Eris Lifesciences - 100% of sales from India Pharma Market

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AR23 notes

Diabetes

  • Insulin:
    o Commercialized 2 products: Human Insulin (Xsulin – Regular and premix as vials and cartridges), Glargine (Xglar)
    o Pipeline consists of Liraglutide and other insulin analogs
    o Clocked 17 cr. revenue with operating losses of (-20 cr.)
    o Expect losses to narrow in FY24 and business to be profitable in FY25
    o Promoted through 200-member field team
  • Glimisave crossed 300 cr. and Zomelis crossed 100 cr.
  • Full-service presence across all the oral segments – Sulphonylureas, DPP4 Inhibitors (vildagliptin, sitagliptin) and SGLT 2 Inhibitors (dapagliflozin) – and in injectable Anti-Diabetes therapies
  • DPP4 and SGLT2 portfolio have grown at a 50% CAGR over last 3 years
  • New launches: Glura (DPP4 Inhibitor), Sidacor
  • In covered market of ~14,000 cr., ranks #8 in terms of revenue and #5 as per Rx

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Cardiac

  • Eritel grew at 19% and is now 175+ crore mother brand
  • New launches: Zayo (relaunched), Bisopharm, Cardexa
  • Number of major molecules will lose exclusivity in cardio metabolic segment in next 3-5 years

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Dermatology

  • Spent 1265 cr. spent in 3 acquisitions
  • Acquired Oaknet Healthcare for 650 cr.
  • Acquired 9 Derma Brands from Glenmark (Medical dermatology) for 340 cr.
  • Acquired 9 Derma Brands from Dr. Reddy (Cosmetic Dermatology) for 275 cr.
  • Acquisition with an “owner manager” mindset, with willingness to do the hard work to create value
  • Oaknet clocked 22% organic growth in FY23 after 3 flat years during FY20-FY22. EBITDA margin expanded from 10% in FY22 to 24% in FY23 and will expand further in FY24
  • Ranks #3 in its Dermatology covered marked with a share of 7%
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Vitamins, minerals and nutrients

Women’s health

  • New launches: Drolute (Dydrogesterone), FCM injection

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Central nervous system

Capex and manufacturing

  • New manufacturing plant in Gujarat began commercial operations in March 2023 and augments capabilities in oral solids, oral liquids, sterile injectables and creams/ ointments. Its built by WHO GMP standards and has 10x footprint of Guwahati site
  • Manufacturing facility at Guwahati contributed 70% of products sold (by value) vs 80% in FY22
  • Capex: 208 cr. (vs 53 cr. in FY22). Taken from gross block increase

General

  • Top-20 mother brands account for 70% of revenue and clocked 17% growth in FY23
  • 15 brands ranked among top-5 in their therapies
  • 4 mother brands with revenues of 100+ cr., 6 mother brands with revenues of 70-80 cr. and 5 mother brands with revenues of 50-60 cr.
  • Excluding impact of Covid products and “at risk” launches, standalone revenue grew by 15.6%
  • Consolidated revenue grew at 25% and 31% excluding impact of covid products and “at risk” launches
  • Preservation of consolidated gross margin of ~ 80% is an integral component of growth strategy
  • Introduced a reward program to recognize top performers from various departments (sales, marketing, manufacturing, etc.)
  • YPM (Yield per Man per Month) in standalone operations (branded formulations business) for FY23 stood at INR 5 lakh per month
  • Future growth: In-licensing, exploring newer therapeutic areas and future patent expiries
  • Permanent employees: 3’548 (median increase was 8.68%)
  • Share price: 550.9 (low), 749.85 (high)
  • Shareholders: 46’403
  • Expected credit loss provided for: 3.5 cr. (vs 3.5 cr. in FY22)
  • Amit Bakshi increased shareholding from 40.28% in FY22 to 40.84% in FY23
  • Contingent liability: 28 cr. (vs 24.5 cr. in FY22)
  • Auditor remuneration: 1.28 cr. (vs 0.5 cr. in FY22)
  • Bankers: Axis, HDFC, SBI, Citi

Industry trends

  • With ~55% share in IPM, chronic and sub-chronic therapies grew by 10.6% in FY23, while acute therapy comprising ~45% of IPM, grew by 7.8%
  • For Eris, chronic and sub-chronic contributes 87% (vs 55% for IPM)
  • NLEM: 7% for Eris (vs 14% for IPM)

Patient initiatives

  • Ambulatory Blood Pressure Measurement on Call: 9,000 clinicians have used this service and over 130,000 patients have been screened through ABPM on Call
  • 24 hours Ambulatory Electrocardiogram: 68,000+ patients have been screened
  • Continuous Glucose Monitoring (CGM): 48,000+ patients have been screened
  • Sleep Study on call: 24,000+ patients have been screened
  • Montana ANC Associate (detect Hb, PIH and GDM in Fetal Origin of Adult Disease): 200,000+ patients have been screened

Disclosure: Invested (position size here, no transactions in last-30 days)

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