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    ZYDUSLIFE   INE010B01027


Delayed NSE India Stock Exchange  -  07:29 2022-10-06 am EDT
423.25 INR   +0.80%
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Zydus Lifesciences : Q1 FY23 Earnings Call Transcript13 August 2022 Format

08/13/2022 | 09:23am EDT

"Zydus Lifesciences Limited Q1 FY 23

Post Results Earnings Call"

August 10, 2022












Moderator: Welcome to Zydus Lifesciences Ltd. Q1 FY23 Earnings Conference Call. Please note, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the opening remarks. Please note that this conference is being recorded. I now hand the conference over to Mr. Ganesh Nayak - Executive Director of Zydus Lifesciences Limited. Thank you and over to you sir.

Ganesh Nayak: Good evening ladies and gentlemen. Welcome to our post results teleconference for the quarter ended June 30, 2022. For today's call we have with us Dr. Sharvil Patel - Managing Director, Mr. Nitin Parekh - Chief Financial Officer, Mr. Arvind Bothra - Sr. Vice President, Investor Relations and Mr. Alok Garg - Sr. Vice President from the Managing Director's office. I hope you would have gone through the quarterly results, investor presentation and the press release which are available on our website and also filed with the stock exchanges. First of all, let me quickly run you through the Q1 FY23 consolidated financial performance.

We registered revenues of Rs. 40.7 billion, up 2% year on year. Excluding COVID related revenues, the growth was 11% on a year on year basis. EBITDA for the quarter stood at Rs. 8.33 billion down 14% year on year. EBITDA margin for the quarter stood at 20.5%. Net Profit for the quarter was Rs. 5.18 billion down 12% year on year. We remain vigilant on managing our costs well and improving efficiencies across the value chain to meet our aspirations of achieving 20% plus EBITDA margin for FY23 as we aim to grow across all our key businesses.

Before I dwell into the operational highlights, I would like to draw your attention to key points related to our two key geographies, viz. India and the US. Our India geography which comprises of the Formulations and the consumer wellness businesses, now accounts for 46% of the total revenues and grew 12% year on year adjusted for COVID related revenues in the formulations business last year. Our US formulations business which accounted for 40% of the total revenues grew in double-digit on a sequential basis aided by volume expansion in existing products and new launches.

Now, let me take you through the operating highlights for the first quarter of FY23 for each of our business lines.

Starting with our formulations business in India geography, the branded business grew by 9% year on year, excluding revenues from COVID related products, generics portfolio and divested products. Overall, the business recorded revenues of Rs. 11.3 billion, down 17% year on year on a high base. Secondary sales growth remained robust for the period signifying healthy demand trend. We gained


market share and improved ranking in our core therapies in the cardiovascular, gynaecology, respiratory and pain management therapeutic areas during the quarter on a YoY basis. Lipaglyn is now ranked as the 66th largest brand in the Indian Pharmaceutical Market during Q1 FY23, improving by 13 positions versus Q4 FY22. Lipaglyn is our first indigenous New Chemical Entity launched in the market. We continue to retain our leadership position in the Nephrology segment while in Oncology, we gained multiple ranks and are now amongst the top two players in India. Our Consumer Wellness business recorded revenues of Rs. 6.9 billion, up 18% year on year. Timely onset of summer and improved distribution reach helped us re-recruit the consumers for summer heavy brands like Glucon-D and Nycil. This helped us achieve double-digit growth in these two marquee brands.

Now, let me take you through the performance of our US formulations business. We recorded revenues of Rs. 15.6 billion with 10% growth on a sequential basis. Price erosion during the quarter was almost entirely neutralized by volume share gains in the base portfolio and launch of new products. We received 7 new product approvals (including 1 tentative approval) and launched 8 new products during the quarter. Approvals for the quarter include one 1st cycle approval. We filed 8 ANDAs during the quarter including 3 filings which are designated as CGT which is Competitive Generic Therapies. On the emerging markets front, the business maintained its growth momentum and recorded double-digit growth. Overall, the business posted revenues of Rs. 3.2 billion, up 14% year on year. The growth was broad-based across most of the geographies. The USFDA inspected our Moraiya Formulations facility between 26th of July to 5th of August, 2022, which concluded with four Form 483 observations. None of the observations were related to data integrity. The company will submit its response to the regulator within the stipulated time. We have put up a new oral solid dosage facility in the Ahmedabad SEZ (SEZ 2) to cater to the requirements of the US market. During the quarter, we successfully completed the qualification and took the first exhibit batch from the facility.

Now, this concludes the business review. I would now request Dr. Sharvil Patel to take you through the key drivers across businesses and initiatives in our innovation program.

Sharvil Patel: Thank you Mr. Nayak. Good evening ladies and gentlemen. It is a pleasure to have you all on the call today. As we continue to evolve as an innovation driven life sciences company, our focus remains on building businesses with sustainable growth on a long-term basis. We continue to invest resources organically and inorganically in this


pursuit and endeavour to enhance shareholder value in the process. Let me share with you the strategic direction for two of our large businesses which is India geography and the US geography. As mentioned earlier, our branded formulations business in India grew by 9% year on year. In the near term, the aim is to grow in line with the market. In the medium to long-term we intend to outperform the industry growth sustainably. This will be achieved by expanding our presence in chronic therapies, introducing new molecules in focus therapies, expanding the presence in institutional segment and leveraging our innovation pipeline including the IP protected novel molecules and biosimilars. We will leverage digital technologies to improve our decision-making and to optimally utilize our resources to expand reach and availability, thereby improving the health outcomes for our patients.

The Consumer Wellness business regained its growth momentum driven by strong traction seen in its marquee brands. We aim to consolidate our position and sustain the momentum by expanding the distribution network, launch of new variants to meet consumer preferences and in turn, emerge as a formidable consumer wellness company.

The US formulations business witnessed healthy rebound highlighting our strength in execution. We look forward to commercialisation of our differentiated pipeline, supported by our business development efforts. Our specialty portfolio is likely to scale up over the medium to long term, and we want it to become a niche and a sustainable growth pillar.

Our philosophy to invest in people to build the businesses has received external validation as well. We received two noteworthy recognitions recently. The first being the Most Preferred Workplaces by Marksmen in association with Economic Times and India Today, and the second being amongst the Best Workplaces in the Biotech and Pharmaceutical Industry 2022 by The Great Place to Work.

With this, let me talk to you about the material developments on the innovation front.

On the NCE research front, as you are aware, our phase 2B/ phase 3 global clinical trials of Saroglitazar Magnesium to evaluate its efficacy and safety in patients with Primary Biliary Cholangitis, which is PBC, and phase 2B global clinical trials of the molecule for NASH/ fibrosis indications are currently going on for the US market. During the quarter, we completed the hepatic impairment studies in NASH and normal PBC patients, the results of which will be submitted in the near term. Clinical trials of Saroglitazar Magnesium in the US are ongoing


for indications of PCOS and NAFLD also. We completed the phase 1B trial of Desidustat in the United States for Chemotherapy Induced Anaemia (CIA) in cancer patients. The pre-IND meeting with the USFDA is scheduled in the current quarter to seek further guidance.

During the quarter, we completed recruitment of patients for our phase 2 clinical trials of ZYIL 1. The molecule is targeted at Cryopyrin Associated Periodic Syndrome which is CAPS, a rare indication. We are planning to initiate global pivotal clinical trial for this molecule in the near term. This marks our third NCE in our global development.

In the Biotech space, we received marketing approval for the drug substance of biosimilar of Adalimumab from the Russian regulatory authority. We continue to file new products in many of our emerging markets and enter new markets through partnerships to ensure long term sustainable growth for this business.

On the Speciality front, our wholly own subsidiary Sentynl Therapeutics Inc. commenced commercial supply of Nulibry during the quarter. Recently, Nulibry received positive opinion from the Committee for Medicinal Products for Human Use, the CHMP, for Nulibry for the treatment of patients with Molybdenum Cofactor Deficiency (MoCD) type A. The brand also received Industry Innovation Award, 2022 from the National Organization for Rare Disorders in the US. Sentynl continues to run various programs to expand awareness and early diagnosis of the Molybdenum Cofactor Deficiency (MoCD) type A and Menkes disease, both of which are life threatening paediatric genetic disorders.

Thank you and now we will start with the Q&A session. Over to the coordinator for the Q&A.

Moderator: Thank you very much. We will now begin the Question & Answer session. Anyone who wishes to ask a question may raise your hand from the participant's tab on your screen. Participants are requested to use headphones or earphones while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from Neha. Neha, please unmute yourself.

Neha: Thank you for taking my question. My first question is on the US business. We saw a very strong growth quarter on quarter. I know, in the opening remarks you mentioned volumes, new launches. If you could give us little more colour on what we are seeing in Asacol and in terms of volume expansion? Are there any one-off product supplies that we have seen or is this a sustainable base that we should grow on?


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Zydus Lifesciences Ltd. published this content on 13 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 August 2022 13:22:00 UTC.

© Publicnow 2022
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Sales 2023 162 B 1 980 M 1 980 M
Net income 2023 20 506 M 251 M 251 M
Net cash 2023 4 543 M 55,6 M 55,6 M
P/E ratio 2023 20,9x
Yield 2023 0,94%
Capitalization 428 B 5 246 M 5 246 M
EV / Sales 2023 2,62x
EV / Sales 2024 2,29x
Nbr of Employees 23 743
Free-Float 23,9%
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Number of Analysts 30
Last Close Price 419,90 INR
Average target price 423,07 INR
Spread / Average Target 0,75%
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Managers and Directors
Sharvil Pankajbhai Patel Managing Director & Executive Director
Nitin Dalsukhrai Parekh Chief Financial Officer
Pankaj Ramanbhai Patel Non-Executive Chairman
Ganesh Narayan Nayak Chief Operating Officer & Executive Director
Dhaval Narendra Soni Secretary & Compliance Officer