Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gland Pharma Ltd (NSE:GLAND, Financial) reported a 5% increase in base business revenue, demonstrating resilience in a competitive environment.
- The company maintained a steady base business EBITDA margin of 34%, similar to the previous year.
- Gland Pharma Ltd (NSE:GLAND) successfully launched six new molecules across key markets, including four in the US, contributing to growth.
- The company entered into a strategic biologics CDMO collaboration with Dr. Reddy's Laboratories, leveraging its state-of-the-art manufacturing facility.
- Gland Pharma Ltd (NSE:GLAND) has a strong cash position with INR28,201 million in cash and cash equivalents, indicating financial stability.
Negative Points
- Cenexi, the European CDMO business, reported a negative EBITDA of INR685 million due to an extended shutdown and operational challenges.
- The company's consolidated EBITDA margin decreased to 21%, primarily impacted by losses at Cenexi.
- Gland Pharma Ltd (NSE:GLAND) experienced a slight delay in order pickup from Saudi Arabia, affecting revenue from the rest of the world markets.
- The gross margin for Q2 FY25 was 59%, down from 62% in the same period last year, mainly due to lower margins at Cenexi.
- Net profit for Q2 FY25 decreased by 16% compared to the same period last year, reflecting challenges in achieving profitability.
Q & A Highlights
Q: Can you provide details on the milestone income and profit share for this quarter?
A: The profit share for this quarter is 8% of revenue at Cenexi, and the milestone income is 7%.
Q: When can we expect a meaningful pickup in core market sales, considering recent product launches?
A: Year-on-year, the US market is still growing. We expect a jump in the US and ROW business due to new contracts and tender offtakes in Saudi Arabia. Overall, we anticipate low double-digit growth for the full year.
Q: What is the timeline for seeing commercial benefits from the biologics agreement with Dr. Reddy's?
A: Initial financial benefits are expected from the first quarter of next year, with further growth depending on product development and market uptake.
Q: Can you explain the sharp decline in Cenexi's gross margins this quarter?
A: The reduction in gross margin is due to a product mix shift, particularly lower uptake at the Belgium site. We expect margins to normalize as issues are resolved.
Q: What is the outlook for Cenexi's EBITDA margins in the coming years?
A: After the new line is operational, we expect Cenexi to be EBITDA neutral or achieve low single-digit margins next year, with a target of 10% EBITDA margins in the following year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
