Key highlights from Gland Pharma Limited (GLAND) Q2 FY23 Earnings Concall
Management Update:
- [00:02:23] GLAND said it saw improvement in supplies in 2H23 and have better visibility on key material supplies going forward.
Q&A Highlights:
- [00:15:19] Neha Manpuria of BofA enquired about the US numbers, the pricing pressure and the growth going forward. Srinivas Sadu MD replied that vs. last year it remains flat. The EBITDA margin impact is most on the cost side impacting bottom line. From a growth perspective GLAND launched 7 products in 2Q23 and there’s a plan to launch 11 in 3Q23 also.
- [00:17:06] Neha Manpuria from BofA enquired that with new product launches and less price erosion in US, why there was not much growth seen in the region QonQ. Srinivas Sadu MD clarified that some of the products, due to competition, GLAND couldn’t get to the estimated volumes, especially oncology products like Pemetrexed and Bortezomib. GLAND expects to grow the existing base.
- [00:18:18] Neha Manpuria with BofA asked about RoW market going back to the last year levels and if it’s a sustainable number. Srinivas Sadu MD answered that the pressure GLAND is facing with RoW and India is due to the cost disruptions. Also there are no one-offs. So once the cost settles down, GLAND believes it will have better opportunity to grow in the region.
- [00:19:34] Dheeresh of White Oak Capital asked about the profit share number for 2Q23 and share of new launches. Srinivas Sadu MD replied that the profit share is 7% and revenue from new launches is about 3%.
- [00:20:01] Dheeresh of White Oak Capital enquired about the reason for lower India business than the guided INR100 crore run rate. Srinivas Sadu MD answered that in India the import costs have not helped GLAND, resulting in margins being low. It’s also due to the dollar going up, adding to increased cost and importing cost.
- [00:29:06] Sameer Baisiwala with Morgan Stanley enquired about the guidance in 1Q of 18-20% growth in topline for rest 9 months but it being flat in 2Q23 and also outlook for 2H23 on sales and margins. Srinivas Sadu MD replied that GLAND doesn’t want to give guidance as the market is still volatile. On numbers, GLAND said insulin didn’t start at the beginning of the quarter and disruption in manufacturing as well as some delay in installations didn’t help in terms of capacities.
- [00:32:39] Ritesh Rathod of Nippon India asked about margin guidance, if the 31%, 32% margin excluding other income is intact. Srinivas Sadu MD said that excluding other income, margin for 2Q23 is 28.5%. GLAND expects it to be in that range on a QonQ basis.
- [00:41:15] Kartik Mehta from Klay Capital enquired about expense attributable to the CDMO business. Srinivas Sadu MD replied that at the EBITDA level it’s INR15 crores in 2Q23, without including the depreciation. Adding depreciation it will be another INR6-7 crores for the quarter.
- [00:44:36] Rakesh Naidu of Motilal Oswal asked about Moody’s downgrade. Srinivas Sadu MD answered that the issue is at the international level. GLAND’s promoter is Fosun Pharma which is a listed company. There is no balance sheet linkage or dependency with them today. So there’s no business impact.
- [00:49:08] Rakesh Naidu of Motilal Oswal enquired about the reason being slow on the INR300-350 crores of capex per annum. Srinivas Sadu MD said that it’s a timing issue and it’s all in track as these are approved projects. GLAND added that by year end it will end up with that number.
- [00:50:08] Saion Mukherjee with Nomura asked about profit share for 1H23 and FY23. Srinivas Sadu MD answered that for 1H23 and FY23 it’s 8%.
- [00:50:56] Saion Mukherjee with Nomura enquired about China, how many products GLAND has filed and future plans. Srinivas Sadu MD said that the company has filed 8 products and two are expected approval by end of FY23; one each in 3Q and 4Q and 6 next year. GLAND has a filing plan for 6 products again in 2024.