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Informist, Friday, Feb. 7, 2025

By Aman Aryan and Sunil Raghu

MUMBAI/AHMEDABAD – Alkem Laboratories Ltd. is on track to meet its earlier announced guidance of 19% for earnings before interest, tax, depreciation, and amortisation margin for the current financial year, the company's management said in a post-earnings analyst conference call. While the 21.6% EBITDA margin for the nine months ended December could also help it surpass the said target, the company sees slight contraction in the March quarter. 

"There may be a slight contraction, but while we will try, we are still in the quarter, we are making efforts because there are certain expenses that we are going to do in quarter four...," one of the company's officials said. Alkem Laboratories might book an additional expense of INR 200 million-INR 300 million in the ongoing March quarter, the company's management said. Given the traditional slower growth trend for the company in the ongoing quarter and the expected additional expense, Alkem Laboratories has maintained its earlier margin guidance.

The additional expense includes the company's plans to file five abbreviated new drug applications in the US market in the ongoing quarter. However, Alkem Laboratories has no plans to launch any new product in the March quarter. It has already filed three abbreviated new drug applications so far in the current financial year, the company said.

The US market will continue to see some price headwinds as the company expects a mid-single digit price erosion in the region in the next financial year. However, a few new products and growth in volumes would likely offset the impact of price erosion in the US market, Alkem Laboratories said. Although the company's sales in the US continued to slip in the December quarter as well, sales in the region fell at a slower clip compared to the previous quarter.   

While the company is looking for some extended releases and some soft launches, it doesn't see any major launches in the US in FY26. US sales fell just over 7% on year in the December quarter to INR 6.34 billion compared to an over 15% fall in the first half of the current financial year. The US market is expected to perform better in the coming financial year compared to FY25, the company's management said.  

Talking about other non-US international markets, the management said, de-growth in one of its largest non-US markets, Chile, due to exchange rate issues, among others, affected the overall performance of the other international markets. "The currency actually you know played spoilsport over there (Chile)...," one of the company's officials said. Revenues from the non-US international markets were INR 3.27 billion, down 4% on year, according to the company's investor presentation.

Strong sales in the Indian market offset the impact of a slowdown in the international market. The company's domestic sales grew 6% on year in the December quarter to INR 23.65 billion, taking the nine-month ended December domestic sales to INR 68.48 billion, also up 6% on year. Alkem Laboratories expects much stronger growth in the domestic market in the ongoing quarter as the company's management pegged the full year growth guidance at 7% for domestic sales. 

Alkem Laboratories expects to beat the market growth in the chronic segment by a percent or two as the introduction of Semaglutide, which is used to treat type 2 diabetes and obesity, will give some incremental growth opportunity. Oral Semaglutide has a market of around INR 5 billion in India. This is without the introduction of the drug's injectable version, the company's management said. The company also said it doesn't plan to add new medical representatives in the near term.  

Earlier Friday, the company had reported a consolidated net profit of INR 6.26 billion, up 5.2% on year, beating the analysts' estimate. Its consolidated revenue for the December quarter rose 1.5% on year to INR 33.74 billion for the December quarter. The company's other income for the quarter fell nearly 1% on year and 31% sequentially, while it rose over 56% on year during the nine months ended December quarter.

The foreign exchange rates-based gain of INR 100 million-INR 200 million during the first nine months of the current financial year was realised in other income, the company's management said. Unlike this, the company made a forex loss in the December quarter and realised the same in the other income for the quarter. 

Friday, shares of the company closed at INR 5,151.35 on the National Stock Exchange, down 2%.  End

Edited by Deepshikha Bhardwaj

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