Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EBITDA margin improved by 700 basis points from 13.1% to 20.1% year-over-year.
- Successful resolution of US FDA Form 483 at the Baddi facility, demonstrating regulatory compliance.
- Strong performance in domestic business with growth in large brands and bridging portfolio gaps.
- Outperformed the IPM in six therapies, including anti-diabetic, neuro and CNS, GI, dermatology, and VMN therapy.
- Significant reduction in API pricing for key products like dapagliflozin and sitagliptin, contributing to improved profitability.
Negative Points
- Mirabegron product launch delayed due to ongoing litigation and settlement agreements, impacting near-term opportunities.
- US business experiencing single-digit price erosion, affecting overall profitability.
- Supply chain issues in Australia led to lower sales in the non-US market for the quarter.
- Increased operational expenses expected in the coming quarters due to investments in new business opportunities like CDMO and medical devices.
- Employee costs increased by INR1 billion sequentially, impacting overall cost structure.
Q & A Highlights
Highlights from Alkem Laboratories Ltd (BOM:539523, Financial) Q1 FY25 Earnings Call
Q: One question on this product called mirabegron, I believe we have a tentative approval for this product. So should we bake in as a near-term opportunity for us?
A: We are bound by the settlement agreement with the innovator, and we don't see it getting launched before the agreement date, which would be somewhere around 2026 or 2027. β Vikas Gupta, CEO
Q: In terms of our EBITDA margin, with it tracking around 20% in this quarter, where do we stand and is there a meaningful change in the way we look at profitability now for our business?
A: The reasons for this improved profitability include a good product mix, improvement in API pricing, and strong cost control initiatives. We maintain our guidance around 18% for the year. β Vikas Gupta, CEO
Q: In terms of the ForEx gain or losses, can you highlight that number for this quarter?
A: We had a ForEx gain to the tune of INR15 crores, which is part of other income and not in EBITDA. β Nitin Agrawal, CFO
Q: For the full year EBITDA margin, are you expecting similar to last year's 18% or 100 basis point improvement on top of that?
A: We would be improving it, but due to new investments in future growth opportunities, our guidance remains around 18%. β Vikas Gupta, CEO
Q: Any change in Penicillin G prices?
A: We are yet to see any impact of PenG prices. In fact, recent times have seen a marginal increase. β Vikas Gupta, CEO
Q: How much of the gross margin improvement that we have seen is sticky?
A: API pricing is expected to remain stable, but product mix changes might impact margins for 2 quarters by around 2 percentage points. β Vikas Gupta, CEO
Q: What are the investments in future growth opportunities?
A: We are investing in our US facility mainly for the CDMO business, with a total investment of INR400 crores to INR450 crores. We expect this business to break even by FY26. β Nitin Agrawal, CFO
Q: What's the growth guidance for the India business?
A: We expect to grow in line with the market, which should be between 8% to 10%. β Vikas Gupta, CEO
Q: Can you let me know regarding the price erosion in base business for US generics?
A: The US generic market is seeing a single-digit price erosion, and this trend continues for this quarter. β Vikas Gupta, CEO
Q: What was the growth for trade generics in the quarter?
A: We don't share segment-wise growth, but trade generics grow in line with the Rx side. β Vikas Gupta, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
