"The company's stock closed at $19.90 a share on the Nasdaq, up 24.4% from its initial-public-offering price of $16. It sold 5.75 million shares, 75,000 more than originally planned, at the high end of its expected $14 to $16 price range.
Sagent Pharmaceuticals focuses on selling generic injectable drugs that treat a range of conditions, from infections to cancer. Unlike many pharmaceutical companies, Sagent is not an early-stage firm still developing medications. It received its first U.S. Food and Drug Administration approval in late 2007, and now markets 22 products, primarily in the U.S.
The company's product-approval numbers have increased every year and that has led to increasing revenue growth. In 2010, revenue rose 153% to $74.1 million compared to 2009, and the company's net loss narrowed to $24.5 million.
Sagent has never been profitable on an operating or net basis since it began commercial production.
It has a pipeline of 46 new products awaiting FDA approval through the agency's Abbreviated New Drug Applications, or ANDA process. That is a much quicker route than the approval time it takes for the FDA to approve a new medication, with Sagent's average approval time taking about 22 months. The company's current roster of drug applications has been on file an average of 21 months, so it expects to launch nearly everything in its pipeline by the end of 2012.
The downside of focusing on generic injectables is price pressure, because anyone can seek approval to sell the medication once a patent for a branded drug expires. While manufacturers that receive the first FDA approval for generic versions can achieve better market penetration and higher margins, multiple sellers usually drive the price per unit down for everyone eventually.
The business is extremely competitive, with large pharmaceutical and generic-drug companies in the mix, including Pfizer Inc. (PFE) and Novartis AG (NVS). Branded pharmaceutical companies are also aggressive about defending the patented drugs they have developed, filing new patents or patent-infringement suits and making last-minute changes to product claims and labels, which can slow generic releases."
Cowan, Lynn. 2011. Sagent Pharmaceutical Closes Up 24% Post-IPO. Dow Jones Newswires, April 20. http://online.wsj.com/article/BT-CO-20110420-715800.html.
