Release Date: May 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strides Pharma Science Ltd (BOM:532531, Financial) achieved its best year for both revenues and absolute EBITDA in FY24.
- The company successfully optimized its business, focusing on cost containment and operational leverage.
- Significant product approvals, including Sucralfate for the US market, were secured.
- The US market performance met the higher end of the outlook with $250 million in revenue.
- Strides Pharma Science Ltd (BOM:532531) achieved a debt-to-EBITDA ratio of 2.72x, ahead of the scheduled target.
Negative Points
- The institutional segment faced a muted performance due to low allocation of tenders.
- Growth in the US market was partially offset by a weak flu season.
- The company expects significant growth only in H2 FY25 due to the timing of new product approvals.
- The soft gelatin business is expected to have a soft EBITDA in FY25 due to the timing of new product approvals.
- The company faces challenges in launching new products due to capacity constraints, limiting the speed of market entry.
Q & A Highlights
Q: With respect to the US, can you share some color on how Suprep is going for you in terms of market share? And have you scaled up to the full potential, or is there further ramp-up possible here?
A: Typically, in products like Suprep when there are three, four players, we are very happy at the 25% to 30% market share. And I can tell you, as we speak, that we are at that spot already.
Q: On OneSource, we talked about a GLP-1 that is going to supply to customers. Is that GLP-1 already commercialized? Or it's in clinical status that you will be supplying?
A: One of the GLPs, one of our partners have gone through is expecting approvals, and we expect our first commercial supplies of GLP to commence in this financial year.
Q: On the US business, the point that you mentioned about, so our intent to grow the business beyond $400 million in terms of some of the newer activities that you're trying to get in. How should we think about our US business evolution, it gets to $400 million the next three years? And then how do we see it going from thereon?
A: The current strategy of niche limited competition kind of limits our growth to $400 million. That's our aspirational growth. We are now very confident we can achieve that. For us to continue to benefit from the US market opportunity, we have to be differentiated with either a platform technology or leveraging our US manufacturing activities. We are building portfolios in the $40 million to $60 million range.
Q: On the other regulated markets, we've been actually very positive on this space. Are there any particular reasons why the traction has not been as much as you probably expected at the start of the year?
A: It's still grown at 20%, but our other regulated market is almost B2B. When we license our products to global players, it takes time for them to launch the product. In H2, you will see these numbers changing quite significantly upwards.
Q: On the US business, what kind of price erosion are you building?
A: The US business is not a function of price erosion for us. When we are challenged heavily, we exit the product. We have a very differentiated way of modeling our US business. We do not have a price erosion because when we are challenged, we let go.
Q: On the endo portfolio, what proportion of the pending ANDAs are still liable to launch? And would any of the ANDAs be significant from our perspective?
A: Our number one selling product now is an Endo portfolio product. We probably have one more product that we will launch this year from the Endo portfolio, which will have an exit run rate almost similar to our number one product. We have a lot of products that will meet our criteria.
Q: We have guided about 12% to 15% growth this year. So that is inclusive of all the product launches that we are planning, right?
A: Yes. Our product is not equal to revenues. A product can be $4 million, a product can be $20 million. We have guided $400 million over the next three to four years. We are growing at 15%. If you continue doing that, we'll do that in three years.
Q: Can you please tell me what is the capacity for GLP-1 across OneSource network, manual injectors, auto injectors?
A: The right combinations of about 40 million unit capacity, and we will complete an expansion in FY26 to take it to 200 million units.
Q: Could you share a bit more guidance on possible de-merger situations for OneSource and the vision that we have over the next couple of years for this particular division and how we aspire to grow in the CDMO division?
A: We got last night, the demerger approvals from SEBI, which was the last step prior to the court process of the demerger. We expect to file filing code, the necessary documentation this quarter. Typically, it can take anywhere from three to four quarters for the court process to get completed and about 60 days for the stock exchanges to list the stock.
Q: Could you talk a little bit about how the alliance with Orbicular for nasal spray is progressing?
A: Progressing very well. It's one of our important partnerships. We will have a first filing this year. We expect to complete into our platform program during the course of the next 12 months, and we should expect approvals thereafter. We have significant interest on these exclusive control substance programs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
