Capitaline

Analyst Meet / AGM 29-May-10

Conference Call

Orchid Chemicals & Pharmaceuticals

Targets revenues of USD 320 million for FY'11

Orchid Chemicals & Pharmaceutical declared the results for the quarter ended March 2010 and held a tele-conference call on 27 May 2010 to discuss the same and its future growth strategies. The conference call was headed by K Raghavendra Rao, Managing Director. The key takeaways of the call are
Key highlights

Total income from operations for the quarter ended March 2010 rose by 20% to Rs 295.1963 crore. Net profit stood at Rs 391.16 crore compared to Rs 26.45 crore in the corresponding previous period.
For the year ended March 2010, total income from operations increased by 3% to Rs 1251.04 crore. Of Rs 1251.04 crore, the revenues from sold business stands at Rs 400 crore and remaining Rs 850 crore came from the continuing business. Net profit clocked Rs 331.34 crore as against Rs 52.17 crore in the corresponding previous period.
The company has sold its Injectable formulation business to Hospira for USD 400 million. The transaction has completed at the end of Q4 FY'10. Till date, it has received USD 380 million. After the transaction, the debt of Rs 1400 crore was repaid.
Due to this transaction, the revenues for the FY 2011 will be lower by USD 90 million and EBIDTA will lower by USD 30-40 million. However, USD 40 million can be compensated with supplying of API to Hospira.
OCPL has booked one time loss of Rs 360 crore which includes price difference arising on bulk drugs & API to the business sold to Hospira of Rs 200 crore, transaction forex loss of Rs 60 crore, Labour settlement of Rs 25 crore, Inventory write off 40 crore and rebate & discount for the sold business Rs 35 crore.
Debt on the books as on 31^st March 2010 is Rs 1300 crore and cash on the books Rs 321 crore.
Outstanding FCCBs as on 31^st March 2010 are USD 17 million maturing in October 2010 and USD 117 million maturing in February 2011. The company is planning to buyback FCCBs maturing in October 2010.
Till date, it filed 35 ANDAs with US FDA and received approval for 20. These include 8 Para IV FTF filings. Of the 8 FTFs, company has already settled patent litigation with 3 products. The break up of ANDAs filings are 13 in Cephalosporins and 22 in NPNC (Non penicillin, non cephalosporin) segment.
During the quarter, it received tentative approval for its ANDAs of Ibandronate Sodium Tablets and Memantine Hydrochloride tablets. Both these drugs are filed with Para IV FTF. Expects to receive final approval and lunch these drugs in the current fiscal. Apart these two products, it also expects to launch 3 non-antibiotic products during the year ended March 2011.
In EU regions, it filed 12 marketing authorizations (MA) by its own and 75 dossier filings through its marketing partner & customers. Of 12 products, 7 are from the Cephalosporin segment and 5 in NPNC segment.
During the quarter, Orchid has entered into an outlicensing and distribution agreement with Alvogen for marketing 8 Orchid's oral non-antibiotic generic formulation in the US market. Expects to launch 2 products during the FY'11 under the agreement. All these 8 products have market size of USD 8 billion. The revenues from the deal will be flowing from FY'12.
OCPL is planning to change its strategy of operations. Till date, the drugs are marketed by their partners but now it is planning to market by their own. For this purpose, OCPL is looking to expand inorganically starting with US, European region and then emerging markets. These acquisitions will be only for marketing.
Cephalosporins and Carbapenem segments will bring growth during the FY'11.
Expects revenues of USD 320 million (Rs 1400 crore @46 per dollar) and EBIDTA of USD 60 million (Rs 276 crore & 46 per dollar) and net profit would be range of Rs 120-130 crore for FY'11. The growth will be driven from launch of two FTFs and 3 non-antibiotic products in US market, and two products carbapenem in EU regions.

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