Alembic Pharma Eyes 18-20% Ebitda Margins Driven By Production Ramp-Up, New Launches

Alembic Pharmaceuticals is targeting to raise its Ebitda margins to 18-20% over the next couple of years, according to the company’s Managing Director, Pranav Amin. The company is hopeful of improving its margins due to enhanced capacity and production ramp-up in the second half of the current financial year.

“We're doing pretty okay on capacities. Some are completely full, while others are ramping up. The other plants will ramp up as well in the second half. And that is why you will see a margin improvement, not just the second half, but moving forward from the current 17% Ebitda margins. I believe that over the next couple of years, we will inch closer to the 18, 19, 20% kind of margins,” he said during a conversation with NDTV Profit on Tuesday.

He highlighted the company's strategic focus on international generics, cost efficiencies, and a rich product pipeline to drive future expansion.

“We have guidance for capex of about Rs 400 crore. Most of this was either maintenance or de-bottlenecking,” he said.

Addressing investor concerns about the challenging US market, Amin acknowledged that pricing pressure "continues to remain". However, he explained that the company is successfully countering this trend.

“The US side, the pricing pressure, continues to remain. I think we're just countering that by higher volumes and adding more products that help us balance it,” he said.

The generics segment in the rest of the world (excluding the US) has shown consistent quarter-on-quarter growth over the past 15-20 quarters, emerging as a high-margin opportunity.

“Strategically, we are trying to build up the rest of the world generics business. It's a good margin business. We focused on a few territories; we're expanding to more. That business has done well,” the top executive said.

A significant portion of Alembic Pharma's R&D spend over the last few years has been allocated toward the US, resulting in a "much richer pipeline". The company is planning some “high-value launches” in the US market over the next 12-18 months, including complex injectables, peptides and ophthalmic products, a segment that is currently performing very well.

Shares of Alembic Pharma closed 2.79% higher at Rs 950 apiece on the NSE, while the benchmark Nifty50 ended 0.64% lower at 25,597.65.