Concord Biotech Limited CC-Sep23.pdf · 2023-11-09
Got it. And secondly, since you and CFO said that we will grow at more than 18%. So, this year we will grow at 18% plus 1% or 2% additional. And also you said a 25% plus growth over the next four years. So, it's some understanding on my end, to what should be the growth that we should expect from the company going forward? Ankur Vaid: So, what Lalit mentioned is that historically we have grown at a CAGR of 18% and we have different growth levers, both at the API as well as at the finished formulation, which will help us grow at a CAGR of 25% over the next five to six years. Because, , this is going to be a gradual process from going from 18% to 25% CAGR because, we are, like in this year, we have got the approval from the US FDA. Customers are including our Limbasi facility into their dossier. So, we will see some growth happening on that end. There will be some growth coming in from the formulation as well. Subsequent year, we would also see that, there will be more consolidation at these two fronts, but also the injectable business will start kicking in. And then, of course, new R&D products as they keep getting commercialized, may be one to two products every year, they would also slowly and steadily start contributing. So, that's why all these three, four opportunities when clubbed together will result into a 25% CAGR growth over the next five to six years. And one has to see it as a gradual move in terms of how we go from 18% to 25%. Huseain Bharuchwala: Got it. And secondly, sir, when you said that, there was one customer whose product got returned in Q2 of FY '23. So, as a result, we are seeing some sort of year-on-year comparison. There is some lumpiness. Was it a sizable return? So, should we consider this as a lumpy quarter for this year, wherein the numbers are way higher than year-on-year basis? How do we see that? Because I understand you said that we should look at the whole year basis. But still, we are not able to contemplate because when we built-in into our models, we are not able to understand exactly, how the year will shape up for the company and how is it comparable year-on-year basis… Ankur Vaid: Sorry, we lost you.
Okay. So, I am just trying to understand. In Q2 of FY '23, you said there were some product returns on the formulation side? Ankur Vaid: Correct. Huseain Bharuchwala: So, there must be some lumpiness in this quarter. Should we consider that there was some lumpiness or no, it wasn't in that case? Ankur Vaid: So, I would say the lumpiness would have been probably in the quarter of the last year because of this one-time effect that came in because of the formulation return. But this year, I think we have seen steady growth in our formulation sales because newer markets have opened up and also our domestic formulation business is growing. So, that's how I would look at this year versus the last year. So, the lumpiness would be more correlated with last year rather than looking at from this year perspective. Moderator: Thank you. The next question is from the line of Vivek Agarwal from Citigroup. Please go ahead. Vivek Agarwal:Hi. Thanks for the follow-up question. So, as the company has highlighted, in the recent quarter or in the first half, its oncology and anti-infectives have picked up. So, is it possible for you to share, what is the share of immunosuppressants in API Dominion in this quarter or the first half and what is the share of oncology and anti-infectives? Thank you. Ankur Vaid: Sorry, we did not get you clearly. Could you repeat that, please? Vivek Agarwal:So, if you can help us understand the share of revenues from immunosuppressants and oncology and anti-infectives or anti-fungal in the first half of the year? Lalit Sethi: In the first half of the year, the contribution from immunosuppressants has been to the extent of around 74% to 75% of the total API sales. And oncology has been in the range of around 13%, vis-à-vis 9% in the same period last year. Vivek Agarwal:Thanks. And is it fair to assume that in oncology, the everolimus that is taking off? Ankur Vaid: So, yes. Our oncology products such as everolimus, midostaurin and other products which are there in that segment are seeing good traction. So, it is not only just one product, but we have close to seven to eight products in that segment and we are seeing good traction in these molecules. Vivek Agarwal:Perfect. And in terms of margins, would you like to give any ballpark numbers for fiscal year '24, given that we have already done close to 42% in the first half? Any range, basically, that would end up for the full year of '24? Ankur Vaid: So, what we discussed earlier was that if, the growth in the EBITDA should be better than the growth that one would see in the top line because of the operational efficiency that gets built in. Vivek Agarwal:Perfect. Thanks, Ankur. Thank you. This is from my side. Moderator: Thank you. The next question is from the line of Chintan Sheth from Girik Capital. Please go ahead. Chintan Sheth: Thank you for the follow-up. One thing on the new product development side, we mentioned a couple of molecules in anti-infective, coupled with oncology and immunosuppressant. Any ballpark, market size which we are looking at in those product categories will be -- how much relative to what we are currently targeting, the addressable market from the existing 20 plus portfolio versus this new five, how much it will add to that? If you can, just a ballpark number would be helpful. Ankur Vaid: So, the addressable market for the new products is close to around $2.5 billion at the formulation level. So, while we don't have data on the API level, but if one would consider around 30% to 40%, we're talking somewhere around $750 million is the opportunity that one could look at. However, these products, once they become commercial, it will be a slow and steady process for us to reach to a leadership position on these molecules. However, we are confident that given our R&D expertise, we have full confidence that, there is a path and we will be able to go through that in order to have that leadership position on these molecules. So, these are sizable markets for these APIs, but it will be some time before we start having a sizable contribution in the overall revenue with respect to these newer products. Chintan Sheth: Right. And in terms of gross margin, I can see that, for the past two quarters, we have been delivering a kind of almost 80% kind of gross margin right now. So, any risk in terms of input price pressure you are witnessing or any, you mentioned the pricing pressure is not there. It's largely driven by volume growth, but any input price pressure which we are forcing right now, or we can expect this 80% gross margin to continue going forward?