Jubilant Pharmova Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from Jubilant Pharmova Limited (JUBLPHARMA) Q3 FY22 Earnings Concall

Management Update:

• JUBLPHARMA stated that its performance during 3Q was affected by headwinds in the Pharmaceuticals segment, that was partly mitigated by robust performance in the Contract Research and Development Services, CRDS, segment.

• The company’s radiopharma business witnessed improved performance, while generic business was affected by lower volumes. API business was affected due to lower volumes resulting from an unplanned shutdown during 3Q. However, API business performance is expected to normalize in 4Q FY22.

• Company’s immediate strategy is to increase production further in U.S. facilities, increase sales from the Roorkee in non-U.S. market and simultaneously transfer some of the Roorkee products for the U.S. market to CMOs to get back in the market early.

Q&A Highlights:

• Rahul Veera from Abakkus asked if the company has restarted the exempted products back to US and the status of remaining capacity diverting to other markets. Pramod Yadav CEO said that the exempted product supplies have started to US market and regarding the diversion of capacity to other markets the efforts are ongoing and the company expects that in FY23, its sales to the non-US market compared to FY22 will be much higher.

• Rahul Veera from Abakkus also asked that on CDMO, if the company’s current run rate of INR370 crores is the normal base or if there would be some one-off products even in 4Q for CDMO. Pramod Yadav CEO stated that about INR80 crore is of the revenue by those Covid related deals, which are almost getting over. The company added that from 4Q22 and into FY23, it expects this to be operating at the normalized levels.

• Divesh with VF Investments enquired that in 3Q, the company EBITDA was about 15% for Pharma segment and once the operations normalize, what’s the sustainable EBITDA for the segment. Pramod Yadav CEO replied that in 4Q, the company can’t expect too much of a change, but will be marginal improvement over 3Q. In FY23, in the operating businesses, the improvement will be seen, like in radiopharma and allergy, while the Covid deals in the CMO business and the issues of generic will exist.

• Divesh with VF Investments also asked about what’s the expectation on CRDS in FY23 based on new capex. Giuliano Perfetti commented that the company expects a large number of contracts and renewal will be signed. Also, overall expect higher revenue than the previous year, due to the utilization of new asset in Noida.

• Rahul Veera from Abakkus asked which segment is hitting the company most.  Pramod Yadav CEO said that in 3Q, the generic segment had a hit for the company. And there was also an impact in the API, due to unplanned maintenance shutdown.

• Rahul Veera from Abakkus also asked that with INR188 crore of topline in generic, if the company will be making any money in the EBITDA level. Pramod Yadav CEO said that in generics, in 3Q, the company didn’t make any money.

• Bharat Celly from Equirus Securities asked how the company is planning to revamp the Sartans product and other company’s updates on discontinuation. Pramod Yadav CEO replied that in Sartans the company didn’t have high market share. And added that there are two other players that has higher market share. However, the other companies are taking their own call on withdrawal of product.

• Tushar Manudhane from Motilal Oswal asked that on Sartan, whatever changes had to be done at the manufacturing level, whether the U.S. FDA confirmation was required to restart or it was done on the company’s prerogative. Pramod Yadav CEO said that the impurity was coming from API. So there was the cleanup process and DMF was revised. Then based on the revised DMF, the company had to file the regulatory approval for the formulated product, for which approval was received and then the product was launched.

• Sarvesh Gupta from Maximal Capital asked that of the about INR500 crore drop in revenue in pharma, how much was a quarter-specific problem going away. Pramod Yadav CEO said that the impact on API will add back in Q4 and the impact of the Losartan will start getting added back in Q4 and then more in the next financial year. However, the impact of the COVID-related deals, that will not get added back in 4Q.