Earnings Call Overview
• Date: February 9, 2023
• Focus: Quarter and nine months ended December 31, 2022
• Key Attendees: Chairman Shyam Bhartia, division CEOs
Financial Performance Highlights
• Revenue Growth: Year-on-year increase driven by Radiopharmacies and Allergy businesses.
• Profitability Issues: Lower profitability due to reduced COVID-related deals and supply chain challenges.
• Generics Transformation: Ongoing changes to enhance growth and profitability, with expectations for improved FY24 performance.
Segment Performance
• Specialty Pharma: Revenues decreased to Rs 760 Crore; EBITDA at Rs 117 Crore.
• Radiopharma: Revenues rose to Rs 613 Crore but faced challenges from order rescheduling and radioisotope shortages.
• Allergy Immunotherapy: Revenues increased to Rs 147 Crore.
• CDMO Sterile Injectables: Stable revenues at Rs 272 Crore; significant EBITDA drop due to lack of COVID sales.
• Generics: Improved revenues to Rs 223 Crore despite a plant shutdown.
• CRDMO: Revenues of Rs 291 Crore; stable Drug Discovery Services.
• API: Revenues rose to Rs 168 Crore from increased utilization.
• Total Revenues: Rs 1,553 Crore; EBITDA of Rs 155 Crore; net loss of Rs 16 Crore.
• Cost Optimization: Initiatives expected to save Rs 150 Crore by mid-FY24.
Management Insights
• Revenue Trends: Current quarter revenue at Rs 400 Crore, down from Rs 410 Crore.
• EBITDA Concerns: Cumulative losses of nearly Rs 1,000 Crore since Radiopharmacies acquisition; expectation of reduced losses in Q4.
• Generics Business: One-time legal settlement gain confirmed; projected loss reduction by FY'24 year-end.
Regulatory and Operational Updates
• Roorkee Plant: Ongoing import alert status.
• Nanjangud Plant: Recent FDA audit with eight observations.
• API Business: Lower volumes due to plant upgrades, despite year-on-year growth.
R&D and Future Growth
• R&D Expenditure: Dependent on clinical data and collaboration opportunities.
• Drug Discovery Services: Healthy demand but selective customer approach; optimism for growth return.
• New DMPK Facility: Focus on expanding capabilities; expectation of double-digit growth in Drug Discovery.
Cost Savings and Capital Raising
• Cost Savings Breakdown: Rs 150 Crore identified savings from workforce management, material sourcing, and operational model shifts.
• Capital Raising Efforts: Biotech market recovery; ongoing discussions for partnerships with large pharma and biotech companies.
Conclusion
• Turnaround Plan: Confidence in achieving breakeven for Radiopharmacy business by end of FY'24 through organic growth and operational efficiencies.