Orchid Pharma Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Orchid Pharma Ltd (ORCHPHARMA) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:05:20] Rupesh Jain from Intelsense Capital asked about capacity utilization in 1H23. Mridul Dhanuka Director replied that on the sterile plant the utilization roughly is 90%. And the oral plant it’s about 70%.

• [00:08:27] Rupesh Jain from Intelsense Capital enquired that in FY23, on current capacity, what’s the peak revenue the company can do. Mridul Dhanuka Director said that it depends on the product mix. The company added that whatever capacity it’s adding will help in continuing the growth momentum and by changing the product mix, ORCHPHARMA can manage that.

• [00:09:47] Rupesh Jain from Intelsense Capital asked about the proportion of business contribution from India. Sunil Gupta CFO answered that it was around 15%.

• [00:11:33] Rupesh Jain from Intelsense Capital enquired how the company is looking at India business geographically. Mridul Dhanuka Director said the company is only a B2B business currently as it sells only to the company that make injection or tablet final products. So geography doesn’t matter.

• [00:16:51] Himanshu Upadhyay of O3 Capital asked about the order book comparison YoverY. Mridul Dhanuka Director said that it would be in line with the growth of company’s expectation. However, exact numbers cannot be given.

• [00:21:57] Nikhil Upadhyay with SiMPL investment asked about the reason for significant deterioration in P&L in 2Q23. Mridul Dhanuka Director said it’s due to the combination of regulated market vs. emerging market, increase in RM prices and product mix.

• [00:26:23] Viraj Parekh of Carnelian Asset Management enquired about Europe relationships being restored but the demand being still subdued. Mridul Dhanuka Director said that it should be in the similar range. Around 40% comes from Europe. It’s grown in absolute value but in terms of percentage contribution it might have fallen by 1-2% vs. last year.

• [00:30:34] Viraj Parekh of Carnelian Asset Management asked about the timeline in terms of promoter stake that needs to be reduced. Mridul Dhanuka Director answered that the timeline is at March 31, 2023, as per SEBI guidelines.

• [00:30:41] Viraj Parekh of Carnelian Asset Management also asked about the regulated unregulated mix for 2Q23 or 1H23. Mridul Dhanuka Director said that it should be close to the overall number which is one to two third.

• [00:31:47] Rupesh Tatia with IntelSense Capital asked about the 2H product mix generally. Mridul Dhanuka Director said that H2 numbers are generally higher gross margin kind of half. But the current war is definitely affecting the Europe market.

• [00:34:30] Rupesh Tatia with IntelSense Capital enquired about royalty for China market, when it’s expected. Mridul Dhanuka Director clarified that whenever the sales start, the royalty would start. Also, there are no milestone payments.

• [00:40:54] Tarang Agrawal with Old Bridge asked about the company’s dependence on Penicillin G and 7-ACA currently in terms of the quantum. Mridul Dhanuka Director said that the company doesn’t use any Pen G directly.

• [00:41:07] Tarang Agrawal with Old Bridge also asked about the pricing for Penicillin G and 7-ACA and the drivers of it. Mridul Dhanuka Director answered that current Pen G price is somewhere around $20, which used to be $9 a few years before. 7-ACA current price continue to stay around $60-65 and have not be elevated much in the past and is not expected to change much going forward.

• [00:46:56] Viraj Parekh of Carnelian Asset Management asked about the capex incurred for capacity expansion in oral and sterile. Mridul Dhanuka Director said that on the sterile plant the capex is INR50 crore, and on oral, expansion would be around INR20-30 crore. For 7-ACA, closer to INR400-500 crore.