Executive Summary
Indoco has seen growth in Q3 FY22 based on the performance of its domestic business.
Though the company hasn’t seen growth in its international segment, Indoco management says the firm is on track to perform
better in the next quarter.
Indoco Remedies Limited has reported a 4.6% jump in its net revenues for the third quarter ended 31 December 2021 to
INR3.49bn ($47m), on the back of its domestic business growth.
The Indian company’s domestic business grew by 15.2% in Q3 FY22 to INR1.9bn, compared to INR1.7bn reported in the same quarter
last year, on the back of the performance of major therapeutic segments – namely anti-infective, gastrointestinal,
neurological and respiratory.
“If you look at the health of the pharma business in the Indian space, frankly, we have done exceedingly well within all our
four core therapy areas,” said Indoco.
For the nine-month period, Indoco’s domestic revenues grew by 27.2% compared to the same period last year.
Furthermore, for the nine-month period ended 31 December 2021, Indoco’s overall net revenues grew by 19.5% to
INR11.0bn as against INR9.23bn reported in the prior-year period.
According to the company, both its COVID-19 as well as non-COVID baskets have done well this year.
The company has been performing well on the back on domestic and international launches including Fevindo (favipiravir)
400mg and 800mg tablets, for the treatment of mild to moderate COVID-19 (see sidebar).
However, the company’s revenues from its international formulation business witnessed a slight drop in Q3 FY22,
compared to the prior year period.
According to Indoco, the underwhelming performance in the company’s international segment was mainly because of
Europe, as the API price of paracetamol had shot up. “As a result, we were not getting the desired feedback from our
front-end partners,” said Indoco. “So that was one of the reasons we had to slow down on that molecule.”
However, the company leadership insisted that Indoco is on track to do far better in Q4 FY22, as far as Europe is
concerned.
Indoco also explained that its material cost as a percentage of sales shot up very sharply both year over year and
quarter over quarter. “Cost of goods has largely gone up because of the increases in pricing sizes, both for starting
materials and for API, as well as some of the APIs we receive, particularly from China,” said Indoco, talking about how
the company was not impacted by China in the first two quarters of FY22, as it planned better around the availability of
products and materials in hand.
Talking about its international business, Indoco said that its revenues from South Africa, Australia and New Zealand
had recorded 25% growth for the nine-month period of the current fiscal year at INR121m, compared to INR97m
reported for the same period last year.
Company’s Expectations From Q4 FY22
During the third quarter earnings call, Indoco revealed that it plans to expand and double its capacity in the coming
year.
Talking about the next quarter, Indoco’s leadership said, “I see a lot of value addition coming from new launches to the
company’s performance going ahead. Not only will it help us grow going forward, but it will also help us change the
manner in which our portfolio is structured today.”
“We are very heavy on legacy products,” said Indoco management, “but I'm expecting new products to contribute
substantially to the company going ahead.”
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