IOL Chemicals and Pharmaceuticals Limited
Know the Company
IOL Chemicals and Pharmaceuticals Ltd (IOLCP), founded in 1986, is a leading Indian pharmaceutical and specialty chemical company headquartered in Barnala, Punjab. The company specializes in manufacturing Active Pharmaceutical Ingredients (APIs), specialty chemicals, and intermediates, with a commitment to sustainable and environmentally responsible practices. Over the years, IOLCP has become a key player in multiple industries, including pharmaceuticals, agriculture, and performance chemicals. Its focus on quality and innovation has positioned it as a trusted supplier for both in India and globally. The Company’s main manufacturing facilities are located in Punjab. It operates one of the largest integrated chemical complexes in this region, where they manufacture various active pharmaceutical ingredients (APIs), specialty chemicals, and intermediates. It exports products and solutions to over 50 countries.
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IOLCP is renowned for being one of the world’s largest producers of Ibuprofen, a widely used non-steroidal anti-inflammatory drug, with a significant 35% global market share. In addition to Ibuprofen, the company produces other essential APIs such as Metformin, Lamotrigine, Clopidogrel, and Paracetamol, catering to various therapeutic areas like pain management, diabetes, and anticonvulsants. The company’s portfolio of specialty chemicals includes Ethyl Acetate and Iso Butyl Benzene, which all are strengthening its strong presence in the global chemical market.
The company’s state-of-the-art manufacturing facilities adhere to stringent international quality standards, having received approvals from global regulatory bodies such as the US FDA, European Union GMP, and WHO GMP. IOLCP’s commitment to innovation is evident through its continuous investment in research and development, with its R&D center being recognized by the Department of Scientific and Industrial Research (DSIR).
Strengths
Having over three decades of expertise, IOLCP continues to play a vital role in the global healthcare and chemical supply chains, contributing significantly to both the domestic and international markets. The Company focuses on expanding its manufacturing capabilities, ensuring compliance with international standards, and diversifying its product offerings with the aim of remain at the forefront of the pharmaceutical and chemical industries.
The Indian pharmaceutical industry’s contract manufacturing business is expected to double over the next few years due to the US Biosecure Act, which prohibits federal agencies from sourcing from Chinese pharma companies. As per this Act, the shift in contract research segment from China to other countries expected to triple the Indian business in immediate future. Pharmaseuticals Industry body believe the Act will boost India’s CDMO and CRO sectors, presenting a significant opportunity for the domestic industry.
IOLCP’s manufacturing facilities are complied with various international standards. It recently completed a successful GMP audit by Brazil’s ANVISA for its 10 API manufacturing units. The company also received regulatory approval from China for its Fenofibrate API, used to treat high cholesterol. In June 2024, the company was awarded a Certificate of Suitability (CEP) for Allopurinol and Pantoprazole by the European Directorate for the Quality of Medicines (EDQM), which enabling it to exports products to Europe. Allopurinol is used for gout, while Pantoprazole treats acid reflux. Furthermore, the company’s Metformin Hydrochloride and Valsartan APIs were approved by China’s NMPA and EDQM, allowing exports to China and Europe. Valsartan is used for treating hypertension.
IOLCP holds a global leadership position in Ibuprofen production, commanding a 35% global market share. The Company is fully backward-integrated, giving it enhanced control over its supply chain and improving cost efficiencies. With the ability to manage large-scale, complex operations, IOLCP offers a diverse portfolio of APIs and chemicals that serve various therapeutic and industrial applications. Its regulatory approvals from major international bodies further solidify its standing, along with strong, long-term relationships with customers.
The growing API market presents IOLCP with significant opportunities to expand its market share. Rising demand from end-user industries for specialty chemicals allows the Company to strengthen its specialty chemicals segment. Supportive government policies including PLI Scheme and Make in India initiatives for domestic API production and the China Plus One strategy provide increased outsourcing opportunities for manufacturers like IOLCL.
In the last financial year, Credit Analysis & Research Ltd (CARE) reaffirmed the Company’s credit ratings. The long-term bank facilities were rated ‘CARE A+’ (Single A Plus; Outlook: Stable), and short-term bank facilities were rated ‘CARE A1+’, which all are sufficient to raise low-cost funds for the Company, if it is necessary.
Capacity expansion and product innovation is continuously implementing the Company as its commitment to improving health through R&D in APIs remains strong. In the FY 2023-24, the Company commenced production of “Acetic Anhydride” for captive use and merchant sale with a capacity of 25,000 MTPA. It also adheres its position in the global API segment. IOLCL is also committed to investing in research and development (R&D) as part of its mission to discover breakthroughs that safeguard lives. The Company’s R&D program focuses on developing safe and effective solutions for global healthcare requirements. It has played a pivotal role in meeting customized and regulatory needs, resulting in four new CEP filings, three USDMF filings, and two new CEP approvals. It actively supports innovative methods of API development, utilizing the latest technological tools to minimize energy consumption and waste, ensuring a cleaner environment. The Company’s R&D team has successfully developed and scaled up a key API intermediate using continuous flow chemistry. Additionally, it has established a novel synthesis route for one of its APIs and filed a patent application for it. In the last year, three products have been successfully scaled up to commercial production from its multipurpose facility, and three additional products are currently in scaling up capacities.
Q1FY25- Financial Results and Operational Highlights
Despite facing various challenging including geopolitical conditions, the Company has successfully maintained operational performance, demonstrating resilience in absorbing the pricing volatility of raw materials for chemicals and intermediates. In the first quarter of the current financial year, IOLCP received approval from Center for Drug Evaluation (CDE) of National Medical Products Administration (NMPA), China to export “Fenofibrate” in China Market.
The Company also received CEP Certificate issued by EDQM for the following products enabling the company to export in European Market: “Pantoprazole Sodium Sesquihydrate” for alternative process (Process – II) – Used for heartburn, acid reflux and gastro-esophageal reflux disease (GORD) as well as Valsartan – Used for to treat high blood pressure (hypertension). Additionally, Allopurinol – Used to prevent increased uric acid, gout and joint pain. With the recent approvals from various regulatory authorities, the Company is excited to explore untapped opportunities in regulated markets.
IOL reported revenue of Rs. 510 crores in Q1 FY25 as compared to Rs. 570 crore in Q1 FY24, reflecting a drop of 10.6 per cent. Total income in Q4 FY24 was Rs. 511 crore. In Q1 FY25, the Company posted net profit of Rs. 29.7 crore as compared to Rs. 46.2 crore, registering a drop of 35.7 per cent. The company’s PAT stood at Rs. 28.2 crore in Q4 FY24.
Outlook
India’s economic outlook is highly promising, with the country set to become the world’s third-largest economy by 2032. This growth is driven by political stability, increased public and private capital expenditure, and rising demand for credit. Additionally, India’s robust banking and financial sector and its emergence as a global manufacturing hub are key factors accelerating economic expansion. With a vast domestic market and growing export potential, India is poised to surpass many other major economies in the coming years.
The global pharmaceutical industry is also on an upward trajectory, projected to reach a market size of $2.3 trillion by 2028, growing at a CAGR of 5-8% (source: the Company – AR). Key drivers include increased healthcare awareness, rising investments in new drug development, and the introduction of breakthrough therapies. While growth is strong, cost reductions from generics and biosimilars are tempering some of the gains.
The Active Pharmaceutical Ingredients (API) market is experiencing significant growth, valued at USD 237.81 million in 2023 and expected to reach USD 393.58 million by 2031. Increasing cases of chronic diseases, an aging population, and advancements in API manufacturing are fueling this expansion, particularly in the growing biotech API sector, which is playing a crucial role in novel therapies. Having key products portfolio with large capacities, international product quality and long-standing relation with customers, IOLCP will be major beneficiary of the API growth, going forward.
Risk
Indian pharmaceutical companies are facing several challenges on multiple fronts. Stringent regulations in key markets such as the US and European authorities are significantly impacting production and export processes. Trade disruptions due to ongoing geopolitical tensions may affect both raw material imports and finished goods exports. Another risk associated with the industry is that, if the global economy falls into a slowdown, it could dampen demand for pharmaceuticals and specialty Chemicals.
Sector: Healthcare
Market Price: Rs. 506.05 as on today
FV: Rs 10/-
Stock Name: IOL Chemicals and Pharmaceuticals Ltd
BSE Code: 524164, NSE Code: IOLCP
Market Cap.: ₹2936 Crore
Book Value: Rs. 274
Segment: Pharmaceuticals - API
Incorporation: 1986
Headquarters: Barnala, Punjab
