Suhani Adilabadkar
Torrent Pharma reported stellar June Quarter 2024 results. Domestic formulation business was the key growth driver with 15% YoY growth in Q1FY25. While the Indian market did well, Brazil was muted and the US still in the negative zone. German generic business continued with its stable growth momentum, rising 10% YoY.
Highlights
- Torrent Pharma reported double-digit YoY revenue growth for the seventh consecutive quarter
- Torrent Pharma to reduce dependence on Losar in cardiac segment
- Consumer Health segment to launch new product by the end of the year
- Management expects about seven to eight in the next three quarters to support US Business.
- Torrent Pharma in race to acquire J.B Chemicals & Pharmaceuticals
Double-Digit Revenue Growth For 7th Consecutive Quarter
Torrent Pharma is ranked 5th in the Indian Pharmaceuticals Market (IPM) and is a major player in the chronic segment. The company reported revenues of Rs 2,859 crore in June Quarter 2024, a rise of 10% YoY supported by strong domestic chronic business and German generics business.
India business consists of branded generics, consumer health and generics. While India and Brazil constitute mainly the branded generics business, Germany and USA are generic markets for Torrent Pharma.
Torrent Pharma reported double-digit YoY revenue growth for the seventh consecutive quarter. At the end of the June Quarter 2024, Torrent Pharma had 20 brands in the top 500 of the IPM, with 18 brands having more than Rs 100 crore sales as of moving annual turnover (MAT). India business revenues stood at Rs 1,635 crore up 15% YoY in Q1FY25. Speaking on India growth, Aman Mehta, Wholetime Director at Torrent Pharma said, “The breakup of the 15% India growth roughly based on the All India Origin Chemists & Distributors (AIOCD) data for the quarter is 2.5% volume, 8.5% price, and 4% new products. This is all fully organic-driven because Curatio is in the base.” Torrent Pharma acquired Curatio Healthcare for Rs. 2,000 crores in September 2022. Curatio is a strong player in the cosmetic dermatology segment with a 50-brand portfolio in India. Curatio business grew 19% YoY in Q1FY25 and witnessed continued high growth traction in almost all its top brands.
Revival In Chronic Business Supports India Business Growth
Torrent’s domestic chronic business grew 14% YoY compared to 8% YoY growth in Indian Pharmaceuticals Market (IPM) driven by strong revival in the cardiac segment and continued traction in anti-diabetes new launches. Chronic segment pertains to drugs for cardiovascular (CV), diabetes, central nervous system (CNS) etc. Chronic therapies are a major growth lever for Torrent Pharma’s branded generics business in India. Chronic therapies are now more than one third of the Indian pharma sector. India is the diabetic capital of the world with 15-17% of its population being diabetic and more than 30% hypertensive. Higher increase in diabetics and hypertensive numbers have attracted redirected focus from both domestic and foreign pharma companies. While Torrent Pharma is moving strongly in domestic business, the management is aware of strong competition creeping in the chronic drug segment over the last couple of years. The company has high dependence on its star anti-hypertensive brand Losar. Speaking on the cardiac segment, Mehta said, “We now have adequate growth engines in place to kind of derisk Losar completely so that it doesn’t affect our overall cardiac growth.” While Losar is still the top most brand, its growth has fallen, the management expects it to fall from 1st to 3rd rank in the next few quarters. Torrent Pharma has also launched new products in the diabetes segment which is witnessing continued strong traction.
Consumer Health Brands Witnessing Strong Traction
The consumer health business is also doing well for Torrent Pharma. The company launched its consumer health segment in H2 of 2022-23. The first product to be launched under this segment was Shelcal 500 and later the product portfolio expanded with addition of Unienzyme, Ahaglow and Tedibar. Star brand Shelcal 500 revenue grew 17% YoY in June Quarter 2024. Commenting on the consumer health revenue base, Mehta said, “Shelcal 500 is somewhere in the vicinity of Rs 300 crore, Unienzyme is about Rs 150 crore, Tedibar is close to Rs 140-150 crore and Ahaglow is about 80-odd crore. This is the broad kind of base that we have.” The company is expected to launch another new product in the consumer health segment by the end of the year. Speaking on overall India business growth, Mehta said, “Going ahead depending on how the market growth plays out, 15% was the Q1 growth, but I think somewhere between 13% or low teens growth for the rest of the year should be doable.” India business has been reporting double-digit growth annually over the past three years.
Muted Growth For Brazil, Germany Business Stable
Brazil reported revenues of Rs 196 crore, a rise of 3% YoY in June quarter 2024. On the Brazilian market, the Chief Financial Officer at Torrent Pharma said, “In Brazil, while secondary sales continue to grow in double-digit, primary sales got impacted this quarter due to floods in one of the provinces, and therefore Q2 should normalize this impact.” According to the management, five new products will be launched during the rest of the year. Torrent Pharma intends to launch six new launches per year in the Brazil market. “We have up to 19 molecules waiting for ANVISA (Brazilian health regulatory authority) approval”, said Mehta.
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For the German market, revenues stood at Rs 284 crore, up 10% YoY. Speaking on the German generics business, Sanjay Gupta, Executive Director, International Business at Torrent Pharma said, “During the quarter, we won incremental new tenders, which will start delivering incremental sales from Q3 and Q4 of 24-25.” Over the past five quarters, the company has increased its overall value of wins in tenders. Gupta further added, “Our overall share of the German generic market is increasing steadily QoQ and currently stands at 6.1% for the quarter with Torrent ranked 5th in Germany in the overall generics business.”
US business Still To Achieve Breakeven, Awaits Approvals
The US generic business reported revenues of Rs 259 crore, down 12% YoY in Q1FY25. While the US generic business is still to achieve breakeven post-R&D expenditure, to move into a profitable zone and build a strong revenue base, new product launches are required. The management had guided $200 million revenue target, which has not been achieved due to lower number of approvals for Dahej and Indrad, is yet to be cleared by US FDA. Clarifying on US business, Mehta said, “We have seen the first wave of approvals from Dahej has come in, but there have been more on the site transfer approval rather than new ANDA approval.” The products which were earlier made in Indrad are now being transferred to Dahej. The management is expecting about seven to eight approvals this year, in the next three quarters, mainly in the oncology segment. Speaking on US Market, Gupta said, “We are expecting a couple of oncology approvals, some approvals which could have an upside in terms of lesser competition. So, that will drive the sales growth. That would propel us forward and next year onwards it should be at a higher rate.”
After Curatio Healthcare, Investors Await Torrent Pharma’s Next Acquisition
Acquisitions have been an integral part of Torrent Pharma’s growth story. Domestic branded generics business was bolstered with the acquisition of Elder Pharma in 2013 and Unichem’s domestic branded generics business in 2017. The latest acquisition was Curatio Healthcare. Torrent Pharma jumped to 10th rank from 20th in the cosmetic dermatology segment by acquiring Curatio in September 2022. On Torrent Pharma’s acquisition strategy, Sudhir Menon, Chief Financial Officer and Executive Director (Finance) at Torrent Pharma said, “Acquisitions have been an integral part of our growth story and that’s something which we will continue to pursue as long as we believe that it’s going to create long-term shareholder value.” The company was in the race to acquire Cipla in 2023.
According to market reports Tau Investment Holdings has put its 53.77% stake in JB Chemicals & Pharmaceuticals on the block. Tau Investment Holdings is a subsidiary of Kohlberg Kravis Roberts (KKR) private equity firm. And Torrent Pharma is one of the negotiating buyers. JB Chemicals & Pharmaceuticals is a key player in the chronic segment with strong focus on cardiology and nephrology therapies. The company is ranked eighth in the cardiology market in IPM with 3 brands amongst the top 20 cardiology IPM brands. JB Chemicals & Pharmaceuticals chronic portfolio accounts 48% of its total business and grew 14% YoY in FY24.
Torrent Pharma’s debt equity ratio stands at 0.57 and free cash flow was Rs 2,833 crores as on March 2024. And strong promoter shareholding of 71.25%. Always on the lookout for strategic acquisitions, Torrent Pharma will chart its future growth both organically and through buyouts. If it’s not JB Chemicals, it will be something else.
