Gland Pharma Q3 Results Review - Long Road To Recovery: Yes Securities

Yes Securities Report

Gland Pharma Ltd. reported a weak quarter on back of declines in U.S. and rest of world revenues YoY as lack of customer offtake, still lingering supply concern and company opting margin over market share led to revenue shortfall.

Gross and Ebitda margin improved QoQ as a fallout of preference for margin vs market share; albeit management commentary of volume share being intact for top products appears out of sync with apparent preference for margin.

Gland Pharma outlined several moving parts heading into Q4 and FY24 – inventory rationalisation at customer end, supply chain leading to production delays and competition leading to price erosion.

While Heparin issue could get relief once second supplier is approved, price erosion could continue to manifest itself in the form of lower profit share and, eventually, revenue impact with a lag.

We cut FY23 estimates as U.S. revenues continue to disappoint with a now revised expectation for a decline of 4% versus earlier forecast of ~8% growth; similarly, FY24 outlook also gets reset for U.S. and other geographies from 15/20% to 10-15% while margin at ~30-31% remains largely unchanged.

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