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Informist, Friday, Jul 26, 2024

--Apr-Jun consol net profit 11.78 bln rupees
--Apr-Jun consol revenue 66.94 bln rupees
--Apr-Jun consol net profit 11.78 bln rupees vs 9.96 bln
--Apr-Jun consol revenue 66.94 bln rupees vs 63.29 bln
--Apr-Jun consol EBITDA margin 25.6% vs 24.1% year ago
--Apr-Jun North America sales up 13% on year at $250 mln
--Apr-Jun consol EBITDA 17.16 bln rupees, up 13.8% on year
--Apr-Jun R&D expense 3.53 bln rupees, 5.3% of sales
--Apr-Jun India sales up 5% on year at 28.98 bln rupees

--CEO: Albuterol mkt shr gain, new launches aided US sales growth

By Apoorva Choubey 

MUMBAI – Higher-than-expected sales in the US market and an improvement in product mix in India helped Cipla Ltd exceed estimates for earnings during the June 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.  

Market share gains in niche drugs in the US such as Revlimid and Lanreotide, new launches and healthy growth in the Indian business, despite some impact of restructuring of trade generics operations, underpinned the strong performance. The company's consolidated net sales for the June quarter rose 5.8% to 66.94 bln rupees, compared with analysts' average estimate of 67.6 bln rupees.

After clocking the highest ever revenue in the US in Apr-Jun, Cipla has raised the guidance for the quarterly run rate of its US sales to $235 mln-$240 mln in the coming quarters. 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. 

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 drugmaker clocked an all-time high revenue of $250 mln from the US business, 13% higher compared with 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. 

This strong sales growth in the US helped Cipla expand its consolidated earnings before interest, taxes, depreciation and amortisation margin by 154 basis points to 25.6% for the June quarter. Analysts were split on how the company's profitability would fare during the quarter, but this expansion surpasses even the most optimistic of estimates.

The company's shares extended gains after the robust earnings for Apr-Jun. The stock closed 5% higher at 1,575 rupees on the National Stock Exchange. Sequentially, the net profit increased 25.4% and the net sales improved 8.6%.

Healthy revenue growth of 5% in sales from domestic operations to 28.98 bln rupees also underpinned the company's overall performance in the June quarter. India is the largest contributor to Cipla's consolidated sales with a share of around 42-45%. India branded prescription business grew at a rate of 10%, the company said.

While gains from the recent acquisition of medicine assets from Sanofi India and a higher revenue share of chronic drugs aided the Indian business, the company faced some lingering impact of a change in the distribution model of the trade generics segment, which led to inventory drawdowns. Cipla has changed its distribution model to consolidate channels and increase direct touch-points for better trade visibility and positioning.

The company's South African sales jumped 19% in constant currency terms during Apr-Jun, aided to an extent by the acquisition of Actor Pharma and recovery in tender sales. 

Cipla spent 3.53 bln rupees, or 5.3% of sales, on research and development investments during the June quarter, a rise of 1% over the spending seen last year. Total expenditure rose 3.0% on year to 52.43 bln rupees. 

Raw material costs were 4.5% lower from a year ago at 12.41 bln rupees. Tax expenses rose 15.1% on year to 4.35 bln rupees.  End

US$1 = 83.72 rupees

Edited by Saji George Titus

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