Alembic Pharma gears up for multiple product launches in coming quarters

Alembic Pharmaceuticals reported a 48 per cent increase in its consolidated net profit to Rs 180 crore for the third quarter ended December 2023

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Alembic Pharma is poised for a series of product launches in the upcoming quarters, with plans for at least 4-5 releases in the fourth quarter of FY 24 and 10-15 launches in FY 25, according to the company's top officials.

“Our injectable plant has a few approvals. The ophthal (ophthalmology) and onco (oncology) line has a few approvals. And we should be hitting the market in the next few quarters for one after the other products,” said CFO, R K Baheti, in an interaction with Moneycontrol.

Alembic Pharmaceuticals reported a 48 per cent increase in its consolidated net profit to Rs 180 crore for the third quarter ended December 2023, due to robust sales across domestic and export markets.

He added that approvals and inspections at various facilities were in limbo till a few quarters ago due to COVID. “Product approvals are now coming thick and fast,” Baheti added. Despite the multiple product launches, Alembic Pharma does not foresee additional capital expenditure for these initiatives, and annual research and development (R&D) expenses are expected to remain around Rs 500 crore, according to the company's management.

In a strategic move, the management aims to focus on promoting new-generation products with growth potential over legacy products. Baheti highlighted the intention to shift focus from products like the antibiotic Althrocin, where Alembic currently holds a dominant market share, to newer antibiotic molecules such as Azithromycin, where there is more room to grow.

During an analyst call, the management disclosed its ongoing efforts in the development of GLP-1 products, leveraging the company's peptide capability. GLP-1 receptor agonist drugs, primarily used in treating type 2 diabetes, have gained popularity for their weight-loss properties.

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The Vadodra-based pharma manufacturer had 11 new launches in the third quarter in the US generics market and received US Food & Drug Administration (USFDA) approvals on eight of its Abbreviated New Drug Application (ANDA) in the third quarter of FY24. The US ex-generics market saw a 32 percent growth in the quarter. On the issue of price erosion, Baheti said that the issue depends on various factors including the number of players in a market and said that the company is focusing more on things it can control like regulatory compliance.

What analysts think
While maintaining a neutral rating on Alembic, Motilal Oswal anticipates a 16 percent earnings compounded annual growth rate (CAGR) over the period from FY24 to FY26. This growth is expected to be driven by a strong performance in the company's core markets, specifically drug formulations (DF) and exports. Analysts highlighted the company's controlled research and development (R&D) spending, as well as its improved operating leverage.

HSBC analysts observed that new product launches and an uptick in supplies from new plants are poised to boost US sales. They also expect gradual accrual of benefits from the newly established plants.

Alembic Pharma operates in diverse therapeutic segments with the anti-infective segment contributing significantly to domestic revenue, while the USA remains a major revenue source in the export market.

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