Gufic BioSciences Ltd

Gufic came in with another flattish set of nos (7% sales growth, 1% loss in EBITDA margins and 10% drop in profits). FY24 is likely going to be a flattish year in terms of profits, as depreciation and interest costs from Indore facility will kick in along with other operating expenses. The interesting thing shown by Gufic is launch of some interesting products (Biapenem in dual chamber bags, Dalbavancin, SeraSeal, etc.). Lets see how they can scaleup in next couple of years. Concall notes below.

FY23Q4

  • Ex-of COVID sales of 170 cr., sales grew from 610 cr. to 691 cr. in FY23 (13%). Ex of sale returns of 26 cr. growth comes to 17.5%
  • Critical care:
    o Sales declined in FY23 due to inventory build-up post-COVID. Had to take 26-28 cr. sales return. With new launches, hoping it to return to growth trajectory
    o PCPM of 7-8 lakhs
    o Surveyed 8000 new hospitals (in urban markets) to finish product mapping, these can potentially contribute 0.5–15 lakh monthly sales
    o Received DCGI approvals for Biapenem and dual chamber bag. Will also be offered to a select CMO partners
    o Received DCGI approvals for Dalbavancin API and Formulation and also applied for a process patent. Will be launched for the first time in India in H1FY24. Will also be offered to a select CMO partners and also exported as its already a big product in US and Europe. The main advantage of this product is only 2 injections are required on first day and the third injection on 8th day. So patient can be discharged after surgery and doesn’t have to stay in hospital. This will be a product where market has to be built in India vs in exports where market already is very big
    o Launch of Ceftazidime + Avibactam was very successful. Sold 98000 vials (own brand + CMO) in Jan-March 2023. Hoping to be in top-3 by end of this year as they are also manufacturing the APIs
    o Most of penem requirement is now being fulfilled by Navsari facility (which was earlier outsourced). Also filing new registrations in international markets
    o Plan to launch oral form of Isavuconazole, have already launched injectable form
    o Haven’t yet got required prices for Meropenem and Piperacillin-Tazobactam dual chamber bags. Currently focusing on launching Biapenem and Teicoplanin which are not in NPPA control
    o Sparsh:
     Launched with field force of 33 people aiming with a PCPM of 10-15 lakh. Reached 5 lakhs by mid-May.
     Have launched 85 products in first phase and will launch 45 more in next phase taking total molecules to 130
     Process validation batches for these 85 molecules are being used to create new dossier for registering molecules in different markets
     Have in-licensed some differentiated wound management products (SeraSeal; 15-20k per vial) for the ICU
    o Tring to bring all the hospital demand into one sales channel
  • Ferticare
    o Was the main growth driver in FY23
    o PCPM of 5-6 lakhs
    o Hormone business (hMG, FSH, hCGs and Cetrorelix) did really well
    o Dydrogesterone launch was successful, plan to launch a sustained release form in FY24
    o Have launched a more potent form of hMG which reduces the chances of failures of IVF cycle
    o Trials with Thymosin Alpha injection for endometriosis is progressing well
  • Healthcare, Stellar and Spark
    o Spark (smaller division) grew by 22%
    o Asthma: Trials for a new product derived from Boswellia Serrata were successful. Plan to launch this in FY24
    o Launch of new zinc-based multivitamin was successful
    o Plan to launch a novel analgesic Polmacoxib for osteoarthritis in FY24 (Hetero got approval for same condition on 14.02.2023)
    o
  • Aesthaderm
    o Stunnox is now the second largest player in the Botulinum Toxin market in India, grew 2.5x over FY22 (still very small)
    o Zarbot: Launched by a new team of 12 people in January and sales are way below expectations. Expand team size to 16
    o Have spent 9cr. on Center of Excellence project (led by Dr. Rajesh Lalchandani, Instagram link has 26k+ followers). Will be importing the fillers for next 2-3 years and only invest in CAPEX once they have economies of scale.
  • Cleared ANVISA Brazil Audit successfully without any observations
  • Received four new registrations and details of which we have mentioned in our Investor Presentation
  • Indore: Validation of facility will be completed by Q2FY24
  • Increase in inventory
    o Sparsh division launch of 85 products
    o Dual chamber bag launches: Had ordered dual chamber bags from Europe based on six-month forecast which didn’t yet pan out as they didn’t get higher prices by NPPA for Meropenem and Piperacillin-Tazobactam
  • Increase in receivables: Payment terms have now been restored to pre-covid levels of 90 to 120 days for contract manufacturers. COVID
  • R&D: 10-12% in FY23, should come down to 6-7% in FY24 due to more focus on validation batches in Indore and again increase to 10-12% in FY25
  • Exports are 15% of sales (including selling via agents)

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

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