JB Chemicals Offers Upbeat Margin Guidance Amid Caution All Around
JB Chemicals said its rank in the domestic pharma market improved to 25 from 32 in the last 12 months.
When India's major drugmakers are cautious in offering any forecasts in an uncertain market, a mid-cap peer is confident of maintaining its margins and growth.
JB Chemicals and Pharmaceuticals Ltd.’s Chief Executive Nikhil Chopra has guided for margins in the range of 24-26% for fiscal 2023. That stems from his confidence about company's Indian and overseas business across verticals.
Chopra's optimism, while responding to BQ Prime's queries at a post-results press conference, is in contrast with caution from top drugmakers. They anticipate volatility from geopolitical tensions and mounting cost pressures.
JB Chemicals, which is among the largest makers of lozenges globally, had a good last year. It's rank in the India pharma market improved to from 32 to 25 in past 12 months, according to its exchange filing.
The core domestic business, which contributes 48% revenue, grew 29% in FY22, Chopra told BQ Prime. He expects 18-20% growth for the company in the Indian pharma market, where "big brands will only get bigger".
The margin guidance is supported by four factors:
Domestic market: He expects the share of revenue from the domestic formulation market to go up to 60-70%, driving overall company growth. JB Chemicals plans to launch 8-10 products in the coming year. Their focus will be on the chronic segment, including medicines for hypertension, heart ailments and probiotics.
Contract manufacturing: The contract development and manufacturing arm of the business is expected to scale up from the current $30 million levels (about Rs 250 crore) to $100 million (around Rs 800 crore) in three to five years, Chopra said. "Adding new products and new partners is the key."
While 70-80% of the revenue will come from the lozenges space–it ranks among the top five manufacturers globally in medicated and herbal lozenges–they are also considering ophthalmology and injectable segments.
International markets: The international business will grow in low double-digits, said Chopra. And Russia and South Africa will continue to remain dominant markets for JB Chemicals. Chopra said they are targeting more progressive launches in the rest-of-world markets.
Medical representatives: Chopra expects the company’s 2,500 medical representatives' productivity to improve by 15-20% from the current levels. They are expected to sell additional products that are now part of its portfolio after its acquisition of Sanzyme Pvt. brands, reducing overall selling costs.