Gufic BioSciences Ltd

Gufic has been coming with quite muted numbers in past quarters along with huge pressure in working capital. Management is always very bullish, its good that the 100 cr. capital raise derisks their balance sheet significantly. Concall notes from last couple of calls below

FY24Q3

• 9M revenue breakup

  • Domestic: 56%

    • 38% critical care (16% growth)

    • 27% ferticare (19% growth)

    • 24% mass market (14% growth)

    • 5.5% Sparsh

    • Remaining aesthaderm (42% growth)

  • Exports: 18%

  • CMO: 23%

  • API: 3%

• Critical care

  • Reached 1,500+ hospitals (50 government hospital)

  • Polyfic became #1 in Polymyxin-B injection market

  • Micafung was market leader in Micafungin market

  • Launched dual chamber bag with Merofic DCB

• Ferticare

  • Launched Supergraf (ultra-purified HMG)

  • Recurrent implantation failure: launched Guficin alpha

• Sparsh

  • Have reached 1,017 hospitals

  • Have increased frontline strength from 42 to 44 people

• Healthcare, Stellar and Spark

  • Good growth witnessed in DD1 group products including DD1 extended release

• Exports

  • Approvals: UK (2), Australia (1), South Africa (1), Mexico (1), Nepal (4), Tanzania (3), Myanmar (2)

  • 190+ registered products across regulated and semi-regulated markets, 150+ in pipeline

• Capex

  • Commercialization & capitalization will happen in March end

  • Delay has been because they increase number of lyophilizers from 3 to 6

  • Indore capacity utilization will be 20-30% in FY25, 30-40% in FY26. In FY25/26, will sell in domestic markets. From FY27, once they get site approval for export markets, utilization will improve

• Working capital cycle

  • Inventory for dual chamber bag has started coming down. Will maintain 18-22 cr. inventory on a steady state scenario

• R&D can reach 9-11% for Indore validation batches

• Target to commercialize 2 products in USA via CMO in FY25, will start in USA as a CMO with a marketing partner

• Prime bio collaboration: 60-40% profit sharing with 60% going to Gufic

• 175 cr. term loans + 150 cr. working capital limit (70-80% utilization)

FY24Q4

• FY24 revenue breakup

  • Domestic: 58%

  • Exports: 20%

  • CMO: 21-22%. Should reduce to 15-17% in FY25

  • API: 4-5%

• Critical care

  • Reached 2,000+ hospitals

  • 25%+ market share in Caspofungin, Micafungin, and Polymaxin-B

  • Gained 15% market share in ceftazidime + avibactam market (2nd rank)

  • In-licensed a novel pain management solution from a Taiwanese company (patented until 2031) for India market (synthetic analgesic with mechanism like an opioid without associated side effects; doing phase 3 trials in India)

  • Launched Dalbavan, a second-generation lipoglycopeptide antibiotic used for serious bacterial infections

  • Have witnessed pricing pressure which has resulted in slower revenue growth (API pricing has also come down)

• Sparsh

  • Have reached 1,400+ hospitals (30 SKUs)

  • Have increased strength from 44 to 66 people (expanded in Gujarat)

• Aesthaderm

  • Zarbot is prescribed by 100+ neurologists

  • Botulinum toxin contributes 25 cr. (aesthetics + neuro). Another 5-6 cr. comes from other products

• Exports

  • 200+ registered products across regulated and semi-regulated markets, 150+ in pipeline

• Capex

  • 4 lines in Indore, will start filing in global markets in November 2024 and expect inspections in 2025

  • Spent 8-12 cr. on validation batches

• Working capital cycle

  • Have extended longer working capital cycles to hospitals, nursing homes and infertility centers. This should reduce by 40-50 cr. by September 2024 and back to normal by March 2025

  • Seeing improved gross margins due to direct business with hospitals

• Should do 950-1000 cr. sales in FY25 and 15-20% growth in next 3-4 years

Disclosure: Invested (reduced position size to <1%, sold shares in last-30 days)