Executive Summary

Indoco has seen growth in Q3 FY22 based on the performance of its domestic business. Though the company hasn’t seen growth in its international segment, Indoco management says the firm is on track to perform better in the next quarter.

Indoco Remedies Limited has reported a 4.6% jump in its net revenues for the third quarter ended 31 December 2021 to INR3.49bn ($47m), on the back of its domestic business growth.

The Indian company’s domestic business grew by 15.2% in Q3 FY22 to INR1.9bn, compared to INR1.7bn reported in the same quarter last year, on the back of the performance of major therapeutic segments – namely anti-infective, gastrointestinal, neurological and respiratory.

“If you look at the health of the pharma business in the Indian space, frankly, we have done exceedingly well within all our four core therapy areas,” said Indoco.

For the nine-month period, Indoco’s domestic revenues grew by 27.2% compared to the same period last year.
Furthermore, for the nine-month period ended 31 December 2021, Indoco’s overall net revenues grew by 19.5% to INR11.0bn as against INR9.23bn reported in the prior-year period.

According to the company, both its COVID-19 as well as non-COVID baskets have done well this year.

The company has been performing well on the back on domestic and international launches including Fevindo (favipiravir) 400mg and 800mg tablets, for the treatment of mild to moderate COVID-19 (see sidebar).

However, the company’s revenues from its international formulation business witnessed a slight drop in Q3 FY22, compared to the prior year period.

According to Indoco, the underwhelming performance in the company’s international segment was mainly because of Europe, as the API price of paracetamol had shot up. “As a result, we were not getting the desired feedback from our front-end partners,” said Indoco. “So that was one of the reasons we had to slow down on that molecule.”

However, the company leadership insisted that Indoco is on track to do far better in Q4 FY22, as far as Europe is concerned.

Indoco also explained that its material cost as a percentage of sales shot up very sharply both year over year and quarter over quarter. “Cost of goods has largely gone up because of the increases in pricing sizes, both for starting materials and for API, as well as some of the APIs we receive, particularly from China,” said Indoco, talking about how the company was not impacted by China in the first two quarters of FY22, as it planned better around the availability of products and materials in hand.

Talking about its international business, Indoco said that its revenues from South Africa, Australia and New Zealand had recorded 25% growth for the nine-month period of the current fiscal year at INR121m, compared to INR97m reported for the same period last year.

Company’s Expectations From Q4 FY22