Concall CC Parthivan
- Financial Performance: The company has shown strong top-line and bottom-line growth, with benchmark cash flows. The return on capital employed stands at 26.19%. Despite investing INR650 crores in capex, the company has increased its cash-and-cash equivalents by INR17 crores to INR770 crores over the past 10 years.
- Expansion Opportunities: The company has identified several growth opportunities. These include an additional business of INR80 crores to INR90 crores from the LatAm markets through their Softgel product line, revenue of INR30 crores to INR40 crores from brand marketing in Central America (LatAm), introduction of generic business in West Africa with potential additional revenue of INR10 crores, new initiatives in CIS and Southeast Asia for a business of INR20 crores to INR25 crores, and an additional income of INR90 crores to INR100 crores from Caplin Steriles.
- Strong Financial Position: The company’s liquid assets are in excess of INR1,450 crores, while payables amount to only INR160 crores. Accruals to cash balance have been INR300 crores each year in the last two years and are expected to continue in the future.
- Sustainability and Scalability: The company recognizes that employable talent comes at a cost and offers good salaries, performance bonuses, ESOP, and employee engagement. They have invested in developing 65 APIs (Active Pharmaceutical Ingredients) and have acquired API facilities to reduce costs and ensure consistent supply. They have also invested in imported machinery to increase productivity and have a strategic focus on expanding their business model in larger geographies.
- Future Outlook: The company aims to complete expansions in oncology, OSD (Oral Solid Dosage), and API projects, as well as product registrations in the next two to three years. They believe that by leveraging positive trends, analyzing markets, and catering to stakeholders’ needs, they will become one of the best companies in their size category.
Vivek Parthipan
- Regulated Market Business: The company is pleased with the progress of Caplin Steriles in the last financial year, achieving nearly 70% growth and breaking even with a small profit. Despite incurring expenses for ANDA filing, R&D, and regulatory costs, the company achieved break-even, which is commendable.
- Product Mix and Approvals: The product mix is currently around 70% product sales and 30% milestone and profit share. The company has received three approvals recently, with one product already launched and two more to be launched soon. They have eight products under FDA review and another 13 products under stability, including complex products like ophthalmics, bags, and vials. The company aims for an additional 50% revenue growth in the coming year.
- Order Book and Production Execution: The company has an order book of around INR230 crores to INR240 crores. The focus is on executing production with a high degree of compliance and completing the validation of the new high-speed and compliant line acquired from Bosch. This will reduce turnaround time, increase productivity, and free up capacity for R&D work and exhibit batches before filing the ANDAs.
- Front-end Progress: The company has made progress with its front end in the U.S., with more information expected in the next few months. Approvals have also been received in Canada and Australia, but the revenue potential from these markets is currently considered small.
- Market Share and Differentiated Business Model: Despite price erosion and market share challenges in the industry, the company has managed to increase its market share for most products without reducing prices. The focus is on maintaining a differentiated business model to ensure long-term sustainability and impact. Regular visits to the U.S. and the completion of Line 6 (pre-filled syringe) and Line 7 (lyophilized products) will enhance the product portfolio and provide visibility on label products and the U.S. market.
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