Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indoco Remedies Ltd (BOM:532612, Financial) celebrated 77 years of excellence in providing quality medicines.
- The company's key brand, Cyclopalm, has crossed a prescriber base of 1 lakh and is growing at close to 20%.
- Indoco received final ANDA approval from USFDA for Lofexidine tablets with 180 days exclusivity.
- The company launched new products in the dental ethical segment and acute division, expanding its product portfolio.
- Indoco's contract research organization, Anacypher CRO, has expanded its offerings with new pharmacovigilance services.
Negative Points
- Net revenues for the second quarter showed muted growth, with only a slight increase from the previous quarter.
- EBITDA to Net Sales decreased to 13.4% from 15.6% compared to the same quarter last year.
- International business revenues declined significantly, particularly in the US and Europe markets.
- The company is facing challenges with its sterile unit, impacting its ability to supply products internationally.
- Increased other expenses, particularly in sales promotional activities, have impacted financial performance.
Q & A Highlights
Q: Can you elaborate on the CAPEX of around 220 crores incurred in the first half?
A: Pramod Ghorpade, CFO: The CAPEX is primarily for upgrading plants as part of the master manufacturing plan, including increasing batch sizes and replacing machines at oral solid doses plants. Additionally, upgrades are being made at the sterile plant in Goa, and advances have been paid for two new lines, one injectable and one ophthalmic.
Q: Why is there a decline in revenues from Europe and emerging markets?
A: Aditi Panandikar, CEO: Both regions are affected by the master manufacturing plan upgradation, which has caused temporary disruptions. The plan aims to align portfolios across locations for better efficiency, impacting supply in the short term.
Q: What is the status of the FDA's observations on the Goa II facility, and when will it be resolved?
A: Aditi Panandikar, CEO: The facility was classified as OAI after a 2023 audit. Remediation is ongoing, with much work expected to be completed by the end of 2024. The FDA unexpectedly visited in July 2024, resulting in seven observations. The company is in dialogue with the FDA to address concerns and expects resolution by Q3.
Q: How do you see the operating margins evolving given the current challenges?
A: Aditi Panandikar, CEO: The company is not providing specific guidance yet but expects improvements as international business stabilizes. Investments are being made to enhance efficiency and capacity, which should improve margins in the future.
Q: What is the outlook for the OTC product segment, and will promotional expenses continue?
A: Aditi Panandikar, CEO: Promotional expenses are necessary for initial OTC product launches, particularly for toothpaste products competing with major brands. The company expects significant growth from these products, with a projected 25-30% increase in the second year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
