Novartis India Ltd (EVONILE) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, the conference will begin shortly. Please stay connected. Thank you.
Moderator: Ladies and gentlemen, good day, and welcome to Q2 FY '27 earnings conference call of
Moderator: Pharma, formerly known as Novartis India Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jayson D'Souza, President. Thank you and over to you, Mr. D'Souza.
Jayson D'Souza (Evonith Pharma): Thank you, Ranju. First, welcome to everyone for to Evonith Pharma's Q2 FY '27 earnings call. I would like to start by introducing the management. We have with us Mr. Vikas Gupta, MD & CEO of Evonith Pharma, Bhagwat Singh Dhoraa, the CFO, on this call, and myself, Jayson D'Souza. Before we start this call, I would like to read out the disclaimer. This call has been organized by the management of Evonith Pharma Limited. Certain statements made in this made during this call may not be based on historical information or facts or may and may be forward-looking statements based on currently held beliefs and assumptions of the management of the company, which are expressed in good faith and in their opinion, reasonable, including those relating to the company's general business plans and strategy, its future financial conditions and growth prospects, and future developments in its industry. Forward-looking statements involve known and unknown risks, certainties and other factors which may cause actual results, financial condition, performance or achievements of the companies or industry results to differ materially from those expressed or implied by such statements. Past performance is not necessarily indicative of future results. This presentation is for general information purposes only, without regard to any specific objectives, financial situation or information needs of any particular person, and does not constitute an offer or invitation to purchase or subscribe for any securities. No part of it should be form basis of or to be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities. With this, I would like to hand it over to Mr. Vikas Gupta, Dr. Vikas Gupta, for his opening remarks.
Vikas Gupta (Evonith Pharma): Thank you, Jayson. A very good afternoon to all of you, and a very warm welcome. Thank you for joining us for our first results call as Evonith Pharma Limited, formerly known as Novartis India Limited. For nearly 8 decades, this company has been home to some of India's most trusted medicines, whether it is Voveran, Methergine, Calcium Sandoz, Myfortic. These are the names that doctors across the country have prescribed for many years, and each of them still holds the number one position in its covered market. In Q2 FY '27, we began a new chapter in that story, and I am glad to have you with us at its start. Let me begin with the business giving a background of the business we inherited. We inherited legendary brands with strong prescriber recall, but there was limited focus and investments in these brands. The majority of the sales was through a through to a single customer. Further, distribution and field presence was limited, with hardly any promotion on the brands. So, demand rested largely on the loyalty that doctors have built up over the years. In other words, we had the brand brands, but not the platform. So, building building that platform is the single largest opportunity in front of us, and it is exactly what we set out to do this quarter. Let me give you a brief of what we have built in in few months. In just a few months since the change of control, we have moved from a single customer model to an independent company with its own distribution network, which markets its own brands. First, the distribution network. We have on boarded more than 20 CFAs that gives us a nationwide network, last-mile reach, and for the first time, a direct control of supply chain. Second, people. We are building a dedicated therapy-aligned field force to connect with doctors in metros and and towns beyond metros, and to bring renewed focus to brands that have been under promoted for some years. And then the systems. We have moved out of the global systems and set up our own platforms for accounting, HR, field reporting, which lets us execute much faster and more independently. We have also strength strengthened our board with an independent chair and brought in an experienced leadership team from some of India's leading pharmaceutical companies. This, in effect, is building a new organization from the ground up. Many of the key building blocks are now in place. First and foremost, strengthening the portfolio. So, alongside this,
Vikas Gupta (Evonith Pharma): into cardiology, which is one of the largest therapy areas as far as IPM is concerned in India. We also signed an exclusive distribution and promotion agreement for a retina portfolio with Accentrix and Pagenax, which takes us into ophthalmology with innovative products and strong specialist equity. With these, our flagship brands now span across six priority therapies, which is cardiology, pain management, wellness, transplant, gynecology, and neurosciences. In addition to that, we have ophthalmology, you know, which we have added, you know, with the in-licensing of these brands. To sum up this quarter now, some of the key highlights for Q2 FY '27. To sum up the quarter, we are now have our own route to market, a stronger portfolio with two new therapy areas and an independent organization with its own systems, not only systems, its own board and a leadership team. Let me tell you how, you know, we read this quarter and I would ask you to read this quarter's numbers in the light of this shift. So Q2 is the quarter in which the old model ended and a new one began. That brings one-time costs, a one-time correction in revenue and upfront investment in people and systems that goes ahead of the revenue. The important point is that these are transition effects. They do not reflect any change in the underlying demand, you know, for our brands. Our revenue from operations for Q2 FY '27 was 56 crores compared with 90 crores in Q2 FY '26. Out of the 90 crore in Q2 FY '26, rupees 41 crore was on account of sales to a major customer. On the half-yearly basis, we have recorded a revenue of 160 crores against 178 crores last year. Employee costs rose to 14 crores from 5 crores last year for the quarter as we started building our own field force and the corporate team. Other expenses were 11 crores, which is almost flat on last year after excluding the one-off expenses. As a result, the adjusted operating EBITDA for the quarter was negative rupees 16 crore. For half year, the adjusted operating EBITDA was rupees 19 crore. As we said in our September call, our team is sized for the future potential of the portfolio, not for today's base. Employee and selling costs will be stepped up in phases through the second half. I would like to specially call out that there are two sets of one-time items in the quarter, amounting to rupees 83 crores. First, an exceptional item of rupees 68 crores that comprises of 61 crores from the termination of the exclusive promotion rights and the related inventory purchase arrangements with one large customer. Second, one-off expenses of about rupees 15 crore relating to the transition and the acquisition-related costs of Minipress XL. These are reported within other expenses. We have set ourselves clear priorities for FY '27. One, stabilize and scale the business, with seamless execution across operations, supply and our commercial model, and complete the market availability through our own network. Second, complete the infrastructure buildout. Our distribution and corporate infrastructure is now in place, and the complete field force will be in place by Q4 FY '27. And third, reducing debt significantly. Looking further ahead, our ambition is clear. We want to move from a stable business to a business that grows above the market, from a portfolio concentrated in a few flagship brands to a broader basket with regular in-licensing, acquisitions and new launches, from a single standalone asset to a platform that grows through disciplined M&A, and from cash sitting on the balance sheet to a business focused on growth, ROCE, and free cash flow. Our brands have always had the trust of doctors and now, they finally have a team behind them. We are still in early stages of organization buildout and we are realistic about the work ahead. But the progress we have made in last few months gives us a lot of confidence. We are building an organization with the capabilities, infrastructure, and ambition to unlock the full potential of Evenile Pharma.
Moderator: tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Aman Goyal with IIFL Capital. Please go ahead.
Aman Goyal (IIFL Capital): Yeah. Thank you for taking up my question, sir. My first question is on the MR spend. So, we are targeted all almost 900 MR. So, as of now, how much is our MR spend? And And secondly, the current MR spend, how does how much is it located to the mini-press? And what is the experience curve for these MR spends currently, I mean whether they are frontline manager or a area manager?
Vikas Gupta (Evonith Pharma): So, Aman, thanks thanks for your question. So, our you know recruitment, our hiring is going on. And we are pretty pretty much satisfied with the pace at which we are progressing. At the current speed, it appears that by you know, end of Q3, you know we should have everybody on board in field. We are taking We are not taking freshers. We are taking experienced people, you know from the industry. So, and and and it is the complete structure, you know like it is there for any domestic pharmaceutical company. So, our hiring is happening you know in line with what industry does, you know all all the leading payer of players of the industry you know do. So, I think by end of Q3, you know or you know, say at the most beginning of Q4, we should have almost everybody on board. Specifically, for Minipress, you know we are planning around 300 people out of these 900, you know to promote Minipress.
Aman Goyal (IIFL Capital): Got Got it, sir. Sir, so second one is on the Minipress also. So So, we have acquired that brand. So, what is the amortization period we are looking to amortize that goodwill?
Bhagwat Singh Dhoraa (Evonith Pharma): So, planning to overall amortize it over 20 to 25 years. That's the range which we have taken for amortization of this.
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