RPG Lifesciences—Q2FY24—Earning call Highlights—19th Oct23 :
–For the 5th consecutive year , we have an upward trajectory of growth
Revenue : 154Cr –Growth of 14% YnY & 4.1% QnQ
EBITDA : 39.1Cr–growth of 26% YnY
EBITDA Margin : 25.5% vs 23% inQ2FY23
PAT : 25.9Cr –Growth of 30% YnY
PAT Margin : 16.8% —vs 14.8% in Q2FY23
–In Domestic Formulations we had 16% growth vs mkt growth of 8%
–Biz segment break-up :Domestic Formulations contributed 66% to total sales of H1 FY24
–International Formulations contributed 19% to total sales of H1 FY2–with 15% growth in H1FY24 Vs H1FY23 i.e 56.3Cr
–API contributed 15% to total sales of H1 FY24–with 7% growth in H1FY24 vs H1FY23 i.e 46.1Cr
–Modernization and Capacity expansion plan at Ankleshwar Plant will be completed by end of FY24 –so that we can make it ready for International Regulatory inspections
–Legacy Product Naprosyn becomes the first 50 Cr+ Brand of the Company
–Strengthening Presence in Rheumatology , Oncology & Augmented Product Basket in Cardiology , Diabetology , Urology
–New product contribution in FY23 is 28% which was 6% in FY19
–In Domestic Formulations : we had a volume growth of 8% & price growth of 5%+ and rest is new product contribution
–Gross Margin improvement from 66% run rate to 71% ,why ? —We had consistent profitability frame-work created & its applicable to both COGS and Opex i.e
In COGS we have worked on product re-engineering , 13 SKUs reformulated which has helped us to improve our margins & we are working on other efficiencies , optimised people at plants, these structural interventions have helped us to improve our margins
–In this Qtr we had some product mix advantage in domestic formulations , international formulations and APIs –this has also contributed to Margin improvement in this Qtr
–We are renegotiating the prices with RM vendors and also we have alternate vendor development programs which is helping us to reduce RM price but it will keep fluctuating as per Macro situation
–Capex : 60Cr in FY24 –for both plant modernisation and capacity expansion for Ankleshwar ( formulations ) & Navi Mumbai ( API) Plants
–Evaluating candidates for Acquisitions both in formulations and API side.
—Strong presence in immunosuppressant segment (Azathioprine) in all the 3 verticals for Domestic , International & APIs .
–Our portfolio is divided into 2 : Mass biz & Speciality biz with Mass biz —our product portfolio is consulting Physicans and GPs & that is our strong forte , in the Speciality side –we were strong on Neprology & built up Rheumatology in the last 3 yrs and its contributing 14% to our Speciality turn-over
Then we are also moving into Gastro entrology & dermatology which are in speciality side. On the mass side we are also working in Diabetology & Cardiology along with CPs and GPs & in all of these segments our intent is to have a coverage of 85% of the universe & we have reached we have maturity except in consulting Physicians which is a large segment where we have reached almost 70/80% of the coverage
–Another segement where we are looking at is Orthopedics due to our great performance of Naprosyn
–Mass vs Speciality the Margin Split is similar as in our legacy biz in Mass is also good margins along with Speciality
–In international biz –our R&D pipeline is centring around 3 to 4 areas , one if them is immunosuppressant segment—there are gaps in line extensions and we are developing molecules here . In category 2 we have complex generic products & we have launched one such product as sodium xyz …version
3rd category is those products which require complex mfring i.e those products which need low temp. , 4th category where we have limited competition & these are the 3 to 4 niches where we will be profitable.
–Currently we have close to about 30% formulations being outsourced & in the domestic formulation the new products are outsourced from reputed CDMOs which are well evolved group in the Country and once we launch a product and it gains tractions , then we take a decision to bring it in-house to add some GP% bps due to it.
–In Domestic formulations the smart strategy is to outsource the formulations as CDMOs are quite evolved in this country and they add to efficiency and speed , unless the product is developed due to our R&D , then we will see that mkt gets mfered by us
—In R&D we are focussing on export oriented products & in APIs we are focussing on APIs which would be exported . The domestic formulation R&D is outsourced by us
PS : Some points in the end I may have missed , please refer to transcripts for it when its released .
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