Q2 FY23 Earnings Conference Call (November 09, 2022) Summary:

Expect about 15% revenue growth in the next three to five years.

Q: Very strong margin performance trend over 2019, 2020, and 2021. The same was depressed in 2022, and the running year looks even more depressed. What is the core margin trend of these businesses?
Rephrased Response: Expect meaningful improvement in the EBITDA margins in H2 over H1
Key factors:

• Consumer products business keeping this at EBITDA-neutral to grow top line faster
• During the course of the pandemic, sales more specifically at our overseas facilities were at a scale lower than what they should have been.
• Macroeconomic factors where inflation and a general increase in all the costs of inputs.

Q: Rival generic player to launch Sevoflurane by the end of this year?
Rephrased Response: People may get approvals, and they may enter, but it’s difficult for them to gain a share because it requires specific capabilities and a particular channel strategy.

Q: Why PPL’s business model choice is favorable?
Rephrased Response: Capabilities in both the west and the east.

• Customers will look east due to China Plus One strategy and pricing pressure, because of fiscal deficits and the money being spent in other areas, and the inflation reduction act and some of the other equivalents in other countries.
• Innovative clients intend to avoid supply chain disruptions for lower volume, less chronic, and small patient occasions or non-recurring treatments, an example would be a rare disease or an oncology treatment, that’s pre-approval. They would probably be looking more for US or North America-based suppliers like us.

Q: Is it possible to reach 25% OPM in 24, 25 given higher costs, especially since all our sites are overseas?
Rephrased Response: We should get there and in the next three years, you will see sequentially.

Q: Any plan to increase the share of manufacturing and services from India versus the current share?
Rephrased Response: we go where our customers want and we help out them and their patients better.

Q: Possible to cross FY’22 EBITDA or that seems remote at this for instance?
Rephrased Response: Not giving such guidance at the moment.

CDMO:

• Ongoing $157 million Brownfield Capex (customer-led, growth-oriented) at our major sites, | Expected to be completed over the next 18 to 24 months.
• The first, part is the generic for our customers – which includes both APIs and formulations. The second part is our generic API. Have our own DMF which we supply to multiple customers.
• CDMO Segment growth plans – a combination of ongoing capacity investments, coupled with client pipeline progressions. AND have nearly 30, 34, 35 Phase-III programs and about I think nearly 20, on the market recently we launched commercial programs.

Complex Hospital Generics:

• One of the few players in the world that has the capability to manufacture all four generations of inhalation anesthesia products.
• Vertically integrated with in-house manufacturing to make starting materials at our specialty fluorochemicals facility in Dahej
• Build a pipeline of injectable products (37 SKUs) – launched two products during the quarter including a prefilled syringe in Germany, and are expected to launch eight SKUs in various target markets in the second half.
• Yet to realize our full potential in the inhalation anesthetics segment. Have a limited number of competitors.
• Gaining more control over the supply chain through the transition of the CDMO for our acquired injectable pain products,
• Continuing to progress our pipeline of other pharmaceutical products that we sell to the same channel that we sell our inhalation products.

India Consumer Products business:

• India Consumer Healthcare business- spent about 15% of our revenues on media and trade promotion
• A good reach in the general trade with access to over 200,000 or two lakh outlets.
• Strengthening our presence and alternate channels of distribution including e-commerce modern trade and our own website, Wellify.in.
• E-commerce contributes to about 15% of total consumer business sales and has been growing well.
• Finding new consumers for existing products, but also launching new products and new formats across the board
• In three years’ time, on the pathway to the teens margin in this business