Alembic Pharmaceuticals Limited
7,349words
90turns
11analyst exchanges
6executives
Management on call
Pranav Amin
MANAGING DIRECTOR
Shaunak Amin
MANAGING DIRECTOR
R K Baheti
DIRECTOR-FINANCE & CFO
Mitanshu Shah
HEAD-FINANCE
Ajay Kumar Desai
SENIOR VP-FINANCE
Key numbers — 40 extracted
11%
talking about it in detail in their presentations. During the quarter, our total revenue is up by 11% to 1416 crores. EBITDA was 164 crores. Profit before tax and profit after tax is down to 34 cro
1416 crore
about it in detail in their presentations. During the quarter, our total revenue is up by 11% to 1416 crores. EBITDA was 164 crores. Profit before tax and profit after tax is down to 34 crores and 35 cro
164 crore
ir presentations. During the quarter, our total revenue is up by 11% to 1416 crores. EBITDA was 164 crores. Profit before tax and profit after tax is down to 34 crores and 35 crores respectively. That's
34 crore
by 11% to 1416 crores. EBITDA was 164 crores. Profit before tax and profit after tax is down to 34 crores and 35 crores respectively. That's because of one-time nonrecurring expense charged by Aleor. Ha
35 crore
crores. EBITDA was 164 crores. Profit before tax and profit after tax is down to 34 crores and 35 crores respectively. That's because of one-time nonrecurring expense charged by Aleor. Had Aleor foll
Rs. 188 crore
previous year practice, APL's consolidated profit before tax would have been higher by Rs. 188 crores at Rs. 222 crores and net profit after tax would have been higher by Rs. 145 crores at Rs. 180
Rs. 222
crore
ctice, APL's consolidated profit before tax would have been higher by Rs. 188 crores at Rs. 222 crores and net profit after tax would have been higher by Rs. 145 crores at Rs. 180 crores. EBITDA on
Rs. 145
crore
een higher by Rs. 188 crores at Rs. 222 crores and net profit after tax would have been higher by Rs. 145 crores at Rs. 180 crores. EBITDA on a likewise basis would have been Rs. 286 crores i.e 20% of sales.
Rs. 180 crore
8 crores at Rs. 222 crores and net profit after tax would have been higher by Rs. 145 crores at Rs. 180 crores. EBITDA on a likewise basis would have been Rs. 286 crores i.e 20% of sales. EPS for the qua
Rs. 286 crore
ave been higher by Rs. 145 crores at Rs. 180 crores. EBITDA on a likewise basis would have been Rs. 286 crores i.e 20% of sales. EPS for the quarter is Rs. 1.80 per share for the quarter. It would have b
20%
. 145 crores at Rs. 180 crores. EBITDA on a likewise basis would have been Rs. 286 crores i.e 20% of sales. EPS for the quarter is Rs. 1.80 per share for the quarter. It would have been 9.16 on
Rs. 1.80
TDA on a likewise basis would have been Rs. 286 crores i.e 20% of sales. EPS for the quarter is Rs. 1.80 per share for the quarter. It would have been 9.16 on likewise basis versus Rs. 12.75 in the cor
Guidance — 20 items
“We continue to remain focused on the long term of the US business backed by 15 plus launches in the next year in FY23 and consolidating market share in the existing products as well.”
“We launched 1 product in the US during the quarter and 13 during the full year and we plan to launch about 15 products in the next financial year.”
In terms of the numbers
opening
“A large part of this growth was spread over not just a narrow part of the portfolio which had some tailwinds this quarter due to the Covid breakout, but it was pretty much across the key product therapies as well as our key focus product portfolios, and we expect this trend to continue going forward.”
In terms of the numbers
opening
“Hopefully with some of the strategic interventions, we expect to strategically accelerate this space of growth.”
“So, I would say 55 million or so should be our base business going forward.”
“Then what we need to compare is between the standalone and consolidated and then you will be able to see that, but I am giving you the figure.”
“Since now it's a subsidiary, what is our R&D guidance for the year?”
“Next year, our guidance would be about Rs.”
“Prakash Agarwal: Lastly, if you could share some broad level guidance for the India business, because we had a high base Q1 last year.”
“We should expect a few basis points higher than the IPM growth.”
Risks & concerns — 2 flagged
Yes, there is a large impact of last year's April and May stocking that happened due to the Covid phenomenon.
— Shaunak Amin
Like I mentioned, with some amount of higher base this year growing at a double digit for '22-23 would be a bit of a challenge.
— Shaunak Amin
Q&A — 11 exchanges
Q
I said earlier that about 55 million or so should be our base business. So, I would say 55 million or so should be our base business going forward. I still stick to that. Apart from that, we had some stocking because we are moving our distributors. So, we did some stocking of a couple of weeks of extra material we supplied. And there were some one-time buy opportunities. Are they still continuing in this quarter, we will wait till the end of the quarter. Prakash Agarwal: I was trying to understand we had 13 launches during the year. So, they would have started picking up some share. Last quart
Pranav Amin
Yes. With what happened to us in the last year and how we saw price erosion. So, this is the number that I am comfortable with. Yes, it is a conservative number but let us see how it goes. Prakash Agarwal: Secondly, on the Aleor business; in one of the presentation slides, you have given with and without Aleor numbers. Aleor is currently despite some high single-digit launch has zero sales. I could not understand that please. Mitanshu Shah: Yes, there is sales, Prakash, and there is sales of 35 crores for the year actually. Maybe because in large millions, you may not be able to see that, but
Q
Cumulatively, Aleor's accumulated R&D expense which was capitalized as CWIP or as intangible assets were about 355 crores. We have expensed out 180 crores in this year March '22. Secondly, Annual R&D expense as of now is about 50 crores which we have charged off in '21-22 and we will charge it off from '22-23 onwards fully. Damayanti Kerai: Sir, you said 50 crore R&D will be additional coming off from FY23 across quarters?
R K Baheti
That's correct. Damayanti Kerai: Sir, I just missed, how much you said the total R&D capitalized for Aleor? About 350 plus crores. Damayanti Kerai: My next question is on India business. Obviously you mentioned traction has been very strong. Can you clarify a bit what factors have helped us in achieving such industry-beating growth? And for FY23, what are your expectations on growth contribution from the volume growth as well as from the price increase part? In terms of the India business, I have been saying it now for quite a few calls we have done significant corrections across the board in
Q
Sir, first of all, this 35 crores of Aleor business is for the complete year FY22 or for the quarter?
R K Baheti
Full year. We have 13 launches in FY22. How much of the 70% growth is attributable to the new launches and any thoughts on the price erosion in FY23? We don't give a breakup of how much of the growth came from the new launches, but strategically what Alembic does as you know is whenever there is a market, we slowly pick up market share. We don't get market share right away. So, we gradually pick up market share in our products, and as we get more confidence and as the buyers get more confidence in our supply chain abilities, we gradually pick up share. So, we don't give a breakup of from where
Q
For which one? Tarang Agrawal: Dasatinib
Jesal Shah
Actually, we are not disclosing products which are under settlement. But you are right; the product has been settled, and we hope to launch at the time of market formation. Tarang Agrawal: And when is that likely to be? We are not able to give an exact date at this time because of confidentiality provisions, but it's not in the near term. Tarang Agrawal: Given that Lacosamide is genericized, how is the market formation because I see there are a lot of players there and how big could this opportunity be? It is still early days. We did launch our product but I think there is a lot of competition
Q
That is one of the focus areas that we wanted to build on for the US business because it's an important area we realized and you mentioned some of them and a few things that we do. I don't know compared to the competition, but what we do internally is if we do pick up an account share, we do carry extra inventory. We carry extra all the way starting from the API or the intermediates to the finished product, so we carry some extra inventory. We have multipurpose plants, so it helps us to be more nimble. We try to leave some capacity idle, so that helps us scale up very fast if there is a market
Pranav Amin
I have always said that one of the reasons why the US market is attractive is – not just for Alembic but for everybody else – it's a large market. And while India is a very steady market and you can grow at market or like Shaunak mentioned earlier in the call that there is a market share growth and you have to either do better than that or less than that but you get restricted to that band. But for the US business, there is a big opportunity to add business very fast and if you see, a classic example is Alembic and we have grown at…. up until last year, we have had a CAGR of 25% in a 5-year pe
Q
I just wanted clarity on US business. In this quarter, we had better than the normal run rate that the average run rate we had. What was the reason? That particular launch of respiratory products, that is the only contributor?
Pranav Amin
No. As I mentioned earlier in my opening statement that one of the reasons why the US did well is we have picked up market share in our existing portfolio. I have been saying it for the last 2- 3 quarters that we are gradually picking up share in some of our products. That is one reason. Number 2, there were some one- time opportunities that we saw in the US market, some short terms, that have kicked up the sales. And third is, we have moved distributors in the US, still some inventory restocking at the distributor level. We carried some extra inventory at the distributor level to make the tra
Q
Yes. As I said, Aleor as of now, it still remains a separate company though we plan to amalgamate it. They have decided to accelerate the amortization. So, I believe the rest of the accumulated tranche will get amortized in '23. Ashwini Agarwal: So, 175 crores will appear as a one-off in fiscal '23?
R K Baheti
155 crores or so. Ashwini Agarwal: Sir, obviously this business is incurring a fairly substantial loss at this point in time and we have a number of filings in there. Could you help us build a picture about how we should look at Aleor over the next 3 to 5 years? You acquired the minority stake of 40% in this and you are amalgamating it in the Holdco. How do we think about this business from a 3- to 5-year perspective? In my opinion, the best way to look at it is, it is separated now, I think we are moving forward it is going to be amalgamated into Alembic. And there is not much to see, right?
Q
Saion, there is no structural shift per se in the market. For the last 3 quarters, I have been saying that we are looking at building up more market share in some products. So, we have had that. That is one aspect of it where we have gained market share in some products. No. 2 There were certain one-time buy opportunities. I don't think they were China related. It was just basic whatever reason the market was short on these products. That was the second one. Third as I mentioned, the distributors. I think that is more only for us because we are moving our third-party distributor to a new distr
Pranav Amin
What we have seen historically with the US market is that it moves up and down. There are opportunities always. And as I said earlier, it's like a massive market size. While the returns have come down considering what we thought initially, but we are being mindful of it. That is why if you see R&D, what I said earlier that R&D also for the next year, we are going to keep R&D flat for the next year. And if you do your job well and if you remain compliant, you will get opportunities as we have seen that from time to time. Saion Mukherjee: Any of the new areas you are looking at for the US market
Q
To be honest, no. As I mentioned, it is an interesting market. So, I didn't want to sell our stake. It's an FDA compliant plant approved for, inspected 4 times. There is a nice portfolio and it's a good basket of products. So, I was quite keen to pick up the balance 40% stake. Prakash Agarwal: What is the pipeline like? How many filed and how many pending? Mitanshu Shah: We have a total of 45 products that we are working on at this point in time. There are others under consideration but 45 on the grid. We have filed 30 of that actually and we have 17 approvals and we have launched 11 products.
R K Baheti
Yes, of course. Prakash Agarwal: Secondly, on India business; since growth is across the board and more so acute, but things will normalize. Just trying to understand; in the past, we have invested and all the capital allocation is higher in the export business. Having done that, now is there an M&A strategy for India? Any thought process there? Shaunak Amin: On the India piece, on the M&A side, like I said, we keep a check of what's going on. At this point in time, looking at the last valuation for the last 3 transactions in the India business that have happened including the veterinary ones.
Q
Since our product Azithral has crossed the 450 crores mark for this year which could actually normalize going forward considering the Covid cases as well have come down drastically, do you believe we can grow in double digit even going forward in FY23?
Shaunak Amin
Like I mentioned, with some amount of higher base this year growing at a double digit for '22-23 would be a bit of a challenge. But going forward, '23 onwards, we should come back to historical growth number that we have been giving pre-Covid which was anywhere from a low to mid-level double-digit growth based on market growth numbers. Just wanted to understand on the US part as well. Considering we have got additional set of queries for the new facility; how do we look at US market from FY23 perspective in the absence of new plants considering the new product approval which we have seen is ha
Q
There were a couple of pending questions but we have some other schedule. So, you can get in touch with anybody whose questions were not responded to after getting in touch with Mitanshu or Ajay and they will be happy to share that information. Thank you very much everyone for joining this call. It is always interesting to interact with you and look forward to seeing you again in the next quarter. Thank you.
Opening remarks
R K Baheti
Thank you dear friends for joining this Conference Call where we are presenting our Q4 and Annual Results for FY22. I am sure that most of you would have received our results but let me briefly take you through the financial numbers: Operationally, Q4 was a good quarter for us. Both India business and US generic verticals performed well, and Shaunak and Pranav would be talking about it in detail in their presentations. During the quarter, our total revenue is up by 11% to 1416 crores. EBITDA was 164 crores. Profit before tax and profit after tax is down to 34 crores and 35 crores respectively. That's because of one-time nonrecurring expense charged by Aleor. Had Aleor followed the previous year practice, APL's consolidated profit before tax would have been higher by Rs. 188 crores at Rs. 222 crores and net profit after tax would have been higher by Rs. 145 crores at Rs. 180 crores. EBITDA on a likewise basis would have been Rs. 286 crores i.e 20% of sales. EPS for the quarter is Rs. 1.
Borrowings
The gross borrowings at consolidated level is 630 crores versus Rs. 500 crores in March 2021 and the Company has 61 crores in cash on hand versus Rs. 285 crores in March 2021. Net debt- equity stands at 0.11 I will now hand over the discussion to Pranav for his presentation on international business.
Pranav Amin
The US business witnessed a good quarter with sales at USD 75 million. This is due to a couple of reasons such as the increased market share in some products as well as some one-time opportunities and some stocking of the distributor pipeline. This gives us confidence in the business moving forward. We also launched our first inhalation product in the US market Formoterol in April. We continue to remain focused on the long term of the US business backed by 15 plus launches in the next year in FY23 and consolidating market share in the existing products as well. As Mr. Baheti mentioned, Aleor is now a wholly owned subsidiary of APL. We will get full control of strategy, operations, and marketing of the entire dermaceutical portfolio resulting into efficiencies and improvement in overall business outlook. Ex-US formulation business as well as the API business have both come off a very high base of last year, hence growth was muted. However, we are confident on both these verticals moving
FDA inspection
We are working hard to address the observations issued by the FDA at our F3 injectable facility located at Karkhadi. Remediation measures are underway and we are in touch with the FDA to move towards full compliance.
In terms of the numbers
The US generics grew at 17% to Rs. 557 crores for the quarter. The ex-US generics degrew by 19% to 188 crores for the quarter whereas the API business grew by 4% to Rs. 222 crores for the quarter. I will now hand over to Shaunak to take you through the India Branded Business. Shaunak Amin: Good afternoon everybody. The India business, for another quarter, our ability to show a continued buildup in momentum in the business continues. A large part of this growth was spread over not just a narrow part of the portfolio which had some tailwinds this quarter due to the Covid breakout, but it was pretty much across the key product therapies as well as our key focus product portfolios, and we expect this trend to continue going forward. Hopefully with some of the strategic interventions, we expect to strategically accelerate this space of growth. If I were to come with the growth numbers, the India business grew by 25% to 449 crores on quarter-to-quarter basis and by 29% to 1926 crores in '22