Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Domestic formulation growth of around 12% for the quarter.
- Ranked as the 16th pharma company in IQVIA and the fastest-growing among the top 20 players.
- Market share increased to 2.17% in Q1 FY25 from 2.06% in Q1 FY24.
- Standalone EBITDA margin of 22.25%, better than the guideline of 21%.
- Consolidated EBITDA margin of 18.52%, exceeding the guideline of 18%.
Negative Points
- Export formulation business declined by 1% in Q1 FY25.
- API business faced challenges, resulting in a 2% decline.
- Logistics issues affecting exports, particularly in Australia and New Zealand.
- Overall income from operations growth of 5%, lower than the guideline of 10.5% to 11%.
- Price erosions in the API segment, although limited, still present.
Q & A Highlights
Highlights from Ipca Laboratories Ltd (BOM:524494, Financial) Q1 FY25 Earnings Call
Q: On the gross margin front, is the improvement due to lower exports? Will margins rationalize as exports scale up?
A: Our exports have good margins except in the UK. The improvement in margins is largely due to a better product mix, lower input costs, and controlled operating costs. The current gross margins are sustainable for FY25.
Q: Do you see a revival in exports soon, or will logistics issues persist?
A: Logistics issues will take more time to resolve. We faced significant challenges in Australia and New Zealand, impacting our exports. We expect improvements from the third quarter onwards as supply chain issues are addressed.
Q: What is the volume growth and price erosion in the API segment for the quarter?
A: Price erosion is now very limited, around 2-3%. Input costs are stable, and there is a marginal improvement in material costs.
Q: Given the supply issues, how should we think about the guidance for API and generic growth?
A: We expect to deliver 10.5% to 11% growth in the second quarter and maintain this for the rest of the year. However, the overall growth for the year might be around 9% due to the first quarter shortfall.
Q: Can you update us on the progress with Unichem and the synergies realized?
A: Gross margins have improved due to better procurement prices and operational efficiencies. We expect further benefits from cost reductions in intermediates and market extensions, but these will take 1-1.5 years to materialize.
Q: How do you see the environment for generics in the USA, and what is the outlook for Unichem?
A: The US market is stable with only marginal pricing pressures. We expect double-digit growth potential for Unichem in the US.
Q: What is the current strength and productivity of your Medical Representatives (MRs)?
A: We have around 6,500 MRs, with productivity improving from INR 4.21 lakhs to INR 4.52 lakhs per month. We are adding more MRs as we launch a new division focused on pain management.
Q: What are your expectations for export growth and profitability for FY25?
A: We expect overall growth of around 9% for the year. Profitability is projected to be better than initial guidance, with consolidated margins potentially exceeding previous estimates by 0.5 to 1 basis points.
Q: Can you update us on your advancements in the US market?
A: We have launched two products and plan to launch three to four more this year, with a total of 12-13 products over the next two years. This will improve plant utilization and overall profitability.
Q: Are you filing new products for the US market?
A: We are building our pipeline for the US market, which takes time. We are about six to eight months away from filing new products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
