Eris Lifesciences - 100% of sales from India Pharma Market

[harsh.beria93]

Margin revival continues, organic sales growth is a bit disappointing and they keep acquiring! I have captured recent call notes below.

FY24Q3

• Since FY17: OCF of 2,100 cr., invested 1,900 cr. in inorganic growth + 400 cr. capex + 400 cr. dividend and buyback. 6-year average GM: 80%+, EBITDA margin: 35%, OCF to EBITDA: 75%

• 3 derma acquisitions of 1**,265 cr. in FY23** will contribute 375 cr. sales and 130 cr. EBITDA in FY24. Tail brands are doing badly and main brands are growing well. Commercial production in Gujarat facility has started for derma products which will aid in margins

• Vision FY29: achieve revenues of 5,000 crores

• Swiss parenteral (51% for 637.5 cr. + 19% for 237.5 cr. by promoters)

  • Valued at 1250 cr. (12x FY23 EBITDA, 4.5x FY24 sales)

  • FY23 revenue: 280 cr., 37% EBITDA margin and 25% PAT margin

  • Remaining 30% will be held by Naishadh Shah, Director of Swiss Parenterals, who will be in charge of day-to-day operations

  • 11 lines of sterile injectables (mostly antibiotics) focused on ROW markets; strong presence in Southern Asia and Africa, and focusing on European markets. Work on distributor led model

  • Will enable Eris to launch Sterile Injectables business in India (hospital focused) along with small volume parenteral market. Target of 100 cr. in first year on the domestic injectables side

  • Differentiation of what goes into Swiss Parenteral vs Eris: Swiss will do large part of hospital business and Eris will do specialty drugs. For example, in Women’s health, there is some amount of biotech which will be done by Eris

  • Will build an OSD business in RoW markets leveraging Eris’s manufacturing facilities and Swiss’ RoW channels and distribution presence

  • 1,000 active dossiers across 200 molecules, and pipeline of 1,000+ dossiers in existing molecules and 40+ new molecules

  • 2 manufacturing units in Gujarat being run as single shift

    • Unit 1 is for general injectables

    • Unit 2 has dedicated blocks for betalactams, penicillins, cephalosporins and carbapenems

    • Will do 40-60 cr. capex in next 2-years

  • R&D: 15 professionals focusing on liposomal, microsphere, oil-based and depot injection

• Insulin: 12 cr. sales in Q3FY24 (YPM: 3.5 lakhs). Reached 5 cr. monthly runrate

• Launches and R&D pipeline

  • Launched Sitagliptin-Gliclazide and Dapagliflozin-Gliclazide in December + Empagliflozin + Linagliptin combination

  • Secured approvals for Liraglutide and Glargine from MJ’s pipeline and these will be launched in Q4

  • Pipeline increased to 26 from 14 in Q2 (17 FDCs + 9 new drugs)

• Looking at standalone performance will no longer make sense as Gujarat facility is part of Eris Therapeutics Ltd

• Tayo (MAT of 80 cr.; 45% Q3 growth), Gluxit (MAT of 75 cr.; 21% Q3 growth) and Remylin (MAT of 70 cr; 51% Q3 growth) are set to reach 100 cr. annual sales

• Biocon portfolio doing 7-8 cr. of monthly secondary sales, gross margins will increase from 50s to 70% by Q1FY25

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

[Rafi_Syed]

Biocon to sell branded formulations business to Eris Lifesciences for $150 mn

One more acquisition

[harsh.beria93]

Eris has been now on a huge acquisition spree, having spent close to 3500 cr. in last few years on acquisitions. One thing this clearly highlights is how hard it is to grow organically in branded market (or that Eris is lacking that capability).

The only good things about their acquisition is large acquisitions are done to get into new therapies, and they pay reasonable valuations for most acquisitions (~3x trailing sales). See a summary of all their acquisitions below.

14.03.2024 call notes

• The Swiss Parenteral and Biocon biologics deals were evaluated together

• Biocon biologics

  • Acquired Indian branded sterile injectable business of Biocon Biologics (1242 cr.; 360 cr. sales; 70 cr. EBITDA and will increase to 100 cr. in FY25). This will expand their presence in the sterile injectables market and has synergies with Swiss Parenterals Limited

  • 435 employees (325 MRs), price includes 50 cr. net working capital

  • Oncology (Monoclonal antibodies; MAB; 80 cr.; 40 field force including 30 MRs) + insulin (200 cr.) + critical care portfolio (80 cr.; 70 field force)

  • Critical care manufacturing will move to Swiss Parenteral, Mabs and Insulin will be sourced from Biocon

  • Insulin:

    • Basalog (Glargine; 8.2% to 10.5% market share in last-4 years) - 100 cr. brand

    • Insugen (rH insulin; 9.5% to 11% market share in last-4 years) - 100 cr. Brand

    • Both Basalog and Insugen have not grown in last 5-years, but have gained volume market share

    • RH insulin Indian market has declined in volume terms in last 5-years

    • Insulin can reach 70% gross margins

    • Hope to gain from interchangeability acceptance for Basalog (no other biosimilar in India has this)

  • Will continue their own Xsulin and Xglar brands

  • Anti-diabetes will be a ~1000 cr. franchise now

  • Oncology – 5 main brands (Biomab, Canmab, Hertraz, Krabeva and Abevmy). Market is growing at 26%+ p.a. 80 cr. sales with

  • Acquired brands highlighted below (maybe more, only highlighted ones where I am sure)

• Will acquire 19% equity stake in Swiss Parenterals Limited from Eris’ promoters (237.5 cr.; same as original acquisition price of 1250 cr.)

• FY25 net debt will be <2x of FY26 EBITDA (1-year forward). Net debt will be 3000 cr. From now on, focus will be on optimizing acquired units. Cost of debt is 8.65%

• Target to reach 5,000 cr. revenues in FY28 (vs FY29 earlier)

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

[Malolan_R]

Hello

wanted to start a new thread on this … Both the Biocon divestiture to Eris and their acquisition of Swiss Parenterals.
Market seems to be overly concerned about rising debt levels in the company.
Market is also worried that all cash flows are being invested in acquisitions and feel some will go wrong.

In a way only time can say . But management seems to be quite convincing.

Malolan

[ranvir]

Eris Lifesciences -

Q4 and FY 24 results and concall highlights -

Acquisitions made by the company in last 24 months -

Oaknet Pharma - entry into Derma business - paid Rs 650 cr

Select brands of Glenmark Pharma - paid Rs 340 cr

Derma brands of Dr Reddy’s - paid Rs 275 cr

Biocon’s domestic Nephro and Onco business - paid Rs 366 cr

Swiss Parenterals - sterile Injectables business - paid Rs 640 cr for 51 pc stake

Biocon’s India Injectables business - paid Rs 1242 cr

**Total cost of all acquisitions put together - 3510 cr **

Total revenues of the acquired assets at the time of acquisition - 1240 cr

Q4 outcomes -

Revenues - 547 vs 396 cr, up 38 pc ( domestic revenues @ 480 vs 389 cr )
Gross Profit - 432 vs 402 cr, up 31 pc
EBITDA - 148 vs 118 cr, up 25 pc
PAT - 79 vs 61 cr

FY 24 outcomes -

Revenues - 2009 vs 1685 cr, up 19 pc ( Domestic revenues @ 1902 vs 1606 cr )
Gross Profit - 1629 vs 1332 cr, up 22 pc
EBITDA - 674 vs 536 cr, up 25 pc ( margins @ 34 vs 33 pc )
PAT - 397 vs 374 cr, up 6 pc ( due much higher depreciation, amortisation, finance costs )

There were non-recurring one time expenses of aprox 38 cr in Q4. Adjusted to that, PAT for FY 24 would have been 430 cr

Consolidated Debt on balance sheet @ 3000 cr. Company intends to reduce it to 2600 cr by end of FY 25 out of internal accruals. By the end of FY 26, aim to bring it down to 2000 cr !!!

Aiming for organic revenue growth of 12-14 pc in the domestic formulations business. Aim to maintain EBITDA margins > 35 pc for FY25. Will share complete company level guidance post completion of integration of Swiss Parenterals and Biocon’s domestic business by end of Q1 FY25. Biocon’s domestic business is currently clocking annual sales of 360 cr. Swiss parenterals clocked FY24 revenues of 280 cr with 37 pc EBITDA margins

Eris - Biocon combined will create 5th largest Anti Diabetic franchise in India with Anti Diabetes only revenue base of close to 1000 cr / yr. It will have significant presence across oral and injectable Anti-Diabetic products

Company can work on expanding margins by using Swiss Parenterals manufacturing facilities to manufacture a lot of Biocon’s injectable products

Eris - MJ Biopharm JV ( 70:30 JV formed in 2022 to sell Insulins and GLP-1 products ) is now clocking a monthly sales of 5 cr. It reported an EBITDA loss of 20 cr in FY 23. In Q4 FY 24, EBITDA loss has narrowed down to 1 cr. Should turn EBITDA positive from Q1 FY 25

The Insulin penetration in the domestic mkt is very low. Company sees fairly large growth runway for their Insulin products - both from Biocon’s and MJ Biopharm’s portfolios

Aim to launch 4-5 new brands in India in Q1 in the Critical care space to be manufactured out of Swiss Parenteral’s facilities

Aprox capex lined up for next 2 yrs @ 70 - 80 cr each

Disc: holding, biased, not SEBI registered

[rbhutoria]

Q1FY25 results and concall highlights -

• Have 5 brands in excess of 100cr and 12 brands in 50-100cr range.

• Eris is now top 20 companies in the market. Have gained 9 ranks since IPO.

• Market growth of 8.1% and we grew at 12.7% in Q1.

• Gross margin at 86% up 300bps, Ebitda margin for Q1 at 39% up 189bps on YoY for base business.

• Guidance for FY25 - revenue growth of 12-14% and margin of 37% for the base business

• Biocon Nephro and Onco business acquired in Nov - Q1 revenue growth of 16%, Gross margin up from 50% to 65%, Ebitda margin up from 19% to 39%. Guidance for the year - 125cr revenue which is a 25% growth and 36% margin.

• Biocon Injectable business - Gross margin at 40%. Expect a 10% improvement in margin going forward. Expect a growth of 28% to 480cr.

• Swiss Parenterals - Guidance of 330cr Sales and 115cr ebitda a growth of 13-14% in sales and 30% in ebitda. Started manufacturing key Biocon Critical Care products and Eris products. Have done multiple regulatory inspections and qualifications. Have filed multiple products. Geared up for future growth.

• New acquisition of biosimilar fill finish lab of Biocon for 105cr. This will reduce time to market by 24 months. Key stepping stone for Biotek business. They have capacity for liquid vials and we will add cartridges and pre-filled syringes. This facility will make us GLP-1 ready. Will help improve margins for our insulin business of 1000bps.

• Overall expect Sales of 2600cr with Ebitda margin of 36% for branded business and consol revenue of 3000cr with Swiss parental with margin of 35%.

• Debt should reach 2500cr by end of FY25 and 2000cr by end of FY26.

• MR strength at 3700+. 560 reps added through Biocon acquisitions.

Disclosure: invested.

[manoopatil]

Eris is able to integrate the acquisitions well and improve the margins on acquired entities. I think they will be able to generate more cash than they are anticipating. Hence the debt repayment will happen earlier than projected. In the very detailed investor presentation here. They have provided outlook for each of their line of business.

Disc-Invested

[ranvir]

Eris Life’s abilities to integrate and turnaround the acquisitions are really really commendable. The kind of margin improvements seen across the acquired brands / companies post acquisition are just eye popping. They did the same with Oaknet Pharma a couple of yrs ago

I think ( personal opinion ), the management can drive a lot of shareholder value in medium term

Another company ( IMHO ) that’s on a similar path is Mankind Pharma ( post the BSV ltd’s acquisition ). Here too, the chances of a successful turnaround are great

Disc : holding both, biased, not SEBI registered , not a buy / sell recommendation

[Malolan_R]

Hello

I have a position in Eris and studying it regularly . I think Eris management is quite aggressive in their growth outlook and this can result in some accidents . We need to wait and watch carefully. We dont know exactly where this will materialize. But yes , its promoter has been very committed in terms of his growth strategy.

Mankind is a different company altogether and not comparable

Thanks

Malolan

[ranvir]

**Eris Lifesciences - **

Q2 FY 25 results and concall highlights -

Revenues - 741 vs 505 cr, up 46 pc

Gross Profit - 555 vs 411 cr, up 35 pc. GMs @ 75 vs 81 pc due significant changes in product mix

EBITDA - 265 vs 181 cr, up 46 pc ( margins @ 35.7 vs 35.8 pc )

PAT - 97 vs 122 cr ( due accelerated depreciation, amortisation and finance costs - because of a series of acquisitions made by the company in last 12 months )

Net Debt @ 2500 cr, ahead of schedule ( had guided for net debt of 2600 cr by 31 Mar 25 )

Guiding for a consolidated revenue of 3000 cr for FY 25 with EBITDA margins of 35 pc

Acquisitions made by the company in last 24 months -

Oaknet Pharma - entry into Derma business - paid Rs 650 cr

Select brands of Glenmark Pharma - paid Rs 340 cr

Derma brands of Dr Reddy’s - paid Rs 275 cr

Biocon’s domestic Nephro and Derma business - paid Rs 366 cr

Swiss Parenterals - sterile Injectables business - paid Rs 870 cr for 70 pc stake

Biocon Biologics India formulations business ( has significant presence in Onco and Anti-Diabetic therapies ) - paid Rs 1240 cr

Total cost of all acquisitions put together - 3740 cr

Total revenues of the acquired assets at the time of acquisition - 1070 cr

Launched Liraglutide ( GLP-1 ) brand - ERLY in Sep 24

Despite the drop in gross margins, the EBITDA margins of the consolidated business remain strong at 35 pc due successful business integration and cost + scale benefits thereof. Also, the company’s new manufacturing facility at Ahmedabad is ramping up with Q2 capacity utilisation @ 65 pc vs 55 pc in Q1. Additionally, company’s in-house production of Derma products has gone up to 30 pc vs NIL in previous FY. This number ( ie - percentage of in-house derma business ) is improving MoM. All these things are helping improve the Gross margins of base business and EBITDA margins of the consolidated business

Pre-Biocon acquisition, company’s anti-diabetes franchise was limited to OHAs ( oral hypoglycaemic agents ) with a topline of Rs 600 cr, 900 MRs and a yield per MR @ Rs 5.4 lakh/month. Post the acquisition and integration, the Anti-Diabetes franchise has OHAs + Injectables with a topline of 1000 cr +, 1200 MRs with a yield per MR @ 7.1 lakh/month - clearly company is benefitting from significant scale business in their Anti-Diabetes business

The OHA and Injectables teams are complementing each other at the field level - which is a great news for the company

Company has added six senior level officials to the Swiss Parenterals business - in the business development and regulatory compliance roles for business expansion in the African, Asia-Pacific and Latin American mkts

Likely to commence - Oral solid Dosage exports business. Expecting regulatory approvals from EU-GMO and ANVISA ( Brazilian regulator ) for the Ahmedabad site. Once approved, exports may commence in mid FY 26

In the process of commencing - CMO business wrt Injectables for the EU mkts. Target customers would be EU focussed big generics players. Looking to get into stable 3-5 yr manufacturing contracts with them

Company acquired 30 pc stake in Levim Lifetech for 54 cr in Q2 FY 25. Levim has developed and commercialised 3 products - Liraglutide ( GLP-1 ), Streptokinase ( used to treat blood clots in Heart, Lungs, blood vessels ) and Pregaspargase ( Onco drug used to treat a type of blood cancer ). Successful development of Liraglutide by Levim builds confidence for a future GLP play. They are likely to commission a large scale manufacturing facility in Mid-2025. Levim’s R&D pipeline is expected to expand significantly going forward

Company’s brand ERLY is based on the active ingredients manufactured at the Levim’s manufacturing facility

Capex for FY 25 should be at 150 cr ( aprox ) + 54 cr investment in Levim’s business

Breakdown of Q2 revenues -

Base business - 501 cr
Biocon’s business - 131 cr
Swiss Parenteral’s business - 82 cr

H2 should see a flurry of launches in the base business. Base business is expected to grow by 10 pc in FY 25

GLP-1 drugs should end up being a big opportunity in India. At present, company is going to play it via Liraglutide. Post FY 26, they ll introduce Semaglutide

As Levim is able to develop more products, ERIS is likely to increase their stake in that business

Expect the Insulins business ( acquired from Biocon ) to grow in high teens in next 2-3 yrs. Only concern here is the supply shortages of Insulins - not only in India but across the world

Swiss Parenterals should do a 330 cr kind of Topline for FY 25. This business is also likely to keep growing at a good pace going forward. CMO to Europe ( once it starts ) - should be an added kicker for future growth

Disc: holding, biased, added more recently, biased, not SEBI registered, not a buy/sell recommendation

[himanshu_pastagiya]

Earlier Debt reduction Plan:
Debt: 31 Mar’24 3000Cr, D/Ebidta 3.5X
31 Mar’25 2600Cr, D/Ebidta 2.5X
31 Sep’25 2300Cr, D/Ebidta 1.8X
31 Mar’26 2000Cr, D/Ebidta 1.6X

Company is delivering more than the plan
Q3 FY’25 PPT:

FY25E Net Debt 2,100 cr. vs. guidance 2,600 cr - lower by INR 500 cr.
H1- FY26P Net Debt 1,750 cr. vs. guidance of INR 2,300 cr. - lower by 550 Cr
Sharp reduction in Debt to TTM EBIDTA ratio
• 3.9x in FY24A
• 2.x in FY25E
• 1.5x in H1 FY26P

• 6x expansion in asset base, largely driven by acquisitions
• Acquisitions in various stages of value creation - especially Swiss (acquired Feb-24) and Biocon (acquired Apr-24)

Company so far seems to be moving on the plan.
Invested in the stock.

[ranvir]

Eris Lifesciences -

Q4 and FY 25 results and concall highlights -

Q4 outcomes -

Revenues - 705 vs 551 cr, up 28 pc
Gross Margins @ 75.9 vs 78.5 ( as Biocon’s acquired business has lower GMs )
EBITDA - 252 vs 148 cr, up 70 pc ( margins @ 35.8 vs 26.9 pc )
PAT - 102 vs 80 cr, up 28 pc ( due accelerated depreciation, amortisation and finance costs on account of acquisitions )

Breakdown of Q4 revenues -

Eris organic revenues - 529 cr, up 10 pc, margins @ 39.5
Biocon’s acquired portfolio - 73 cr, margins @ 25.3 vs 19 pc ( massive margin improvement post acquisition )
Swiss Parentals portfolio - 93 cr, margins @ 36 pc

FY 25 outcomes -

Revenues - 2894 vs 2009 cr, up 44 pc
Gross margins @ 75.3 vs 81.1 pc
EBITDA - 1017 vs 675 cr, up 51 pc, margins @ 35.8 vs 26.9 pc ( massive margin expansion due synergy benefits post acquisition )
PAT - 375 vs 397 cr ( due sharp increase in depreciation, amortisation and finance costs on account of acquisition of Biocon’s domestic business )

Total amortisation charges for FY 25 @ 227 cr

Breakdown of FY 25 revenues -

Eris organic revenues - 2070 cr, up 9 pc, margins @ 39.5 vs 34.5 YoY
Biocon’s acquired portfolio - 386 cr, margins @ 23.9 vs 19 pc ( massive margin improvement post acquisition )
Swiss Parentals portfolio - 326 cr, up 12 pc, margins @ 33.4 pc

Acquisitions made by the company in last 24 months -

Oaknet Pharma - entry into Derma business - paid Rs 650 cr

Select brands of Glenmark Pharma - paid Rs 340 cr

Derma brands of Dr Reddy’s - paid Rs 275 cr

Biocon’s domestic Nephro and Derma business - paid Rs 366 cr

Swiss Parenterals - sterile Injectables business - paid Rs 870 cr for 70 pc stake

Biocon Biologics India formulations business ( has significant presence in Onco and Anti-Diabetic therapies ) - paid Rs 1240 cr

Total cost of all acquisitions put together - 3740 cr

Total revenues of the acquired assets at the time of acquisition - 1070 cr

Launched Liraglutide ( GLP-1 ) brand - ERLY in Sep 24

In addition - Company acquired 30 pc stake in Levim Lifetech for 54 cr in Q2 FY 25. Levim has developed and commercialised 3 products - Liraglutide ( GLP-1 ), Streptokinase ( used to treat blood clots in Heart, Lungs, blood vessels ) and Pregaspargase ( Onco drug used to treat a type of blood cancer ). Successful development of Liraglutide by Levim builds confidence for a future GLP play. They are likely to commission a large scale manufacturing facility in Mid-2025. Levim’s R&D pipeline is expected to expand significantly going forward. As Levim is able to develop more products, ERIS is likely to increase their stake in that business

Guidance for FY 26 -

Domestic business ( including Biocon ) - 2900 - 3050 cr, growth @ 15-20 pc, EBITDA margins @ 37 pc
Swiss Parenterals - 375 - 390 cr, growth @ 15-21 pc, EBITDA @ 35 pc

Guiding for a combined EBITDA in the range of 1200 - 1250 cr for FY 26 vs 1018 cr for FY 25

Capex planned for FY 26 @ 200 cr. Out of which, 100 cr to be spent towards new injectables block, 50 cr to be spent towards Swiss Unit -1 and GLP validations

Debt on books on 31 Mar 25 @ 2200 cr ( vs 3000 cr in Mar 24 ). Aim to bring it down to 1800 cr by Mar 26

Company now has the following brands under its injectables Insulin play in India -

Regular Human Insulin ( fast acting ) - Xsulin, Insugen
Insulin Glargine ( slow acting ) - Basalog, Xglar
GLP -1 - Erly ( Liraglutide )

In addition, company has an array of brands of Oral Hypoglycemic Agents, like -

Sulfonylureas - GlimmiSave, Cyblex
DPP4 inhibitors - Zomelis, Glura, Tendia
SGLT 2 Inhibitors - Glut, Linares

Novo Nordisk is expected to vacate the Insulin space ( in pre-filled Cartridge format ) in India by end of 2025. Eris is going to be a key beneficiary

Biocon’s Biologics business has grown by 11 pc for FY 25 ( led by 21 pc growth in Insulin business comprising of Basalog + Insugen. At the same time, the critical care business de-grew by 20 pc as the company de-focussed on that part of business due low margins )

Biocon’s Nephrology and Immunology business ( which was acquired earlier ) grew @ 30 pc in FY 25

Sales loss incurred by the company due shortage of Insulin in India were to the tune of 50 cr

Revenues from Insugen + Basalog @ 242 cr, up 21 pc ( despite Insulin shortages ). Total revenues from Biocon Biologics @ 386 cr, EBITDA 76 cr

Have commenced Insulin Vial operations @ Bhopal. Insulin Cartridges business should commence from Bhopal facility - later this yr

Launches lined up in H1 FY 26 - gSaxenda ( liraglutide ) and Insulin Analog ( genetically altered versions of normal Insulins )

Liraglutude’s safety profile is much better than any other GLP-1

Company is slated to launch Semaglutide in FY 27. Preparations for the same are underway

Aim to be No 3 player in the Diabetes mkt in next 3 yrs from current rank of 5. Their current mkt share in Diabetes mkt stands @ 6 pc ( up from 3 pc - 1 yr back )

Currently have 1200 MRs dedicated to Diabetes division

Share of in-house production stands @ 66 pc. Should be able to take it to 80 pc by Mar 26

Will be launching over 10 new products in India in FY 26 ( including non-diabetes focussed Injectable products )

Eris plans to export Oral solids to RoW + LatAm mkts via Swiss Parenterals distribution setup. Also plan to commence CMO operations for EU mkts using Swiss parenteral’s facilities. Company believes, Swiss Parenteral’s business potential is currently under utilised. Should be able to unlock a lot of value by FY 27

Aiming to grow PAT by 50 pc in FY 26 vs FY 25

Company could not focus on the Biocon’s critical care Injectables business in Q4 because of lack of management’s bandwidth. They are hopeful of being able to resolve the same by Q2 FY 26

Novo Nordisk was doing an annual sales of 450 cr by selling Mixtard ( their Insulin ). This is the mkt size they ll be vacating this FY

Disc: holding, looking to add more, not a buy / sell recommendation, not SEBI registered

[ranvir]

Eris Lifesciences -

Q1 FY 26 results and Concall highlights -

Revenues - 773 vs 720 cr, up 7.5 pc
Gross margins @ 76.1 vs 74.9 pc
EBITDA - 277 vs 250 cr, up 11 pc ( margins @ 38.5 vs 34.7 pc )
PAT - 125 vs 89 cr, up 41 pc ( amortisation cost in Q1 @ 56 cr - this can be safely added back to PBT )

Company started ramping down its trade generics business wef Q1 - down from 13 to 3 cr. This led to an EBITDA level loss of 5 cr

Debt on books as on 30 Jun @ 2317 cr ( up from 2222 cr on 31 Mar - due to 66 cr of capex in Q1 + strategic buildup of inventory of Biocon products ). Aim to bring down this debt to 1800 cr by 31 Mar 26

Priorities for FY 26 -

Commercialisation of company’s pipeline of ’ first to market ’ Oral Hypoglycemic agents ( used to treat type 2 diabetes )

Leverage the mkt opportunity in RHI cartridges

Complete Insulin in-sourcing with all vials and carts by Q4

Scale up of company’s new business divisions. Aim to launch over 10 new products in India in FY 26 ( including non-diabetes focussed Injectable products )

To secure ANVISA approval for ERIS’s and Swiss Parenteral’s manufacturing facilities

Strengthen CMO pipeline from ERIS’s and Swiss Parenteral’s facilities wrt Injectables and OSDs

Company now has the following brands under its injectables Insulin play in India -

Regular Human Insulin ( fast acting ) - Xsulin, Insugen
Insulin Glargine ( slow acting ) - Basalog, Xglar
GLP -1 - Erly ( Liraglutide )

In addition, company has an array of brands of Oral Hypoglycemic Agents, like -

Sulfonylureas - GlimmiSave, Cyblex
DPP4 inhibitors - Zomelis, Glura, Tendia
SGLT 2 Inhibitors - Glut, Linares

In Q1, domestic business grew by 11 pc - from 632 to 702 cr ( had there been no insulin shortages, growth in domestic business would have been 13-14 pc )

International business de-grew in Q1 from 74 to 68 cr. EBITDA from international business also de-grew from 25 to 22 cr. Have received EU-GMP approvals for both the company’s injectable sites in Q1. Should see pick up in international business wef Q2 - both wrt Injectables + OSDs

Biocon’s business reported EBITDA margins of 30 vs 19 pc ( at the time of acquisition )

Commenced insulin vials production from Bhopal facility in Q1. Should commence production of Insulin cartridges wef Q4

Have commenced validation of synthetic Semaglutide at Swiss Parenteral’s manufacturing facility @ Ahmedabad

Company exports business should pick up wef FY 27. They have confirmed contracts of > 100 cr / yr like ( combined value ) -

Corticosteroids in DPI form for several EU countries for Client -1
Niche Betalactam DPI ( antibiotic - dry powder inhaler ) for EU countries + AUS/NZL + Canada for Client 2
Niche Betalactam DPI for a different set of EU countries for client 3
Corticosteroids in Ampoule form for UK for client 4
Anti Fungal injections for UK mkt for client 5

The CMO business is likely to be capacity constrained for FY 27,28. Company is likely to make investments in this space to expand capacities so that they can ramp up this business as soon as possible

Corticosteroids are a class of steroid hormones that are used to treat a wide range of conditions due to their potent anti-inflammatory and immune-suppressing effects. They are often used to manage conditions like asthma, arthritis, lupus, and skin conditions like eczema

Still guiding for a 15 pc kind of topline growth for entire FY 26

GLP-1 mkt in India should be 2500-3000 cr in the first year of launch and should grow from thereon

Aim to take up the International business revenues to 1000 cr by FY 29 ( from a base of aprox 370 cr at present )

The Insulin mkt being vacated by Novo Nordic in India is of the order of 500 cr/ yr. Eris should be able to capture 200 cr/yr out of the same

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation, posted for educational purposes

[Midhunjoe]

Report on the impending insulin pen shortages due to withdrawal by Novo Nordisk. Eris management pegs this opportunity to be ₹ 200 cr . GLP-1 opportunity in FY 27 and CDMO contracts makes it an interesting play.

Disclosure: Not invested. Studying

[ranvir]

Eris Lifesciences -

Q2 FY 25 results and concall highlights -

Revenues - 792 vs 741 cr, up 7 pc
Gross margins @ 74.5 vs 75.9 pc
EBITDA - 288 vs 265 cr, up 9 pc ( margins @ 36.4 vs 35.7 pc )
PAT - 134 vs 97 cr, up 39 pc ( due steep fall in depreciation, interest costs )

Q2 capex @ 50 cr - largely towards Insulins, GLP-1s, General Injectables

Debt on books @ 2280 cr vs 3000+ cr on 31 Mar 24 ( 18 months ago )

Segmental performance -

Domestic business -

Revenues @ 708 cr, up 10 pc. H1 revenues @ 1410 cr, up 11 pc
EBITDA @ 266 cr, up 11 pc. H1 EBITDA @ 527 cr, up 13 pc

Guiding for a full FY revenue growth of 12 pc. EBITDA growth for full FY expected @ 15 pc with margins near 37.5 pc. Upside from RHI cartridges business may provide an upside to these numbers

Prices increases that company has taken in late H1 should also aid growth

Biocon’s acquired business reported EBITDA margins of 30 pc vs 19 pc at the time of acquisition. In house manufacturing should lead to further margin expansion in FY 27

Biocon has entered an agreement to supply all three types of Insulins - RHI, Glargine and Asphart to Eris for India and select RoW mkts. Eris would be able to sell these in RoW mkts using the distribution network of Swiss Parenterals

Also, Eris’s Insulin Vials facility @ Bhopal went live in Aug 25. Have produced 20 lakhs vials since then

Company should also be the first to market wrt the GLP 1 opportunity ( post Mar 26 ). Their leading position in Insulins ( @ 15 pc Mkt Share ) should help them do really well in GLP-1 mkt

International business -

Q2 revenues @ 83 vs 84 cr. H1 revenues @ 152 vs 158 cr

Q2 EBITDA @ 27 vs 25 cr. H1 EBITDA @ 50 vs 50 cr

Shortfall in H1 revenues due non-availability of dry powder capacity as the same was occupied for validation batches of EU CMO projects

Still on track to report full FY 26 export revenues of 380-390 cr

Swiss Parenterals now ranks among the few Indian companies to have both EU and ANVISA approvals. Have received first purchase order to make Reference Listed Drug ( RLD ) - ie the Innovator brand of the product. Should bring in revenues worth 125-150 cr in FY 27 with similar EBITDA margins. Discussions underway to expand this contract to 17 countries

Swiss Parenterals is in discussions with large generic companies to make Corticosteroids and Complex Carbohydrates for both RLD and LoE ( loss of exclusivity opportunities )

Clearly, this business is nearing an inflection point

Initiated 130 cr capex for their Unit -3 ( all their 4 units are located at Ahmedabad )

Notes from previous concalls -

Commenced insulin vials production from Bhopal facility in Q1. Should commence production of Insulin cartridges wef Q4

GLP-1 mkt in India should be 2500-3000 cr in the first year of launch and should grow from thereon

Aim to take up the International business revenues to 1000 cr by FY 29 ( from a base of aprox 370 cr at present )

The Insulin mkt being vacated by Novo Nordic in India is of the order of 500 cr/ yr. Eris should be able to capture 200 cr/yr out of the same

Company exports business should pick up wef FY 27. They have confirmed contracts of > 100 cr / yr ( combined value ) like -

Corticosteroids in DPI form for several EU countries for Client -1

Niche Betalactam DPI ( antibiotic - dry powder inhaler ) for EU countries + AUS/NZL + Canada for Client 2

Niche Betalactam DPI for a different set of EU countries for client 3

Corticosteroids in Ampoule form for UK for client 4

Anti Fungal injections for UK mkt for client 5

Notes from Q2 concall -

Company’s RHI cartridges business should go live in Dec 25

Company had acquired Bhopal Insulin capacity LY and upgraded it by spending 80 cr

Key triggers in near term include - pick up in domestic Insulin business ( as the Innovator exits ), GLP-1 launch in Q1 next yr, as Bhopal plant ramps up - Biocon branded business’s EBITDA margins should improve further ( from 30 pc at present ), acceleration in export business wef next FY ( as mentioned above )

Company’s current stake in Levim Lifetech stands @ 30 pc. Eris intends to invest another 100 cr in Levim. Naturally the stake should go up ( management did not specify the exact number )

Over and above the Insulins / GLPs, company has a couple of significant launches lined up for Q3 / Q4 - should help accelerate growth in H2

Guiding for EBITDA margins of 37 pc for domestic and 34 pc for International business ( Swiss Parenterals ) for H2

US mkt is a great example where the GLP1s and Insulins have co-existed for a decade now. GLP-1s work as a “glucose sensitizer” for beta cells, potentiating insulin’s effects to restore normal blood glucose levels, but their action is dependent on the presence of elevated glucose and the availability of insulin. Hence - both therapies co-exist

Company’s EU CMO order book has the potential to grow to 700 - 800 cr / yr kind of business in next 3 yrs ( its currently @ 100 cr / yr - starting next FY )

Company has started seeing heightened demand for their Insulin products wef Nov ( as the Innovator has exited recently ). Augurs well for company’s domestic business in H2

Disc: core holding, biased, not SEBI registered, not a buy / sell recommendation, posted only for educational purposes

[ranvir]

Eris Lifesciences -

Q3 FY 26 results and concall highlights -

Revenues - 807 vs 727 cr, up 11 pc

Gross margins @ 72.3 vs 75.7 pc

EBITDA - 282 vs 250 cr, up 13 pc ( margins @ 34.9 vs 34.4 pc ) - due slower increase in employee costs + fall in other expenses

PAT - 109 vs 87 cr, up 25 pc ( due sharp fall in interest costs + depreciation )

Adjusted PAT - 120 vs 87 cr, up 38 pc ( adjusted for one time exceptional item of 17 cr - due implementation of new labour codes )

Q3 capex @ 78 cr - largely towards Insulins, GLP-1s and General Injectables

Net Debt @ 2270 cr. Aim to take it down to below 1800 cr by end of FY 27

Segment wise performance -

Domestic formulations -

Revenues - 696 vs 635 cr, up 10 pc

EBITDA - 254 vs 230 cr, up 10 pc ( margins @ 36.5 pc, flat YoY )

In Q3, company has decided to discontinue certain tail brands with low volumes and limited profitability. This should hit the domestic revenues by aprox 2 pc for FY 27 - but would improve business’s margins. Excluding these brands, domestic business grew @ 12 pc. Margins are excpected to inch higher towards 39 pc !!!

Eris’s mkt share in RHI Cartridges market now stands @ 25 pc vs 15 pc in Sep 25 vs 8 pc in Apr 24 - sharp gains made by the company in this segment

At the time of acquisition of Biocon’s domestic business, company always aimed at achieving 25 pc mkt share in RHI cartridges business. Now they aim to achieve 25 pc share in RHI cartridges + Glargine business ( currently @ 17 pc ). This is a 3000 cr / yr mkt in India. Also witnessing strong tailwinds given strong prescriptions being generated by the company

Also aim to make strong inroads into the Insulin Analogues market comprising of Asphart, Degludec and Lispro ( analogue Insulins have various advantages over RHI but are more expensive ). Analogue Insulins total mkt size in India is around 1700 cr / yr

Company started making RHI Vials @ Bhopal facility in Aug 25. They started making Glargine vials wef Feb 26. Expect to start making RHI + Glargine cartridges, Degludec plain + Degludec + Liraglutide combo wef Q4 FY 26

Eris’s rapid gains in Insulins is also on the back of Innovator vacating the mkt

Eris is ready to launch Semaglutide in India in the first wave. Shall be performing the fill - finish job in-house @ their Ahmedabad facility

International business -

Revenues - 111 vs 76 cr, up 45 pc

EBITDA - 33 vs 22 cr, up 46 pc ( margins @ 29.7 pc, almost same YoY )

Margins did not expand as the company is investing heavily in people and capacity building for EU CMO opportunities

Should close FY 26 with international revenues of around 375 cr with EBITDA > 115 cr ( indicating a very strong Q4 for international business )

For FY 27, guiding for revenues @ around 600 cr with EBITDA > 180 cr wrt the international business on the back of - tail winds in base business, new product approvals in LatAm, exports from Ahmedabad site, Semaglutide CMO opportunities, strong build up in EU CMO book

Notes from previous concalls -

Biocon has entered an agreement to supply all three types of Insulins - RHI, Glargine and Asphart to Eris for India and select RoW mkts. Eris would be able to sell these in RoW mkts using the distribution network of Swiss Parenterals

Company should also be the first to market wrt the GLP 1 opportunity ( post Mar 26 ). Their leading position in Insulins ( @ 25 pc Mkt Share ) should help them do really well in GLP-1 mkt

Swiss Parenterals now ranks among the few Indian companies to have both EU and ANVISA approvals. Have received first purchase order to make Reference Listed Drug ( RLD ) - ie the Innovator brand of the product. Should bring in revenues worth 125-150 cr in FY 27 with similar EBITDA margins. Discussions underway to expand this contract to 17 countries. Swiss Parenterals is in discussions with large generic companies to make Corticosteroids and Complex Carbohydrates for both RLD and LoE ( loss of exclusivity opportunities ). Clearly, this business is nearing an inflection point

Company’s current stake in Levim Lifetech stands @ 30 pc. Eris intends to invest another 100 cr in Levim. Naturally the stake should go up ( management did not specify the exact number )

US mkt is a great example where the GLP1s and Insulins have co-existed for a decade now. GLP-1s work as a “glucose sensitizer” for beta cells, potentiating insulin’s effects to restore normal blood glucose levels, but their action is dependent on the presence of elevated glucose and the availability of insulin. Hence - both therapies co-exist

Notes from Q3 concall -

Q4 should see full impact of price hikes taken by the company in domestic branded business. Should bump up growth rates by 2 pc or so

Company continues to gain mkt share in RHI cartridges business in Jan as well

Company shall be making Semaglutide in-house @ their Ahmedabad facility. Process validation batches are undergoing stability trials at present

Company has also developed Esaxerenone - inhouse development. This drug has extremely positive effects on hypertension patients. Should launch it in next FY

Guiding for a full yr EBITDA of 1150 cr or so vs 1018 cr in FY 25 ( a growth of 13 pc )

9M capex @ 200 cr. Capex guidance for next FY @ 250-300 cr

Esaxerenone - is used to treat drug resistant hypertension. It’s a disease modifying drug. Has added benefits of minimal side effects on kidney functions. It’s a very promising drug

Semaglutide’s data wrt its effects on Cardio health is much better than that of Tirzepatide - another positive brought out by the management

Company’s RHI cartridges are priced @ 40 pc discount to that of the innovator ( who is now vacating the mkt ). Going forward, company also has the option to resort to gradual price hikes ( over next 2-3 yrs )

Disc: core portfolio holding, not SEBI registered, biased, added more - recently, posted for educational purposes