Rationale

The positive outlook on the ratings factor in the growth plans identified by Jagsonpal Pharmaceuticals Limited (JPL)'s new management following the acquisition by a professional private equity fund- Infinity Holdings in Q1 FY2023. In addition to driving company's growth through product portfolio expansion, the company has also been making efforts to improve its cost structure. The ratings reaffirmation factor in JPL's long track record of operations, good brand presence, strong pan-India distribution network and healthy financial risk profile. The ratings also factor in the successful launch and scale up of Dydrogesterone molecule in FY2022. The ratings are, however, constrained by JPL's moderate operating scale and limited growth in the existing brands till now with stiff competition due to the presence of a large number of generic drug manufacturers in the domestic branded generic segment. Further, some of the company's key brands have been under price control coverage or are based on old molecules, thus limiting the overall profitability. ICRA also considers JPL's complete dependence on third-party manufacturers through loan-licensing model which would require the company to ensure quality standards for the manufactured products.