More Stories

Informist, Friday, Jul 26, 2024

--Expect volume gains in US led by new launches

--CEO: See US sales quarterly run rate of around $240 mln
--CEO: India market should continue to grow at 10%

--CEO: Hope to sustain operating margins in coming quarters
--CEO: Looking to add movement disorder drugs to portfolio
--Expect R&D spend to be higher in coming qtrs at 5-6% of sales
--Looking to launch Advair generic in US in first half of 2025
--See sustainable US quarterly sales runrate of $235 mln-$240 mln
--Looking for branded generic, other M&A deals in India
--Looking for in-licensing, capability enhancing deals in US
--Will keep an eye on deals for injectible units in US
--Will keep an eye on deals for specialty drugs in US
--Looking for in-licensing, capability enhancing deals in US

MUMBAI – Cipla Ltd has raised the guidance for the quarterly runrate of its US sales to $235 mln-$240 mln in the coming quarters, as it expects market share gains in niche drugs such as Lanreotide, ramp-up of some more new launches and higher production from facilities in the country. Until now, the company's guidance for US sales was $220 mln-$225 mln, which it has either achieved or exceeded in the last five quarters, including Apr-Jun. 

"We are hopeful of maintaining US sales in the band of $235 mln-$240 mln, on a sustainable basis," Managing Director and Global Chief Executive Officer Umang Vohra said at a virtual press conference today. The US accounts for 31% of revenue, but is deemed an even bigger contributor to profitability due to the high margins of drugs sold there.

During the June quarter, the city-based drugmaker clocked an all-time high revenue of $250 mln from its US business, 13% higher compared to a year ago. This was driven by a better product mix, market share gains in complex drugs such as Revlimid, Lanreotide and Albuterol, and sales boost from new launches. Analysts had expected Cipla's US sales between $230 mln and $236 mln during the June quarter. 

The company is hoping for key launches such as peptide assets to shore up volumes in the coming quarters. The drugmaker is also confident of launching key generics Advair and Abraxane next year, as it believes the process for regulatory clearances for these products is now progressing, after having been delayed due to non-compliance at Goa and Pithampur units last year.

Cipla is hopeful that it may be able to launch its generic of Advair in the US in the first half of 2025. With many assets and projects being ramped up, the company has also guided for higher research and development spending, towards the upper end of the range of 5-6% of sales. For the June quarter, R&D spend was 3.53 bln rupees or 5.3% of sales, a rise of 1% over the spending seen last year.

The strong outlook for the US business has made the company confident of sustaining overall operating margins of around 25% for the current financial year. During Apr-Jun, Cipla's consolidated earnings before interest, taxes, depreciation and amortisation margin expanded 154 basis points from a year ago to 25.6%. Analysts were split on how the company's profitability would fare during the quarter.  

The city-based drugmaker's consolidated net profit rose 18.3% on year to 11.78 bln rupees for the reporting quarter, higher than the Street's estimate of 11.18 bln rupees. The company's consolidated net sales for the June quarter rose 5.8% to 66.94 bln rupees, lower than analysts' average estimate of 67.6 bln rupees.

The company released its quarterly results during market hours, following which the stock extended gains and closed 5% higher at 1,575 rupees on the National Stock Exchange. 

HUNT FOR DEALS

Cipla is on the lookout for acquisition and other deal opportunities in its key markets, including the US and India. The company will look out for capability-enhancing deals in the US, such as those for injectible or specialty drugs manufacturing units or in-licensing opportunities, Vohra said. 

For India, the company wants to plug gaps in its branded generics portfolio as well as add bigger brands in therapy areas it is not very active or relevant in. The company wants to augment its market position in categories such as mental health, movement disorder, anti-microbial, metabolism and neurology. 

During the June quarter, the company's sales from domestic operations rose 5% to 28.98 bln rupees. Cipla expects Indian business to record revenue growth of around 10% in coming quarters.  End

US$1 = 83.73 rupees

Reported by Apoorva Choubey 

Edited by Aditya Sakorkar

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.