Gufic Biosciences Limited (NSE: GUFICBIO) Q2 2025 Earnings Call dated Nov. 18, 2024
Corporate Participants:
Ami Shah — Company Secretary & Compliance Officer
Avik Das — Head of Investor Relations
Pranav J. Choksi — Chief Executive Officer and Whole Time Director
Devkinandan Roonghta — Chief Financial Officer
Analysts:
Bhavya Sonawala — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q2 and FY ’25 Earnings Conference Call of Gufic’s Biosciences Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Ami Shah, Company Secretary. Thank you. And over to you, ma’am.
Ami Shah — Company Secretary & Compliance Officer
Thank you, Sejal. Good evening, everyone. I welcome you all to Gufic Biosciences Limited Earnings Conference Call for the second quarter of financial year ’24-’25.
We have with us today Mr. Pranav Choksi, CEO and Director; Mr. Devkinandan Roonghta, CFO; and Mr. Avik Das from Investor Relations team, to give the highlights of the business and financial performance of the company and to take questions, if any.
Before we begin, I would like to state that some of the statements that will be made in today’s discussion may be forward-looking in nature. It is subject to unfortunate risk and uncertainties, and the actual result could materially differ. The company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information or future events or otherwise.
We will now begin the call with the opening remarks from Mr. Avik, followed by a financial overview from Mr. Roonghta. Thereafter, we’ll have the forum open for the interactive Q&A sessions.
Over to you, Avik. Thank you.
Avik Das — Head of Investor Relations
Thank you, Ami. And welcome, everyone, to our quarterly conference call.
I will quickly update all of you all on our strategic business units, and I will begin with the Indore facility. The commissioning of the Indore facility marks a transformative milestone for us. The immediate focus for this facility is a carefully calibrated strategy where we aim to ramp up the production in a phased manner. So in this approach, we try and balance operational readiness with our long-term objectives and ensuring efficiency, regulatory alignment and most importantly, quick market responsiveness.
In the short term, the strategy centers on transferring select high-demand products from Navsari facility to Indore. By moving these products, we aim to optimize production capacity, while maintaining seamless supply chain operations. The process will involve rigorous validation protocols to ensure that the high standards of quality and consistency that we are known for are preserved. This targeted transition will allow Navsari facility to focus on backlog export orders, while leveraging Indore’s capacity to scale production progressively.
Simultaneously, we will [Technical Issues].
Operator
Mr. Avik, we are not able to hear you. Mr. Avik?
Pranav J. Choksi — Chief Executive Officer and Whole Time Director
I think since he might be in Indore on route, there might be an issue. So, what we can do, we can go to Roonghta sir, and then let Avik join back once he gets connected again.
Operator
Sure, sir.
Devkinandan Roonghta — Chief Financial Officer
I will just highlight the financial result for Q2 of ’24-’25 versus Q2 of ’23-’24.
The total revenue for the current quarter of Q2 is INR204.2 crores. Last year Q2 it was INR214.9 crores. The EBITDA for current quarter of Q2 is INR38.7 crores. Last year it was INR39.7 crores. The EBITDA margin for Q2 of current year is 18.9%. Previous quarter Q2 was 18.47%. Profit before tax for Q2 of this quarter is INR29.3 crores. Previous year Q2 was INR30.9 crores. The PAT margin for Q2 of current financial year is [ 14.30% ]. Last year Q2 it was 14.38%. Profit after tax for current Q2 is INR21.8 crores. Previously it was INR23.2 crores. PAT margin for current Q2 is 10.68%. Last year it was 10.80%.
Now, I will highlight the six monthly result of ’24-’25 versus ’23-’24. The total revenue for the current half yearly is INR407 crores. Previous half yearly, it INR409.9 crores. The EBITDA for current half year is INR79.8 crores [Phonetic]. Last year it was INR76.1 crores. The EBITDA margin for current half year is 18.62%. Last year it was 18.57%. The profit before tax for current Q2 — current half year is INR57.4 crore. Last year it was INR59 crores. PAT margin — profit before tax margin for current half year is 14.10%. Last year it was 14.39%. Profit after tax for current half year is for INR42.6 crores. Last year it was INR43.8 crores. The PAT margin for current is 10.44%. Last year it was 10.69%.
Thank you.
Operator
So, should we begin the question-and-answer session?
Ami Shah — Company Secretary & Compliance Officer
Avik has joined. He has rejoined. He had some network issues. Avik, can you continue with the business details?
Avik Das — Head of Investor Relations
I’ll do that. So, I’ll restart by giving you all an update on the Indore facility. What I was touching upon is our short-term strategy and the long-term strategy. So, I’ll first begin — I hope I’m audible now. Can someone confirm that?
Operator
Yes, sir. You’re audible.
Avik Das — Head of Investor Relations
Thank you so much.
So, our short term strategy for the Indore facility will be centered around transferring some of our high-demand products from Navsari. By moving these products, we aim to optimize the production capacity while maintaining seamless supply chain for these products. The process will involve rigorous validation protocols to ensure that we are able to sustain and maintain our highest standards, which we are very well known for. Now, this targeted transition will allow Navsari facility to focus on backlog export orders by leveraging Indore’s capacity to scale production progressively.
Simultaneously, we will initiate audits of the Indore facility by our domestic contract manufacturing partners. These audits are intended to validate that the Indore plant adheres to the stringent quality standards required for manufacturing their products for the domestic market. Over the next two months, three months, these audits will be undertaken followed by a phased initiation of product — production for these partners. This collaborative approach will not only position the Indore facility as a trusted manufacturing hub for complex injectables for our partners, but also facilitate a gradual scale-up of the operations.
Now as you all know, a critical pillar of our long-term strategy is leveraging the Indore facility to gain a foothold in the regulated markets. The facility’s advanced infrastructure positions us as a very competitive player, capable of meeting the stringent requirements of most of the regulatory bodies. We’ve shortlisted high-potential molecules that align with the market opportunities in these regulated markets, and we are in the process of finalizing collaborations with partners to facilitate registrations. The production of exhibit batches for these molecules will commence shortly, laying the groundwork for regulatory dossiers submissions and future approvals. This phased approach to scaling production offers every [Technical Issues] by allowing the facility to gradually ramp up.
[Technical Issues]
Operator
Ma’am, we lost Avik sir again.
Ami Shah — Company Secretary & Compliance Officer
Okay. So, I think we should — we’ll start with the — or we will wait for a minute and then post which…
Operator
Avik sir is back, ma’am. Sir, please continue.
Avik Das — Head of Investor Relations
Right. So, I was saying that the phased approach to scaling production will offer several advantages. It minimizes operational risks by allowing the facility to gradually ramp up capacity while addressing potential challenges during the transition. Additionally, focusing on exhibit batch production and regulatory preparation ensures that the Indore facility is well positioned to meet the expectation of international markets, which will be the way ahead for our long-term growth.
The gradual scaling also optimizes resource allocation, ensuring that our investment in manpower, infrastructure and materials are used effectively in the short term. The Indore facility’s strategic role extends beyond its immediate operational goal. It represents a key component of our vision to establish ourselves as a leading player in both domestic and international markets. By balancing the need to ramp-up production immediately with our long-term objectives of regulatory alignment and market expansion, we are hoping to set a robust foundation for sustained growth and meaningful market impact, not only domestically, but also in select international markets.
Now, I’ll quickly update you all on all our business divisions. To begin with, in the Critical Care division, this remains the backbone of our operations, supplying life-saving injectable solutions to hospitals across India. With a strong focus on addressing critical challenges in anti-fungal and anti-bacterial therapy, this division has further made it a priority to combat sepsis, which is one of the leading causes of hospital mortality. We’ve done a lot of — we’ve done a lot of product development. We’ve relaunched one of our products, which is especially targeting towards sepsis and we’ve definitely taken it up as a cause that we are rallying around to control the rise of sepsis in hospitals.
For this, we’ve engaged more than 3,000 healthcare professionals through more than 100 scientific activities nationwide, raising awareness about sepsis management and moreover, the judicious use of antimicrobials. These initiatives will aim to equip clinicians with tools and knowledge for early detection and effective intervention. This reinforces our commitment to improving patient outcomes and working with hospitals more as a partner than only a supplier.
On the product front, we are expanding our pipeline with innovative molecules in advanced anti-bacterial and anti-fungal classes. These products are uniquely positioned to address therapeutic gaps while offering complex manufacturing processes at very competitive prices. By aligning scientific education with cutting-edge product development, Criti Care is not just providing solution, we believe we are shaping the future of cost-effective hospital-based care. We’ve also given a brief of the kind of pipeline we have in this division in our Investor Rresentation.
Now, coming to Ferticare division. Ferticare is addressing the rapidly growing need for assistive reproductive technologies in India, where infertility rates are rising at an unprecedented pace. We are committed to being a comprehensive solution provider in this domain, for which we are expanding our pipeline of products towards recombinant hormonal products such as rFSH and rHCG. Additionally, we are also introducing very differentiated products like niacinamide-based vaginal gels and coenzyme Q10 supplements to support the reproductive health holistically.
The division recently also launched Fertimax, a specialized task force focused on deepening engagement with gynecologists and IVF centers. It offers a very niche and specialized hormonal product offering. These initiatives have already begun driving market penetration and further strengthening our relationships with leading IVF chains, IVF centers and boutique practitioners across the nation.
Coming to Aesthaderm. Aesthaderm is at the forefront of creating a category for aesthetic dermatology in India. Stunnox, our flagship botulinum toxin brand, it aims to democratize the access to aesthetic treatments and expand the user base among dermatologists and cosmetologists. Stunnox has become the second most used botulinum toxin in India, with acceptance driven by its quality and performance. And over the past six months, we’ve trained nearly 300 doctors through specialized workshops and onboarded several trainers to conduct knowledge dissemination nationwide. These efforts, combined with clinical studies on new indication such as hyperhidrosis are building confidence among practitioners. Additionally, we are expanding our cosmetic portfolio to include solutions for concerns like melasma, wrinkles and dry skin. This comprehensive approach should position us as an early mover in the fast-growing aesthetic dermatology space, which is poised for growth as awareness increases, incomes rise and the population ages gradually.
On the Neurocare division, the focus over here is on the therapeutic application of botulinum toxin, which is addressing an unmet need in the conditions like spasticity and chronic migraines to name a few. Zarbot is India’s first botulinum toxin type A of international pedigree. It has gained acceptance with more than 100 neurologists within a year of its launch. Here, we are doing targeted scientific activities and interacting with user groups. We’re creating a robust ecosystem of knowledge-sharing and best practices. This should position Gufic as a pioneer in therapeutic botulinum toxin applications, and we are also offering hope to patients with very complex neurological conditions.
Now, coming to Sparsh division. Sparsh division is designed to serve a broader spectrum within the injectable market, [Technical Issues] a wide basket of essential and specialized injectables for smaller and mid-sized hospitals across India. Now, unlike Gufic Criti Care division, which targets high-intensity critical care needs, Sparsh provides cost-effective solutions to cater to the day-to-day therapeutic requirements for smaller hospitals and nursing homes. Now, these include essential treatments for gastroenterology, nephrology, radiology and even critical imaging support. We have some niche products in our basket over here such as S-Panoriya, which is a unique alternative to the widely used Pantoprazole.
We are also soon to tap [Technical Issues].
Operator
Ma’am, we again — yes, sir. Please continue.
Avik Das — Head of Investor Relations
Yeah. So, Sparsh’s direct-to-hospital approach enables deeper engagement with hospitals. It provides us visibility into their purchasing trends and their therapeutic requirements. Now, this strategic advantage allows us to identify emerging needs quickly and it also allows us to introduce relevant products, which effectively expands our portfolio and which deepens our relationship with our hospital partners.
Now, one of the short-term challenges of this approach is an increase in the debtor days due to the direct credit to hospitals. However, the long-term benefits significantly outweigh the downsides in our opinion. By fostering direct relationship with hospitals, especially in India’s growing healthcare infrastructure space, Sparsh will position itself as a reliable partner in their journey. This model not only builds loyalty and trust, but also offers the ability to scale the product portfolio strategically that should ensure comprehensive coverage of hospital needs as they grow. Additionally, Sparsh’s wide therapeutic coverage from dual chamber bags to niche products like contrast media soon should position it to capture a significant share of the hospital budgets. And this approach aligns with our vision of becoming an indispensable partner for hospitals offering both value and convenience.
Now on, Spark, Stellar and Healthcare division, these divisions continue to drive growth through innovative product launches and strategic initiatives in their domains. Stellar’s recent introduction of as VonPHa, which is a novel PPI, has gained significant traction, reflecting our ability to capture market opportunities in niche segments. Spark’s patented Stretchmark Meter is revolutionizing how gynecologists approach stretch mark prevention, boosting our brand, StretchNil. And Healthcare division with its Sallaki range, has achieved top market rankings, cementing its leadership in orthopedic and pain management.
Now, on the international business front, our international business division is seeing growth driven by our strategy of investing in regulated market registrations. We very recently received approvals in Thailand, Sri Lanka, Lithuania, and we also won a tender with U.K. NHS. By owning registrations, we enhance market visibility, ensure supply chain stability and gain better control over tender participation. This strategy positions us as a reliable global player, with plans to scale production at the Indore facility to support further international expansions.
With this, I’ll open the call up for questions. Yeah. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Bhavya from Samaasa Capital. Please go ahead.
Bhavya Sonawala
Yeah. Hi. Thank you for the opportunity. Hope I’m audible.
Operator
Yes, sir. You are.
Bhavya Sonawala
Yeah. So just had two questions. My first question is I wanted to understand, has there been any loss of revenue because of the transfer from Navsari to Indore?
Pranav J. Choksi
Hi, Bhavya. Pranav here. So, there has been no loss of revenue as such during the transfer process. There has been a loss of revenue in the quarter because Indore started in October, October 3 to be precise. So, that’s why the capacity which was not available at Navsari could not be met by Indore in the last quarter because the production started in the first week of October. So, that is the thing. Also, during the transfer also there’ll be three batch validation. So the batch size has been kept in such a mind that the orders do not get lost. Whatever validation samples have to be removed, those will be kept on the site. So, there’ll be no loss in the transition process.
Bhavya Sonawala
Okay. Understood. And my second question. I think in the presentation you had mentioned that the Board took a decision to do further USFDA documentation. So, just want to understand what percentage of this procedure have you already completed in terms of documentation, if that’s possible to answer?
Pranav J. Choksi
Yeah. So, what we mean by that statement that if you see a year ago in October, the facility was ready for commissioning subject to limited tests. So at that time when we had some external audits done by, I would say, experts from the pharma industry and ex-regulatory chiefs or ex-regulatory inspectors, they gave us a lot of suggestions about improvement and certain process parameters and certain utility parameters. I’ll just give us few examples. Electricity, steam and what do you call, electricity, steam primarily and then water. These are the main three factors, which come in injection factory. And normally, based on the background what we have and details what we have, we had started the designing in 2021. EU Annex 1 had come up and now also U.S. guidelines will be changing in the next two years as per what the draft copies is available online for everyone to see.
There are certain modifications, which we needed to be done to ensure that we comply this not only now, but in the years to come, so assuming, there will be no further guideline change in next two years to three years. So to incorporate that, if we started the production, it would be a little bit difficult for us to revalidate the entire process using the new guidelines. Hence, we took it on ourselves to spend those six months, eight months, finish those modifications and re-qualifications. And answering your question, as of now, all those things have been done and hence, on October 3, 2024, we have started the production from the Indore facility.
Bhavya Sonawala
Okay. Understood. Just a clarification. I think Avik mentioned that whichever high-demand products that we had and that’s been shifted to Indore, so did we need any approval for this? And going ahead, what is the timeline and procedure for a EU GMP and all the other just to start off a CDMO and also international?
Pranav J. Choksi
Yeah. So, I’ll answer your first question. So the FDA license of most of the products as tech transfer had already has been taken in the last, I would say, eight months to nine months as the sidewise [Phonetic] of the qualification studies were going on because of the R&D data and the tech transfer data, which we have from Indore, plus we had taken some batches like I said, that’s the reason we got delayed in terms of commercial production. So, all the molecules license are in place.
The EU — I mean, let’s say the first thing for a CMO or a CDMO option, we have audits which started all the way in May, June, July and audits are ongoing. Even today as we speak as Avik there in Indore, it’s there where we have another big Indian MNC also getting the audit done, plus we have an visitor from Saudi Arabia also. So, they — all its eye in place right now going on. So, we assume that the Gufic’s own manufacturing will happen October onwards and we foresee that the CMO, CDMO business will be initiated in December, I mean, November and December to start off with and then go on and so on, I mean, go on.
We are hoping that the EU audit will be triggered. I mean, we already have triggered the EU audit with two molecules and we are hoping that they would come and visit us by around June 2024 to September 2024 based on their dates and we should have a EU, I would say, approval hopefully before the end of next year that is 2025. Coming to the U.S. Like I said, our focus is purely CMO, CDMO based. So, that would be depending on our clients in terms of their investments and their timelines for validation batches. So even if they take the validation batches and then from the next month till March, when they will trigger it will be depending on their regulatory departments thing. But we are looking at a calendar year of 2026 where we see some action on the USFDA front.
Bhavya Sonawala
Okay. Understood. So is it fair to assume there wouldn’t be much of a revenue contribution from Indore at least for this year?
Pranav J. Choksi
Yeah. Bare minimum would be because, like I say, validation batches would still contribute something, yes. But the real potential of the Indore facility would be seen in the next two years to three years. Yes.
Bhavya Sonawala
Okay. Thank you so much, Pranav sir. Thank you.
Pranav J. Choksi
Yeah.
Bhavya Sonawala
Yes. Thank you.
Operator
Thank you. The next question is from the line of Midhun James [Phonetic] from Cupertino Investments [Phonetic]. Please go ahead.
Unidentified Participant
Hi. Thanks for the opportunity. Am I audible?
Operator
Yes, sir.
Unidentified Participant
Yeah. So, I think the big elephant in the room is Indore. So, I think even in the last con call also, we had given a projection of Indore starting operations and contributing to the revenue from the current quarter, which have not seen — we have not seen that happen. So my first question is, when do you see Indore contributing to some revenue? Is it from the current quarter, the running quarter, or from the next quarter? When can we see some revenues from Indore happening? Because without that, the overall revenues is like stagnant for almost four, five quarters now.
Pranav J. Choksi
Yeah. So answering your first question, the revenue would be captured from Indore from this quarter itself. And already, like I said, from October 3rd, the manufacturing has started. So the revenues of Indore would be seen in the books financially from 2024 December quarter. Answering your second question, yes, if you see last year, there were multiple factors. Apart from the capacity constraints which we have, there were also — around 20% of our revenue is contributed by around six to eight molecules. Now, the six to eight molecules, what we had in the last three years, four years, they actually got eroded by almost 35% to 50% in terms of API pricing in the last one year from China. And that’s why what you see right now also there has been a unit increase in terms of these 20% of our revenue.
But yes, you are absolutely right. We are not reflecting in the value again because of the reason mentioned above, because the erosion of the API and that goes through. At the same time, yes, the capacity constraint would be the reason — I mean, a primary reason why the flat revenue is there. However, with Indore coming in is not — actually, I would say, Indore is not only the elephant in the room. There has to be other things like the botulinum toxin and the Penem and other things also start kicking in. We were a little bit more guarded in terms of our revenues in this first, second quarter. Reason being also the debtor cycle, we did not want to push out.
So, one of the reasons that we were a little bit more, I would say, conservative and we will continue to do so going forward without affecting the revenue or the profitability part of it is something in certain institutions in India. We have taken a strategic role because if you also see other companies in our same sector, the debtors window has almost blown up like ours by almost 35 days, 45 days extra than what was the normal norm. So, that is something which we are taking up and to ensure that not go through that level of credit, I would say, credit spread out at the cost of revenue. So, that’s the reason it’s there. But yes, Indore definitely plays a big role apart from other factors.
Unidentified Participant
Okay. Got it. My next question is regarding the botulinum toxin product. So recently, I think there was a filing wherein which there seems to be the — there is some arrangement between Dr. Balram Singh’s entity. I think he has moved out from the Board. So, can you give some more clarity on what has happened on that regard and how does it impact you as a company?
Pranav J. Choksi
Sure. So, Dr. Balram Singh was a Board of Director of Gufic Biosciences and we — you must have also read in the news that we formed a separate subsidiary where Gufic and Prime Bio that is Dr. Balram Singh’s entity came together to form a subsidiary of Gufic Biosciences. And in order to make the Board a little bit more clean in terms of governance, since he was also the Board of Director of Gufic Prime Bio, which is the subsidiary of Gufic Biosciences, we had asked him to resign from the Board of Biosciences and attend the — and become like a little bit more aggressive Board of Gufic Prime Bio.
So, relationship and the entire arrangement doesn’t change. It’s just to keep the — because apart from botulinum toxin, there are some other projects which we are working on. And for that matter, we are looking at some movements happening in that sector in the next three months to six months, which we will announce in due time. So for us to make a separate clean entity for the projects, which we are doing overall with Dr. Balram Singh made sense and hence, he is still full-fledged with us. But he’s just right now on the Board of Gufic Prime Bio, which is a subsidiary of Gufic Biosciences. So, that is just the change that we have done.
Unidentified Participant
Okay. So, meaning, there is no difference in — basically, the working arrangement is just a — okay. I understood the point. And last — next question is regarding the Selvax. Can you give some color on where are we on Selvax? What is the research going on in that front, please?
Pranav J. Choksi
Right. So, I think, Selvax, firstly, just for people who might not be aware was an investment, which we had done on in the oncology space, I think to be more precise, immuno-oncology space, which is a very interesting mechanism in terms of treating certain solid tumors where combination of anti-CD40 antibodies and interleukins come together and the results in, I would say, canines, that is dogs and also another animal species has been very, I would say, promising. Currently if you see the update as Avik has also — I mean, in our presentation, in the company presentation, we have given them, there have been some additional studies, which have been done, which further, I would say, clarify that the product has some significant role. However, this is on a very small scale where the dose determination studies are still pending. So, we are clear that Selvax is sort of, I would say, a five-year, six-year window. However, it provides a very unmet need in terms of treating certain solid tumors.
So just to — if I summarize the entire development as on today, in the last two quarters, there have been some additional studies done on mouse, which have shown positive results. Now the main question was the scalability. So the initiation of the scalability of these studies have been done, where like, I think if you read the — I’m just reading out a line from that expert that out of 24 animals, around 92% — the cure rate of 92% was achieved, which is something unheard of in oncology.
However, like I said, I would not like to put our hopes very high. I’m saying, no, I have my hopes very high, but just let the data come out on a little bit single-based large study, then I think I can comment on that further. And we also have now — I mean, the company has — Selvax has started working on the cell line in terms of the scalability, in terms of the production on a big scale. So the expression was done on a small scale and a lab scale. Now the expression of the same vector of the anti-CD40 antibodies will be done on a bigger scale to see whether this technology can be actually scaled and show relevance over — like making it in commercial production scale. This is where the current update is of Selvax.
Unidentified Participant
Okay. Thank you. That’s all from my side. Thanks.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to Ms. Ami Shah, Company Secretary. Thank you. And over to you, ma’am.
Ami Shah
Thank you. Thank you, everyone. We apologize for the Internet connectivity issue. I appreciate all of you joining us today. And if you have any questions which has remained unanswered, you can get back to our Investor Relations team and we’ll be happy to take those separately.
With that, we conclude today’s call. Thank you.
Operator
[Operator Closing Remarks]