Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lupin Ltd (BOM:500257, Financial) reported strong double-digit growth in revenues and margins on a year-on-year and quarter-on-quarter basis.
- EBITDA margins expanded by 290 basis points quarter over quarter, reaching 23.3%, driven by new product launches and operational improvements.
- Positive FDA inspection outcomes for multiple facilities, including Aurangabad, Somerset, Nagpur, and Dabhasa.
- The US business showed strong growth, driven by stable in-line business and new product launches like Mirabegron and Doxycycline.
- India business outperformed the market with 10.5% growth versus IPM growth of 8.7%, driven by strong performance in cardiac, respiratory, GI, and vitamin segments.
Negative Points
- R&D spend is expected to ramp up in Q2 and Q3, potentially impacting margins.
- The US business faces single-digit price erosion in base products and additional generic competition for certain products like Suprep.
- The institutional business in India showed significant variability, which could affect future performance.
- The company faces ongoing litigation and regulatory hurdles for products like Mirabegron and Tolvaptan, which could impact launch timelines and market share.
- The biosimilar market remains challenging with high investment costs and competitive intensity, potentially affecting returns on investment.
Q & A Highlights
Q: Our first question is on the India business. While we have grown at 18% year on year, you said that the RX performance was 10.5%. Is there any institutional business contributing to this quarter that was not there last year? How should we think about the growth going forward?
A: Yes, the institutional business explains the difference. The growth in the India region formulation business is 10.5%, but when we add other business that we sell in India, it goes to the higher number. The institutional business went from INR15 crores to INR121 crores. This is a good number for the GIB business, and we expect good numbers going forward.
Q: On the US business, it seems we are seeing good performance from new sales like Mirabegron. Do we see a meaningful ramp-up in the coming quarter from here on, including the launch of the 50 milligram versions?
A: We continue to increase our share on the 25 milligram and are evaluating the timing of the 50 milligram launch. There is an upcoming hearing on the 780 patent, and we expect to ramp up the product based on the outcome.
Q: Could you give us an update on Tolvaptan, given the litigation? What's our stance here? How should we think about this product?
A: We are gearing up for a launch in the first quarter of next fiscal year, pending a win on the litigation front and product approval. We expect to maintain a decent share even after additional competition enters the market.
Q: On generic Spiriva, we are seeing our share coming off a little bit. Could you explain the dynamics of that market? Is the innovator's strategy impacting our ability to gain share?
A: We are seeing share at the 30% level, which is consistent with past data. The brand's $35 copay has shifted more business towards commercial. We have a higher share of commercial, which gives us hope to gain more share as the commercial component of the product increases.
Q: On the market share of albuterol, there seems to be some softening on a sequential basis. Could you help reconcile the impact and market share loss?
A: Our market share has been stable at the 20% level. There was additional demand during the flu season, but no real change in market share. We expect some erosion going forward with the launch of Amphastar, but our share has been stable so far.
Q: On the Mirabegron launch, how do we see the sales run rate for this product going ahead?
A: We don't highlight product-wise sales, but we expect high single-digit growth over the previous year, considering additional competition and other product launches like Pred Forte and Glucagon.
Q: On the US market, given the few launches in the second half and Tolvaptan in FY26, how should we look at the US growth in '26?
A: FY26 should be a very strong year for us, given the current products and new launches like Tolvaptan and other injectables. We are looking at a solid year in fiscal year '26.
Q: On the margin front, our long-term guidance is 20% to 23%. Given the current quarter and upcoming product launches, should we expect to reach that margin level by next year?
A: This quarter had lower R&D spend, which will increase in the next quarters. We also have adjacencies that make losses. The overall guidance is moving towards 23% to 24% in the medium term.
Q: On the other businesses, we are seeing robust growth across the board. What is driving this, and how sustainable is the growth momentum?
A: It's about maximizing our portfolio across different regions. For example, the European region has seen growth with limited competition and new product launches. We expect all our regions to grow and help the company achieve double-digit growth.
Q: On the biosimilar business, given the situation with ranibizumab, are you worried about the investment and opportunities in biosimilars?
A: We are glad we didn't invest in ranibizumab due to high competition. Our investment in Lucentis is smaller and more niche. We have partnerships in place for market access and share gain, so we are not concerned about our investment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
