Release Date: November 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Divi's Laboratories Ltd (BOM:532488, Financial) reported significant revenue growth in Q2 FY 2025, driven by expanding market opportunities.
- The company's strategy to diversify across portfolios is yielding favorable results, with a robust pipeline of generic products advancing towards regulatory approvals.
- The contrast media segment is showing noticeable progress, with strong engagement from key customers and significant growth potential.
- Successful USFDA inspection at the unit two facility reaffirms Divi's Laboratories Ltd (BOM:532488)'s commitment to quality and regulatory compliance.
- The company is making investments to expand technical capabilities in response to the demand for new peptide drugs, particularly those targeting GLP-1.
Negative Points
- Divi's Laboratories Ltd (BOM:532488) is facing pricing pressure across its generic business, impacting sales despite volume growth.
- Logistical challenges, including extended transit times and increased logistics costs due to global shipping disruptions, are affecting operations.
- The company is cautious about raw material price stability, as market sensitivity to Middle East developments and crude oil price fluctuations could impact costs.
- There is uncertainty regarding the timeline for pricing stabilization in the generic segment, with hopes for normalization in the next six months to a year.
- The ongoing investments in expanding peptide synthesis facilities make it difficult to quantify the financial impact at this stage.
Q & A Highlights
Q: Can you elaborate on the current status of your peptide projects, specifically regarding the 500 L reactors and whether you're close to supplying customers?
A: We have been in the peptide business for 14 years, supplying amino acids to innovators. We are now involved in both solid and liquid phase peptide synthesis. Currently, we are producing fragments undergoing qualifications, and it will take some time before full commercialization. We hope to start supplies sooner, depending on regulatory approvals. - Dr. Kiran S Divi, CEO
Q: Regarding the generic business, you mentioned future opportunities starting from 2026. Can you provide more details on the number of new products and the current pricing challenges?
A: We are experiencing pricing pressure across the board in our generic business, despite volume growth. Future generics are in various stages of qualification, with some awaiting regulatory approval. These products will start contributing to revenues once approvals are obtained. - Dr. Kiran S Divi, CEO
Q: Could you provide an update on the contrast media segment and when we can expect commercial supplies?
A: In the contrast media segment, some iodine-based products are already commercialized, and we have long-term contracts. Gadolinium compounds are still in qualification stages, and we expect commercialization in the next 1 to 2 years. - Dr. Kiran S Divi, CEO
Q: What is the status of the Unit 3 expansion, and when will it be operational?
A: Unit 3 is expected to start production in December 2024 in a phased manner. Initially, it will focus on backward integration to free up capacity at regulatory units, with full utilization expected in 6 to 7 months. - MS NMA Prasad Divi, Director
Q: How are you managing the logistical challenges and increased shipping times due to the Red Sea disruptions?
A: We have been proactive in planning shipments well in advance and maintaining extended safety stock levels. This approach ensures minimal disruption to our supply chain despite the extended shipping times. - MS NMA Prasad Divi, Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
