Table of Contents
Sector Outlook: Positive
Domestic formulation business to deliver strong growth
JB Chemicals and Pharmaceuticals Ltd. reported a 13.5% YoY revenue growth to Rs. 10,006 mn in Q2FY25, surpassing expectations. The domestic business led growth with strong performances across major brands, including acquired portfolios. Internationally, the formulations segment performed well, with the CDMO division expected to pick up in H2FY25. EBITDA grew 11.1% YoY to Rs. 2,705 mn, with a margin of 27.0%, while PAT rose 15.9% YoY to Rs. 1,746 mn. Strategic focus on cost optimization, a favorable product mix, and price growth boosted gross margins. The company aims to be a top 10 player in India by prescription count, driven by its disciplined focus on core brands, line extensions, and acquisitions, especially in the cardiac segment.
Key Concall Highlights
Domestic Business Outlook:
JB Chemicals will continue to pursue growth in the domestic market, which is led by its chronic strategy. The company’s domestic business is expected to consistently outperform the IPM, which is led by brand focus, market share gains, and an increasing chronic mix. From the 16th rank, in terms of prescriptions, JB intends to eventually be among the top 10 players.
Ophthalmology Portfolio:
The ophthalmology segment registered strong growth in Q2FY25. The company is excited about the recent ophthalmology foray, which has brought some of the biggest brands. The current quarterly sales run rate is Rs. 480 mn. Expanding the prescriber base has started yielding results. JB Chemicals has increased the MR strength of this division from 65 to 105 MRs. The company intends to launch one new product in this segment every quarter.
MR Productivity:
PCPM has nearly doubled over four years with a marginal addition of field force in the organic business. There are currently seven focused therapy divisions, with a total strength of more than 2,300 MR working for JB Chemicals. The company does not plan to add MRs over the next 12-18 months.
Cilacar:
The company’s focus remains on growing the Cilnidipine molecule. The focus remains on five SKUs—Cilacar, Cilacar-T, Cilacar-M, Cilacar-TM and Cilacar-TC. The Volume growth for these brands has been in the 12-14% annual range.
Cost Optimization Initiatives:
JB Chemicals expects to deliver operating margins of 26-28% despite inflationary pressure and external market uncertainties. Cost optimization efforts and a favourable product mix enhanced margin.
Azmarda:
The company expects robust 15-20% annual growth for this brand, driven by a ~20% CAGR for the Sacubitril-Valsartan market over the next 4- 5 years. According to JB Chemical, demand has reached a steady state of 125k monthly units, and volumes are expected to increase to 145-150K units by the end of FY25E.
CMO Business:
The CMO and domestic formulation businesses account for 75-80% of total sales in Q2FY25. Given the product portfolio and new product pipeline, the company’s CDMO business will maintain growth momentum aided by new launches, new partners, and expansion to newer geographies. The company expects to grow this business from US$50 mn to US$100 mn over the next 4-5 years.
Other highlights:
- In the mid-term, India and CDMO business should constitute around 75%-80% of total revenue.
- JB Chemicals plans to expand its IV products capacity from 5.4 mn units per month to 7.5-7.8 units per month.
- The company has consistently reported a growth of 6%+ volume over the past 4-5 years.
- The company’s top 5 brands remained among the top 150 brands in India as of Sep 2024.
Valuation and Outlook
JB Chemicals and Pharmaceuticals Ltd. reported a 13.5% YoY revenue growth to Rs. 10,006 mn in Q2FY25, surpassing expectations. The domestic business led growth with strong performances across major brands, including acquired portfolios. Internationally, the formulations segment performed well, with the CDMO division expected to pick up in H2FY25. EBITDA grew 11.1% YoY to Rs. 2,705 mn, with a margin of 27.0%, while PAT rose 15.9% YoY to Rs. 1,746 mn. Strategic focus on cost optimization, a favorable product mix, and price growth boosted gross margins. The company aims to be a top 10 player in India by prescription count, driven by its disciplined focus on core brands, line extensions, and acquisitions, especially in the cardiac segment.
