Good morning, everyone. Welcome to the earnings call for the Q1 of 2024 at Blau Farmacêutica. Today, we have Marcelo Hahn, the CEO and founder of the company, Douglas Rodrigues, the CFO and Investor Relations, and myself, Matheus Fujisawa, the Investor Relations. Our call is taking place in Portuguese with simultaneous translation into English, and it's going to be available on the company's IR website. Now, I'll pass the floor on to Marcelo to begin the presentation.
Good morning, everyone, and thank you, Matheus. Just to make sure everyone's up to date, Bruna Gamboa is our former Investor Relations at Blau. She's not part of the company anymore. She would like to follow along with her own personal projects. We hope she's very successful in her personal projects. So we also have Matheus, our Investor Relations coordinator.
Now he's here on the stage with us. So I wanna take advantage of this opportunity to mention our concern and solidarity to the situation in Rio Grande do Sul. Because of the very challenging moment they're going through, Blau implemented many different measures to help support the people there. We're also donating medication, especially antibiotics, to certain hospitals there. The Blau family is engaged with many donations in the Rio Grande do Sul region. Now, we're really happy to share the results of the Q1 of 2024. Before I get into the numbers for the quarter itself, we would like to quickly go over the strategic plan for the company with the strong investments we performed in the last few years. From now on, in 2024, we started to capture our returns.
I would like you guys to leave here with the perception that there are positive results to be captured in 2024, and results that are even more significant to be captured in the next few years. As a highlight, I mention five main deliverables. When we look at the execution of our launches pipeline that's connected to the increase of our productive capacity, we estimate that we'll be launching between 24 and 27 products with over BRL 7 billion of addressable market. About 10% of this amount in 2024, and even more relevant values in the next few years. The expansion of our capacity is in line with the investments and demand.
With the use of Bergamo and some other lines we already have in our factories and two other product production lines in Blau São Paulo, we are able to support our short- and mid-term needs, which will reflect into even higher margins than what we've seen recently. In the mid to long term, the main project is the PIMU project in Pernambuco, which also intends to keep up with demand. That's why we're gonna be building this with a gradual migration and a phased out approach. After this is 100% complete, we'll have the capacity of about three times greater than what we have currently, with the inclusion of medication categories that we don't produce yet, and that will meet the needs of new markets, locally and internationally, with our markets that we're developing.
In the pharmaceutical national market, it's quite common to import the IFA, the pharmaceutical ingredient, and then with the API, the active pharmaceutical ingredients. For some strategic projects, it makes sense to produce the API to really increase the levels of margins in these products. Now, as we talk about the monoclonal antibodies, the new generation of medication with an addressable size of BRL 5.6 billion in Brazil, we're developing together with Celsius Bio. The development schedule is following its original plan, and we plan to launch these drugs as soon as we have the patents. So the search for new regions and geographies is also gonna take an important role in this new cycle as we search for ways to increase our revenue in strong currencies and access to new markets.
We can mention Prothya, the investment in Europe with all of the plasma chain, all the way to the finished product. Prothya, as we mentioned in the previous call, has been growing in accelerated paces within revenue of EUR 328 million in 2023. You can see the potential of the business. I also wanna highlight that for Hemarus and our plasma collection centers that are currently having four cycles in different stages, plus our subsidiaries in Latam that are also ramping up with their growth. We're gonna show you some more details about both of them throughout the presentation. On slide three, we wanna share some important updates here from the company.
When we go back to the international front at Hemarus, we continue to have the collection center, pull spring, and we hope to be opening in the second half of 2024. Now, the north side center we opened in the end of last year is still in a soft opening regime, ramping up. In the affiliates, we opened up a new logistical center in Uruguay that's gonna also meet the needs of the Latam operations, especially in the Midwest and Central America. Central America. In Bergamo, we completed the integration. Now we're accelerating the production of the oncological drugs from Blau at the Bergamo, and this is the main operational leverage to be able to increase our margins that have the potential to reach the same levels of the other Blau factories.
Now, when we get into the aesthetics business, we have another Medytox partnership with one of the botulinum toxin supply agreements. This partner was chosen because of their capacity to add more products to our portfolio and enable geographic expansion to these markets. The aesthetics market is gonna grow above average in the next few years, and Blau intends to capture this growth, and that's why we've been able to develop a business unit that's really dedicated to this segment, Blau Aesthetics, which has been growing greatly. On slide four, I wanna highlight that the initiative to open up three business units was fundamental to really complete the completion of 39% of the revenue in the Q1 of 2024.
30% of this came from the institutional segment in our business unit for onco, Hemato Specialties, and the business units for pharma, OTC, aesthetics, and Hemarus in our operation in the U.S. So a little less significant in the consolidated numbers, but they've been evolving quite significantly. Now, Matheus will continue to mention the highlights in the quarter. Another important highlight. Let's go back to one slide, please.
Yeah, so we can see the intensification of the evolution in the margins, the gross margin of the EBITDA or the net margin as well. We can see that the gross margin went up 230 basis points. And when we look at this in the last quarter, it had gone up 30 basis points. Last year, it had gone up 120 basis points.
So we can see a real intensification in the margins, and we also see an important adjustment in the level of stocks with the fourth reduction consecutively. And we went from almost 300 days in 1Q in 2023 to 225 days in 1Q 2024. So it's a really significant reduction, and this improvement led to a improvement in our cash position of BRL 73 million, with a reduction of the net debt of BRL 45 million. So as a final highlight here, we see the important Blau balance sheet and low leverage reduction in regards to 0.4 in the previous quarter, and that gives us resilience in the macro scenario that's still very challenging and a lot of strategic flexibility. Moving on to slide 5, we're gonna talk about the revenue for the launches.
We really talk about the pipelines and how we should be launching over BRL 7 billion in the next few years, but we noticed that general investors have a bit of a difficulty to add this to the model, so we're gonna help with this slide a bit. But in order to do this, we're gonna have to go back to 2023 to talk about the performance of the launches in the last three years. We can see that our revenue of BRL 78 million from launches, and here the criteria is a little different than what we were doing in the last releases. We changed the criteria to keep up with the internal targets for revenue coming from launches.
So, on the right upper side, you can see we're gonna talk about 23, and we're always gonna look at the batch of launches in 2022, that was the most significant. So we look at BRL 1.1 billion TAM from this batch in 2022. We multiply this by the market share of 7.14%, and we reach a potential revenue of close to BRL 81 million reais. But even if you look at the effective revenue that goes to Blau, we reach BRL 57 million, where you can see on the lower right side. So where is the rest of the revenue going to? Well, it's because the TAM data that come from IQVIA are the end prices, the final prices.
You have to deduct taxes and margins from intermediate players, and we're talking about this, the conversion rates of the TAM into net revenue. We've noticed it's been around 70%. So if we look at BRL 1.1 billion and the 7.4% of market share, and 70% of the conversion rate will reach the revenue of BRL 57 million in this batch from 2022. And then you can apply this to all of the other years and batches of product launches. We don't intend to update this every quarter. This with this kind of detail, we're probably just gonna update this annually. But just so you guys can keep up with the evolution of the revenue from the launches, we showed this here on the bottom, on the left side.
So you can see the LTM revenue in the last 12 months, for 1Q 2024. And you can see the comparison year by year. So where are we trying to get to with all of this? When we move on to slide 6, you can see our pipeline, for up to 2027, with the products that have a TAM of 7.4 million. So if we... billion. So if we compare the BRL 7.4 billion, then we can perform a sensitivity analysis alongside our investors to try to estimate the potential revenue to be captured in the next few years by Blau. So we can see the market share or the conversion rate of the TAM into the net revenue. So here it's just a hypothesis, it's not a guidance.
But if we were to consider 20% market share and this conversion rate of 70%, we would have an incremental revenue of approximately BRL 1 billion from these products. And then, of course, you can perform different simulations, and depending on this, you can reach even a new Blau with this pipeline until 2027. And till 2027, it's not even including the monoclonal antibodies, and it doesn't include Hemarus, Prothya, and all of these other elements. So this is just Brazil. And if we get back to the left side of the slide, we launched three products in the Q1 of 2024, considering a TAM of BRL 239 million.
What's interesting about all of this is that the TAM we launched now in the Q1 of 2024 is already higher than everything we launched in 2023. Finally, on slide 7, with the revenue, you can see the revenue grew 39% from 1Q compared to the same quarter last year, or 27% if you consider the exclusion of the Bergamo. And the drop is mainly due to the calendar effect. So you can see the interactive spreadsheet available on the IR website. And you can see in the last six years, we always have this kind of dynamic. If you analyze growth per company, you can see that there's 27% growth from Blau, 21% from Hemarus, plus the contribution from the Bergamo acquisition.
If you look at this per segment, you'll see growth of 30% in the institutional segment, which is a core business for the company, 122% in the non-institutional segment, which includes retail, Hemarus and aesthetics. And that seems to be a real important avenue for growth in the company. So as Marcelo mentioned, we are convinced that this result was very important due to the segregation into business units. And what's most important is the results we're gonna be able to conquer in the next quarters. Now, I wanna pass the floor on to Douglas, our CFO, and he's gonna be able to keep up with the presentation.
Thank you, Matheus. Good morning, everyone.
Well, let's keep up with the presentation, and let's talk about the gross profit in this quarter, BRL 120 million, a margin of 33.3%, and an evolution of 230 basis points in regards to the previous quarter. So this sequential evolution has the following main factors, with the better use of the productive capacity in the company, optimization of the Bergamo operation. Bergamo is still in operation, that's still going through a turnaround, and also the stock turnover. So the cost of acquisition is smaller than the cost we carry in our inventory. So if you keep up with all of the other variables, you have a natural trend to intensify and evolve continuously, and they're gonna contribute to increase the company's margins.
Alongside this, in our consolidated results, we carry operations that have no effective contribution to the gross margin of the company. So these two factors added up will make the company lever and increase the level of gross margin. So it's important to have this analysis with the potential for margin generation. So or these new investments and new operations. So when you move on the right side here of this same slide, we get into expenses. Expenses also follow the trend or evolution in the results with another quarter of dilution, 18.7%, in regards to our net sales. When we look at our details and information, the sales expenses are pretty flat in this quarter.
The variable parts are keeping in line with sales, and this is really related to the internal restructuring of the business units and activities in the business units. The administrative expenses that are also impacted in this quarter by the new restructuring and also some strategic projects with extraordinary expenses in the Q1. So, this 2% of the revenue in the Q1, but that's really related to the stage of development in these products and their characteristics that kind of impact this quarter. So the company keeps up with this process to also intensify, dilute, and lever the expenses. So we can see all of the operational gains and efficiency, and the EBITDA also mentions the reduction in regards to the previous quarter.
So we also gained 320 basis points. We generate BRL 65 million in EBITDA, and that's really related to the reduction of the margin of the gross margins and reduction of the expenses. We have the margins about 12%, evolution of 370 basis points, and besides all the operational improvements, we also have the tax efficiency in this quarter. We also disclosed the JCP, the interest on capital. So it's a sequential improvement in our net margins. And you can see the operations that don't contribute, representing almost 1% of the net revenue. So you can see the potential in the short term to really lever the margins in the company. So let's move on to the next slide, where we look at the working capital and CapEx.
Matheus has already given us some spoilers here, but I think working capital is really important for our cash generation. For another quarter, we continue to evolve, and that represents 58% of our revenue. Despite a very challenging scenario, the company continues to search for ways to improve the indicators. Accounts receivable is still a pretty high level, 109 days, but that really reflects the current moment in the market, but it was kept stable in regards to the previous quarter. When it comes to payments, we're able to evolve a bit with a 3-day gain, 73 days versus 70 in the previous quarter. The main highlight is the reduction of our stock levels. Matheus already mentioned this.
So if you compare that with 12 months before, you can mention that of course, within a supply chain that's a little more normalized, the company can have better control on the levels of stock and continuously search for improvements and efficiency, and of course, better cash generation. So in the quarter, the level of BRL 50 million, this is the level that should be expected for the business as usual in the next quarters. Basically, our P 1000 project that we're gonna start working with, and of course, then you have the development stage for R&D, including Simmons Bios projects. So you could have some variations between quarters.
And finally, the last but not least, I think this is probably the best slide we could share before getting into Q&A, which is the company has been highlighting a relevant flow of investments that still don't contribute to our profitability. But you can see an important cash generation above BRL 70 million, a reduction of our net debt of BRL 45 million, and a leverage rate of 0.3 times, which makes the company basically a very unique case in the sector. All of this is after a relevant investment flow and margins that are still at a maturity phase. So this gives us, as Matheus mentioned, a scenario of instability with resilience that will really help us advance and accelerate our strategic plan and analyze all of the opportunities.
So I'm closing up with this part, and now we'll get into Q&A, and then after, we'll come back to our final remarks. Thank you so much. Okay, let's go. So our first question is from Felipe Amancio at Itaú BBA. Felipe, you may proceed.
Well, good morning, everyone, guys. Thanks for taking my question. I wanted to talk about the Bergamo dynamic. We noticed there was a relevant drop compared to the previous quarter. So I wanted to understand what led to this drop. You even mentioned this seasonality, but could you give us a bit more details? And also, I would like to understand if there was some effect in the gross margin, because Bergamo, in this quarter, had relevant impact on the business, and I wanted to understand if this mix effect had some impact.
But yeah, anyways, the sales of Bergamo in the Q1 being lower than the previous quarter has a calendar effect with the phasing of the Q1, but nothing that would compromise the plan when we consider the growth and potential year over year. But even if you perform this analysis of the margins, of course, if we exclude Bergamo, we continue to evolve with the gross margin. So basically, considering the factors I mentioned, not only with the revenue, but also better use of the productive capacity, the stock turnovers and renegotiation also with the Bergamo suppliers. And then you have this upside of Bergamo, which is this turnaround operation. As we produce more products there, I can optimize this, but even excluding Bergamo, our margins are still at this level.
All right. Thank you, guys. Perfect.
Thanks, Felipe.
So our next question is from Yan Cesquim from BTG. You can release your audio, Ian.
Good morning, Marcelo, Douglas, Matheus. I wanted to. I have two questions here. One is about working capital, and I want to understand, considering that we've already noticed this improvement in the cycle stocks and inventories, I wanna understand what you guys consider to be the ideal level of stock, if you can continue the optimization agenda. And the second question is about the non-institutional aspect. So we noticed that the non-institutional aspect reaches almost 16% of the revenue, and I would like to understand this better. So if you consider the budget and plan, what's the ambition that you consider with this channel when it comes to its share in the short or midterm?
So when we look at the working capital, yes, in this year, with a more normalized supply chain, can the company have more controls and efficiency? There is also a trend with trying to have a target that reaches about six or seven months of inventory. But of course, there are more strategic items in a more normalized scenario. We'll be able to search for this efficiency, but it's also a gradual movement. And then when we get into the second question, which is a little more related to the non-institutional business unit, you can see this is very much related to the potential, right? So the retail business unit that has a potential, despite the share being a little lower, there's a huge potential for growth.
Then the aesthetics business unit, that's also exponential, and we operate with this partnership between Blau and... That expanded the opportunities in the market and this partnership with Medtox as well, bringing in more products and a potential for growth. And then, our plasma collection operation, it's ramping up. So we should expect a percentage of about 15%-20% share overall. If we look at what would be our plan for the year, and any kind of variation would be somewhere around 15%-20%, but you can add on if you want. Yeah, he asked about the days, right?
So it would be 180 days, ideally, which would be about three months of the IPA, and so we don't have any risk with the lack of products if there's an increase in demand and, difficulty to bring in the API from abroad, right? So that's why it's so important to have this verticalization process.
Okay, perfect, guys. Thank you so much.
Since we do not have more questions... Well, if you have any questions, just raise your hand. Feel free to hop in. We'll just give it a few more minutes, but. Yeah, we have some final remarks here if there's no more questions. I think there are. It's really important to explain Blau's business. We are a company that has been working on investments more than ever.
We have a target plan here in the company that's quite huge and that's split in between different work groups. So I wanna highlight Armados, the plasma collection center in the U.S., that contributes more to expenses than profitability in the business. We also have all of our R&D work that we spend about 11% of our net revenue to develop new products, and this is also an expense we have in the company. So within our Inventta, which is our PDI, we have professionals that have a high level of experience, PhD scientists, et cetera, and all of the other expenses we have that the company kind of carries on. And we have all of the API actual production plan, and we have about 70-some employees.
So, that impacts our consolidated margins, but the potential is huge. And I'm trying to talk about this so you can understand the magnitude of these investments. So we also have Prothya. And up until today, we haven't really accounted for any of the returns on that investment. But despite all of these investments in the company, the company has solid results, and we're in a very resilient scenario. So if we compare with any other peer in the market, our results in the last line are better than our comparables. So I wanted to kind of express this here. The company has a potential for growth that's huge. So everything we've been investing in, we haven't been capturing at this point in time. We're starting to capture, and this is kind of what Matheus has been talking about here.
So to give you an idea, we reached an all-time high of requests for registrations now in the Q1, which were 11 requests, right? Just in Brazil. The potential for growth is huge still. A lot of people say like: Oh, yeah, the monoclonal antibody is gonna be transformational. We're gonna change this, and it's gonna be transformational. But the company has been investing a lot in the last few years, bringing in important results. We hope to soon have a market that really knows more about our business, to understand that everything we're investing in will be consolidated and bring very important results for the company.
So we even want to invite you all to have a deeper analysis of this and understanding what Blau is currently and what the potential is with the investments we've already performed, but are still in this maturity curve. And it's worth mentioning that we are working with exceptional drugs, drugs that are essential as well. And within the hospitals, which is our core business, the Brazilian population is aging, and so above 68 years old, we already have 7 million. There's even an article on Valor and in the last year, we had an additional 1 million. So there's been access to these drugs in the private hospital network, besides all of the number of beds and hospitals, that's growing a lot.
That demonstrates a huge avenue for growth besides what we already have today, besides everything we already mentioned. We have some more questions in writing. Yeah, let's cover these. Cristiano Shioka says... Where is Cristiano from? He doesn't say where he's coming from, but I think he's an individual investor. Yeah. And he's saying, what's the expectation for the P-One Thousand? That we kind of modified a bit, and the macroeconomic situation in the country, as well as the need for caution in the company, which helped... Well, they decided to postpone the beginning of the construction work, but we intend to start the work in the second semester this year with some speed, and the launch of new drugs that also maybe need a different kind of production plan that's more dedicated.
We're gonna invest in Pernambuco. We've already invested, actually, and we plan to start as soon as possible in the second semester, as soon as we get all the licenses to do so. We have one more question from Carlos Gurgel that I also think is an individual investor. Is there an expectation for Blau presenting profitability per product line and not only the consolidated numbers? No one in the sector does this, and we've monitored our other peers as well, and sometimes we have a strong point. For example, if you produce the API in-house, you're gonna have a bigger profitability or a strong point. So according to each productive process and each development, you'll have a strong point and a weak point.
I think, exposing this, goes against the interests of the actual shareholders of the company. I'm a company shareholder, and all of my assets are invested in Blau, and my time, as well, is 100% dedicated to Blau. So we're focused on bringing in the best results to our investors, but this disclosure, we can't provide right now. That would place the company in a very sensitive position. But we're committed to more and more help guide investors to understand the potential with the current margin and the potential of the evolution of the margin. And despite not having the breakdown per product, we're providing a breakdown per company. So we have Blau, a little more mature, we have Hematus, Bergamo, and all of this has different characteristics, and they should be evolving at different intensities.
I also have a breakdown of the institutional segment and the non-institutional segment, where you have retail aesthetics, and you can even break down Hematus from this segment. So there's a little more details there, as much as possible, of course, to not compromise the company's strategy. Moving on a bit, I wanted to talk about the overall photograph of all the expenses the company has. If you get the final results, and you add back all of the expenses we're having, you'll see the results the company achieves. Because we have a lot of investors questioning like, "Oh, well, your profitability is not the same as it was in the past." But we never invested that much, as much as we have been investing now. So no, we never had as many expenses and not bringing in the immediate returns, right?
So I wanna make this clear, and the company is really carrying on an API plan for plasma collection centers, where expenses are really high. So, 4 leases per month, all the operational expenses as well. Besides all of this, you have an investment with Prothya, R&D investments, and a lot of things that the companies carry on. So imagine if you didn't have these expenses, and then you'll forget the future. So investors need to have this balance. So if they would like the promising future or something more immediate, let's say. Yeah, so that's pretty much it. Let's go to our final remarks. I wanna thank you all for your presence, and our investor relations area is available for any possible questions that may come up.
We believe that the worst phase it was passed in the past, and we're confident about the execution of these projects. Blau is just starting, so please join us. Blau!