- Revenues for the quarter stood at ₹796 Cr (5% decline YoY). Gross margins decline by 840 bps YoY.
- Gross margin compression is due to product mix and they had inventory of increased RM prices which were adjusted to the lower realizations they received.
- They are seeing an uptick in opportunities in the regulated markets and are expecting to see a sequential recovery from here. They believe that some of the products that they let go due to increased competition is playing in their favor.
- They are guiding for $250 million revenues from the US for the next financial year. The revenues from the US business are expected to be close to $150 million this year.
- They started the integration of Chestnut Ridge in October 2021and the site contributed to revenues only for a few days during the quarter.
- They recently completed a USFDA inspection at the facility in Chestnut Ridge and received 2 minor observations.
- They retained market share in terms of volumes for key molecules and the new launches from Chestnut Ridge will expand product offerings in the coming quarters.
- Freight costs were at elevated levels during the quarter. They are going to focus more on cost improvement programs and are looking to increase margins through reducing opex.
- The promoters will be infusing ₹200 Cr which will be used to augment growth strategies.
- Stelis achieved its first operational break even during the quarter and had a positive EBITDA. None of it was due to Sputnik, it was through various CDMO contracts.
- They have received a NOC to export 50 million doses of the Sputnik vaccine. They are in the final testing phases and are confident of starting invoicing in 3 to 4 weeks.
- Other regulated markets have reached pre-COVID sales of $40 million.
- The Africa business was impacted due to several countries reporting high COVID cases leading to fewer doctor visits and thus lower prescription generation.
- The Endo deal closed in the last few weeks, the effect on financials will be seen from Q4 onwards.
- MAnagement believes that 55% gross margins are sustainable and will be achieved post normalization of RM costs. They are currently holding higher cost inventory so it will take some time.
- The ARV business has been steady at $25-29 million. This is the minimum quantity that they will normally get even if they are not very aggressive on the pricing. But the gross margins in this business keep on shrinking.
- For Teriparatide(biosimilar), they had a plant inspection scheduled on January 10 which got postponed due to Omicron but they have received an intimation of an inspection in March. They are hoping to receive approvals within this calendar year.
- For Stelis, they have built the infrastructure and are in discussion with customers who work in viral platforms and cell and gene therapy. They have a fairly good funnel of customers that are auditing their facilities.