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Marksans Pharma Limited Q2 FY24 Earnings Conference Call Insights

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.
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