{"id":160572,"date":"2024-04-26T07:43:10","date_gmt":"2024-04-26T11:43:10","guid":{"rendered":"https:\/\/44.250.171.167\/?p=160572"},"modified":"2024-04-26T07:43:12","modified_gmt":"2024-04-26T11:43:12","slug":"laurus-labs-ltd-q4-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/laurus-labs-ltd-q4-fy24-earnings-conference-call-insights\/","title":{"rendered":"Laurus Labs Ltd Q4 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Laurus Labs Ltd (LAURUSLABS) Q4 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>R&amp;D Progress<\/strong>\n<ul>\n<li>Advanced several pipeline projects across offerings and augmented technology\/manufacturing platforms.<\/li>\n<li>Deepened cooperation with major CDMO clients on green\/sustainable tech like continuous flow chemistry, biocatalysis.<\/li>\n<li>Significant investments in development &amp; manufacturing capabilities for next growth wave.<\/li>\n<li>Innovative cell &amp; gene therapy (CGT) investments; successful NexCAR19 commercial launch in India.<\/li>\n<li>Second large GMP integrated R&amp;D facility under construction for CGT to service more patients affordably.<\/li>\n<li>Collaboration with IIT Kanpur on gene therapy; GLP\/GMP plant construction for viral vectors &amp; gene therapy products<\/li>\n<\/ul>\n<\/li>\n<li><strong>Financials<\/strong>\n<ul>\n<li>9% revenue growth to INR 5041 cr driven by formulations, CDMO, Onco APIs &amp; Bio division.<\/li>\n<li>EBITDA margins at 16% impacted by higher opex on growth projects &amp; higher R&amp;D spend.<\/li>\n<li>Q4 results improved sequentially led by positive contribution from all businesses.<\/li>\n<li>Gross margins at 52% for FY24; EBITDA at 16% impacted by opex on growth projects.<\/li>\n<li>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.<\/li>\n<li>Capex of ~INR 700 cr invested, mostly in CDMO and Bio divisions.<\/li>\n<li>Net debt at INR 2003 cr, targeted to reduce going ahead.<\/li>\n<\/ul>\n<\/li>\n<li><strong>ARV Franchise<\/strong>\n<ul>\n<li>ARV business stabilizing; market volumes largely stable aided by pricing trend over last few quarters.<\/li>\n<li>Impact on ARV franchise broadly stabilized and expected to stay in current range.<\/li>\n<li>Optimization programs to counter pricing impact; portfolio breadth &amp; new markets to solidify leadership.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Generics Business<\/strong>\n<ul>\n<li>8 ANDA filings; 99 approvals including tentative; 2 US launches in Q4 &amp; 2 more launches in preparation.<\/li>\n<li>Diverse pipeline across ARVs, CVS, diabetes, CNS &amp; GI.<\/li>\n<li>R&amp;D spend 4.8% of sales; first modified release generic product launch.<\/li>\n<li>Maintaining market share leadership in first-line HIV treatment APIs.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Oncology and Other APIs<\/strong>\n<ul>\n<li>Onco APIs reported highest ever Q4 sales; strong 27%+ growth in FY24.<\/li>\n<li>Capacity expansion &amp; new product validations at Vizag for Onco APIs.<\/li>\n<li>Other APIs (CVS, diabetes, asthma) recovered sequentially led by CMO deliveries.<\/li>\n<li>4 new DMF filings in FY24 taking total to 83.<\/li>\n<\/ul>\n<\/li>\n<li><strong>CDMO Business<\/strong>\n<ul>\n<li>Substantial increase in RFPs from big pharma\/biotechs; focus on early &amp; late stage projects.<\/li>\n<li>Over 70 active projects; commercial supplies for 10 products.<\/li>\n<li>Crop Science CDMO contract; capacities being added at new animal health facility.<\/li>\n<li>Leveraging scientific capabilities to diversify revenue streams.<\/li>\n<li>No need for equity capital raise for growth or protection.<\/li>\n<li>Meaningful revenue contribution from animal health and crop protection contracts expected.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Bio Division<\/strong>\n<ul>\n<li>28% growth led by CDMO services expansion &amp; growing customer base.<\/li>\n<li>Downstream capacity operationalized; 20% increase in R&amp;D capacity.<\/li>\n<li>Plans for larger fermentation capacities at Vizag &amp; Mysore for opportunities in GMP pharma manufacturing.<\/li>\n<\/ul>\n<\/li>\n<li><strong>FY25 Outlook<\/strong>\n<ul>\n<li>Entering year with solid foundation, focused on sustainable profitable growth.<\/li>\n<li>Prioritizing operating margin improvement, higher asset utilization, delivering on late-phase NCE opportunities.<\/li>\n<li>Expecting pricing pressure in some APIs offset by volume growth and cost improvement measures.<\/li>\n<li>Continuing investments to create long-term value for stakeholders.<\/li>\n<li>Tax rate expected around 25% going forward under new regime.<\/li>\n<li>Capex plan similar to current year focused on Bio and CDMO divisions.<\/li>\n<li>High receivables due to higher Q4 revenues, expected to normalize.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Integrated CDMO capabilities<\/strong>\n<ul>\n<li>Able to offer integrated services spanning biocatalysis, enzymes, chemistries across animal, crop &amp; human life sciences.<\/li>\n<li>Integrated approach with in-house enzyme manufacturing capability provides significant advantage over non-integrated players.<\/li>\n<li>Deeper engagement with innovators who can access multiple capabilities from single vendor.<\/li>\n<li>Complex projects involving continuous flow chemistry, biocatalysis becoming integral due to big pharma&#8217;s ESG commitments.<\/li>\n<\/ul>\n<\/li>\n<li><strong>China Diversification Opportunity<\/strong>\n<ul>\n<li>China-based CDMOs have significant US exposure; US pushing to reduce dependence on China under Biosecure Act.<\/li>\n<li>India CDMOs like Laurus well-positioned to capture shift with existing capabilities and capacities.<\/li>\n<li>More late-phase project RFPs indicate big pharma&#8217;s vendor diversification efforts have started.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Formulations Business<\/strong>\n<ul>\n<li>New product launches in US align with strategy to be global leader in 15 high-volume growing products.<\/li>\n<li>Aim for gradual market share gain post-approval without disrupting pricing.<\/li>\n<li>Adding packaging lines to cater to new multi-year, multi-product tertiary packaging contract.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Bio Division Strategy<\/strong>\n<ul>\n<li>Shifting strategy to produce pharma intermediates\/APIs at Vizag and non-pharma at Mysuru.<\/li>\n<li>Long-term plans for 10 food proteins with 1350 ton total capacity for contract manufacturing.<\/li>\n<li>Food protein capacities not very large for B2B model.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Gene Therapy Investments<\/strong>\n<ul>\n<li>Investing in R&amp;D and manufacturing for gene therapy at IIT Kanpur.<\/li>\n<li>Near-term impact on P&amp;L due to Capex and Opex, but strategic for long-term growth.<\/li>\n<\/ul>\n<\/li>\n<li><strong>API Capacity Utilization<\/strong>\n<ul>\n<li>API capacity increased by 50% recently, but other APIs segment saw 25% revenue decline YoY.<\/li>\n<li>New capacity meant for clinical trial supplies, not generic APIs.<\/li>\n<li>Other APIs a smaller portion of overall API sales, so growth not critical for entire segment.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Long-term Strategic Vision<\/strong>\n<ul>\n<li>Transition from pure-play API to integrated offerings across human, animal, crop sciences.<\/li>\n<li>Early investments in new areas to capitalize on innovator de-risking.<\/li>\n<li>Though growth not visible yet, exploring opportunities with partners for conviction areas.<\/li>\n<li>Expect CDMO contribution to grow from 20% currently to 1\/3 in next few years.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Laurus Labs Ltd (LAURUSLABS) Q4 FY24 Earnings Concall R&amp;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 &amp; manufacturing capabilities for next growth wave. Innovative cell &amp; gene therapy (CGT) investments; [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,5747],"tags":[3187,10169,9138],"class_list":["post-160572","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-healthcare-stocks","tag-biotechnology","tag-earnings","tag-pharma"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":157996,"url":"https:\/\/alphastreet.com\/india\/laurus-labs-limited-q3-fy24-earnings-conference-call-insights\/","url_meta":{"origin":160572,"position":0},"title":"Laurus Labs Limited Q3 FY24 Earnings Conference Call Insights","author":"Praveen","date":"January 25, 2024","format":false,"excerpt":"Key highlights from Laurus Labs Limited (LAURUSLABS) Q3 FY24 Earnings Concall Business Performance Gross margins remained resilient at over 52% for several quarters despite slower Q3 performance. 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