In conversation with Krishna Raghunathan, CFO of Supriya Lifescience Ltd

Today's customers are more informed, and regulatory expectations for quality are higher than ever. Given these factors, I believe the Indian pharmaceutical industry is set for continued growth and global leadership, states Krishna Raghunathan, CFO of Supriya Lifescience Ltd.

What key factors have driven the company's highest-ever quarterly revenue of Rs 186 crore in Q3FY25, marking a 33 per cent year-on-year growth and an impressive 57 per cent surge in net profit?

Several strategic initiatives drove this quarter's impressive revenue growth. We saw more substantial volumes, deeper market penetration, and the expansion of new portfolios. A key highlight has been our increasing presence in regulated markets, which command premium pricing. In fact, exports contributed 85 per cent of our revenue this quarter, a significant jump from 74 per cent in FY24.

Additionally, we made strong inroads into LATAM (Latin America) markets while also gaining traction in North America and Africa, aligning with our global expansion strategy. Today, we are an innovative organisation serving 1,500 clients across 120 countries.

Our fully backward-integrated business model gives us a distinct edge on the product front. This model ensures supply chain security, sustainability, and cost efficiency by covering key therapy areas such as anaesthetics, antiasthmatics, antihistamines, decongestants, and anti-gout.

What led to a nearly 10 per cent decline in revenue contribution from the Asian region, and what strategies enabled the company to increase its share from 8 per cent to 21 per cent from the LAC region?

Revenue growth has been visible and attributed across several product categories and geographies. The major geographies for us would be Europe, LAC, and the rest of the regions. We have witnessed volumes grow in American and European markets, which has been very encouraging. This quarter has also seen growth in the Latin American (LAC) markets.

Typically, our observations indicate that LAC markets have a subtlety as far as premium pricing and volumes are concerned. Given our numbers, we have done very well in LAC for the past couple of quarters. The volume demand is evident, and there is also a good premium compared with Southeast Asian markets. While comparing LAC with other high-premium markets such as North America or Europe may not be correct, but there is tremendous scope when LAC is to be compared with Southeast Asian or even domestic markets.

At Supriya, there is immense scope for volume growth in LAC and LATAM markets, given our recent launches, such as Esketamine hydrochloride in LATAM. This year, we became the first Indian company to have received approval from Brazilian regulator ANVISA (Agência Nacional de Vigilância Sanitária) for that life-saving drug. We also launched a low-cost alternative to Atorvastatin, a key drug in controlling cardiovascular treatment.

Could you provide insights into the company's Analgesic/Anesthetic segment, which accounted for 60 per cent of total revenue? What efforts have contributed to its success, and how does the company plan to drive growth in other segments?

While we generally refrain from commenting on specific products due to various complexities, our anaesthetic basket, which includes 8-9 products, holds immense potential. In comparison, several antihistamines and anti-allergic products in the market are priced higher than the ones in our portfolio. While outlining a strategy for each product or the broader basket remains challenging, we are optimistic about further expansion in the coming years.

Can you elaborate on the company's ongoing projects, including ANDA filings for Antihypertensive and Vitamin-based drugs?

With a roster of 1,500 clients globally, we welcome at least two audits every week. Our facilities are approved by major regulatory bodies, including USFDA, Health Canada, EDQM, ANVISA, TGA Australia, etc., which positions us firmly in a market where supply chain security and GMP compliance are paramount. And we are always ready with audits and filings.

From a project's perspective, there's a lot of action on areas such as our Whey Protein project and bulk API projects such as those with DSM-Firmenich. Whey Protein is a huge volume business with volumes of over 18,000 tons. We have a moat of being the only player in India with American technology, and with the recent FSSAI license, it has immense scope. The project has started on an exciting note, with our marketing partner having onboarded large distributors of whey protein across the country.

On the project front, we are also working with several opportunities similar to the one at DSM-Firmenich, where the demand is for APIs and advanced intermediates from multinational customers. The demand for DSM is nearly 5-10 mts, and we are on course to take it to its full potential by FY27.

How will the Module E Production Block at Lote Parshuram support the company's long-term growth, and are further capital expenditure plans in the pipeline?

A significant milestone we achieved last quarter was commissioning the Module E block at our Lote Parshuram facility. The facility, spread across 5,000 square meters and structured over four levels, adds 335 KLPD to our capacity, taking the total capacity to over 1,000 KLPD.

We have invested a total of Rs 125 crore in the newly inaugurated Module E manufacturing block, which is expected to achieve its peak revenue contribution by FY'27. This investment helps improve the capacity at the block by 55 per cent.

Regarding future expansion, there is always the need for capex in the pharmaceutical business. That is to drive operational excellence. But we are a sustainable organisation and on the operational efficiency front, our working capital days improved to 124 days in the Q3 FY'25 compared to 134 days in the same quarter last year.

What is your outlook on the future trajectory of India's pharmaceuticals and drugs industry?

India's pharmaceutical sector is on a strong growth trajectory, with reports forecasting it to reach USD 130 billion by 2030 (EY) and USD 450 billion by 2047 (Bain & Co). While current media discussions focus on tariffs and U.S. policies, it's essential to recognise that pharmaceuticals—especially life-saving drugs—are not cyclical. There is always a demand for high-quality medicines.

Today's customers are more informed, and regulatory expectations for quality are higher than ever. India is well-positioned to meet these demands, thanks to its access to advanced technology, a skilled workforce, and a stable business environment. Given these factors, I believe the Indian pharmaceutical industry is set for continued growth and global leadership.

Disclaimer: The opinions expressed above are personal and may not reflect the views of Dalal Street Investment Journal.