Thank you @Rohit_Dubey for the notes. I got a chance to listen in, One point worth noting from the conf call was on the topic of backward integration for APIs- the mgmt. comments were that they don’t plan to backward integrate (for newbies - make the raw material (RM) are the intermediate needed to produce the molecule that Neuland needs to produce as the final product) for every single item they need.
Rationale:
- There are a few companies in Japan, US, Europe, China who are efficient players in a particular space who have invested in the infrastructure, have a deep knowledge of making those RM/intermediate molecules that Neuland needs. it would not be the best use of our resources to make it in house when its available at a better rate with time and money saved from sourcing from these players. ( read: would need to invest in infrastructure, get ppl specialized in this area, ramp up time, etc. and still not be able to produce at a lower cost necessarily)
- They plan to locally source and integrate with their supply chain and thus in the bigger scheme of things, reduce the dependence on Chinese suppliers. historically they have been around 45-50% dependent on the Chinese players for the RM. Now they are in mid-twenties from Chinese dependence perspective and they plan to target higher single digits-lower double digits in the longer run.