Torrent Pharmaceuticals Ltd Q3 2024 Earnings Call Transcript

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

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Just on the gross margin front, sequentially, where the India sales has been pretty stable, even Brazil sales have improved, but the gross margin have dipped. So any particular reason you would want to call out?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : In Brazil, at least in the last two years, fourth quarter has been much stronger than the earlier three quarters. So would that be a similar phenomenon this time as well?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst :

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Even on Germany side, the tenders which we had won in the past where the revenue was supposed to be coming in fourth quarter. So from that perspective, Germany also would be looking better in the coming quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2024 / 10:10AM, TORP.NS - Q3 2024 Torrent Pharmaceuticals Ltd Earnings Call

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Any regulatory update on Indrad?

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Sir, when you said 31% kind of margin looks a sustainable base going ahead, so, can you talk about the headroom improvement which might be available for Curatio. Are you broadly done with the improvement margin which you are targeting, that's why, like we might be looking more at the sustainable margins or like you have more room to improve there?

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Any expectation or any assumption about the volume part of the market which you might be building in right now for next year or so?

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Somewhere like 3% to 4% kind of volume growth you are comfortable? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2024 / 10:10AM, TORP.NS - Q3 2024 Torrent Pharmaceuticals Ltd Earnings Call

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : My second question is on like status of supply ramp up from Dahej. So although we have seen a sequential improvement like minor improvement in the US sales, but like how are supplies picking up from Dahej and what are you focusing on?

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : So in the coming quarters, it should definitely move up from this USD33 million sales which we have seen for the quarter?

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : My next question is on Brazil business. So generic, now you said moved up to 40% of total segment sales. So can you talk a bit about like your launch plan for both the branded generic part as well as the generic part and what will be your priorities for Brazil segment in next, say, two years or so?

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : One just last point on Brazil business. So right now, you have BG portfolio, GS portfolio. Do you have presence in tender market also or it's not there anymore? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2024 / 10:10AM, TORP.NS - Q3 2024 Torrent Pharmaceuticals Ltd Earnings Call

Question: Neha Manpuria - BofA Global Research - Analyst : On the India business, Aman, how much would the trade generic and the consumer healthcare piece of the total India business? I'm just trying to understand how much growth we're seeing in the actual branded generic business versus these new areas that we have been trying to grow over the last few years.

Question: Neha Manpuria - BofA Global Research - Analyst : So basically, to have more national ads, et cetera, like you had for Shelcal?

Question: Neha Manpuria - BofA Global Research - Analyst : We are seeing a lot of our peers obviously trying to expand into the chronic segment. It's much talked about by everyone, particularly in markets that Torrent is very strong in. In that context, how do we see ourselves trying to maintain our market share or even maintain this 3% to 4% volume growth that you have talked about, how do I balance the fact that there is increased competition, there are new players trying to get in as well as Torrent trying to protect its market share and at the same time maintaining margins? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2024 / 10:10AM, TORP.NS - Q3 2024 Torrent Pharmaceuticals Ltd Earnings Call

Question: Neha Manpuria - BofA Global Research - Analyst : So you don't see the need to add more MR to the 5,500 number that we have in place to keep the growth momentum in the India business?

Question: Neha Manpuria - BofA Global Research - Analyst : I know, you don't want to talk about Curatio separately. So if I were to just say the entire portfolio that we have acquired the pediatric, derma portfolio, initially, we were very strong in South and West, and the idea was to make it more Pan-India. If you could give us some color in terms of what's the doctor coverage we've been able to achieve since it's been a year, how much more do you think there is to go in that and now that you've moved Tedibar to the consumer healthcare, is there any other brands that we can look at or brand extensions that we can look at on the acquired portfolio?

Question: Neha Manpuria - BofA Global Research - Analyst : Sudhir, now that we are less than one-time net debt to EBITDA and a lot of the noise around M&A has gone away, should I think about Torrent looking at more deals like we have done in the past in the India business?

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : The first question is on the overall India industry growth, right. If you look at any data source, it's been trending down, right? Like you said, your press release calls out about 9% growth for IPM, right? I know we're growing faster, 200, 300 bps like we have guided. But just want to understand and it seems to emanate more from volume growth, which you are better. So just trying to understand what's happening from an industry standpoint and what we are doing differently to increase our volumes?

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : I don't know whether I got the MR number right. It's 5,700, right, or is it 5,500?

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : On top of this, on an annual basis, you plan to add 200 MRs.

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : Any commentary on the productivity of the field force, where does it stand right now and is there any aspirations of where we want to reach?

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : Second question is on US business. Just looking at the commentary that growth will start from 1Q, where are we in terms of price erosion, because of the lack of launches, are we still seeing a higher side of price erosion?

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : What is the prognosis here? Do we think that this remains and once the launches start, you will start seeing like high single digit value growth you think for next year, how should we look at the US business next year?

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : I think in the opening remarks, there was a comment about profitable growth in the sense that in the US. So if we reach the kind of scale that you're talking about, when you mean profitability, what are we referring to?

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : Where is that now? Like it's negative I get it. But how far? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2024 / 10:10AM, TORP.NS - Q3 2024 Torrent Pharmaceuticals Ltd Earnings Call

Question: Shyam Srinivasan - Goldman Sachs (India) Securities Private Limited - Analyst : Last question is again on sustainable margin. I thought was not 31, right, 31.8 is the number for the Q3, so it's 32 then what we should assume as a base going forward?

Question: Rashmi Shetty - Dolat Capital Market Pvt. Ltd. - Analyst : So what will be the R&D guidance now in FY25 to '26 the US business will be picking up?

Question: Rashmi Shetty - Dolat Capital Market Pvt. Ltd. - Analyst : Sir, with all the businesses on cash now, US, Brazil or Germany and even India and the base level is now EBITDA margin is around 31.8%, are we targeting that annually every year, we should improve at least your margin by 50 to 100 basis points?

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : I have a question on Brazil. Now in Brazil, on the macro market growth, which seems to have picked up a bit. What do you sense, what has really driven this improvement in the underlying market growth, and what is the sense and how does it play out here from here on? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2024 / 10:10AM, TORP.NS - Q3 2024 Torrent Pharmaceuticals Ltd Earnings Call

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : In terms of our own plans for the market, apart from launches in the three therapies we are present right now, I mean is there a plan to add some more therapies as we go along?

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : Secondly, on the ROW market as they are ex-Germany markets which are there, anything you want to call out, any markets where we made reasonable progress over the last few quarters and what is looking promising going forward?

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : So in terms of size in Brazil, what is the size in the branded generic market in terms of the size of the companies which are there?

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : This is including the innovators? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2024 / 10:10AM, TORP.NS - Q3 2024 Torrent Pharmaceuticals Ltd Earnings Call

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : And how has this changed over the last three years or so in terms of rank number 20?

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : Like the way I understood India market, is this a business where as long as there's revenue growth coming in, leads to continuous margin improvement as we go forward?

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : Just taking off from there, Sudhir, you are saying there is a serious positive operating leverage in Brazil, and I guess US with the scale that we start to get incrementally whatever growth we get, we should get some positive leverage coming from there also. So overall, these two should be further positive factors from a margin expansion perspective as we go forward?

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : Aman, in terms of India, how are you looking at the new launch landscape for the next say four to five quarters, are there some interesting opportunities which are there?

Question: Nitin Agarwal - DAM Capital Advisors - Analyst : On Sitagliptin, you referred in your conversation, what has worked for us in your assessment in Sitagliptin? It's a reasonably competitive market.

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Sir, just this breakup of this ROW and contract manufacturing sales, if you could share?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Secondly, just on the India market again. The in-licensing of products, any thoughts on pursuing that as a strategy given that we have such a strong presence on the chronic side?