AstraZeneca Pharma India Limited — Q1 FY25 earnings call

Call held 8 Aug 2024

Management summary

AstraZeneca India is undergoing a significant strategic transition from a manufacturing-led model to a specialist biopharmaceutical trading organization. The company delivered robust double-digit growth in FY24 and started Q1 FY25 with strong underlying momentum despite the loss of exclusivity for key brands. Management is focused on accelerating the launch of the global innovative pipeline in India to support the parent company's $80 billion revenue target by 2030.

Highlights

  • Total Revenue for FY23-24 reached ₹1,330 crores, representing a 29% YoY growth.

  • Q1 FY25 revenue growth (excluding Lynparza) stood at 45% YoY and 8% on a sequential basis.

  • Profit Before Tax (PBT) grew by 64% in FY24, with EPS increasing 63% to ₹64.60.

  • Oncology segment remains the largest contributor, with Tagrisso alone accounting for 26.53% of total sales.

  • An exceptional charge of ₹57 crores was recorded in Q1 FY25 related to the closure of the Bangalore manufacturing plant.

  • The company declared a dividend of ₹24 per share for the financial year 2023-24.

  • Inventory holding improved to 64 days in FY24 compared to 74 days in the previous year.

Key financials

3 periods

Headline

  • EPS
    ₹64.6
    YoY +63%
  • Material Consumption to Sales
    45.9%
  • Employee Costs as % of Sales
    18.6%
  • Book Value Per Share
    ₹284.77

Q1 FY25

  • Exceptional Charge
    ₹57 Cr

FY24

  • Revenue
    ₹1,330 Cr
    YoY +29%

What they filed

Q1 FY27: revenue up 29.8%, net profit down 32.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue408 440 480 526 559 +37%612 +39%579 +21%683 +30%
EBITDA53 77 86 81 75 +42%45 −42%61 −29%49 −40%
Net profit38 31 58 56 54 +42%33 +6%45 −22%38 −32%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Oncology
    ₹319.9 Cr Tagrisso Sales₹200.7 Cr Imfinzi Sales₹131.3 Cr Lynparza Sales42% Growth Rate
  • Biopharmaceutical (CVRM & Respiratory)
    ₹181.1 Cr Brilinta Sales₹75.2 Cr Forxiga Sales27% Brilinta Growth

Guidance & targets

Other

  • Plant Sale Realization Other · next 12 to 15 months · Medium confidence Completion of sale
    what kind of realizations company is expected to get in the next 12 or 15 months when the entire sale happens.

    — Satish Bhatt (Analyst Question acknowledged by Management)

Revenue

  • India Revenue Growth Revenue · Current/Ongoing · Medium confidence 30%
    if we want to bring innovative medicines to India faster, which will help grow our organization, it's already doing a 30% and it will contribute more by 2030 versus what we are doing today.

    — Sanjeev Panchal, Managing Director

Market context

  • Global Revenue Ambition Revenue · by 2030 · High confidence $80 billion

    Previously $45 billion → $80 billion

    Two months back your parent had given guidance of USD80 billion by year 2030... India would be a larger contributor from what it is currently.

    — Sanjeev Panchal, Managing Director

Risks & concerns

  • Gross Margin Compression

    medium

    Margins have been declining over the last two quarters due to product mix shifts and the transition to a trading model.

    Analyst acknowledged

  • Loss of Exclusivity (LOE)

    medium

    Key brands like Forxiga and Brilinta have faced or are facing loss of exclusivity, requiring new launches to offset revenue pressure.

    Management acknowledged

  • Plant Exit Costs

    low

    The closure of the Bangalore site involves one-time exceptional charges (₹57 cr) and potential employee-related liabilities.

    Both acknowledged

Areas of evasion (2)

  • Breakdown of the ₹57 crore exceptional charge
  • Specific realization value expected from the Bangalore land sale

Q&A highlights

1 direct, 1 evasive
Gross Margin Decline Partial
All these changes in the gross margin material cost can happen because of the mixed changes and the fact that we are becoming a specialist organization which is more focusing on the trading products.

Explains the structural shift in profitability as the company moves away from in-house manufacturing to importing/trading global products.

Asked by Harsh Bhatia

Exceptional Charge of ₹57 Crores Evasive
It is a bundle of various expenses which has been estimated at this point in time. And it includes employee related aspects and various others as well. It may not be appropriate to sort of break it down at this point in time.

The charge significantly impacts Q1 FY25 earnings, and management's refusal to provide a breakdown leaves uncertainty regarding the total cost of the plant exit.

Asked by Satish Bhatt

Custom Duty Exemption Benefit Direct
We are now working on how the benefit can be passed to the patients in our country that will help expand the access to our medicine.

Addresses regulatory tailwinds in the oncology sector and the company's commitment to patient affordability.

Asked by Harsh Bhatia

2 min read 5 chapters

Detailed narrative

Oncology Portfolio Drives Growth

The Oncology business is the primary engine for AstraZeneca India, growing at 42% YoY, significantly faster than the market. Tagrisso remains the flagship brand, contributing ₹319.9 million (26.53% of total sales), while Imfinzi and Lynparza also showed robust performance. The recent launch of Enhertu in January 2024 for HER-2 positive metastatic breast cancer is expected to be a key catalyst for future growth in the segment.

Strategic Exit from Manufacturing

AstraZeneca is exiting its Bangalore manufacturing site as part of a global strategic review. This transition resulted in a ₹57 crore exceptional charge in Q1 FY25, covering employee-related aspects and other closure costs. The company intends to sell the site, which is described as a 'prime property' near the airport, with realizations expected over the next 12-15 months. This move shifts the company toward a 100% trading model for innovative global products.

Biopharmaceutical Resilience Amid LOE

Despite the loss of exclusivity (LOE) for Brilinta and Forxiga, the Biopharmaceutical division grew by 8%. Brilinta achieved 27% growth YoY by sustaining market leadership in the OAP market. The company is also expanding its respiratory portfolio through an exclusive distribution agreement with Mankind Pharma for Symbicort, aiming to improve access across India.

Rare Disease Market Entry

AstraZeneca officially entered the Indian Rare Disease market with the launch of Koselugo for pediatric patients with neurofibromatosis type 1 (NF1). Management highlighted that finding and diagnosing rare disease patients is a key challenge, and they are leveraging digital tools and partnerships with advocacy groups like ORDI to build awareness and widen the national policy ambit for rare diseases.

Digital and AI Integration

The company is heavily investing in digital transformation, reaching over 5,000 'white space' healthcare professionals through digital channels. Initiatives include the 'Lung Mitra' platform and AI-based screening collaborations with the governments of Goa and Karnataka for early lung cancer detection. Internally, the company has launched 'easy chat GPT' for employees to simplify operations and accelerate innovation delivery.

This is an AI-generated summary of a publicly available earnings call transcript.
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