Indies Pharma raises new bond, board to determine roll-out of HQ project

Pharmaceutical distributor Indies Pharma Jamaica Limited is expected to tackle the development of its prime real estate holding at Ironshore in Montego Bay, having raised funds to refinance existing debt and for investment.

The company issued a new five-year bond valued at $1 billion through a private placement arranged by NCB Capital Markets Limited. Indies Pharma CEO Dr Guna Muppuri said interest on the bond was in the order of 9.5 per cent.

The funds will refinance an existing $805-million bond that became due this month, while the rest is to be invested.

The Financial Gleaner understands that one of the company’s priorities is the relocation of the company’s headquarters from its present cramped 72,000 square feet facility at Montego Freeport. The company plans to build a new facility, having recently received planning permission to develop 136,000 square feet of warehousing and office space at Ironshore, which is at the opposite end of the city.

But Muppuri was non-committal on the issue. He said the company will be left with about $125 million and that discussions are ongoing on how it is to be deployed, with the board set to consider the issue in another month.

The Indies Pharma property at Ironshore spans around three acres. The prime real estate, which sits in a commercial belt housing retail shops, industrial companies and hotels, was acquired for use as warehouse and commercial space, including future headquarters for the company.

Indies purchased the property in March 2020 for $411 million, financed by a loan from Indies Pharma’s parent company, Bioprist Holdings.

The Financial Gleaner also understands that the company is considering selling a portion of the property that is now valued in the US$7 million to US$8 million range, or about $1.3 billion. The proceeds would be ploughed back into the development of the new HQ. Muppuri said he would neither confirm nor deny the options until the Indies Pharma board meets.

Downturn in business

Meanwhile, the pharma company is still seeing a downturn in business, its newly released third-quarter results show.

Revenue for the quarter declined by a substantial 12 per cent, from $296 million to $260 million; net profit performed even more poorly, falling 30 per cent from $44 million to less than $31 million.

Indies said late arrivals of out-of-stock items resulted in lost sales. Muppuri also said the slow pace of drug approvals by the Ministry of Health and Wellness also continued to take a toll.

Sales were also down over the company’s nine-month period, but by 1.3 per cent, from $867 million to $856 million, while net profit underperformed by four per cent, sliding from $176 million to $168 million.

For some time, Muppuri has been inveighing against the regulatory regime regarding approvals for new drugs, saying the slow pace and red tape have been harmful to Indies Pharma’s business.

“I will never stop making that comment, because I feel there’s something seriously wrong. I see a lot of new companies and new products that have been out from other companies, and I feel there’s something terribly wrong that we’ve not been able to get those approvals,” Muppuri said.

In addition to that issue, Muppuri said the company currently has three containers sitting on the wharf, plus two other air shipments tied up at Customs, citing a glitch on the JSWIFT portal.

JSWIFT – which stands for Jamaica Single Window for Trade – is an electronic platform that acts as a single point of access for importers and exporters to submit applications for trade permits. The digital system is designed to allow traders to apply for licences, permits, and certificates online, streamlining the process by reducing physical visits to multiple agencies.

Muppuri said the shipment and Customs delays happened in a period of heightened demand in the pharma market. Additionally, permits for the imports expired in August, which will likely result in the company being penalised, he said.

“Demand went up, but we don’t have any stocks to keep up. We did not anticipate that level of demand. We only have products based on the traditional 10 per cent increase year-on-year. So, when the sudden increase in demand came, we couldn’t supply it,” Muppuri said.

“We are going to pay the penalty for the breach of the expired permits, because we can’t do anything more. The permits expired at the end of August. Until now, we cannot clear the goods because we couldn’t get new permits. So, we have decided that we may have to pay a penalty to Jamaica Customs for the breach, which, technically, was not our fault,” he said.

neville.graham@gleanerjm.com