Key highlights from Cipla Limited (CIPLA) Q3 FY24 Earnings Concall
- Financial Performance
- Revenue grew 14% to INR 6,544 crores.
- EBITDA margin expanded to 26.3% due to favorable mix and pricing actions.
- PAT grew to INR 1,049 crores or 16% of sales.
- R&D spend increased 10% YOY to INR 400 crores or 6.1% of revenue.
- Reported strong growth across key markets like India, North America, and Africa.
- India business grew 12% driven by branded prescriptions, generics, and consumer health.
- North America sales hit all-time high, growing 18% to $230 million.
- South Africa business grew 35% excluding asset sale.
- New Product Launches
- Cipla continued to invest in R&D and new product pipeline.
- Filed 2 new respiratory products in the US.
- Have 4 peptide launches planned in FY25 with more in development.
- Working to derisk launch of generic Abraxane and other key assets.
- Regulatory Update
- Received warning letter for Indore facility, responded to FDA queries.
- Focus remains on remediation efforts at Goa facility.
- Submitted pending requisitions for Goa site.
- Derisking key launches from Goa is a priority.
- Business Development
- Received approval for Actor Pharma acquisition in South Africa.
- Will help grow portfolio of leading brands in the market.
- Integration expected in Q4 FY24.
- Guidance
- Q4 margins to be impacted by seasonality.
- FY EBITDA margin trending to higher end of 23-24% guidance range.
- ROIC remains healthy at 29% for trailing 12 months.
- Targeting around 6% of revenue as R&D spend.
- Focus on fewer high potential assets in pipeline.
- Expect similar trend of around 6% for next few years.
- Attractive long-term growth potential from expanding reach in India.
- Near-term outlook depends on WPI trends and ability to take price hikes.
- Targeting higher than market growth next year through mix of price and volume.
- Abraxane Launch Plans
- Fastest route is approval from Goa site, which could be ready for re-inspection in Q1 FY25.
- If Goa not cleared, will require clinical trials from alternate site, delaying launch.
- Timeline for approval unchanged if Goa clears, could be faster than expected.
- Advair/ Lanreotide
- Expect to file Advair generic from alternate site by mid FY25.
- Unlikely to need full FDA review cycle, could see approval in 6-9 months.
- Approval possible by end of FY26 if no other queries from FDA.
- Lanreotide now have 20% share, similar to last quarter, with incremental gains expected.
- Seeing higher offtake this quarter, share should start picking up.
- Supply issues fully resolved at this point.
- Symbicort Filing Strategy
- Currently filed from Indore site.
- Will add second site to file when get FDA queries.
- By approval, will be two site filing or single site depending on strategy.
- US Pricing Environment
- Currently in the 4-6% price erosion band, which is normal.
- Expect it to shift to 6-8% band in 1-2 years as part of commodity cycle.
- Quarter one usually sees more price challenges with new budgets.
- Environment slightly calmer now but expect cyclical worsening.
- Aims to have portfolio where no single asset is over $50 million.
- Peptide Contribution
- Several peptide launches planned in next few quarters.
- Peptides will be meaningful but respiratory remains largest category.
- Respiratory has higher margins due to controlling more of value chain.
- India Consumer Health Business
- Saw strong growth in Q1 but more moderate in Q2 and Q3.
- Overall still in a growth trajectory supported by anchor brands.
- Inventory rebalancing early in year impacted growth.
- 35-40 stores have achieved ROI showing profitable model.
- Cash Deployment
- Disciplined approach to IRGs will continue, not compromise just because of excess cash.
- India M&A will be largest given confidence in growth.
- Cipla Health bolt-ons continue to be evaluated.