Marksans Pharma Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from Marksans Pharma Limited (MARKSANS) Q2 FY24 Earnings Concall

• Financial Performance
  • Revenues grew 17% year-on-year to INR531 crores in Q2 FY’24.
  • EBITDA up 41.9% year-on-year to INR113.9 crores in Q2.
  • PAT grew 39.5% to INR83.9 crores in Q2.
  • Gross margin improved 174 bps to 52.4% in Q2.
  • For H1 FY’24, Revenue grew 16.4% year-on-year to INR1,031.3 crores.
  • EBITDA grew 41% year-on-year to INR215.9 crores in H1.
  • PAT grew 28.3% to INR154.3 crores in H1.
• Operational Environment
  • Saw improved demand and volume growth across key markets.
  • Pricing pressure normalized for Rx products in US.
  • Reduction in raw material and freight rates vs last year.
• Strategic Initiatives Progress
  • Received key product approvals from USFDA and UK MHRA.
  • USFDA inspection completed with EIR status for Time-Cap Labs.
  • On track with capacity expansion of acquired Teva unit.
  • Passed recent audit by German health authorities.
  • Strategic initiatives aimed at maximizing shareholder value.
• Growth Outlook
  • Optimistic about driving growth.
  • Focus remains on strengthening product pipeline.
  • Expects revenue contribution from Teva unit to increase quarter-on-quarter.
  • Hoping to sustain current strong margins in H2.
  • Soft raw material and freight rates supportive.
• Teva Facility Integration
  • Facility now operational but integration still ongoing.
  • Investing to upgrade capacity.
  • Expect full revenue potential from April 2024 onwards.
• New Product Launches
  • Received approvals for products like Esomeprazole.
  • Launching in respective markets through distribution channels.
  • Increases product portfolio and revenue generation.
• Demand Trends
  • Growth drivers remain US and Europe markets.
  • Expects this positive trend to continue in coming year.
• Capital Allocation
  • Priority is expanding capacity at newly acquired Teva plant.
  • Also exploring M&A opportunities in Europe.
  • Plans to expand geographies though nothing concrete yet.
  • Will consider buyback or dividend based on free cash flow.
• ANDA Filing Targets
  • Targeting 4-5 ANDA filings per year in US.
  • Targeting 15-20 product authorizations per year in Europe.
  • Already working on 60-70 products for Europe filings.
  • Working towards filing DMFs for backward integration.
  • Optimistic to file by end of current financial year.
• Revenue Mix
  • Largest segment is pain, followed by digestive and cough/cold.
  • Around 30% from prescription-related segments.
  • Some brands in Australia and Dubai region.
  • Active in e-commerce segment like Amazon.
• Capex Outlook and R&D Spending
  • INR80-100 crores capex planned for next 6-12 months. Currently at 1.6% of sales.
  • Guidance of around 2% for FY25-26.
  • Further capex possible later to expand capacity further.
  • Plan to increase R&D spending going forward.
  • To support more ANDA filings and new product development.
  • Expects gradual increase rather than significant jump.
  • Tailwinds from raw material costs moderating.
  • Future growth to be driven by operating leverage and expanding product portfolio.
• OTC Prescription Mix
  • Globally around 70% OTC, 30% prescription.
  • US slightly higher OTC around 78%.
  • UK has larger prescription share so averages to 70/30.
  • Expect mix to remain relatively stable next 3-5 years.
• Branded Business Opportunities
  • Currently small part of major markets like US, UK, Europe.
  • May explore brands but generics are main focus.
  • India, parts of Europe better markets for branding.
  • Could expand via M&A which helps with costs, timelines.