Laurus Labs Ltd.'s growth for rest of fiscal will be aided by strong revenues from contract manufacturing and improving formulation or finished drug pricing, according to Founder and Chief Executive Officer Satyanarayana Chava.
Margins are expected to remain stable between 29% and 30%, given the rise in solvent prices, Dr. Chava told BQ Prime's Niraj Shah.
The pharma and biotech company had delivered in-line first quarter net profit which rose 4% year-on-year. Escalating costs were offset by revenue growth of its contract development and manufacturing arm.
The company's revenue rose 20% and operating profit were up 15%, while operating margin was at 29.5%.
CDMO
"We are very confident that revenues from contract development and manufacturing company will continue to grow despite high base of last year,” Chava said. “We demonstrated a very good Q1 and further delivery commitments from our partners are also looking very good."
The newer capacities that are being added will further aid CDMO growth in FY24, he said. However, the best year of growth for CDMO at Laurus Lab will be FY25 as these new capacities hit peak utilisation, Chava said.
APIs And Formulations
Pricing pressure in anti-retroviral active pharmaceutical ingredients and the formulation business were significant during this quarter. However, API volumes will continue to remain strong with a yearly revenue mark seen around Rs 3,000 crore, Chava said.
But the slight growth in volume would be offset by a slight drop in the prices, Chava told BQ Prime. “I don't expect this number to go down or up drastically.”
Formulations, he said, are expected to see better pricing from the third quarter of the current fiscal. "We are expecting higher sales volume as more formulation capacity lines becomes operational.”
Solvent Prices
Though solvent prices, which are crude-dependent, remain a key risk to growth, there won't be any issue about availability of raw materials, Chava said. “Solvent prices can impact margins, but not its execution.”
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