Cipla Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Cipla Limited (CIPLA) Q4 FY22 Earnings Concall

Management Update:

• CIPLA said it crossed the $1 billion milestone in its domestic-branded prescription business, driven by the sustained growth across the company’s acute and chronic portfolios.

Q&A Highlights:

• Prakash Agarwal from Axis Capital asked about the outlook of India business. Umang Vohra Global CEO replied CIPLA would like to see very high growth, better than market for the non-COVID portfolio. So the company remains bullish on India.

• Prakash Agarwal from Axis Capital enquired about the current goodwill of about INR3,000 crores, if it largely pertains to Invagen acquisition or there is more subparts to it. Dinesh Jain Interim Global CFO replied it has a South Africa part also in addition to Invagen. CIPLA did an acquisition of Medpro in 2013.

• Anubhav Aggarwal from Credit Suisse enquired about the reason for other expenses being higher in Q4 vs. the run rate. Umang Vohra Global CEO answered that expenses are higher because in 4Q, particularly the India business had more expenses than usual on account of 4Q being a respiratory quarter. And the fact that CIPLA was not able to spend it in 3Q on account of COVID-related.

• Anubhav Aggarwal from Credit Suisse asked about the expectation for margin for FY23. Umang Vohra Global CEO said that the margin range that CIPLA is guiding towards is upwards of 21%. And from the last call, CIPLA is somewhere closer to the 21.5-22%. But considering the procurement costs, etc., this time, the high inflation in commodities, CIPLA is in the 21-22% range.

• Neha Manpuria from Bank of America asked about the peptide asset and if there is any change in market share expectation and the time line for ramp-up on the product. Umang Vohra Global CEO clarified that CIPLA is not changing any of its expectations from the product. And the plans largely remain on track.

• Neha Manpuria from Bank of America asked about the FY23 outlook for R&D expense, now that CIPLA has one respiratory asset in trial. Umang Vohra Global CEO replied that between 6-7% would be where CIPLA would end up mostly in R&D.

• Neha Manpuria from Bank of America enquired about the Abraxane timeline. Umang Vohra Global CEO answered that CIPLA doesn’t have a specific date as yet on the inspection, but inspection has started in the country and quite significantly. So CIPLA is also hoping to be audited soon.

• Saion Mukherjee from Nomura Securities asked about growth in trade generics in India for FY22 vs. FY21. Umang Vohra Global CEO replied that CIPLA’s highest growth probably was in its consumer business, followed by the branded prescription business in FY22. And trade generics was also significantly comfortable in double digits.

• Bino Pathiparampil from Incred Capital asked about Advair, if Teva has launched it and if yes, how the market has changed. Umang Vohra Global CEO replied that there has been a very limited launch by Teva, but CIPLA hasn’t seen any material change to pricing in the market.

• Sameer Baisiwala from Morgan Stanley enquired about price increases and in which markets have CIPLA been able to pass on the input cost inflation. Umang Vohra Global CEO answered that to some extent, prices are adjusted in the emerging side of the world to the extent the company can. And India, companies have got the permission to price higher.