Cipla Ltd Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tushar Manudhane - Motilal Oswal Finance Service - Analyst : Thanks for the opportunity. Sir, just on the gross margin front, is it to do with relatively lower RM cost or largely to do with the product, if you could explain that?

Question: Tushar Manudhane - Motilal Oswal Finance Service - Analyst : Just a clarification here. So let's Revlimid share as a percentage on absolute basis, that was larger stable quarter-over-quarter or whether it has increased?

Question: Tushar Manudhane - Motilal Oswal Finance Service - Analyst : Okay. And any thoughts on Abraxane post US restriction on Goa site?

Question: Tushar Manudhane - Motilal Oswal Finance Service - Analyst : So the timeline as we have guided that didn't change as we stand?

Question: Tushar Manudhane - Motilal Oswal Finance Service - Analyst : Thank you. That's it for me.

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Hi. Thank you for the opportunity. First one on the R&D expense. The R&D expense in this quarter seems to be quite subdued as compared to the last quarter. So do we expect the activity to pick up in the rest of the year and it is expected to be higher?

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Sure. Can you suggest any range for this full year for the R&D expense?

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Sure. Perfect. And on Goa plant, (inaudible) that we'll share at the appropriate time. But what is the internal assessment? Are you confident that we'll get clearance without any inspection? Or do you think that there's the inspection requirement once we complete our remediation measure? And are we currently employing and consultants our third-party consultants for the plant?

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Sure. And then just from the US product pipeline are in terms of the two peptides that we have and what is the updated here? Have we got the approval? Or are we waiting for the approval and the launch will be imminent post approval? And secondly, on generic Advair, what is the update in terms of filing from the Invagen plant?

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Sure. Thank you. And all the best and more questioners. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 26, 2024 / 10:30AM, CIPL.NS - Q1 2025 Cipla Ltd Earnings Call

Question: Damayanti Kerai - HSBC - Analyst : Hi, thank you for the opportunity, Ashish, one clarification. This Advair timeline, which you have given that will launch or for filing from the InvaGen site, 1H next calender year?

Question: Damayanti Kerai - HSBC - Analyst : Okay. So filing by end of this year or Jan and then like you will wait for the approval to come.

Question: Damayanti Kerai - HSBC - Analyst : Okay. That's helpful. My question -- first question is on US business. So this [$25 million] delta, which you have seen quarter on quarter, was it all driven by the existing product pickup or Lanreotide generic played a big role there?

Question: Damayanti Kerai - HSBC - Analyst : That's helpful. And my second question is on a very strong gross margins, which you have explained earlier. So is this the sustainable rate? And on back of a strong performance in Q1? Do you have any plan to revise your EBITDA margin guidance for the full fiscal?

Question: Damayanti Kerai - HSBC - Analyst : So broadly, you expect to see similar margins in coming quarters. That should we understand?

Question: Damayanti Kerai - HSBC - Analyst : Okay. That's helpful. And get back in the queue. Thank you.

Question: Surya Narayan Patra - Philip Capital - Analyst : Thank you for this opportunity, sir. And congratulations for the great set of numbers. Sir, my first question is on the generic Lanreotide what we have launched. So if you can just qualitatively, can you give some sense that how big this opportunity could be, for the quarter end, what impact the branded Lanreotide would have seen because of this product? Because my understanding, -- if you can just clarify that, understanding that the pricing of these two products would be meaningfully different. So is the generic version you see kind of rapid progress in that inflation that I'm getting. So then what the impact to the branded version of the in how would one think progress progressively for this equation in the subsequent quarter?

Question: Surya Narayan Patra - Philip Capital - Analyst : Okay. And sir, have you seen any change in the prescription writing put in by the doctors because 2 products and the different pricing, of course, for the prescriber, the pricing will not matter. But any change in the prescription pattern?

Question: Surya Narayan Patra - Philip Capital - Analyst : Okay. And, just on the domestic formulation business with the transition process, and so what was the actual implication and impact that we would have seen in this quarter and whether any further continued impact that could be seen in the subsequent quarter? Or it is just a quarter of the transition -- transitioning quarter and hence, whatever impact that we are facing at the time?

Question: Surya Narayan Patra - Philip Capital - Analyst : Okay. So is it the nature of inventory adjustment and post the transition we'll have a betterthat transition we'll have a better predictability about the inventory in the channel and the profitability. How should we think progressively?

Question: Surya Narayan Patra - Philip Capital - Analyst : Yeah. Thank you. Wish you all the best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 26, 2024 / 10:30AM, CIPL.NS - Q1 2025 Cipla Ltd Earnings Call

Question: Neha Manipuria - Bank of America - Analyst : Yeah. Thanks for taking my question. Umang just to follow up on Lanreotide. The economics for Cipla, is the same for the generic as well as the 505(b)(2) product, right? So you know, and given the prescription pattern does not change if there is, is that the generic cannibalizes on the, you know, 20%, 22% market share that we have with 505(b)(2). Is that something we should be worried about? Or am I thinking this incorrectly?

Question: Neha Manipuria - Bank of America - Analyst : And is this a strategy because we foresee generic competition in Lanreotide. So to some extent, shields us from other a competitor launching a generic Lanreotide. Would that be the correct me to think about this from a more slightly longer-term perspective?

Question: Neha Manipuria - Bank of America - Analyst : Understood. And my second question, sitting on close to $1 billion of cash. How should we think about capital allocation for, let's say, slightly more medium-term is growth? Again, what would be your focus areas if you were to allocate this capital in your balance sheet?

Question: Neha Manipuria - Bank of America - Analyst : And outside of India, what areas would this be the usual OTC that you've done or some other are you open to even generic opportunities in the US? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 26, 2024 / 10:30AM, CIPL.NS - Q1 2025 Cipla Ltd Earnings Call

Question: Neha Manipuria - Bank of America - Analyst : Okay. And do we want to quantify this and what areas we could probably look at? Do you have anything in your pipeline?

Question: Neha Manipuria - Bank of America - Analyst : Yeah. Understood. Thank you so much.

Question: Ankush Mahajan - Axis Securities - Analyst : Yeah, this is Ankush Mahajan. Sir, thanks for the opportunity for the question. Sir, last quarter, we have seen there is some data, that also the price erosion has increase drastically. So would you throw some light on the price erosion, how the things are in the market now for the January, especially in terms of price erosion? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 26, 2024 / 10:30AM, CIPL.NS - Q1 2025 Cipla Ltd Earnings Call

Question: Ankush Mahajan - Axis Securities - Analyst : Sir, in terms of Advair and Abraxane, so money, we had at we are launching, what of the target date, launching date, launching time?

Question: Ankush Mahajan - Axis Securities - Analyst : I see. And we more have four more peptides in the pipe -- in the launch line pipe. So any view -- on light on it sir?

Question: Ankush Mahajan - Axis Securities - Analyst : So one peptide that we already launched. So any light on it, sir?

Question: Ankush Mahajan - Axis Securities - Analyst : Thank you so much.

Question: Bino Pathiparampil - Elara Capital - Analyst : Hi, good afternoon. Most questions answered. Just a couple of clarifications. So Umang in the next few months, we probably will see one or even two more players entering the albuterol inhalation market. What do you what are your thoughts around that? Do you think there could be another round of little price erosion market share loss, et cetera?

Question: Bino Pathiparampil - Elara Capital - Analyst : Understood. Second question on domestic market. You had done a deal with Sanofi for the CMS products. Is the full benefit of that reflected in Q1 revenue?

Question: Bino Pathiparampil - Elara Capital - Analyst : Understood. Thank you. That's it from my side. Thank you.

Question: Aman Vij - Investment Management - Analyst : Yeah. So my first question is on the site portfolio, okay. So you mentioned one, we have launched two more in H2. So one and then one you delayed. Is my understanding correct out of the four?

Question: Aman Vij - Investment Management - Analyst : Sure. And this includes the osteoporosis product also?

Question: Aman Vij - Investment Management - Analyst : Osteoporosis product.

Question: Aman Vij - Investment Management - Analyst : Sure, sir. And just out of this, any of the GLP-1 products we are launching this year?

Question: Aman Vij - Investment Management - Analyst : No, both, sir. So I was not talking about the leader side. So because that approval is coming sooner. So we don't have any product for that. For the development --

Question: Aman Vij - Investment Management - Analyst : No, no. For outside India, sir?

Question: Aman Vij - Investment Management - Analyst : So, second question is on the Lanreotide again. So -- on the generic side. Sir so we have the like 2 market the market share on the So can this also achive similer market share? Or do you think this will remain a much smaller product for us?

Question: Aman Vij - Investment Management - Analyst : Sure. And any word on the competition, I believe there are three more ANDA filers. So when are you expecting the competition to come in for the generic version?

Question: Aman Vij - Investment Management - Analyst : Okay. Thank you.

Question: Nitin Agarwal - DAM Capital - Analyst : Thank you for taking my question. Umang on the US business the two peptides that you talked about for this year and the one that you talked to subsequent ones. From a size and scale perspective, are they kind of similar to what the Lanreotide opportunity for us? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 26, 2024 / 10:30AM, CIPL.NS - Q1 2025 Cipla Ltd Earnings Call

Question: Nitin Agarwal - DAM Capital - Analyst : Okay. Secondly, and on Lenalidomide is it fair to assume that this year and next year, we'll have volume higher volume shares versus what you've sold in '24?

Question: Nitin Agarwal - DAM Capital - Analyst : And if I just take a look forward. We've got a high base of Lanreotide this year, with both our version being there maybe as well as (Inaudible) is there. On this base, does that base start to become a challenge for us to grow at some point in time? I mean, how do you see that, say, a couple of years out? How do we grow on this -- on the base of where a significant proportion is being contribution by thses B2 products?

Question: Nitin Agarwal - DAM Capital - Analyst : Thank you.

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Thank you for the opportunity again. On Lanreotide, my understanding was that the economics will be slightly better than ANDA (inaudible) products. Is it a good assumption or would it be very similar. What we have is 505(0)(2). REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 26, 2024 / 10:30AM, CIPL.NS - Q1 2025 Cipla Ltd Earnings Call

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Sure. And on the generic side, there is a slight difference in terms of indication versus the innovative product, right? So will it have any impact in terms of what we call a skinny label generic wherein you have to be kind of in a very short that it doesn't end up in that indication, which is not covered in our label?

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Lanreotide, yes.

Question: Kunal Dhamesha - Macquaire Capital - Analyst : Okay, Sure, thank you and all the best.

Question: Krishnendu Saha - Quantum Mutual Fund - Analyst : Yeah. Hi. Thanks for taking my question. Most of the questions have been answered. Just when you say supply for Lanreotide. So am I to assume that there is a supply constraint, there's manufacturing capacity with your partners for Lanreotide? Is it correct to say? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 26, 2024 / 10:30AM, CIPL.NS - Q1 2025 Cipla Ltd Earnings Call

Question: Krishnendu Saha - Quantum Mutual Fund - Analyst : So right now we are manufacturing constraint, which slowly will ramp up. That's the way -- and we're creating a couple of more in the basket. Just for my understanding, if we have a couple of more peptides, does it help in the basket, does it help in any way to marketing or desire. I don't track in details. But just thinking, does it really help because integrations are different? Does it help?

Question: Krishnendu Saha - Quantum Mutual Fund - Analyst : Yes, obviously at profitability. And does it make sense, does it give you leverage we have four, five, six peptides in the basket to they're using different therapies and on and so forth. Does it help?

Question: Krishnendu Saha - Quantum Mutual Fund - Analyst : (inaudible) Just on the Indian front, we are acquired, I suppose -- has the acqusition gone through? And do we in the business? What is the run rate? Any thoughts on any number you are trying?

Question: Krishnendu Saha - Quantum Mutual Fund - Analyst : The you acquired a cosmetic and personal care business? I (inaudible) I suppose to.

Question: Krishnendu Saha - Quantum Mutual Fund - Analyst : Thanks. And the last question on the raw material cost pressure that you see this I know the product mix was better off. That's why the gross margins are better. But do you see in the material cost being lower as compared to last year? Is it the same?

Question: Krishnendu Saha - Quantum Mutual Fund - Analyst : Okay. Thank you very much.

Question: Sumit Gupta - Centrum - Analyst : Thank you for the opportunity to ask two questions. First is on the domestic side. So what is the current MR base? And how do you -- so do you plan to expand the MR base?

Question: Sumit Gupta - Centrum - Analyst : Okay. And Majority, how much would be growth CapEx?

Question: Sumit Gupta - Centrum - Analyst : So the incremental [$5 billion to $7 billion], which is pointing towards a CapEx for this measure would be US. or it would be 50-50 US, India?

Question: Sumit Gupta - Centrum - Analyst : Understood. Thank you.