This is one of the cheapest multinational stocks

Moneylife Digital Team

Wyeth has gone through many avatars as Lederle Laboratories (India), Cyanamid India, a merger with Geoffrey Manners when the name was changed to Wyeth and, in 2009, Wyeth of USA merged with Wagner Acquisition, a wholly-owned subsidiary of Pfizer. Pfizer Inc is now the parent company of Wyeth.

The company has achieved market leadership in the segments of folic acid, oral contraceptives and depilatory cream in India. Wyeth and Pfizer continue to operate as separate companies In India.

Formulations contribute about 70% to Wyeth’s total turnover. Exports account for about 30% of its total turnover and yield relatively higher realisations.
 Wyeth introduced several new therapies in India. It was the first to launch hormone therapy. The company introduced vaccines against HI-B (Haemophilus influenzae type B) and pneumococcal diseases in the country.  Enbrel, a breakthrough treatment for rheumatoid arthritis and Rapamune, an immunosuppressant that prevents rejection of renal transplants; Prevenar, a pneumococcal conjugate vaccine and Tygacil, the world’s first glycilcycline antibiotic are among the internationally-known products launched by Wyeth in India.

 The Indian pharmaceutical formulations market includes the export markets as well. The domestic market accounts for nearly 61% of total formulation sales. The share of exports has steadily risen from 30% in 2005-06 to around 39% (market size: $5.20 billion in 2009-10) in 2009-10. The domestic formulations market has expanded at a CAGR (compounded annual growth rate) of 14%-15% over the past three years and reached a size of Rs417 billion in 2009-10. This was primarily driven by robust growth witnessed in the anti-diabetic, cardiovascular, gynaecology, respiratory and neuro/CNS (central nervous system) segments.



In 2009-10, the lifestyle diseases segment grew by nearly 25% compared to the overall industry growth of 17.7%. In the domestic market, lifestyle segments such as anti-diabetic, cardiovascular and gastrointestinal segments have emerged as chief growth drivers over the past three-four years. Acute segments, mainly anti-infectives, have continued to expand at a steady rate due to inadequate sanitary & hygiene conditions.

The domestic market is concentrated with the top 10 players controlling about 38% of total formulations sales. Within exports, entry-barriers are significantly higher in regulated markets compared to semi-regulated markets, due to stringent guidelines in the former.

Wyeth’s revenue for the quarter ended March 2011 was Rs169.27 crore compared to Rs106.92 crore in the corresponding previous period, a stupendous growth of 58%. Operating profit for the reporting quarter was Rs64.80 crore, a 50% increase over the Rs43.30 crore achieved in the year-ago period. Average revenue and operating growth in the past five quarters were 38% and 111%, respectively. Its operating profit margin in the March quarter was 38% and that for the past five quarters was a healthy 38%.

Based on the annualised results for the March 2011 quarter, Wyeth’s market-cap to revenue was 3.02 times and market-cap to operating profit was 7.89 times. This makes it one of the cheapest multinational stocks. Return on net worth for the 16-month period ended 31 March 2011 was a splendid 43%. The stock makes a good buy at the current price.