Q1FY25:
• Gross Margin for Q1 FY25 is 59.6% vs 55.3% in Q1 FY24. • EBITDA Margin for Q1 FY25 is 35.7% vs 34.0% in Q1 FY24, aided by new product launches.
• Company has filed 22 products in Mexico, a key part of expansion into larger LatAm markets. Dossier compilation ongoing for 35 products, to be filed in the next 12-18 months, including products from Outsourcing partners.
• Amaris Clinical, CRO wing of Caplin Point, completes BE studies for 12 products, with a further 5 products planned for the coming Quarters.
• Company’s API R&D division completes development of 80+ molecules, to be scaled up once GMP facilities in Vizag (General API ) and Thervoykandigai (Oncology API) go onstream.
CAPLIN STERLIES:
o US Q1 FY25 revenue at ₹77.93 Crores; an increase of 68.9% Y-o-Y
o Update on Caplin Steriles USA Inc, company’s own label in the US – 45 out of 50 state licenses received. On target to launch first products by Oct 2024. Plans to launch 35 products in 12 months.
o Company has received approvals for 4 Ophthalmic products so far, all have been launched till date. Approvals for 3 more to be received within this year
o Company has 24 ANDA approvals, with 10 more under review. Plans to file another 8 products in the next 12 months.
o Line 6 – Pre-Filled Syringe products line will be qualified for first submission batches by Q2, plans to file 7 products in the first 12 months of operations.
o Automation & Digitalization Update – Quality Control and Microbiology sections almost 80% paperless. Work ongoing to convert all physical logbooks to e-logbooks by year end. Next stage is to convert all Batch Manufacturing and Packing Records (BMR & BPR) to electronic format, as company aims to become completely paperless by next year.
• Expansion work ongoing at CP-1 (Puducherry site) for higher Lyophilized Injection capacity due to enhanced demand from markets. Part of the expansion includes installing unique Dual Chamber Pre-Filled Syringe line, a segment with limited competition at LatAm
CONCALL NOTES:
• US FRONT END: In the US, the focus will be more on distributing our own products effectively in the future.
The new concept would be to source and outsource with our current resource, which is our cash reserves, source the products from the CMOs of India and other countries buy and sell the products to the wholesalers of USA, which has the effective second layer of distribution hierarchy. There are virtual companies who do big business without even having their own ANDA base. Their model is to cater not only in the U.S. market but also supply the shortage products in U.K., Europe and other places of regulated market. We will definitely have an upward edge compared to virtual companies as we are building our own pipeline of products.
We plan to come to market with our own Caplin Steriles label by October or November of this year, and we plan to launch around 30-plus products within the first 12 to 15 months.
Sticking true to our parent company’s success mantras of taking the road less travelled, we are replicating the same in the U.S. by targeting the smaller warehouses and IDMs rather than the big 3, where we feel our pricing and consistency would be much better established even if the growth in top line is a little bit slower than what some of the larger companies have done in the past.
The other mantra for Caplin is also being pro-outsourcing, which we have done in the past from China and we continue to do. This is something the Chairman also touched upon, where we are looking to in-license products from other highly quality conscious companies which will further augment our offering to the market.
• LATAM: Recently, we created a warehouse for our Chilean business and the capital of Chile. We have registration to the tune of 72 products.
Business from Peru, Costa Rica and Mexico is improving slowly based on the registrations, generating more ads for our onco products from the institutions are also guaranteed.
And we also started one more warehouse in Guatemala, which we are sure will increase the cash flow and profit.
And we also started a branded generic business which is increasing in 3 major countries of Central America, which is Guatemala, El Salvador and Honduras.
• Brazil audit is likely to be started in the next week, which will also open up more opportunities.
• Once we complete all these Caplin One factories, we will enjoy a tax benefit of 8% which will also help the company to increase the profitability
• Second half of the year is always larger for Caplin Steriles.
• As caplin Steriles and Caplin One lab contribute more to sales, it will lead to improvements in margins.
• Mexico: The warehousing model will not be able to start unless you have 20 to 30 products at this stage. So, it will take 1 to 2 years.
We have around 8 to 9 products at this point. We have launched a couple of them. Some of these are very tender-oriented products. So, we actually, like Chairman said, until we get to about 25, 30 products, we don’t plan on launching our own warehouse and front-end sales in Mexico until we hit the right kind of portfolio. So probably another 18 to 24 months is what we are looking at to have day-to-day sales over there in Mexico.
• CASH RESERVES AND ACQUITISIONS: We are looking at 2 or 3 meaningful acquisitions, probably this can happen over a period of time – A) brand marketing company and B) distribution company, which has got a very good network of supplying to various institutions or pharmacies, which are at the bottom of the pyramid. C) we will also go for some brands, if it is, meaningful. And if everything goes well, there is a possibility of acquiring from ANDA also. So, it’s better to keep the cash as a reserve to go for more acquisition advantages.
• We also have plans to reach some products in the form of insulin and other products directly from countries where they are manufacturing and they don’t have the capabilities to selling in ROW market. We will take it up. We will not focus for biosimilar and other insulin, that kind of system. We will not think of taking it to U.S. market because it’s not easy for us to do that kind of a business. But we will sell it. We will sell in countries where we are there for the last 20 years. And we have the right connection. And people also trust the quality of our medicine.
• Phase III capex of Caplin Steriles: Will be actually under Caplin One Labs, but also catering towards the U.S. We expect this to be around INR220 crores to INR230 crores kind of an investment over the next 2 to 3 years.
• Chile market is 70% government and 30% private market. Currently, we are going to focus on the private market because of the volumes, given the volume is lesser, the profitability will be higher. And we will also get into the, what we call, an institution business over a period of time. So next year, we are sure to get very good returns from the Chile market.
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