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Informist, Friday, Oct. 25, 2024

By Steffy Maria Paul and Anshul Choudhary

MUMBAI – Torrent Pharmaceuticals Ltd.'s management said in a post-earnings analyst call Friday that a higher mix of branded products, price hikes in its branded business, and slower investments will help the company continue improving its gross margin. The higher mix of branded products has majorly helped the company improve its margins in the past few quarters and the same is expected to continue in Oct-Dec as the mix is unlikely to change for now, the company said. 

The drug manufacturer said it does not plan on making any major investments in its branded business at least for the next three years. The company said it has fully absorbed the cost incurred for hiring 300 medical representatives during the year and this would further assist margins. Torrent Pharmaceuticals' gross margin for the latest quarter was 76.5%, as against 75.7% during the previous quarter. 

"I think the general guidance which I have been giving is that we should see anywhere between a 50 basis point to 100 basis point improvement (in margin) happening every year," the company said. 

The company said it will continue to focus on improving its market share in chronic therapies, launching new products, improving field-force productivity, and scaling up its consumer health business. It expects its domestic business to continue to outperform the market growth.

The company said that its gross debt has come down to INR 30 billion from INR 39 billion as of Mar. 31, after it repaid INR 9 billion during Apr-Sept. Currently, its net debt is at INR 18 billion, the company said. Torrent Pharma expects to further repay around INR 5 billion-INR 6 billion in Oct-Mar, with the aim of becoming debt-free by 2025-26 (Ap-Mar).

The company expects its business operations in the US to become profitable in the next three years. Currently, its business in the region is at break-even pre-research and development spending. The company said it had diverted a chunk of its research and development spending to its markets in Brazil, Mexico, and Germany, following its troubles in the US. "But if everything is starting to go right for US, we'll see how to incrementally allocate R&D (research and development) for US," the company said. However, it does not expect to substantially increase its research and development spending in the region for at least the next year, the management said. 

Its brands in the chronic and sub-chronic segments gained higher market share, and it saw positive traction in the consumer health business as well. It expects to further improve the visibility of its consumer health business through advertisements and by increasing the number of retailers covered, Torrent Pharmaceuticals said.

Revenues from its insulin products were impacted in the quarter due to a scheduled shutdown of its facility for maintenance in August. The facility will be released for manufacturing in December, the company said. However, it expects to make up for this shortfall in Jan-Mar, and said this will not impact the full year's performance. 

Torrent Pharmaceuticals reported its earnings after market hours Friday. It recorded a consolidated net profit of INR 4.53 billion for the September quarter on consolidated revenues of INR 28.89 billion. On Friday, shares of the company closed at INR 3,432.85 on the National Stock Exchange, up 3.4%.  End

Edited by Tanima Banerjee

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