Key highlights from Marksans Pharma Limited (MARKSANS) Q2 FY24 Earnings Concall
- Financial Performance
- Revenues grew 17% year-on-year to INR531 crores in Q2 FY’24.
- EBITDA up 41.9% year-on-year to INR113.9 crores in Q2.
- PAT grew 39.5% to INR83.9 crores in Q2.
- Gross margin improved 174 bps to 52.4% in Q2.
- For H1 FY’24, Revenue grew 16.4% year-on-year to INR1,031.3 crores.
- EBITDA grew 41% year-on-year to INR215.9 crores in H1.
- PAT grew 28.3% to INR154.3 crores in H1.
- Operational Environment
- Saw improved demand and volume growth across key markets.
- Pricing pressure normalized for Rx products in US.
- Reduction in raw material and freight rates vs last year.
- Strategic Initiatives Progress
- Received key product approvals from USFDA and UK MHRA.
- USFDA inspection completed with EIR status for Time-Cap Labs.
- On track with capacity expansion of acquired Teva unit.
- Passed recent audit by German health authorities.
- Strategic initiatives aimed at maximizing shareholder value.
- Growth Outlook
- Optimistic about driving growth.
- Focus remains on strengthening product pipeline.
- Expects revenue contribution from Teva unit to increase quarter-on-quarter.
- Hoping to sustain current strong margins in H2.
- Soft raw material and freight rates supportive.
- Teva Facility Integration
- Facility now operational but integration still ongoing.
- Investing to upgrade capacity.
- Expect full revenue potential from April 2024 onwards.
- New Product Launches
- Received approvals for products like Esomeprazole.
- Launching in respective markets through distribution channels.
- Increases product portfolio and revenue generation.
- Demand Trends
- Growth drivers remain US and Europe markets.
- Expects this positive trend to continue in coming year.
- Capital Allocation
- Priority is expanding capacity at newly acquired Teva plant.
- Also exploring M&A opportunities in Europe.
- Plans to expand geographies though nothing concrete yet.
- Will consider buyback or dividend based on free cash flow.
- ANDA Filing Targets
- Targeting 4-5 ANDA filings per year in US.
- Targeting 15-20 product authorizations per year in Europe.
- Already working on 60-70 products for Europe filings.
- Working towards filing DMFs for backward integration.
- Optimistic to file by end of current financial year.
- Revenue Mix
- Largest segment is pain, followed by digestive and cough/cold.
- Around 30% from prescription-related segments.
- Some brands in Australia and Dubai region.
- Active in e-commerce segment like Amazon.
- Capex Outlook and R&D Spending
- INR80-100 crores capex planned for next 6-12 months. Currently at 1.6% of sales.
- Guidance of around 2% for FY25-26.
- Further capex possible later to expand capacity further.
- Plan to increase R&D spending going forward.
- To support more ANDA filings and new product development.
- Expects gradual increase rather than significant jump.
- Tailwinds from raw material costs moderating.
- Future growth to be driven by operating leverage and expanding product portfolio.
- OTC Prescription Mix
- Globally around 70% OTC, 30% prescription.
- US slightly higher OTC around 78%.
- UK has larger prescription share so averages to 70/30.
- Expect mix to remain relatively stable next 3-5 years.
- Branded Business Opportunities
- Currently small part of major markets like US, UK, Europe.
- May explore brands but generics are main focus.
- India, parts of Europe better markets for branding.
- Could expand via M&A which helps with costs, timelines.