Torrent Pharmaceuticals Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from Torrent Pharmaceuticals Ltd (TORNTPHARM) Q1 FY23 Earnings Concall

Management Update:

• TORNTPHARM launched four products in 1Q23 and will be launching 4 products in 2Q23, of which three are expected to be day-one launches.

Q&A Highlights:

• Tushar Manudhane of Motilal Oswal asked about shortage of medicine in Germany market, if it’s a temporary shortage or if there is good opportunity. Sanjay Gupta ED replied that the company has not seen any impact of any shortages in Germany. On the contrary, the company saw Germany govt. review reference prices.

• Prakash Agarwal with Axis Capital asked about the INR38 crore settlement income, where it is included. Sudhir Menon CFO replied that it’s in other operating income. It’s related to patent settlement that’s done with one of the innovator which is non-recurring.

• Prakash Agarwal with Axis Capital asked about the current capacity utilization.  Sudhir Menon CFO answered that all the facilities put together, the company should be around 54% capacity utilization.

• Prakash Agarwal with Axis Capital enquired if there is any expectation of US FDA resolution by end of 2022. Sudhir Menon CFO clarified that with the internal understanding, the minimum expectation is that it should happen over the next 3-4 months.

• Prakash Agarwal with Axis Capital asked about the volume and price breakup of India growth. Sudhir Menon CFO replied that the company’s AIOCD growth reflection is 17% and breakup is volume at 5%, price at 9% and new products at 3%.

• Dheeresh Pathak from White Oak Capital asked about the share of top brands in Brazil.  Sudhir Menon CFO said it’s a specialty business. About 83% of the prescriptions are generated from specialties. The company added that 88% of company’s business is coming from brands above 20 million reais, which is 10.

• Damayanti Kerai from HSBC asked about the outlook for growth in the Brazil segment. Sudhir Menon CFO said that in the last 6 months, the company launched 5 products in Brazil, which is the result of large number of filing and approvals in Brazil. Currently, the company has 11 products that are under approval.

• Saion Mukherjee of Nomura enquired that in Brazil, how much market TORNTPHARM currently covers. Sudhir Menon CFO answered that the coverage is currently around 22-23% and the company is aiming to double it in the next 3 years.

• Saion Mukherjee of Nomura also asked about the size of the branded market; CNS, diabetes, cardio in Brazil and the company’s position in the 3 segments. Sudhir Menon CFO replied that the overall branded generic market is about $20 million and the covered market is going currently around 5% and TORNTPHARM’s growth in this area is about 13.7%.

• Kartik Mehta from Klay Capital asked about the India business, if there are lesser opportunities of larger size due to issues of valuation or product mix. Sudhir Menon CFO answered that inorganic remains the core focus for the company. TORNTPHARM also added that it’s not about size but the strategic fit.

• Nitin Agarwal from DAM Capital asked about the US plants operating at 54% capacity utilization, if there is any element of underrecovery.  Sudhir Menon CFO clarified that all the facilities in India put together the capacity utilization is 54% and not for only US facilities. There are no under absorbed overheads in the P&L.