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Gufic Biosciences Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from Gufic Biosciences Limited (GUFICBIO) Q2 FY24 Earnings Concall

  • New Product Launches and Approvals
    • Launched new products like Dalbavancin and SeraSeal across divisions.
    • The company received regulatory approvals for products in markets like Sri Lanka, Chile, Malaysia, Australia and Brazil.
    • Expecting approvals for Immunocin-Alpha and dual-chamber bags with Meropenam in Q3.
    • Antifungal drug targets INR500-600 crores existing market.
    • HMG used in IVF is INR200-300 crores market and goal is to improve efficacy to gain share from recombinant FSH.
    • New drug delivery systems being developed for pain management.
  • R&D Achievements
    • Gufic’s R&D team developed an anti-fungal product that eliminates cold-chain handling, making it accessible to remote healthcare centers in India.
    • The company is working on recombinant alternatives for critical hormones to become self-reliant in supply.
    • Concluded trials using Thymosin Alpha 1 to treat endometriosis and recurring implantation failure with positive results.
  • Sales and Distribution Expansion
    • Gufic is doing business with nearly 1000 hospitals under its Sparsh division and has presence in 12 states.
    • The company has reached 60% of IVF centers in India through its Ferticare division.
    • Gufic set up a neurology team targeting critical neurology segment for its brand Zarbot.
  • Financial Performance
    • Reported total revenue of INR215.2 crores in Q2 FY 2324, up from INR175.7 crores in Q2 FY 2323.
    • PAT grew to INR23.2 crores in Q2 FY 2324 compared to INR20.2 crores in Q2 FY 2323.
    • For 1H, total revenue rose to INR410.8 crores and profit after tax increased to INR43.8 crores.
  • Sparsh Division Growth
    • Sparsh currently generates around INR3 crores per month in revenue with 6-7 lakhs per capita per month.
    • The company aims to reach INR10 lakhs per capita per month, which would justify adding more sales personnel.
    • Gufic targets reaching INR6-7 crores per month in revenue from Sparsh by end of this financial year.
  • Internationalization Strategy
    • Gufic steadily builds presence across regulated and semi-regulated markets.
    • Currently has 200 registered products in over 40 countries.
    • The company has over 150 products in pipeline for registration in international markets.
    • Takes targeted approach for product registration based on market attractiveness.
  • Arisia Clinics Strategy
    • Arisia clinics meant as training centers and knowledge hubs for doctors.
    • Goal is to sell products like Botulinum Toxin, fillers and other aesthetics.
    • Aims to expand doctor base beyond metros into tier 2 cities for wider reach.
    • Will open more clinics as knowledge centers, not as profit centers.
  • New Indore Facility
    • Existing Navsari facility expected to hit full capacity by mid-2024.
    • New facility needed to meet demand as injectables market expands in India.
    • Gestation period required for approvals so facility needs to be ready in advance.
    • Will help expand capacity and access new geographies with sophisticated products.
    • Expect gradual ramp up over 2-3 years from 25% to 70% utilization.
  • Growth Drivers and Comparison
    • Domestic market driving more growth compared to exports.
    • New products like Dydrogesterone and Polmacoxib contributing.
    • Sparsh acquisition added inorganic growth domestically.
    • Critical care and infertility segments saw expansion.
    • Domestic growth higher than exports currently.
    • Exports to regulated markets already at capacity.
    • Domestic growth is 6-6.5X while exports is 4-4.5X.
    • New facility needed to expand export capacity.
  • Debt Repayment Plans
    • 99 crores raised via preferential allotment to be used.
    • 50% to repay term loans, 50% to reduce cash credit limits.
    • Term loan repayment avoids prepayment charges.
    • Reduced debt to reflect in March balance sheet.
  • Working Capital Management
    • Conscious trade-off between margins and working capital.
    • Direct hospital billing avoids leakage despite long cycle.
    • Optimizing inventory levels considering production cycles.
    • Exploring ways to reduce contract manufacturing cycles.
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