Release Date: July 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strides Pharma Science Ltd (BOM:532531, Financial) reported a significant increase in gross margin to 61%, indicating strong operational efficiency.
- The U.S. market recorded its highest-ever quarterly revenue of $70 million, showcasing robust performance.
- The company achieved a 20% EBITDA margin, marking the best quarterly performance in 12 quarters.
- Strides Pharma Science Ltd (BOM:532531) successfully reduced its net debt to less than INR 2,000 crores, improving its financial health.
- The company has a strong pipeline of new product launches and strategic investments in chronic drugs, indicating future growth potential.
Negative Points
- Despite improvements, the company still faces challenges in optimizing its network and fully utilizing its capacities.
- Price erosion in the U.S. market remains a concern, although the company is managing it by focusing on high-margin products.
- The company's access market, which includes global fund business, is not a primary focus and is subject to external factors, leading to potential revenue volatility.
- The expansion of the fill-finish capacity to 200 million devices will require significant CapEx of around $50 million and will take about 3 years to complete.
- The high level of promoter pledge at 65% remains a concern, although efforts are being made to reduce it.
Q & A Highlights
Q: What was the run rate for Q1 in terms of top line and EBITDA for OneSource?
A: We don't give specifics. We have given you a guidance, and we are saying we are on track. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: Can you provide more details on the expected revenue from the OneSource business this year?
A: Stelis, which delivered about $20 million of revenues last year and was still loss-making, will end up closer to $50 million and we'll have an EBITDA of almost 35%. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: What is the reason for the delay in launching the teriparatide biosimilar product, and when can we expect the launch?
A: We were not first wave approved for the European markets. The launch is expected in the second half of this year. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: How many products would be relaunched in FY '25 based on source change and cost leadership?
A: We think we'll have another 4-5 products to be launched during the year. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: Can you share the market size of the 505b(2) nasal spray and control substance products to be filed in Q1 FY '26?
A: The 505b(2) discovers a new market opportunity. The nasal spray opportunity is about $600 million to $700 million. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: What is the contribution of the top 5 products to the total revenues in the U.S. market?
A: We have about 35 products constituting almost $250 million of business. We don't have a concentration risk. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: Has price erosion in the U.S. amplified in recent months?
A: Price pressures are product-specific. We will only launch a product if it meets our price/tax. The rational exuberance of the buying community to push suppliers down resulting in big shortages is a thing of the past. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: What are the expectations for working capital optimization in the future?
A: At the current number of days that we operate, we are already amongst best-in-class. We see very little opportunity to do better there. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: What is the market size of the novel biologics drug substance molecule won from a top 3 global animal health company?
A: It's novel, so the market will discover it once it's approved. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
Q: When will the promoter pledge be substantially reduced?
A: Now that we are very close to an [entity] process and listing, we believe that our pledge positions will come down quite significantly. (Arun Kumar, Executive Chairperson of the Board, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
