APLLTDNSENovember 11, 2022

Alembic Pharmaceuticals Limited

5,188words
100turns
10analyst exchanges
6executives
Management on call
Pranav Amin
MANAGING DIRECTOR
Shaunak Amin
MANAGING DIRECTOR
R. K. Baheti
DIRECTOR, FINANCE AND CFO
Mitanshu Shah
HEAD, FINANCE
Jesal Shah
HEAD, STRATEGY
Ajay Kumar Desai
SENIOR VP, FINANCE
Key numbers — 40 extracted
14%
though most of you might have received it by now. During the quarter, our total revenue was up by 14% to Rs. 1,475 crores, EBITDA was Rs. 231 crores, net profit was Rs. 133 crores. EBITDA margin fo
Rs. 1,475 crore
most of you might have received it by now. During the quarter, our total revenue was up by 14% to Rs. 1,475 crores, EBITDA was Rs. 231 crores, net profit was Rs. 133 crores. EBITDA margin for the quarter was 16%
Rs. 231 crore
it by now. During the quarter, our total revenue was up by 14% to Rs. 1,475 crores, EBITDA was Rs. 231 crores, net profit was Rs. 133 crores. EBITDA margin for the quarter was 16%. For H1 FY23, the numbers
Rs. 133 crore
r, our total revenue was up by 14% to Rs. 1,475 crores, EBITDA was Rs. 231 crores, net profit was Rs. 133 crores. EBITDA margin for the quarter was 16%. For H1 FY23, the numbers are EBITDA Rs. 240 crores, ne
16%
ores, EBITDA was Rs. 231 crores, net profit was Rs. 133 crores. EBITDA margin for the quarter was 16%. For H1 FY23, the numbers are EBITDA Rs. 240 crores, net profit Rs. 67 crores. You are aware th
Rs. 240 crore
was Rs. 133 crores. EBITDA margin for the quarter was 16%. For H1 FY23, the numbers are EBITDA Rs. 240 crores, net profit Rs. 67 crores. You are aware that in Q1, we wrote-off a significant amount of amor
Rs. 67 crore
DA margin for the quarter was 16%. For H1 FY23, the numbers are EBITDA Rs. 240 crores, net profit Rs. 67 crores. You are aware that in Q1, we wrote-off a significant amount of amortized R&D expense of Aleor
Rs. 16 crore
rmaceuticals. So, we continue to do that and in this quarter, that is in Q2, we have expensed out Rs. 16 crores out of previously amortized R&D cost and that makes it Rs. 131 crores of charge-off for the ha
Rs. 131 crore
in Q2, we have expensed out Rs. 16 crores out of previously amortized R&D cost and that makes it Rs. 131 crores of charge-off for the half year. If we would not have done that, our profit before t
Rs. 108 crore
efore tax would have been higher by Rs. 131 crores and profit after tax would have been higher by Rs. 108 crores. That is for the half year. Residual intangible assets and books pertaining to Aleor operations
Rs. 24 crore
t is for the half year. Residual intangible assets and books pertaining to Aleor operations are Rs. 24 crores. We hope in the next couple of quarters we will clean it up. EBITDA on a likewise basis would
Rs. 338 crore
pe in the next couple of quarters we will clean it up. EBITDA on a likewise basis would have been Rs. 338 crores without charging off these onetime expenses that would have been 12% of sales. This is for H1.
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Guidance — 20 items
Shaunak Amin
opening
“That being said, I think going forward, we continue to maintain and extremely confident of outperforming the market growth numbers on a consistent basis.”
Pranav Amin
opening
“We have been guiding for low R&D in the future and this is a trend that we will see going forward as well.”
Mitanshu Shah
qa
“Prakash Agarwal: No, I was asking going forward, what is the kind of expenses we should start penning in given the approval and launches will start from the injectable plant?”
Mitanshu Shah
qa
“Prakash Agarwal: And congrats on the approval that has started, just trying to understand for the opportunities, do you still left on these products and will you plan to launch that?”
Pranav Amin
qa
“Prakash Agarwal: And we should start seeing more, the kind of filings you have done would range, in the past, you mentioned that to start with, it will be smaller and basic products, but you would have complexity going ahead, so when should we start seeing the complex product approvals or they are still in the filing stage?”
Pranav Amin
qa
“I don't know what the blended price erosion would be for the portfolio, I am assuming it will be high teens, but product-wise, if we see, I am seeing erosion of upwards of 30% in specific products.”
Jainil Shah
qa
“I just wanted to ask on the API front, we have grown really well, so what is driving this growth and how should we look at it going forward?”
Pranav Amin
qa
“I had mentioned earlier in the year or everywhere, so we expect the API business to go about 10% during the year.”
Pranav Amin
qa
“Thirdly, if there is disruption in the market, right, as I have been saying, there is a lot of supply in the market currently, but we may see some disruptions going forward.”
Pranav Amin
qa
“Once that happens, there will be opportunity for some price.”
Risks & concerns — 1 flagged
The challenge with Valsartan/Sacubitril is only that there are multiple SKUs in this product.
— Shaunak Amin
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Q&A — 10 exchanges
Q
The capitalized cost is Rs. 1,100 crores for all these 3 plants, F2, F3 and F4. The yearly spend is around Rs. 200 odd crores in the expenditures and once we start commercial use, for F2 and F3, this cost would be in vicinity of Rs. 300 crores, including depreciation. Prakash Agarwal: So, yearly you said Rs. 200 crores I heard that, and then INR 300 crores?
Mitanshu Shah
Yes, with depreciation, Rs. 300 crores. Prakash Agarwal: Put together? Yes. Prakash Agarwal: And yearly Rs. 200 crores for all the 4 facilities? That is true. Prakash Agarwal: No, I was asking going forward, what is the kind of expenses we should start penning in given the approval and launches will start from the injectable plant? So, Prakash, this is exactly what I said, put aside F4, let us take F2 and F3. Then the running cost is around Rs. 160 crores-Rs. 170 crores, which is like cash burnout, okay, that is overhead and then you have to add another Rs. 100 crores as depreciation. Prakash
Q
I would like to know the outlook on the US generics like what kind of price erosion that you are witnessing?
Pranav Amin
The US business is the most competitive I have seen it at least in the last 10 years or so. There is a lot of oversupply in the market. I don't know what the blended price erosion would be for the portfolio, I am assuming it will be high teens, but product-wise, if we see, I am seeing erosion of upwards of 30% in specific products.
Q
So, sir, just wanted to understand, since we have already started getting approval from the new facility, so I just wanted to get a color, how many ANDAs are pending approval from F2 and F3 injectable facilities largely?
Mitanshu Shah
We have got like 34 filings actually between these 2 facilities and then we have got another 17 odd filings from the CMO, which eventually we will bring to these facilities, so 50 odd at this point in time. And this 50 include on oral as well or it is just injectable? Yes, it does cover orals So, if I just talk about the injectables, not orals solid, so how many products that would be? We have around 7-8 filing for OSD. So, large part is injectable in that case? Is it correct? Yes. And second on the overall US pricing, so are you seeing that the overall pricing pressures have started cooling o
Q
I would like to know about the Brovana, which was commercialized, like what kind of traction that you are seeing?
Pranav Amin
This is the product we commercialized through CMO. We are gradually picking up share. It is a good market still and we have picked up some share. We must have got 10% or so market share right now. So, can you guide like what kind of market share is there? Or what is the market size? I don't have that figure with me on hand, I will have to just double check and get back to you.
Q
I just wanted to ask on the API front, we have grown really well, so what is driving this growth and how should we look at it going forward?
Pranav Amin
The API business has been a good business for us. We are focused on quality and timelines kind of things and as the world is looking at better suppliers with compliance facilities, we have been able to do that with our service levels. I had mentioned earlier in the year or everywhere, so we expect the API business to go about 10% during the year. This was an exceptionally high quarter where we had about 23% growth, but yes, 10% is a fair enough growth as expected in the API business. And on the US front, you did mention that there were certain onetime opportunities, so ex of that, what would b
Q
Sorry, I have joined late, so I am not sure if this question has been asked. So, now we are seeing some products getting approved from the onco-injectable facility, so does that mean that some part of OPEX and depreciation which was capitalized start hitting the P&L from 3Q onwards?
Mitanshu Shah
Once we start taking the commercial batch, that would be the due date on that. We won't capitalize it and it would be part of expenses. So, we can expect that to happen by Q4. And in the last call, the numbers mentioned that within the P&L, around Rs. 100-Rs. 200 crores falls on the OPEX side and I think Rs. 180 odd crores on the depreciation side, are these numbers right? Am I reading the right number there? Though I think the buildup will be a bit more steady than everything coming at one go? Yes. Nikhil, that one was for all the 3 plants, F2, F3 and F4 actually. So, somebody has just asked,
Q
Except the Rs. 16 crores which I said, we charged in this quarter, which was out of previously amortized R&D expense of Aleor, there is nothing one-off and this quarter our numbers are okay. I don't think there is any exceptional debits or high number. Cyndrella Carvalho: Any scope to improve it further, sir?
R. K. Baheti
I cannot say that. Effort to contain expenses continues. The particular area of focus at this moment is of course R&D, but it takes time because when you evaluate projects, you decide what to continue, what to drop. Even when you decide to downsize, it takes time, so it is a process that will not happen overnight, but we are constantly at it. Cyndrella Carvalho: Any quantum that we would like to specify over a year, any certain amount that we would expect due to these activities? On an annualized basis, we plan to save about Rs. 100 crores this year versus what we spent last year. Cyndrella Ca
Q
F4 is another oral solid OSD facility. We have done 2 site transfers and 1 filing from F4. We will wait until the FDA comes to audit and then we will add more products over there. Bhagwan Chodhary: And sir, in terms of F2 and F3, do we have the filings in EU and other countries than the US?
Pranav Amin
No, not as yet. Our goal is to do some filings for these 2, but the priority was first to take on the US, which we have done, and now we will extend it to other territories as well. Bhagwan Chodhary: When we got the approval, this Mesalamine franchisee, can you please share what is the market opportunity and size for this product? And have we launched it? No, we haven't launched it as yet. Volume-wise, it is not a very large product. There is about 5 to 7 people already in the market, but it is an interesting opportunity and we will launch it in Q4. Bhagwan Chodhary: And sir, lastly, have we f
Q
I have a couple of questions, starting with preoperative expenses, so how much of this Rs. 1,100 crores would pertain to F2 and F3, which will charge to P&L once the facilities are commercialized?
Mitanshu Shah
So, almost Rs. 950 crores pertain to F2 and F3. Now, we saw some good growth in our anti-diabetes franchise in India, currently we have launched Sitagliptin after the patent expiry, so how has been the traction so far? And can you speak a little bit about market formation? Sitagliptin, it is too early. It has just been launched. It is hard to give you an indication at this point in time, but just we had launched it and we are getting good traction, but I would honestly like to comment on market formation, maybe a quarter down the road because it is literally like 1 or 2 months is very hard to
Q
Yes, thanks. I can understand lesser number of questions this time because it is a Friday evening and guys you have attended almost multiple calls but thank you at the same time for all of you who have joined and an interesting session, and look forward to seeing, interacting with all of you next quarter. Thank you.
Management
Speaking time
Pranav Amin
24
Mitanshu Shah
15
Moderator
12
Shaunak Amin
12
Puneet Pujara
10
R. K. Baheti
9
Bharat Celly
6
Nikhil Mathur
5
Sumit Gupta
3
Jainil Shah
3
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Opening remarks
R. K. Baheti
Thank you. Good evening, everyone, and thank you for joining Alembic Pharma's second quarter results conference call. I know it has been a hectic day for you, a couple of pharma companies announced their results today. So, I will be short today. Let me briefly take you through the numbers for the quarter ended and half year ended 30th of September, though most of you might have received it by now. During the quarter, our total revenue was up by 14% to Rs. 1,475 crores, EBITDA was Rs. 231 crores, net profit was Rs. 133 crores. EBITDA margin for the quarter was 16%. For H1 FY23, the numbers are EBITDA Rs. 240 crores, net profit Rs. 67 crores. You are aware that in Q1, we wrote-off a significant amount of amortized R&D expense of Aleor, the company which has been now merged with Alembic Pharmaceuticals. So, we continue to do that and in this quarter, that is in Q2, we have expensed out Rs. 16 crores out of previously amortized R&D cost and that makes it Rs. 131 crores of charge-off for th
Shaunak Amin
Good evening, everybody. This quarter for the India business, the topline was 8%, which reflects us to be in line with the Industry. As per last year, we did have a large sale of Amphotericin-B primarily to deal with COVID related fungal infections as a service. So, we did launch that. If I were to take that out, our growth jumps to 11%. Both specialty as well acute care, a good double-digit growth with 10% in Specialty, largely driven by gynecology, anti-diabetic and ophthalmology. Ophthalmology is outperforming specialty areas and the balance of the growth is driven by the acute, which is growing at 11%. Along with that, the animal health care business continues to show a strong better performance clocking in 15% growth for this quarter. The growth for this quarter as our business was in line with the Industry and with IMS numbers and if I were take up primary number versus the IMS number, we do continue a degree of outperformance. That being said, I think going forward, we continue
Pranav Amin
Thanks, Shaunak. It was an interesting quarter for the international business, especially the ex-US and API business both had a decent quarter, especially considering that they are coming off a high base of last year. The US business continues to remain challenging and a lot of oversupply in the market and a lot of price erosion due to that. In spite of that, we managed to grow the business by 20% in the quarter. This was due to some onetime opportunities that we had in the market. The sale for the current quarter in the US was $52 million. We continue to remain focused on this on the long term of the US business. As we announced, we have got first of our 3 ANDA approvals from the two Injectable sites. Though the site approvals are pending, but product approvals have started flowing in. So, that is promising. Our R&D expense is Rs. 168 crores. If you see ex of the onetime Aleor products R&D charge-off, it is Rs. 151 crores, which is 10% of sales in the quarter. We have been guiding for
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