Key highlights from Laurus Labs Limited (LAURUSLABS) Q2 FY23 Earnings Concall
Management Update:
- [00:10:45] LAURUSLABS said that on the R&D front, it’s continuing to allocate critical resources to its initiatives and invest in portfolio with product-specific approach based on complexity and scale of economies. The company added that it’s also moving up in the value chain by investing in complex generics.
Q&A Highlights:
- [00:20:15] Jeevan Patwa with Sahasrar Capital asked when can the company utilize the 10 billion tablet capacity. Satyanarayana Chava CEO answered that by end of FY23, the company expects about 75% utilization of 10 billion tablets. Also LAURUSLABS said it has built the capacity to increase the 10 billion tablets to 15 billion capacity if there is an opportunity in a notice period of 12 months.
- [00:22:45] Jeevan Patwa with Sahasrar Capital enquired that out of the 47 approved filings in developed markets with a size of $21 billion, how many have been already launched. Satyanarayana Chava CEO replied that the company has lunched 14 molecules as of now with an addressable market size of $2.5 billion.
- [00:26:42] Sudarshan Padmanabhan from JM PMS asked about the extent of pricing drop between 1Q23 and 2Q23. Satyanarayana Chava CEO answered that in the formulation the price drop was 20% and from 2Q22 vs. 2Q23 the price difference is close to 15%.
- [00:29:10] Sudarshan Padmanabhan from JM PMS queried about the sustainability of CDMO growth that’s been strong for the last three quarters. Satyanarayana Chava CEO answered that the company expects to have good partners, and good visibility in the segment. LAURUSLABS is very bullish on the division going forward.
- [00:32:53] Madhav Marda of Fidelity asked about pricing, if it will come back eventually. Satyanarayana Chava CEO replied that the company hopes pricing should bounce back to some extent positively. But LAURUSLABS believe it’s at the lowest pricing right now and don’t expect the prices to go down further.
- [00:34:31] Krish Mehta from Enam Holdings asked that on the FDF business, how much of its sales was from ARV in 1Q and 2Q23. V.V. Ravi Kumar CFO answered that ARV is INR55 crores in 2Q23 vs. INR275 crore in 1Q23. So out of INR150 crores in formulation, only INR50 crore came from ARV and rest from non-ARV.
- [00:35:28] Krish Mehta from Enam Holdings also enquired that as a percentage of total revenue what percentage was ARV vs. non-ARV in 2Q23. V.V. Ravi Kumar CFO said that 29% is total ARV, both APIs and formulations put together.
- [00:39:24] Nitin Agarwal from DAM Capital asked about the ARV run rate of INR3,000 crore per year, if the company stands by it. Satyanarayana Chava CEO said that it will be down, but not significantly. LAURUSLABS formulation sales is lower in Q1, Q2, especially very lower in the Q2, but expects to bounce back in Q3, Q4. So it will be between INR2,000-2,500 crores.
- [00:45:57] Kunal Dhamesha of Macquarie asked that if the company has seen any change in trend of new RFPs being floated given that biotech has been under pressure in US. Satyanarayana Chava CEO said that the company hasn’t seen any decline in the number of RFPs being floated by partners. The trend is positive rather than negative in the number of RFPs.
- [00:50:46] Bharat with Quest for Value asked about the reason for an increase in other expense by INR70 crores in 2Q23. V.V. Ravi Kumar CFO replied that it’s due to forex loss in 2Q23, and having some other expenses also like adding new blocks, capacity addition and head count increases.
- [00:58:39] Neha Agarwal from SageOne Invest asked about the growth visibility of non-ARV formulations. Satyanarayana Chava CEO answered that by end of FY24, most of growth in formulations will come from non-ARVs. However, in ARV there is a limit for growth in both API and formulations.