Expansion as well as research and development (R&D) work led Shilpa Medicare to report a muted sales growth in its March 2015 quarter, Vishnukant Bhutada, MD, told CNBC-TV18.
The company’s sales declined 4.02 percent to Rs 150.10 crore in the quarter.
Shilpa Medicare's joint venture with an Italian partner, in which it had invested Rs 150 crore, is expected to become operational by July-August this year, Bhutada informed.
Recently, it got confirmation for 12 Abbreviated New Drug Application (ANDA).
Its inspection from Brazil and EU is over with a positive sign whereas they are yet to receive any reply from US FDA.
Bhutada expects revenue to grow around 5-10 percent in FY16-17.
"All these will be crystallized by say 2016-end or 2017 when we really see the growth from the expansions and all the additions of the activities that we are doing," he added.
He also said that it is focused in creating the largest capacity into the oncology Active Pharmaceutical Ingredient (API) formulation.
Below is the edited transcript of Vishnukant Bhutada’s interview with Mangalam Maloo & Reema Tendulkar on CNBC-TV18
Mangalam: Your annual sales growth has been muted at about seven percent while this quarter also the revenue has grown just four-tenths of a percent. Any particular reason why?
A: The major reason for this is the - if you see there are several ongoing projects which are going on for the expansion like our SEZ formulation unit. We have been inspected by the Mexico authorities recently.
Brazil and EU inspection is over with a positive note. With EU, we had filed for Abbreviated New Drug Application (ANDA). Around 12 ANDA have been filed already and soon, we will have the US inspections also.
The joint venture (JV) with the Italian partner is almost at the completion stage. We have spent almost Rs 150 crore in that. July-August will also be operational. Addition of non-oncology and the oncology API block is also going on. The Rest of World (RoW) market and the local market, our formulation facility for onco is going on which will be completed by September 2015. Expansion and the all R&D activities are going on.
Our Japanese custom manufacturing block will be ready by March 2016. All these will be crystallized by say 2016-end or 2017 when we really see the growth from the expansions and all the additions of the activities which we are doing.
Reema: We understand that the company’s two plants were inspected by the US FDA in March of 2015. Have you heard back from the US FDA?
A: No, we completed their 483 and have replied to them, but are yet to receive any final confirmation from them.
Mangalam: You indicated that the full effect of the expansion will be seen in FY16 end or FY17. Any growth guidance that you can leave us with in regard to revenue growth in FY16-17.
A: FY16-17 will probably be around 7-10 percent, 5-10 percent. We should be able to do that.
Mangalam: And should we see some expansion in your margins as well? Your margins expanded by nearly 100 bps year-on-year (YoY) in FY15?
A: Company’s philosophy is that there is this niche area, which is oncology and it is unfortunately growing very fast all over the world. The company is practically focused in creating the largest capacity into the onco Active Pharmaceutical Ingredient (API) formulation.
Second line, third line - we are going to do it. So, backward and forward integration for this special oncology division is going on and that will improve the margins certainly in the future.
Reema: If you do get the US FDA approval, what kind of opportunity does it open up in incremental sales?
A: I cannot number it, but currently all the sales and the growth we have seen from the EU and other markets. In US we filed the formulation site 12 ANDAs, API around 14 Drug Master File (DMFs) have been filed from our API site. So, there is a huge scope if we really get this going on.
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