Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gland Pharma Ltd (NSE:GLAND, Financial) reported a 16% year-on-year growth in quarterly revenue, reaching INR14,017 million.
- The US market showed strong performance with a 27% increase in revenues, driven by healthy volume share of existing products and new launches.
- The company's core markets achieved a 25% revenue growth in Q1 FY25, constituting 76% of total revenues.
- Gland Pharma Ltd (NSE:GLAND) filed eight ANDAs and received approval for seven ANDAs during the quarter.
- The biologic CDMO business is experiencing positive momentum, with the Genome Valley facility attracting advanced-stage interest for contract manufacturing of monoclonal antibodies and novel plasma-based proteins.
Negative Points
- Consolidated EBITDA margins for the quarter were 19%, down from 25% in Q1 FY24, impacted mainly by Cenexi's negative EBITDA.
- The rest of the world markets contributed 20% of revenue in Q1 FY25, a 3% decrease compared to Q1 FY24.
- The Indian market experienced a 19% decrease in revenue compared to Q1 FY24.
- The company received two and three Form 483 observations from the US FDA inspections at its Hyderabad manufacturing sites.
- Cenexi recorded a negative EBITDA of INR286 million for the quarter, and is still a few quarters away from a complete turnaround.
Q & A Highlights
Q: Can you explain the dynamics behind the slowdown in US revenues, excluding Cenexi, and how should we think about it in subsequent quarters?
A: The major difference is due to milestone income from the previous quarter. The decline in US revenue is about 14% from the previous quarter, with 8% attributed to milestone income. Additionally, product mix and launch quantities of heparin, which is a low-value, high-volume product, impacted the revenue. This is expected to normalize over the next few quarters. - Srinivasa Sadu, CEO
Q: What are your plans for the domestic business and acquisitions?
A: For the domestic business, we are evaluating strategic options as our facilities are primarily designed for global markets. We don't intend to scale up unless we find a dedicated facility for the India business. Regarding acquisitions, we are focused on complex injectables and building manufacturing capabilities, especially for difficult-to-make products. - Unidentified Corporate Representative
Q: Of the 61 ANDAs pending, is there a split between Gland's ANDAs and partner ANDAs?
A: Most of the pending ANDAs are Gland's as we have been filing them ourselves lately. - Srinivasa Sadu, CEO
Q: Is the milestone income the reason for the quarter-over-quarter growth in gross margins for the base business?
A: The dip in gross margin is due to the product mix, particularly the increased supply of heparin, which has a lower contribution margin. This impact is expected to normalize in the next quarter. - Srinivasa Sadu, CEO
Q: Can you provide more details on the biologic CDMO business and the potential strategic collaborations?
A: We are in discussions for large-scale contract manufacturing of biosimilars and in-licensing opportunities. This involves investment into large-scale production and expanding our CDMO business. More clarity will be provided in the next quarter. - Srinivasa Sadu, CEO
Q: How is the demand in the US market currently?
A: The demand remains strong, with volume up by 30% compared to last year. The slight decline in the previous quarter was due to capacity constraints on a couple of brands. We expect to meet our annual targets. - Srinivasa Sadu, CEO
Q: What is the impact of the 3-week shutdown at Cenexi on Q2 revenue?
A: The shutdown will impact Q2 revenue, but it is also being used to install a new high-speed line, which will increase future volumes. The actual impact is only one additional week beyond the usual summer maintenance shutdown. - Srinivasa Sadu, CEO
Q: Can you quantify the milestone and profit share components for the last quarter versus this quarter?
A: In Q4 FY24, the profit share was 10% and milestone was 15%. In Q1 FY25, the profit share is 10% and milestone is 9%. The gap in milestone income affects both gross and EBITDA margins. - Ravi Mitra, CFO
Q: What is the expected growth for the base business excluding Cenexi for the full year?
A: We expect mid-teens growth for the base business, with an EBITDA margin around 32-33%. - Srinivasa Sadu, CEO
Q: Are there any one-off impacts from Cenexi this quarter?
A: No, there are no one-off impacts. The CDMO business is continuous. - Srinivasa Sadu, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
