Alembic Pharma Expects Pace Of Growth In First Half Sustaining

Alembic Pharmaceuticals Ltd. expects its domestic and active pharmaceutical ingredient businesses to grow at the same rate in the second half as they did in the first, according to Chief Financial Officer Rajkumar Kumar Baheti.

However, the drugmaker may not see similar growth in its exports because of price erosion due to oversupply in the U.S., Baheti told BQ Prime.

"Today, we're struggling with the US market not for business, but for prices," he said. The price erosion is hurting the margins, which is an area of concern, Baheti said, adding that sales by value won't "see much increase".

If the 10-15% rise in raw material prices sustains, then it could hurt margins in the long term, the CFO said.

The drugmaker is not heavily dependent on active pharmaceutical ingredients for its international business. A disruption in supplies due to the resurgence of coronavirus in China may likely hit the domestic business as it gets its ingredients from the country. However, the company is sitting on three to four months' supply, Baheti said.

Alembic Pharmaceuticals has received U.S. FDA approval for Pregabalin capsules from its Jarod Facility. This is a PAS, or prior approval supplement, approval, which is a shift of product from one side to another, Baheti said.

The PAS allows the company to make drugs at formulation division IV, Jarod, Gujarat, according to its Dec. 22 exchange. "This is the first product approval from the Jarod facility, which was inspected in December."

When fully operational, the facility can generate annual revenues of Rs 150–200 crore, Baheti said. But that will take a year and a half to two years. The drugmaker does not expect any incremental revenue from this facility in the current fiscal.

"We are not very optimistic on the outcome as far as FY23 is concerned, which is almost over," Baheti said. "I don't expect any significant changes even in the first two quarters of FY24," Baheti said, as the price pressure will continue.