing products for direct sales, the company also manufactures various pharmaceutical products for different marketers on loan license or on contract manufacturing basis. Its business is primarily conducted on a principle-to-principle basis with various marketers.

Currently, it caters to multiple corporate clients on loan licence and/or contract manufacturing basis. It has its production facility at Ambernath, Maharashtra, for producing generic medicines in the tablet form and nutraceutical medicines in the tablet form, syrup and sachet form. It has a dedicated and separate floors for pharmaceutical products and nutraceutical products respectively as the norms and standards are different for both of them and are governed by FDA and FSSAI respectively. Since the FDA norms for pharmaceutical products are much more stringent, to comply with FDA standards separate guidelines are there to be followed. Facility has total production capacity of up to around 8-9 crore tablets per month.

The company produces an average of 5-6 crore tablets per month, with production capacity varying based on the weight of the medicines. Higher-weight medicines result in lower production quantities and vice versa. The syrup production capacity for nutraceuticals is approximately 37.5 kiloliters per month, while sachet production capacity ranges from 30 to 40 lakh sachets per month, depending on the powder weight per sachet. The facility is certified by relevant authorities and undergoes periodic audits by state and central FDA authorities. It includes a QA/QC unit and a warehouse for storing raw materials and finished goods in designated chambers under controlled conditions. The company engages contract manufacturers to produce generic medicines and antibiotics in various forms, including tablets, sachets, syrups, and capsules. All contract manufacturers are WHO-GMP certified to ensure their facilities and processes comply with applicable standards and industry norms.

Proceed is being used for:

• Funding capital expenditure requirements towards acquiring machinery in the manufacturing unit
• Funding the incremental working capital requirements of the company
• Repayment and/or prepayment, in part or full, of certain of its outstanding borrowings availed by the company
• General corporate purposes 

Industry Overview

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry growing at a CAGR of 9.43% since the past nine years. Turnover for 2023-24 reached Rs 4,17,345 crore. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. India has highest number of pharmaceutical manufacturing facilities that comply with the US Food and Drug Administration (USFDA) and has 500 API producers that make for around 8% of the worldwide API market.

Market size of India pharmaceuticals industry is expected to reach $65 billion by 2024, $130 billion by 2030 and $450 billion market by 2047. According to the government data, the Indian pharmaceutical industry is worth approximately US$ 50 billion with over $25 billion of the value coming from exports. About 20% of the global exports in generic drugs are met by India. Indian hospital market valued at $98.98 billion in FY23 and projected to grow by 8% CAGR and reached to $193.59 billion by FY32. India is among the top 12 destinations for biotechnology worldwide and 3rd largest destination for biotechnology in Asia Pacific. The country holds 3-5% of the global biotechnology industry pie. In 2022, India’s bio-economy was valued at $137 billion, and aims to achieve $300 billion mark by 2030.

The pharmaceutical industry in India is a significant part of the nation's foreign trade and offers lucrative potential for investors. Millions of people around the world receive affordable and inexpensive generic medications from India, which also runs a sizable number of plants that adhere to Good Manufacturing Practices (GMP) standards set by the World Health Organization (WHO) and the United States Food and Drug Administration (USFDA). Among nations that produce pharmaceuticals, India has long held the top spot. Medicine spending in India is projected to grow 912% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants, and anti-cancers, which are on the rise. 

Pros and strengths

Formulation expertise: Formulation is key in the pharmaceutical industry and ability to formulate is what decides the outcome for the company. The company has established huge foundation in formulation development across diverse range of therapeutic categories. The company has an in-house QA/QC facility that works towards enhancing the formulations. This expertise has helped the company to establish as a reliable and a partner of choice in the exports market.

Wide range of products: The company has product portfolio of over 100 registered trademarks including generic medicines, pediatric drugs, Anti TB (new to the basket) treatments and eye drops. It produces tablets, capsules, syrups, sachets, and injectables, ensuring that it caters to a wide range of healthcare needs. It offers a diverse portfolio, including tablets, capsules and syrups. This gamut of products offerings with wide diversity allows the company to address the varying demands of different markets and customers, thereby strengthening its position in the pharmaceutical industry as one stop shop for various requirements and a preferred partner of choice.

Asset light model: The company has presently outsourced manufacturing of its requirements to the 5 contract manufacturers. Hence there is no need for heavy working capital or any maintenance capex or issues pertaining to any labour unrest or drawing ire of USFDA or CDSCO (The Central Drugs Standard Control Organization) or other regulators from regulatory perspective.

Risks and concerns

Maximum revenue comes from limited customers: The company derives a significant part of its revenue from its major customers and it does not have long-term contracts with these customers other than contracts with 2 customers for one year. Its top ten customers have contributed 97.45%, 100% and 100% of its revenues for the year ended March 31, 2024, March 31, 2023 and March 31, 2022 respectively based on Restated Financial Statements. The loss of one or more of these customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition, and cash flows.

Geographical constrain: All its manufacturing facilities are situated at Ambernath, Thane, Maharashtra resulting in concentration in a single region. The concentration in Maharashtra heightens its exposure to adverse developments related to competition, as well as economic, political, demographic, and other changes in the state of Maharashtra, which may have a material adverse effect on its business, financial condition and results of. Any localized social unrest, natural disaster or breakdown of services or any other natural disaster in and around Maharashtra or any disruption in production at, or shutdown of, its manufacturing facilities could have material adverse effect on its business and financial condition.

Dependent on third party transportation providers for delivery of raw materials: The company is 100% dependent on third party transportation providers for delivery of raw materials to it from its suppliers and delivery of its products to its customers. It has not entered into any formal contracts with its transport providers and any failure on part of such service providers to meet their obligations could adversely affect its business, financial condition and results of operation.

Outlook

Asston Pharmaceuticals is engaged in the business of pharmaceuticals, specializing in exporting healthcare products globally. The company offers a diverse range of products, including tablets, capsules, sachets, and syrups. Its product portfolio encompasses various therapeutic categories, such as analgesics, antibiotics, antifungals, vitamins, and more. The company has wide range of products coupled with formulation expertise. On the concern side, the company derives a significant part of its revenue from its major customers and it does not have long-term contracts with these customers other than contracts with 2 customers for one year. If one or more of such customers choose not to source their requirements from it, its business, financial condition, and results of operations may be adversely affected. Moreover, all its manufacturing facilities are situated at Ambernath, Thane, Maharashtra resulting in concentration in a single region and any interruption for a significant period, in these facilities may in turn adversely affect its business, financial condition and results of operations.

The company is coming out with a maiden IPO of 22,41,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 115-123 per equity share. The aggregate size of the offer is around Rs 25.77 crore to Rs 27.56 crore based on lower and upper price band respectively. On performance front, the net revenue from operation of the company increased to Rs 2,503.92 lakh in FY25 as against Rs 1,558.62 lakh in the FY24 representing an increase of 60.65%. The increase in revenue from operations was due to increase in export business of the company. Moreover, its profit after tax for the year 2024-25 increase by 217.95% from net profit of Rs 136.03 lakh in financial year 2023-24 to net profit Rs 432.51 lakh in financial year 2024-25.

The company’s goal is to become one of the leading suppliers of pharmaceutical products globally. Currently, it serves the West African region and recognize significant demand for products like it. The company is actively pursuing opportunities to expand into higher-margin markets such as North America and Europe. The company aspires to be a leading international supplier of healthcare products by introducing a wide range of generic and branded offerings, positioning itself as a key player in the export market. Presently, it has warehouse facility for its Ambarnath facility and all its contract manufacturers also have warehouse facilities to store raw materials and finished goods at their respective locations. Going forward, it looks to augment its storage and handling capacity in order to increase its exports and market presence pan India and worldwide.