Alembic Pharma targets 5-6 new product launches in US every quarter
RK Baheti, CFO of the generics drugmaker expects a growth of 7-10% in the Active Pharmaceutical Ingredients (APIs) business.
Vadodara-based generic drug maker Alembic Pharmaceuticals plans to launch 5-6 new products every quarter in the United States. The company launched 11 new products during the third quarter of the current financial year (Q3FY24), and 20 new products in the first nine months of the year (9MFY24).
The company's CFO RK Baheti said if the newly launched products gain traction and prices remain stable, Alembic Pharma should witness good business in the US generic market.
Alembic's US generics sale for Q3 picked up and were at $57 million versus $53 million in Q2FY24 helped by new launches and volume gains for existing products.
The pharmaceutical company has grappled with steep price erosion in the US generic market in recent years. However, prices have begun stabilising, and even though product specific pricing pressures remain, new launches are expected to start contributing to growth.
Alembic Pharma specialises in active pharmaceutical ingredients (APIs) used in drugs to manage conditions such as diabetes, osteoporosis, and depression. Baheti expects the API business to grow at 7-10% amid pricing pressures.
“With generic stabilising, hopefully, API business will also improve,” he said.
Revenue of the API business, which contributes 19% to the total, declined 11% to ₹289 crore in Q3.
Alembic Pharma reported a third-quarter profit of ₹180.5 crore, a 48% year-on-year (YoY) increase from ₹122 crore, driven by strong sales in both the US and domestic markets. The company revenue grew 7% YoY to ₹1,630.6 crore from ₹1,509 crore. Earnings before interest, tax, depreciation, and amortisation (EBITDA) margin for Q3 was at 16.3% versus 16.5% in the same quarter last year.
For 9MFY24, revenue growth is 11% YoY at ₹4,712 crore, while profit has jumped to ₹438 crore from ₹189 crore. Margins have spiked to 14.3% from 12%.
Domestic business, Baheti noted, is outperforming the market in most categories, and the margins are good.
Brokerage firm HSBC has maintained its 'Hold' rating on the stock with a target price of ₹835 apiece. HSBC said a steady growth outlook for India formulations business should act as a cushion for the company while its US business continues to face challenging market conditions.
Antique Broking has also maintained 'Hold' recommendation on the stock with the same target price as HSBC citing potential margin improvement due to operating leverage.
Alembic Pharmaceuticals has market capitalisation of ₹18,971 crore. The company's shares have surged more than 86% over the past year.
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(Edited by : Shweta Mungre)
First Published: Feb 6, 2024 1:07 PM IST
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