Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Morepen Laboratories Ltd (BOM:500288, Financial) successfully raised INR 200 crore through a QIP, attracting global investors like Bank of America and Morgan Stanley.
- The company reported a 64% increase in profit after tax, demonstrating strong financial performance.
- Morepen Laboratories Ltd is expanding its medical devices segment, which now contributes 30% of the business, with plans to increase this to 40% in the next five years.
- The company has achieved a significant increase in export revenues, with a 20% growth in exports during the first half of the fiscal year.
- Morepen Laboratories Ltd has received product registration with USFDA and Health Canada, enabling it to start exporting medical devices to the US and Canada.
Negative Points
- The company experienced a decline in domestic API sales, particularly in low-yielding markets like India, Bangladesh, and Pakistan.
- There were capacity constraints in the production of medical devices, affecting the growth in this segment.
- The company's EBITDA margin, although improved, is still below the industry standard, with a target to reach 15% in the next three years.
- Morepen Laboratories Ltd faces challenges in the South American market due to competitive tender pricing.
- The company is still in the process of expanding its finished dosage facility, which has faced delays due to regulatory approvals.
Q & A Highlights
Q: Can you provide an outlook on the India-centric and South America-centric API business growth?
A: Sushil Suri, Executive Chairman and Managing Director, explained that in India, the company is focusing on high-value customers and reducing sales to traders due to price fluctuations. In South America, a tender was lost, affecting sales, but the focus remains on maintaining profitability rather than just volume.
Q: Why was there no growth in the medical device segment this quarter, and what is the outlook?
A: Sushil Suri noted that capacity constraints affected production, but the company is addressing this with new SMT lines. The installed base of glucometers is growing, and the focus is on increasing strip sales, which are more profitable. The company expects growth to resume as capacity issues are resolved.
Q: What is the strategy for achieving the 5,000 crore revenue target by 2030, and how will the revenue mix change?
A: Sushil Suri stated that the company aims for a 20% CAGR with a focus on profitability. The revenue mix is expected to shift to 40% from medical devices and 60% from pharma by 2030, with medical devices growing faster.
Q: Can you elaborate on the recent approval for Class 1 medical devices in the US and Canada?
A: Sushil Suri highlighted that the approval includes non-invasive devices like ortho supports. The US market offers higher margins, with products selling for $15-$20 compared to lower prices in India. The company is focusing on expanding exports in this category.
Q: What are the plans for the new product additions in the medical devices segment?
A: Sushil Suri mentioned that the company is expanding its product line, including nebulizers and ortho supports, and is open to client-specific products if there is sufficient volume demand. The focus is on home medical devices for both domestic and export markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
