Key highlights from Aurobindo Pharma Limited (AUROPHARMA) Q2 FY24 Earnings Concall
- Revenue Growth
- Revenue grew 25.8% year-on-year to INR7,219 crores, driven by growth across formulations, APIs, and geographies.
- Formulations revenue, excluding Puerto Rico, grew 29% YoY to INR5,968 crores.
- US formulations revenue, without Puerto Rico, grew 35.7% year-on-year to INR3,385 crores, driven by volume gains, stable demand and new launches.
- Europe formulations revenue grew 16.7% year-on-year to INR1,769 crores.
- Growth markets revenue grew 24.7% year-on-year to INR564 crores.
- Margin Expansion
- EBITDA grew 67.7% year-on-year and 21.9% quarter-on-quarter to INR1,403 crores.
- EBITDA margin expanded to 19.4% against 16.8% last quarter.
- Margin expansion driven by higher capacity utilization, operating leverage, lower material costs, and favorable product mix.
- US Business Performance
- Received 15 ANDA approvals and launched 19 products in Q2 FY24.
- Filed 10 ANDAs during the quarter.
- US revenue growth driven by injectables and oral solids.
- Improved pricing environment in US with price erosion remaining neutral.
- US formulations revenue excluding Puerto Rico grew 35.7% year-on-year.
- Injectables revenue stabilized around $80-90 million per quarter currently.
- Oral solids growing at double digit rate driven by new product launches and volume gains.
- Launching 40 new products in 12 months, on track.
- Leveraging manufacturing capabilities and broad portfolio
- Capacity Expansion
- Multiple manufacturing plants under installation and commissioning.
- New plants in China, Pen G, and API expected to be operational starting Q4 FY24.
- Clinical trials underway for biosimilars plant which will be commissioned in FY25/26.
- Existing plants undergoing debottlenecking to increase capacity.
- Outlook
- Confident of sustaining growth momentum in revenue and earnings.
- Expect to achieve over 20% EBITDA margin target for FY24.
- Focus on new product launches, cost efficiencies and expanding product pipeline.
- Exploring bolt-on acquisitions aligned with company’s growth strategy.
- Targeting over 20% EBITDA margin for FY24.
- R&D spend expected to increase back to INR350-400 crores per quarter.
- With plants getting commissioned, capex may moderate from FY25.
- Strategy capex of $100-150 million will continue for biosimilars, CMO etc.
- Existing generics business may not require major capex.
- MSD Partnership
- Signed letter of intent to partner with MSD for biologics contract manufacturing.
- Will invest in infrastructure for innovator biologics manufacturing with capacity of over 15 KL bioreactors.
- Aims to compete with major CMOs globally in both drug substance and finished product.
- Final investment amount still under negotiation, expected clarity in 4-5 months.
- Debt Position
- Gross debt increased by $160 million in Q2 FY24.
- Spent on Indonesia acquisition, PLA plant capex, working capital.
- Expect to end FY24 with net debt between $0-50 million.
- Cash flows from PLA plant will help reduce net debt next fiscal year.
- Revlimid Launch
- Launched in October 2023.
- Pricing similar to competitors.
- Planning for stable quarterly revenue contribution throughout settlement period.
- Europe Business Outlook
- Focus on improving profitability and margins rather than chasing top line growth.
- Aiming to achieve company average EBITDA margins of 20% with scale.
- New injectable and biosimilar launches to aid growth along with China facility.
- Indonesia Acquisition
- Acquired Pfizer’s branded portfolio in Indonesia.
- 16 well-known brands with INR31 million revenue.
- Gives direct presence in large and growing pharma market.
- Closed in Q3 FY24, will aid growth from FY25.
- Europe Biosimilar Filings
- Faced delay earlier, have resubmitted Pegfilgrastim file.
- Will submit Filgrastim and Trastuzumab files by end of January 2024.
- Pegfilgrastim and Filgrastim approvals expected in FY26.
- Trastuzumab approval likely in FY27.
- Audit for Filgrastim expected in Q1 2024.
- ARV Business Revenue
- Quarterly revenue around $25 million ± $5 million.
- No huge growth expected unless unable to supply in a quarter.
- Organic Capex
- Existing plants capex around $125-150 million annually.
- Not embarking on major new greenfield plants currently.
- Adding lines and debottlenecking existing plants to reduce gestation period.
- Inorganic Investments
- Spent $95 million this year on acquisitions for new markets and business.
- Do not foresee similar scale of investments every year.
- Will evaluate bolt-on acquisitions if value-accretive opportunities arise.