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Welcome to the earnings webcast for the third quarter of 2024 at Blau Farmacêutica. Today we're live with Marcelo Hahn. He's our CEO and founder, Douglas Rodrigues, CFO and IR, and Matheus Figueirão, our investor relations. Our webcast is taking place in Portuguese with simultaneous translation into English and will be available on the company's IR website. By the end of the presentation, we'll have a Q&A session dedicated to sell-side analysts, and the analysts that would like to submit questions must raise a hand on Zoom, which is located at the bottom part. The other investors can send questions to ir@blau.com. Now I'll pass the floor to Marcelo so he can begin the presentation with slide three.
Thank you, Matheus. Good morning, everyone.
I want to start off with reminding all that we had reached the all-time high revenue with BRL 465 million, and we have an all-time new high for the third quarter of 2024 of BRL 474 million. This represents a growth of 31% compared to the same period last year, with a highlight to our core business in the hospital segment. This performance is 5% organic, with new launches growing 80%, and the rest coming through the improvement in the mature portfolio, with one-third coming from prices and two-thirds from volumes. As we reinforced for a bit, the macroeconomic scenario is still challenging, but the pharmaceutical market is really resilient, and we knew that the situation in the hospital market last year would be atypical due to imbalances with the pandemic. So we just focused on our business execution program to have better developments and launches.
After this, we were able to restructure key areas in the company: commercial, industrial, and medical. We want to highlight this new go-to-market split into business units with greater focus, management, and control. To meet these needs for growth, we had important investments in our productive lines with scale gains and better operational processes. We assessed the incentives and created a structure that was closer to our customers. We had improvements in all of our targets related to last year as well as the quarter before, as you can see on the slide. The growth of the revenue, increase of operational margins, optimization of the cash cycle. We always had a lot of conviction on the strategic plan, but this was only possible due to engagement from the entire company contributing assertively.
So now we move on to Matheus, and he'll keep up with the presentation.
Thank you, Marcelo. And now we're going to talk about some R&D and innovation. And we see Blau invested about BRL 169 million in the last 12 months, which represents a bit more than 9% of the revenue in the quarter. When we go over these investments here to the side graph, you can see that the BRL 100 million contribution from the launches represents almost 6% of our revenue. And you can see that this difference between investments and revenue has been dropping gradually. So now it's about 3.5% points. And naturally, at a certain point in time, it would invert.
And now the expectation is when we launch the first monoclonal antibody that's produced 100% by Blau and expected for 2028, then we won't have a development cost that's relevant, and we'll have a potential revenue that's really relevant. And when we look to the right side of the slide, you can also see that these investments are translated into the submission of 60 drugs for approval in Brazil and Latin America in the nine first months of 2024. We had the approval of 43 drugs in the same period. So we launched six new drugs in Brazil. And these are just new molecules, which is different than the amount of submissions and approvals, which is the number of actual registrations. So we do this so that investors can have an idea of the incremental market that we have reached in Brazil.
With the new molecules, we can see that we've already added BRL 450 million in just nine months. Now moving on to slide five, we can see that the revenue grew 31% compared to the third quarter of 2023, renewing the all-time high record to BRL 474 million. It's interesting to see that the growth was 100% organic since Bergamo was already consolidated in the third quarter of last year. The highlight was our core business in the hospital segment with growth of 35%, as you can see on the slide, showing major performance in the mature portfolio, with growth coming at about 1/3 from prices and due to 2/3 voluume. Besides this, you can see an acceleration of these launches that grew almost 80% in the quarter.
When you look at this in the retail segment, statins and plasma, we can see the growth was a little more timid by 8%, impacted by the renegotiation of the sales at MRS. When we look at only retail and aesthetics, we have a solid growth of 24%. Now I'll pass the floor to Douglas so we can continue with the presentation.
Thank you, Matheus. Good morning, everyone. And I think the third quarter is always really important because of a natural characteristic. In the third quarter, you have clear signs of what will be the delivery in the year. And you always have the expectation about what's the next year. And finally, of course, you have the last mile.
In this specific case with Blau in the third quarter, it's a lot more important because it really sets the cycle for an evolution of 12 months, which is very robust and significant when you consider all of the indicators for results following the same trend. So when you look in the past, we knew there would be challenges, and this evolution would have to be quarter over quarter. Even Marcelo highlighted the conviction we had towards our plan, but of course, changes and adjustments needed to be implemented. And now we just reached this result because we had a lot of focus on the consistency of this execution. That's what brought the results. And when you look at the gross margins, we reached in this quarter 39.5%, an evolution of 300 bps versus the previous quarter. And that's pretty much it.
You have a new level of revenue that continues to grow in volume and price in the cost dynamic. You always have the dilution of these costs, better efficiency, and then this level of 39.5% was what we were expecting to reach in the last quarter, but now the new challenge is to keep this new starting point to begin in 2025, so we have to understand the dynamic for the next quarter and even the speed in recovering margins, especially when you have this increase in the dollar rate, but we consider this to be a new level that we should search for. There's still initiatives, of course, at lower scale, but this evolution from 24- 23 was a lot more significant, but there's still a lot of room to potentialize the gross margins in the company within the current level, so next slide, guys.
Our expenses here, the main highlight is the lack of our NPL. Last quarter, we had an impact of BRL 15 million, almost three points in our revenue. This year, we don't have NPL. Despite this effect, we had over 50% of this amount also. There is already an expectation that we should be reestablishing this throughout the next quarters. We have BRL 17.5 million with almost two points on the R&D. Of course, there is still room for operational leverage with the growth of our revenue. Next slide. Another highlight, considering the gross margin and dilution of the expenses. Here we have a margin that is almost 25%. If you look at the starting point, which was the third quarter, there was significant evolution. Basically, this comes from the gross margins. The biggest effect is the gains in the gross margins, as already mentioned.
Then this quarter, you don't have the NPL effect. So, next slide. The net income, also significant. When it comes to the net margins, we more than double in nominal terms. It's almost three times more, if you remember the profits in the third quarter. And I want to remind you all that this is the recurring net income. We had that advantage in the third quarter last year, which is exactly where we brought Bergamo into our base. And I want to remind you that this transaction was the acquisition value, which was lower than the book value. So, really healthy margins. And in the quarter, you also had an increase in the effective rate due to income tax, basically considering the lower level of interest on equity. And I want to remind you about the company's policy of 25% distribution of dividends.
So the currency variation didn't get in the way. But now we must understand how we can stabilize the dollar in the last quarter of 2024. [foreign language]
Another highlight when it comes to working capital, so the cash cycle improves about 54 days. This basically comes from inventory, a reduction of 2 months in the inventory. When you look at this deadline for the receipt, the mix in the receipt was also a positive effect. We know about the dynamics in the sector, so this is another quarter perspective, so the amount of days payable, and remember, last quarter was almost like a photograph of the closing date, right, for the accounting balance sheet, and we're also talking about really good levels when it comes to working capital and how important it is to have cash release, so then CapEx and intangibles, we follow this schedule for the development of the program, about seven and a half, and the revenue, this is the level Matheus highlighted in the evolution.
We kind of keep up with the development of the monoclonal antibodies that increase the investment curves. Of course, the goal here is to consider the composition of the new products and the total revenue of the company and then increment this quarter over quarter. Fixed asset CapEx, especially in this quarter, you'll have an increase of BRL 10 million, which is the cost of acquisition for the property in Pernambuco. This is the composition of the cost of land. If you look at the CapEx excluding Pernambuco, this is pretty much the level, the maintenance level and small adjustments that are gained in our current lines. Then next slide.
I think it's also probably important to consider that just a year ago, when we had earnings that were a little weaker, the company was pretty much convinced about its investment plan, and we reached an all-time high in investments, but of course, some of these already contribute in a timid manner when it comes to our earnings, but the others still have major potential, and the company always had this financial solidness, so you can see the level of leverage, and you can see the cash generation kind of handles the investment plan and the company in a more phased approach, and of course, the trend is to keep this low level of leverage to be able to handle the scenario that we consider with the interest rates high, and the cash here is more than ever a priority, well, guys, that was it.
Just wanted to go over the results here. And now we'll get into our Q&A session. And then, of course, Marcelo will come back to share his final remarks. Actually, we'll do the opposite. Yeah. We'll have the final remarks with Marcelo, and then we'll get into Q&A. All right. Yeah, let's do that. Okay, Marcelo, you can hop in.
Well, just to wrap up on slide 12, I just want to say that we have been really preparing for this moment. I will keep up this engagement to keep this pace of results at Blau. We always see the price recovery drop in costs and all the operational leverage we're capturing for 2025. We're planning some new productive lines that should meet our needs till 2027. And that's where we're considering some efficiency gains, right?
So, Blau Pernambuco, considering this adjustment and a lot of licenses also for the processes underway. And we have projects also for execution in 2025. We plan to open up a unit to be able to capture the beginning of the fiscal incentives granted by the government in that state. At Bergamo, we've already reached an important integration target for systems, teams, producing launches. And we are also working on some more mature drugs to be able to balance out the productive capacity of our plants. We think we're halfway, and now we must continue this process. And with even more results, now we can accelerate the tax scenario as well. Well, as we analyze the long-term projects we have, we can see important advances along with our strategic plan.
All of this movement from the opening of our first subsidiary in that time, and as well as our RD&I center and for business development, that will expand the possibility for licenses in and out in certain market niches, and so Blau will stop being a company that's focused on the Brazilian market only, but more focused on the Latin American reality, so we're considering the Blau Day on the 26th of November. Keep up and get to know more about our business.
All right, so yeah, now we're going to start our Q&A, so now we'll start with the Q&A session, and the analysts that would like to submit any questions should raise hand on the Zoom platform with the icon on the bottom part. For other investors, consider questions by email, ir@blau.com. The first questio n comes from Rafael from XP. All right.
Just waiting to get approval to be able to open up his mic.
Okay. Good morning, Marcelo, Douglas, Matheus. Congratulations on your results. And I want to thank you for taking our questions. The first one is about the revenue more related to the mature portfolio. And then just wanted to get some more details on how much we should expect for growth, especially if we consider 2025 and start off with a revenue base that's a little more robust. And then, of course, considering the launches that will go past those three years. And then also when it comes to launches, you have the addressable market of BRL 714 million for 2024. And can you guys provide more details on what the situation is currently for this? That would be great. Thanks, guys.
Well, then the growth of the company for next year is according to the market's growth.
The market has been growing about 12% a year for mature drugs, and when it comes to the launches, it doesn't depend on the company. We submit this to Anvisa, and then we follow this kind of approval process, and except for some situations, some parties may come in before or after, but we can't really price this, right, so that's the estimate that the company has, and then we can obtain the registration and the licenses that would help anticipate the revenues for the next quarters, so this is a mature portfolio trend that's more aligned to the market, and of course, you have the other levers that can grow more, but that's where we see the actual composition of the total amount with the mature portfolio. For the launches, Matheus can give us more details.
So yes, we're confident about fulfilling what we promised of BRL 700 million in the year. In the fourth quarter, of course, we'll have some positive surprises. And this is also a pathway for growth. I must also remind you all that our project to capture revenue. We don't want to focus only in Brazil. We want to also focus on the demand in Latin America. And so, as Matheus mentioned, we had some different registrations. And now we're going to start adding these products as well to Latin America.
Okay, great. So now we're going to head to our next question. Can we keep up, Rafael? Yes, very clear. Thank you. Have a great day. Okay. The next question comes from Felipe Amâncio from Itaú BBA.
Hi there. Good morning, everyone. Thanks for taking our questions. We have two on our side. First, about profitability.
In the last quarters, we've been noticing recovery in the company's margins. And I wanted to understand what's the size of this space you guys still see for improvements in the gross margins? And also, as Douglas mentioned, how you're considering the impact of the dollar when it comes to profitability? And the second question is about the capital structure. So in this quarter, we noticed there was a reduction in the leverage. And I want to understand what we should expect for capital structure looking ahead, considering the AP1000 investments that should be intensified from next year onwards.
Okay, thanks, Felipe. Starting off with the gross margins. So here you can see the evolution of what would be possible and feasible. Then, of course, we have some major initiatives, as Marcelo mentioned, so new lines.
And this process of always optimizing the productive capacity will always bring in better efficiency and gains in volumes, as well as some important contributions if we look at this from an isolated manner. So the main goal is to reach this same level of margins as the rest of the company. The trend is by the end of 2024, we should already be halfway. But of course, it's very significant for Bergamo. And then we bring this into the contribution of the whole consolidated value. If you consider that the levels of revenue at Bergamo should be about 10% of the total amount, there would be this effect of the middle of the pathway, let's say. So, of course, the company will continue to search for efficiency and improvements.
But about the dollar, we always say it's natural that this, if you consider the dynamic in the market, is really to be an importer for finished products or APIs. And the recovery of the margin prices happens. But we just need to understand the speed and understand how the volatility and scale-up and what's the level of the dollar that they should stop at, right? So now you may be operating at about 580, then you go back to 575, then 582. You have election effects and so on. But yes, this is a component for margin recovery for this currency variation. When it comes to working capital, yes, we had considered 180 days. When you look at the inventory, it seems to be a healthy level. It should be the company's level.
Always search for ways to find small efficiencies where you could have a variation that's not that significant up or down. But the dynamic also of receipt days counts receivable. The market still has challenges, of course. There is a portfolio mix factor that also brought us a little closer to the previous quarters. And then we're at this level of about 75 days, which is what should be expected. So we should expect to keep this level, right? But the main evolution is in the DSOs in 2024. Now we just need to improve this basis, but the evolution won't be as significant as it was this year.
Great. So thanks for that. Thanks for the answers.
The next question is from Hernan Plata, from Citi.
Okay, good morning, everyone. Well, thanks for taking my question.
I just wanted to understand a bit more about the growth of the hospital mature profile. But as you guys maybe share a bit more of the performance among molecules, was there a delivery in alpha? And is the private immunoglobulin market already contributing to the results in this quarter? That's it, guys. Thanks.
All right. So immuno-dependence that Blau has is dropping every month with the launch and growth of new products. So today, it's at a really low level. Blau is really focused on the private market despite making major efforts to keep the regulatory framework in Brazil with the different measures in the Supreme Court. But the company has been making a bigger effort to be closer to customers and sell more immunoglobulins in the private market. And so the main highlight is an increase in the sale of its portfolio.
So we have a bigger productive capacity. We launch new products, and we have a huge portfolio that we sell to the same spot. So the idea of like a one-stop shop is becoming even more consolidated. We have a portfolio that's really robust, and we're really competitive. We produce almost all of our products that we sell in the country, sorry. And so with this, we have a competitive advantage and a strong point compared to our competitors in all of the products, which includes biological synthetics. So when you consider the immunoglobulin and Botox, so when we reduce the public market, which used to be 45% of our revenue in 2019, and when you look at the last 12 months, we see it's 14%. And naturally, we reduce concentration on these main molecules that were really focused on the public markets.
And then when you look at the regulatory situation this year with alpha and the public bid with the Ministry of Health, we suffered quite a bit. We had to give up on a lot of our margin to be able to avoid having this international product without any kind of traceability or records coming into the country. So Blau had to make a big effort. And now this year, the alpha business was not really good for the company. So if we capture this in the future, this is going to be an upside as well for immunoglobulin. That will also be an upside. But we're not counting on this. We're counting on the private market, a sustainable long-term market, new products, and this is closer to our customers well. That's our focus.
Very clear. Thank you so much, guys.
So our next question is from Jan Siskind from BTG. And I think your mic is open.
Hey, good morning, Marcelo, Douglas, Matheus. Two questions on my side. The first one is a follow-up on the question about margin potentials. Douglas talked about the target when we consider Bergamo reached the margin levels for Blau in 2025. And I want to understand how these margins operate today. It's a reference for potential synergies. That's the first question. And the second question is about the revenue from new products. We saw that the revenue has been growing over 50% in the annualized basis, over 100 million in revenue. And if we consider the pipeline for new launches, I want to understand what's the contribution of these new products for the revenue that you guys currently consider in your budget looking at 2025. That's it, guys. Thanks.
Well, great.
To simplify the Bergamo exercise, we must consider that by the end of 2024, we're already kind of halfway, and it's like the Bergamo operation would be at maybe 20 by the end of the year, and we're going to scale up and win these, right, so the Bergamo process, when you consider all of the integration and synergies, the most obvious ones are already captured, but you have the effect of producing and transferring the Blau products that are produced at Caucaia and send them to the Bergamo plant, right, so yeah, then you also have to distribute the old stock, right, which had negative margins or some kind of a negative situation, and Bergamo was a company that used to be leading to losses, right?
We had this major turnaround in the company, but we still carry on some products or liabilities that had bad management, and that ended up kind of generating losses for the company. So besides producing new products with positive margins, we also have this challenge of wrapping up with this stock. And we hope to finish this year still, which would eliminate this negative backlog we have. Well, that's the most important point, right? So since we must consider planning and tax planning, the effect of generating results at Bergamo would lead to offsetting this, and you would be able to use the accumulated loss, right? So in the consolidated basis, this is also really important than about the launches. And when we look at 2025, what would help even more are the launches that were made in the last three years.
We naturally gain market share with these products. And then what's expected at the end of the day is that this contribution should continue to grow in a scenario where our investments on R&D remain relatively stable. This would trend to favor our margins. So you kind of close up on that. [ foreign language]
Perfect, guys. Thank you so much.
Then the last question is from Emerson Souza. Emerson, your audio is already authorized.
Tem duas perguntas aqui, por favor. A primeira, eu gostaria de explorar pouco mais. So we want to explore the currency dynamic. You had mentioned that this customer acquisition, it's lower in dollars, has helped the gross margin of the company. Could you guys explain maybe a bit of the metrics? So what's the average currency that you guys consider in the company's stock today?
How has the dollar cost evolved at the field, right, level? So I also want to understand on the hedge policy in the company. So if you notice that there's a dynamic with more robust growth, launches getting more traction, I want to know if it would make sense to maybe recover some of your hedge policy looking at your stock level. And then the second point is if you could also share a bit more on the contributions for growth through the expansion of both lines in São Paulo and Cotia that you're looking at for the short, mid, and long terms. Thank you.
Thank you, Emerson. Who's going to start? I'll start off with the hedge aspect. So about the hedge, we'll close the company strategy on the 30th of September. So yes, we do want to have some kind of protection.
We use our international cash position, but of course, this major scale-up in the dollar is also something we're discussing internally to be able to handle this. We have important growth levers for our revenue out of the country, but of course, we have this protection trend. We also always highlight that I'm not the only importer in this segment, right, so it's a really unique characteristic of the pharmaceutical sector to be an importer and, of course, transfer on prices, but of course, protection mechanisms are very important, so if you talk about the average dollar in the stock and then look at the evolution of the dollar, we can see, of course, at all moments, you have this new composition to know if the average level should be 540 or 550 and if this is just like an occasional scenario issue.
But I think that would be a great guidance, right? You look at the average dollar and that regardless, right, of the value of the imports, when you look at the cost in dollars compared to the past, you can see that it reduced this, right? So it's the API reduction effect that we've already mentioned. And a lot of the effect that was negative last year, considering the correction of the prices, and actually would be transferred throughout this process. So you're going to search for improving the cost of acquisition, which is lower than the inventory costs. Great. Now, the other answer is about the increment of the revenue we'll have with the three units in Blau, São Paulo, and also the unit in Cotia. The idea is to increment this revenue by 20%.
And so I hope we'll already start putting this into practice from the second and third quarter next year. And with this, we'll also consider this in the Latin American market as a whole, not only in Brazil.
Very clear, Marcelo, Douglas, and Matheus.
Thank you for the questions. Have a great day. Now we're wrapping up with no other questions. Marcelo, do you have any other final remarks?
Well, I just hope to see you all in the Blau Day. And that's where you'll be able to get to know more about our plans for the business in the mid- to long-term and, of course, being more aware of what's going on in the company. So that would be an excellent opportunity to update. So invitation made. Great. Thank you all so much for connecting today.
And if you have any additional questions, feel free to contact the Investor Relations Department at Blau. Have a nice day. Bye. Take care. Great. See you. Bye.