Categories Concall Highlights, Earnings, Health Care

Laurus Labs Ltd Q4 FY24 Earnings Conference Call Insights

Key highlights from Laurus Labs Ltd (LAURUSLABS) Q4 FY24 Earnings Concall

  • R&D Progress
    • Advanced several pipeline projects across offerings and augmented technology/manufacturing platforms.
    • Deepened cooperation with major CDMO clients on green/sustainable tech like continuous flow chemistry, biocatalysis.
    • Significant investments in development & manufacturing capabilities for next growth wave.
    • Innovative cell & gene therapy (CGT) investments; successful NexCAR19 commercial launch in India.
    • Second large GMP integrated R&D facility under construction for CGT to service more patients affordably.
    • Collaboration with IIT Kanpur on gene therapy; GLP/GMP plant construction for viral vectors & gene therapy products
  • Financials
    • 9% revenue growth to INR 5041 cr driven by formulations, CDMO, Onco APIs & Bio division.
    • EBITDA margins at 16% impacted by higher opex on growth projects & higher R&D spend.
    • Q4 results improved sequentially led by positive contribution from all businesses.
    • Gross margins at 52% for FY24; EBITDA at 16% impacted by opex on growth projects.
    • Q4 gross margins down 450 bps QoQ despite favorable product mix shift due to lower share of high-margin Bio/Synthesis, reduction in inventory overheads absorbed.
    • Capex of ~INR 700 cr invested, mostly in CDMO and Bio divisions.
    • Net debt at INR 2003 cr, targeted to reduce going ahead.
  • ARV Franchise
    • ARV business stabilizing; market volumes largely stable aided by pricing trend over last few quarters.
    • Impact on ARV franchise broadly stabilized and expected to stay in current range.
    • Optimization programs to counter pricing impact; portfolio breadth & new markets to solidify leadership.
  • Generics Business
    • 8 ANDA filings; 99 approvals including tentative; 2 US launches in Q4 & 2 more launches in preparation.
    • Diverse pipeline across ARVs, CVS, diabetes, CNS & GI.
    • R&D spend 4.8% of sales; first modified release generic product launch.
    • Maintaining market share leadership in first-line HIV treatment APIs.
  • Oncology and Other APIs
    • Onco APIs reported highest ever Q4 sales; strong 27%+ growth in FY24.
    • Capacity expansion & new product validations at Vizag for Onco APIs.
    • Other APIs (CVS, diabetes, asthma) recovered sequentially led by CMO deliveries.
    • 4 new DMF filings in FY24 taking total to 83.
  • CDMO Business
    • Substantial increase in RFPs from big pharma/biotechs; focus on early & late stage projects.
    • Over 70 active projects; commercial supplies for 10 products.
    • Crop Science CDMO contract; capacities being added at new animal health facility.
    • Leveraging scientific capabilities to diversify revenue streams.
    • No need for equity capital raise for growth or protection.
    • Meaningful revenue contribution from animal health and crop protection contracts expected.
  • Bio Division
    • 28% growth led by CDMO services expansion & growing customer base.
    • Downstream capacity operationalized; 20% increase in R&D capacity.
    • Plans for larger fermentation capacities at Vizag & Mysore for opportunities in GMP pharma manufacturing.
  • FY25 Outlook
    • Entering year with solid foundation, focused on sustainable profitable growth.
    • Prioritizing operating margin improvement, higher asset utilization, delivering on late-phase NCE opportunities.
    • Expecting pricing pressure in some APIs offset by volume growth and cost improvement measures.
    • Continuing investments to create long-term value for stakeholders.
    • Tax rate expected around 25% going forward under new regime.
    • Capex plan similar to current year focused on Bio and CDMO divisions.
    • High receivables due to higher Q4 revenues, expected to normalize.
  • Integrated CDMO capabilities
    • Able to offer integrated services spanning biocatalysis, enzymes, chemistries across animal, crop & human life sciences.
    • Integrated approach with in-house enzyme manufacturing capability provides significant advantage over non-integrated players.
    • Deeper engagement with innovators who can access multiple capabilities from single vendor.
    • Complex projects involving continuous flow chemistry, biocatalysis becoming integral due to big pharma’s ESG commitments.
  • China Diversification Opportunity
    • China-based CDMOs have significant US exposure; US pushing to reduce dependence on China under Biosecure Act.
    • India CDMOs like Laurus well-positioned to capture shift with existing capabilities and capacities.
    • More late-phase project RFPs indicate big pharma’s vendor diversification efforts have started.
  • Formulations Business
    • New product launches in US align with strategy to be global leader in 15 high-volume growing products.
    • Aim for gradual market share gain post-approval without disrupting pricing.
    • Adding packaging lines to cater to new multi-year, multi-product tertiary packaging contract.
  • Bio Division Strategy
    • Shifting strategy to produce pharma intermediates/APIs at Vizag and non-pharma at Mysuru.
    • Long-term plans for 10 food proteins with 1350 ton total capacity for contract manufacturing.
    • Food protein capacities not very large for B2B model.
  • Gene Therapy Investments
    • Investing in R&D and manufacturing for gene therapy at IIT Kanpur.
    • Near-term impact on P&L due to Capex and Opex, but strategic for long-term growth.
  • API Capacity Utilization
    • API capacity increased by 50% recently, but other APIs segment saw 25% revenue decline YoY.
    • New capacity meant for clinical trial supplies, not generic APIs.
    • Other APIs a smaller portion of overall API sales, so growth not critical for entire segment.
  • Long-term Strategic Vision
    • Transition from pure-play API to integrated offerings across human, animal, crop sciences.
    • Early investments in new areas to capitalize on innovator de-risking.
    • Though growth not visible yet, exploring opportunities with partners for conviction areas.
    • Expect CDMO contribution to grow from 20% currently to 1/3 in next few years.

Most Popular

Cochin Shipyard Ltd (COCHINSHIP) Q4 FY22 Earnings Concall Transcript

Cochin Shipyard Limited (NSE:COCHINSHIP) Q4 FY22 Earnings Concall dated May. 26, 2022 Corporate Participants: Madhu S Nair -- Chairman & Managing Director Jose V J -- Director Finance Analysts: Vastupal Shah

All you need to know about Antony Waste Handling Cell in one article

Can you guess the name of the company that was listed during the IPO frenzy in 2020 and is the second largest player in the Indian municipal waste management industry?

Demystifying the Leading Non-Ferrous Recycling Company of India

“Hey, how is the market doing today?” “Oh!, its falling tremendously since morning” I am sure news like these might be a common topic of discussion for you nowadays. Interestingly,