LAURUS LABS LIMITED FY22 PERFORMANCE : KEY TAKEAWAYS

Management indicates the challenges in availability of raw materials and increase in the cost of solvents. However they are trying to minimize any disruption to their commitments to customers by expanding their critical supplier base. 

Management says, FY 22 operationally has been fairly resilient where we are stabilized on our sales and profitability was maintained closer to 30% despite headwinds in our ARV API business. 

For the full year FY 22, the company achieved INR 4,936 crore with a growth of 3%, whereas in Q4 it achieved 1,420 crore against INR 1412 crore in the corresponding quarter. 

Segmental Performance FY22

Segmental Performance Q4FY22

Laurus Generics - Finished Dosage Form (FDF)

The formulation division reported revenues of INR 1,880 crore in FY 22 with 13% growth, whereas INR 491 crore for the quarter with an increase of 14%. The contribution from this division has improved during FY 22 to 38% when compared to 35% in the previous financial year. 

LMIC business started witnessing gradual stabilization in the demand from various multilateral agencies versus company previous quarter performance, which was impacted due to stocking at various channels. 

Management has informed in its concall that During Q4, we have received final approval for lopinavir-ritonavir combination from the US FDA and we have launched that product recently. Additionally, we're awaiting a few more product approvals, which should drive growth in the coming quarters. 

Laurus has signed and will be part of MPP license for Pfizer's oral COVID vaccine, this will increase the broad access in LMIC markets. 

In the developed markets, the company is observing stable market share for their products and no pricing pressure here. Company is focusing on the US market with the new product launches. They have filed one product during the quarter and a total of four were filed during FY 22. Overall filing number improved versus FY 21 and management expects filing pace to pick up during the current financial year. They have received three approvals during the quarter and total five approvals in FY 22. Cumulatively, they have a total of 31 ANDA filed to date. Of this, they have a total of 11 final approvals and 11 tentative approvals so far. 

In Canada, they have 11 product approvals, of which they have launched five products and they intend to launch two more products in the next few quarters. 

For the European markets, they have validated two products as part of their contract manufacturing partnership. They expect a significant upside in FY23 from these products. In Europe, They have a basket of eight approved products of which they have already launched three products and they will be launching more products based on the market opportunity. 

Management says, we continue to invest in our FDF infrastructure, our brownfield expansion at unit 2 is progressing as per our expectations and is expected to add significant capacity to our FDF operations taking the capacity to 10 billion units. Currently the brownfield expansion is under qualification and will be ready for commercial use before June 22. 

During the quarter, the company successfully completed EMA inspections for unit two and brownfield expansion also was inspected by the European agency. 

Laurus Generics - API

Management briefs about ARV Business 

ARV during the quarter saw improvement in procurement and sales to other generic companies have grown sequentially, by 47% to almost INR 300 crore, for the full year FY 22, the business reported negative growth of one third, almost 33% due to high base effect while overall demand environment stays softer. 

Onco API reported INR 72 crore sales during the quarter reflecting growth of 16%, Laurus Labs has one of the largest high potent API capacities in India, and we are partly adding new capacities during the next 12 months. We also added a lot of capacity in the previous 12 months as well. In other APIs other than ARVs and Onco we have achieved INR 171 crore sales during the quarter, this was supported by new contract supplies. For FY 22 while our growth was muted we believe the segments should return to a healthy growth trajectory in FY 23. 

Laurus Synthesis 

Company provides Contract Research and Manufacturing Services (CRAMS) and Contract Development and Manufacturing Organization (CDMO) to global pharmaceutical companies and several late-stage projects. 

Management briefs that CDMO business has maintained a solid growth momentum and delivered robust growth and we doubled our revenues by almost 100% to INR 360 crore in the Q4. For FY 22 CDMO business grew very strong over 75% year on year. 

Management further informs during concall, on multi year supply contract, we executed in quarter two FY 22 the Capex work is on fast track. Additionally, our proposed Greenfield investment to set up a dedicated R&D center for our CDMO division at Hyderabad and three manufacturing units in Vizag under Laurus Synthesis is progressing as per our expectations. New sites for this division will have the capabilities to handle steroids, hormones, and high potent molecules apart from large scale products.

Laurus Bio 

Management briefs about the Laurus Bio. The revenues have improved over 40% quarter on quarter to INR 35 crore mainly led by new capacities getting operational. For the full year FY 22 the sales was INR 100 crore, which is a very significant growth, almost 70% compared to pre acquisition annualized data of INR 58 crore as we brought more operational synergies and added more capacities to this division. We're also gradually ramping up on the 180,000 L fermentation capacity with our large scale manufacturers. 

Laurus Bio has operated its 180,000 L fermentation capacity fully so capacity utilization is 100% in case of Laurus Bio. New fermentation capacity will only come by the end of FY 24, so significant growth in revenues at Bio can come only in FY 25. 

Information on Capex in FY22

Capex of INR 950 crore executed in the full year. Most of the investments across key projects are on track.

Product portfolio diversification 

Company has focused over the portfolio diversification over the years. Let us look how the company has improved its product portfolio and product contributions. 

4th Quarter Performance

Quarter on Quarter : 31 March 2022 Vs 31 December 2021 

Year on Year :  31 March 2022 Vs 31 March 2021 

Total Income : 

37.91 % Up quarter on quarter 

0.68 % Up Year on Year  

Gross Profit Margin : 

6.91 % Down quarter on quarter 

3.59 % Down Year on Year 

EBITDA : 

36.95 % Up quarter on quarter 

16.51 % Down Year on Year   

EBITDA Margin: 

0.20 % Down quarter on quarter 

5.75 % Down Year on Year 

EBIT Margin or Operating Profit Margin : 

1.39 % Up quarter on quarter 

6.57 % Down Year on Year 

Net Profit : 

49.64 % Up quarter on quarter 

21.90 % Down Year on Year   

Net Profit Margin: 

1.27 % Up quarter on quarter 

4.70 % Down Year on Year   

Cost of material as % of sales 

6.91 % Up quarter on quarter 

3.59 % Up Year on Year