Good morning, everyone. Welcome to the Blau Farmacêutica
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First quarter 2025 earnings call. We are live at the Blau studios with Marcelo Hahn, the CEO and founder, Douglas Rodrigues, and Matheus Fujisawa, our investor relations. Our call is going to be recorded in Portuguese, simultaneously transitioned to English.
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After the presentation, we'll get into the Q&A session, prioritizing the sell-side analysts. If you'd like to submit questions, you should select the Q&A icon and choose the raise hand option. Other investors can send their questions in the chat or by email.
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RI at blau.com. Now I'd like to pass on the floor to Marcelo. The most important message here is that we were able to balance out the results.
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The present appeared to be challenging with the scenario of high interest rates and the dollar impacts that we had in the quarter, with the displacement of part of the revenue in the public channel and trading stream.
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Performance with only one bottleneck in first quarter 2025. Here it's worth noting that we have already returned to operating with both brands in.
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Still had growth in the quarter, demonstrating our resilience. In other times, this would be a lot more of a relevant effect on the company's results. This is also due to the results of the investments we're making. When we analyzed the private hospital segment, we had growth of 15%, more than offsetting the aforementioned impacts and again, outforming the market, just as we did it last year. This is a result of the company's portfolio.
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Which is in constant evolution.
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These effects are temporary.
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Allowed the company to be confident in continuing its ongoing upward trajectory for results. Among some novelties, we had the first revenue.
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This is an important step also to help with the.
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Anticipation of tax benefits. Not very significant impact, but it should be an important lever in the future. We had the approval of 14 new registrations in the first quarter of 2025, most of them in Latin America. The company has invested to grow organically in the region. It is replicating its portfolio in Brazil and in other geographies. For the numbers presented in the slide, we'll highlight current net income and 50%.
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Investments in biotechnology and expansion of our production capacity.
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Carrying a delivery of results in the short term, despite all the challenges we mentioned. Setting the scene for our future, which is even more promising than our present.
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On the next slide, I want to highlight the qualities we already have today. We already have the largest portfolio and leadership in the oncohemato market, with over 100 different molecules and service to more than 9,500 institutions. This portfolio combines biological and synthetic molecules. We have five factories in Brazil and an API factory as well. This is an important competitive differential with high scale.
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Important competitors as well. As well as indirects, with over 3,000 operating in 10 different countries. We continue to invest in a future that's even more promising.
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In the last five years, we invested more than BRL 1.7 billion, an amount equivalent to our revenue last year. These investments with people, technology, innovation, and the capital market are already building the future of Blau. I had to also mention our annual convention of sales. We performed in April, which gave us the necessary energy to deliver the results in the recurring year, which is a small move, but very important to help us prepare and capture the blue ocean of opportunities that are going to be transformational in biotechnology so we can provide an even better future. Blau of the future seeks for differentiation and expansion of its portfolio, focusing on high value-added products and here are the best examples of monoclonal antibodies. We also have an incredible pipeline with other relevant products in our market.
To support this portfolio growth, we're expanding our productive capacity. At first, in our current factories, we'll include the API factory.
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step is the centralization of production.
With the portfolio and scale and fiscal incentives, strengthening our competitive advantages at Blau, consolidating our leadership in the local market, and expanding into Latin America with access into new global.
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Thank you, Marcelo. On slide 5, once again, we're going to reinforce our launch pipeline that should be accelerating in the coming years due to the investments of approximately 10% of our revenue that we're making. We've analyzed the investments in 2022 to 2024, and we had a TAM of about BRL 2 billion in the period. This should be growing about 50% in the period between 2025 and 2027, approximately BRL 3 billion, considering only the drugs that have still not yet been launched, but that we've already been submitted for MVs approval. Finally, considering the first three monoclonal antibodies we're developing, we can reach an incremental TAM of BRL 6 billion between 2028 and 2030. It will be doubled in the previous period.
Moving on to slide 6, in the revenue, we can see Blau grew 4% in the first quarter of 2025 compared to the first quarter of 2024, reaching BRL 373 million, as shown in the chart on the left. We need to analyze the right side chart to understand different dynamics in the quarter. For the private hospital segment, we had solid performance, growing 15% in the period, and once again, outperforming the market. According to IQVIA, there was a growth of approximately 5%. However, we had some temporary impacts that reduced our consolidated growth in the quarter. First, we had a shift in part of the public bidding delivery from the first quarter of 2025 to the second quarter of 2025, leading to a 5% drop in revenue in the channel. The second impact was on the aesthetics business unit.
As you had mentioned, the sale of the botulinum toxin registration was BRL 7.5 million, which led to the operation of only one brand in the first quarter, which Marcelo already mentioned, and this is already normalized in the second quarter. We already have both brands. Finally, we did not have plasma revenue this quarter due to the negotiations and the price that we've been discussing at Emiris. That is also along with the impacts we had in the aesthetic business unit, which led to a relevant drop of 24% in revenue in the retail aesthetics and plasma segment. It is also important to reinforce the negative seasonality of the first quarter compared to other quarters. That is where we have the preventive maintenance in the factories. We also have vacations for the commercial teams. We have fewer business days for production and also sales.
Finally, the quarter was another proof of resilience.
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We had many impacts with high interest rates and dollar, but even so, we were able to grow our revenue in our consolidated results. When we look at the private hospital segment, we were above the market level. We understand it was a very resilient result. Now I'll pass the floor on to Douglas to continue the presentation. Thank you, Matheus. Good morning, everyone. Clearly now in the next slides, we'll see the financial indicators as they carry on a bit of this impact and the revenue. Our revenue, if compared with the last quarter of 2024.
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There's a bit of a slowdown due to the other points mentioned. When the core business unit grew, that was very solid, and that's important to highlight. Of course, in regards to the first quarter of 2024, it was a growth that's still timid, but so important to consider since the first quarter has a seasonality factor. All of these impacts do not remove the company's conditions to deliver the annual plan, which is in line with the consensus. Moving on to the gross margin, we see another quarter where the company has been able to lever and improve its gross margins. If you only look at Blau, we have a stabilized gross margin, which is the same margin we had in the previous period. Bergamo has another quarter scaling up, and we're already reaching close to 30% within Bergamo.
I think these are the main levers and the dynamic to continue to scale up our margins. Once again, resuming another level of revenue, this should be leveraging. If you look at this, it is an evolution that is very significant during this period, growing over 25% compared to the previous quarter and almost 700 basis points. I think this is the process. This is how we're going to look at the year. Of course, the recovery in the revenue and the consistency of the execution of the deliveries. Moving on to the next slide, when we look at the expenses, they're going to carry on the effect of the revenue levels. The expenses compared to the previous quarter, the nominal volumes are the same level. Of course, with lower revenue, you have the impact of the non-dilution.
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The revenue versus the first quarter of 2024 had an impact of over 20%. If we compare, you can see the EBITDA margin that is also going to be impacted, of course, with very significant evolution versus the first quarter of 2024. Basically carrying on all of the gross margin evolution, which is going to be a little easier considering the non-dilution of the expense. In regards to the last quarter, you will have stability in the gross margin, but the revenue level impacts the EBITDA margin. It is still a margin for the first quarter and very consistent when you indicate the recovery.
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For the next quarters. Net income was impacted by the operational dynamics. Of course, the currency variation. On 31st of December, we had one value and now a whole another value in dollars. If you look at the first quarter of 2024, the FX also is favorable. I think it is worth highlighting that we also have the tax efficiency in the company that has basically been able to offset the effects of the recurring income tax. That also helps lever the net income. Here we have an evolution of 50% demonstrating to the company when it comes to short-term delivery has consistency in its results. Now moving on, I think another point that is more challenging is working capital, but nothing that will make us lose conviction about our deliveries.
When we look at the first quarter, of course, all of the impacts in the revenue, the company already had inventory in-house. You have this impact elevating the margins and the comparison of the working capital versus net revenue from 45% to 48%. Once again, while you recover revenue, you should get back to levels before that the company already always highlights. We have 180 days of inventory. It is a sustainable level, and that is the company's internal target. In this quarter, we had an impact, especially in the inventory and the setback in the revenue. I think the first quarter, if you look at the average of 2024, this is the path. When you look at this, we have invested a lot in monoclonal antibodies, plus the company's pipeline with biologicals and others.
The CapEx issues were redirecting the increase of productive capacity in our current production plants. That is a step towards reaching our mid to long-term project with Pernambuco. We start the small investments in preparing our industrial complex in Pernambuco. That is the CapEx level. Of course, reinforcing the solidness and capital allocation of the company and a capital structure that is very solid. In regards to the previous quarter, we had a leverage of 0.1 and 0.2 and an increase, but still very timid, very low. That is related to the dynamic of deliveries and results in the first quarter, cash generation and the maintenance of the level of investments and the working capital impact. Nothing that will not reinforce our message.
Blau Farmacêutica is very well positioned to be able to guarantee short-term deliveries and redirect the strategic investments in the long term. That is what I wanted to share. Now I will pass the floor back to Marcelo for his final comments, and then we will get into Q&A. Thank you very much. Thank you, Douglas. As you saw in the previous slides of this presentation, Blau Farmacêutica was able to overcome the challenges in the quarter. What is most important, maintain its execution in the long term, reinforcing this plan, which aims to make Blau Farmacêutica as a global biotechnology company. When we present more details of each of these initiatives, which in the end are all connected, there is no way to expand portfolio and geographies organically without making investments in research and development and expanding our production capacity.
Blau has chosen the most sustainable path, which is to develop and have its own products, as well as making the raw materials for some strategic medication. This takes a little longer, it is true, but it gives us a more competitive position in the market and increases the barriers to entry of other competitors. Our growth journey and differentiation journey is just starting. Join us. Now I'll pass the floor to Matheus so we can start the Q&A. Thank you, Marcelo. Now we'll begin the Q&A session. We will have a self-set analyst that would like to submit questions. It's just like the raise hand on the Zoom platform icon located at the bottom center. Other investors can send their questions in the chat or by email at blau.com. First question is from Rafael Alagi from XP. Rafael, I think your mic's already released.
Hi, good morning, everyone. Thanks for taking our questions. We'll have two on our side. The first one is about Emmaus, and we consider the issue with establishing this supply contract. I want to understand a bit more about the main challenges that the company is considering and if this could be related to a competitive scenario, maybe, or if it's more related to the duration of the contract that the other party could be searching for, considering that you guys even highlighted this in the report. That would be the first question. The second question is about the working capital dynamic.
Douglas just mentioned some points, but I wanted to explore a little bit more about how this is represented by plasma and how much of this is maybe locked in a little more and reliant on the first point, and how much of this would come from other products, etc. If you guys could discourse a bit on this and the strategic rationale, as well as what is behind the increase of other products as well. Thank you. Marcelo, do you want to start off with the dynamic? Yeah, okay. Good morning, Rafael, and thanks for the question. On Emmaus, the company's idea is to search for the best opportunities for pricing and also contracts with better conditions. Covering, of course, the other units. Sales were complete until the last quarter of 2024. We have very little stock, and the negotiations will be with big companies.
We know there are about 10 players in the world, and that includes Protea, which Blau invests in, and we have possibilities to sell to them as well. We are setting the best opportunities to be able to bring this into the business on working capital and the impact this has. I think it is pretty small, but Douglas could explain this a little better. We do hope to perform the sale as soon as possible. This impact we had in the first quarter is not lost because this plasma has a long life. We can sell for the next quarter or six months from now, no problem. What is most important is that it is in stock and it contributes with a positive profitability margin. For us, it is one of the best negotiations.
We also have the opportunity that if we think it's good, at some moment, we could sell on the spot market. That's not what we're searching for at the moment. Our team is focused on finding a partner for this next opportunity. Yeah, that's exactly it, Marcelo. When we look at this operation in the U.S., we clearly don't have scale. Our negotiation power is limited, but we're always searching for a contract that can be very attractive in the timeline. It takes a bit of time. About the working capital, I think the impact for plasma is maybe a little less significant in this dynamic of the impact of the revenue. When we look at the aesthetics business unit, you're talking about biologicals, which is basically imported ready, and it's in our inventory while it waits for the normalization of the revenue.
The dynamic, which was phasing out the delivery, which is also in the inventory on 31st of March, and the company is also thinking about how to deliver this plan in 2025. This is another one-off dynamic, and I think we should resume this once the revenue gets back to normal and we get back to a more healthy level that we are searching to keep our working capital cash cycle that was impacted by over 30 days initially. Very clear, guys. Thank you so much. Thank you, Rafael. Next question from Vinícius Figueiredo at BBA. Vinícius, your mic is open. Hi, good morning, guys. Thanks for taking my question. About starting with Bergamo here, could you guys talk about the opportunities you guys found in-house in the acquisition that kind of unleashed this increase in the gross margins?
If we should observe this benefit helping with the margin expansion a bit more when we look at the next quarters and about botulinum toxin, could you guys explore this temporary effect a bit more? It was not that clear to us yet. You guys had to once again perform the registration of the suppliers. It was not clear to me to understand why you had to perform this once again, right? Was there a shift that maybe required this new documentation? Now that we look at a single supplier, can we imagine maybe profitability that is better for this specific product? Hi, Vina. Thanks for the questions. I will answer the Bergamo part. We found a company with productivity that was very low, a lot of idle capacity, and the plant was producing at really high costs.
The IPA purchases had values that were above the market average. We quickly requested a visa to have the production of the drugs from the Blau line. We were able to really go after this possibility. In this sense, Bergamo was really focused on promoting the drugs. Blau, alongside the commercial team we have, is more focused on negotiation of the sale of the product. With the portfolio Blau has, we were able to really expand this. Besides the opportunity to sell some of these products also in the public market, we had some restrictions in Bergamo. Due to internal policies, they use outsourced providers, reducing the margins. Blau took on the initiative to start performing the sale directly of these products. You can see that our participation in public bids was almost zero.
We increased their participation in public bids and the sales as well. This gave us a lot of profitability. We still have capacity to increase. We are launching new products as well. We understand that we still have space to search for the same results we have on average for the processes, right? We also have space operationally. Even the fact that Bergamo had this carry-on of balance sheet can also bring some efficiency when it comes to income tax and profits before income tax. Sorry, profits after income tax. The registrations for the botulinum, they already had long-term partnerships for a supplier. The brand is actually from Bergamo. We had a big challenge because we had to compatibilize the interests of both manufacturers, which are competitors. This was an initiative with negotiations.
The development of this negotiation helped us find the best option for the company to continue to have suppliers that were from Bergamo and that brought in the best opportunities, better coverage in the territory, greater opportunities to develop strategies, and even to be able to perform the production of this toxin in Brazil. We found a better partnership. We also wanted to. The registration of this product is disconnected to the product brand, but in this negotiation with the supplier, we chose to continue to have both brands in the market, manufactured by the same supplier. That is where we had some regulatory challenges to register this product because this product used to be registered by Bergamo. We created a new registration by Blau with a new brand. To do this, we needed to have a complete process for the sale of the other registration.
I can't transfer a brand to a new product if I don't cancel this product alongside a visa. We needed to keep this registration live to be able to transfer this to a new brand. That's what was done. We had a period where we did not commercialize the product. This was a transitional period. When we were able to get all of the licenses to be able to commercialize, we didn't have the necessary time to prepare the packaging material. We didn't have a lack of sales, but we had the problem where we weren't able to bill and deliver. The orders that were issued were restrained. Now, in the second quarter, we performed the sale of these products.
Now they're already being traded in the market normally, and they're billed and delivered with this restraining in the volume in the first quarter. We understand this business unit is going to deliver the targets for 2025 easily because they're servicing the market and continuing to keep up with the strategic plan of the company. The competitive positioning with botulinum got better. Yeah, not only got better, but we also had a new rebranding of this product and a relaunch of this product. We were able to improve the commercial team as well, increasing our focus on this business unit because we had expected also other launches of other products in this business unit from this year onward. We're already reinforcing our marketing team, our commercial teams, and the entire strategic plan also that we had for advertising. Very clear.
Thank you so much, Marcelo and Douglas and everyone on the team. Thank you. Thank you, Vinícius. Our next question is from Estela Estrano at JP Morgan. Hi, guys. Good morning. Thanks for taking my question. The first one is about the launches. If you could give us an update on how the ramp-up is for the new molecules that were launched from the mid of last year all the way till now. What are the expectations for launches in the pipeline for 2025? The second is, how are you looking at the competitive scenario? I think the dynamic was maybe a little more difficult in 2023 and 2024. I wanted to understand how you guys are looking at competition now in the beginning of the year. Thank you. Okay, I'll start off with the first question on the launches.
We hope to launch about BRL 700 million in market value this year, which are values that are similar to what we launched in 2024. Here, more than just thinking about the recurring year, we need to think about the next cycle. We reinforced this in the call. We launched about BRL 2 billion in the market in the last three years. In the next three years, we should be also planning to launch at least BRL 3 billion. That is 50% more. For the monoclonal antibodies, we should double this once again. The launches overall, of course, you have variations from product to product, but normally they meet the expectations of the company, which is that they should gradually ramp up on their market share and also their share in the revenue of new products.
The scenario of the competitive market continues, not at the same level of stress that we had a year and a half ago, but the market is competitive. Blau's done excellent work with the commercial team and our portfolio with our stronger presence. This has brought great opportunities to our business, but the competitive scenario continues as it always was, without the stress of the past. That struggle we have not seen, right? Because now with this portfolio, and what are the products where they are fighting for prices? With this portfolio, we consider to have a comfortable scenario in this sense. Very clear. Thank you so much. We also have a question on the chat. I think we already answered. Renan Ulrich from the Infinity Investment Club talked about the measures the company has to reduce the days of stock and improve working capital.
Also having the product in-house and plasma, etc. It's just about phasing out the delivery and some other factors where we believe that after the recovery in the revenue, we'll be able to really resume our revenue. Another point we want to highlight, just as Blau is a company that has quarterly results, our suppliers also have the ambition of meeting their goals. In the end of the year, we also have a bigger amount of inputs in our factories due to our commitments with these manufacturers to negotiate the best prices and conditions. We end up receiving more inputs than necessary in the last quarter of the year, which ends up being carried over for the beginning of the year.
You start preparing the year, and it's normal that you'll have to start off with some higher levels of stocks that after this is stabilized and drops gradually. That's it, guys. I don't think we have any more questions on the chat. Marcelo, any final remarks? I just want to thank you all for the opportunity to talk about Blau a bit more. I want to say that the management in the company is very aligned and confident with the promising future of the company. We've invested more than ever, and we've seen the challenging political and economic environment in the country. Every quarter, we've demonstrated that we've been investing more and more, and these results are going to come.
Our segment is a segment where investments are a little more long-term, and we have many regulatory challenges also to meet, including the clinical trials. These are entry barriers for the future for our competitors. We are on the right path, and we are going to bring the results that are promising in the future. Our ambition is to be a global company as well, and we are on the right path. We really believe in this. I just want to transmit this to you guys, and thank you all, and wish you all an excellent day. Thank you so much. Thank you, everyone. Flowers.