CDMO Contribution Is Expected To Be At 35-40% In FY26: Senores Pharma | CNBC TV18

Summary

Senora Pharmaceuticals, led by Mr. Swapel Sha, is positioning itself for significant growth following the acquisition of 14 ANDA products from Dr. Red's. With a market potential ranging from $400 million to $1.1 billion, the company expects revenue for FY24 to be between ₹400-420 crores, and anticipates ₹700 crores in FY26. The company is focusing on its CDMO business, which is projected to contribute 35-40% of future revenue. Despite increasing borrowings and a high debt level of ₹140 crores, Senora is optimistic about its future growth, with a positive cash flow and no immediate need for additional funds in the near term.

Takeaways

• 😀 Senor Pharma has acquired 14 abbreviated new drug applications (ANDAs), which are expected to drive future revenue growth.
• 😀 The company is targeting a revenue of ₹400-420 crores for this fiscal year, with good profitability outlook.
• 😀 The potential market for the 14 acquired ANDAs ranges from $400 million to $1.1 billion, depending on market channels.
• 😀 In the next fiscal year, Senor Pharma projects its revenue to reach ₹700 crores, with profitability improving through operational efficiencies.
• 😀 The CDMO (Contract Development and Manufacturing Organization) business is expected to contribute 35-40% to the revenue mix next year.
• 😀 The CDMO business primarily focuses on government contracts, including controlled substances and NDA (New Drug Application) products.
• 😀 Senor Pharma has increased its borrowings significantly, from ₹15 crores in FY22 to ₹250 crores in FY24, mainly due to acquisitions.
• 😀 The company has repaid ₹90 crores of debt using IPO proceeds and operating cash flow, leaving ₹140 crores in pending debt.
• 😀 The company is working on reducing its extended cash cycle, where certain revenues take up to 210 days to realize.
• 😀 Fixed asset turnover has been below 1 in the past year, and the company plans to address this issue in the upcoming earnings call.
• 😀 Despite financial challenges, Senor Pharma remains optimistic about its high-growth phase and future revenue generation from acquisitions.

Q & A

What is the strategic importance of the 14 abbreviated new drug applications (ANDAs) acquired by Senora?

The 14 ANDAs acquired by Senora are strategically important as they position the company for growth in the coming years. These products will undergo significant tech transfer, and production will begin at their U.S. manufacturing plant, helping to boost both profitability and revenue over the next 2-3 years.

What is the estimated market potential for the 14 acquired products?

The market potential for these 14 products ranges between $400 million to $1.1 billion, depending on the business channels, including government contracts and specialty clinics.

How much revenue does Senora expect to generate in the current year?

Senora expects its revenue for the current year to be around 400 to 420 crores.

What is the expected revenue for Senora next year?

Senora is expecting to generate around 700 crores in revenue next year, with a 5% profitability increase due to operational efficiencies.

What will be the revenue mix for Senora's CDMO business in the upcoming fiscal year?

The CDMO business is expected to contribute about 35% to 40% of Senora's total revenue next year, with a significant focus on government contracts and control substances.

Why has Senora's borrowing increased significantly over the past few years?

Senora's borrowing has increased due to the consolidation of multiple companies. This has led to an increase in their fixed assets and intangibles, contributing to higher debt levels.

How has Senora been addressing its debt and cash flow issues?

Senora has paid down 90 crores of debt using IPO proceeds and operating cash flow. Although its days sales outstanding (DSO) is extended (180-210 days for some revenue streams), the company is working on improving this through talks with banks and customers.

What is the current amount of debt on Senora's books?

Senora currently has about 140 crores in pending debt after repaying 90 crores.

Is Senora planning to raise more capital in the near future?

No, Senora does not plan to raise additional capital in the near future over the next 2-3 years.

What is the company's expectation regarding its fixed asset turnover in the near future?

Senora is not able to provide a specific number for its fixed asset turnover at this point. However, they plan to address this issue during their earnings call after the completion of the fiscal year.