Thread by @ValueEducator

#LaurusLabs Q3 FY22 concall highlights 💊🧪

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1. They are facing challenges due to logistics, RM availability and higher price - especially for solvents. Most solvent prices were at an all time high.

They have started to see some easing in terms of availability and cost of APIs and solvents. However, supply chain and logistics costs continue to be a challenge.

2. Revenue has seen marginal growth of 3% despite lower sales in the ARV APIs and formulations. All other businesses except ARV APIs have grown for the quarter and 9 months.

3. Gross margin for the quarter was at 58.8% compared to 54.7% last year. EBITDA margin was at 28.2% for the quarter and 29.6% for 9 months.

4. There is an increase in demand for ARV APIs from Q4 onwards. They believe this sluggishness was only transient in nature and demand should normalize from now onwards.

5. They are positive on reaching their goal of $1 Billion in sales for FY23. This will be supported by several approvals and multi-site capacity expansion across API, formulations and CDMO.

6. The formulation business reported a revenue of ₹373 Cr (13% decline YoY). The contribution from the formulation segment has improved during the 9 months to 40% from 36% in the previous year.

Laurus has signed and will be a part of MPP license for Molnupiravir to increase the broad access in LMIC markets

7. Filed 3 ANDAs during the 9 months. They made a supplementary ANDA filing during the quarter. They expect to file around 6-7 ANDAs for the full year.

Cumulatively, they have filed 30 ANDAs. Of this, they have 10 final approvals and 8 tentative approvals so far. They have 11 product approvals in Canada, of which they are launching 5 and are in the process of launching a few more.

8. They continue to invest in FDF infrastructure. Their brownfield expansion at Unit 2 is on track and is expected to take the total FDF capacity to 10 billion units per year. It will come online early next quarter.

9. Their R&D is more focused on non-ARV products right now. They have identified a few products which are complex and need scale.
Antiviral API business during the quarter was weaker than expected and declined 65% YoY.

The steep decline is due to the higher base effect because of inventory stocking by global agencies last year.

10. In oncology APIs, they did ₹85 Cr sales which is a growth of 33% YoY. For 9 months, there is a growth of 8%.

11. They filed 4 DMFs during the quarter. 2 DMFs are non-ARV. Total number of DMFs to date is 71.

12. As indicated last quarter, they have started construction of a dedicated facility for a global life sciences company. It is a multi-product, multi-year supply contract.

Part of the capex for this is funded through commercial advance. They are also investing in one more greenfield facility for the synthesis division and building an R&D center. All these projects are progressing as expected.

13. During the quarter, Laurus Bio commissioned 2 new fermenters of 45 KL each taking the total capacity to 180 KL. There was a few months delay in qualifying the fermenters.

14. They believe that they have the capability to become a very large player in CDMO in the global space

They have the regulatory track record, EHS compliance and manufacturing infrastructure is world class. So they believe they have a lot of avenues for growth and the CDMO business is still in its infancy.

15. They want the synthesis business to contribute at least 25% of overall revenue by FY25. This includes biologics CDMO.

16. ARV APIs are not very high gross margin products compared to the rest of the business. This quarter the contribution from ARV decreased so gross margins look higher.