Gland Pharma IPO fully subscribed on final day; QIBs oversubscribe but retail, NII stay away

By: |
November 11, 2020 3:11 PM

After seeing a tepid response for the initial two days, Gland Pharma’s initial public offering (IPO) was oversubscribed on the third day and final day of the subscription.

Backed by China’s Fosun Pharma, the company is a manufacturer of generic injectables with market share in over 60 countries, including the US, Europe, Canada, Australia, India and the rest of the world.

After seeing a tepid response for the initial two days, Gland Pharma’s initial public offering (IPO) was oversubscribed on the third day and final day of the subscription. The Rs 6,480 crore issue saw an overwhelming response from qualified institutional buyers (QIB) while the other two categories were still largely to subscribe to even half of their portion. So far the issue has received bids for 4.86 crore shares against the 3.02 shares on offer. Gland Pharma’s IPO is the biggest public issue by a pharmaceutical company in India. 

Subscription status

Backed by Chinese firm Fosun Pharma, Gland Pharma is a leading B2B pharmaceutical company with a healthy market across the globe. On the final day of subscription, QIBs have so far subscribed their portion 5.48 times while non-institutional investors (NII) have subscribed 20% of their portion. Retail investors, who have so far oversubscribed all the recent IPOs, were largely missing so far with the subscription rate of their portion sitting at just 20%. Overall the issue has been subscribed 1.7 times.

Analysts have been upbeat about Gland Pharma for its strong product portfolio that includes 267 ANDA filings comprising 191 ANDA filings for sterile injectables, 50 for oncology and 26 for ophthalmic related products. ICICI Securities has given a subscribe recommendation to the stock at Rs 1500 per equity share, the stock is available at 31.7x FY20.

Play on BioNtech and Pfizer’s vaccine success?

Gland Pharma could also benefit from its Chinese parent’s partnership with German pharma firm BioNtech which has seen pathbreaking success in its coronavirus vaccine trials with Pfizer. Fosun Pharma’s share price surged as high as 20% yesterday after the news of Pfizer and BioNtech’s mRNA-based vaccine broke. Guo Guangchang, chairman of majority shareholder Fosun International, told SCMP that Fosun Pharma was working with regulators to speed up clinical work in China to pave the way for its sale upon approval.

Grey market premium falls further

In the grey market, Gland Pharma has seen rapid decrease in its premium. Ahead of the announcement of the IPO the shares were trading at a premium of over Rs 200 but soon after the price band was announced, grey market watchers said that the premium tanked. “Currently the grey market premium of Gland Pharma is at around Rs 18,” said Manan Doshi, a Gujarat based independent dealer in unlisted shares.

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