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Informist, Tuesday, Aug 6, 2024

By Narayana Krishna

HYDERABAD - Losses related to acquired European company Cenexi have impacted Gland Pharma Ltd's consolidated net profit in the June quarter. Although the pharma company's revenue for the quarter saw double-digit growth, both the topline and bottomline missed analysts' estimates.

Hyderabad-based Gland Pharma today reported a consolidated net profit of 1.44 bln rupees, down 26% year-on-year, while its revenue rose 16% year-on-year to 14.02 bln rupees. Analysts had estimated Gland Pharma's June quarter net profit at 2.22 bln rupees on a revenue of 15.41 bln rupees. Sequentially, the company's net profit was down 25.3% and the revenue fell 8.8%.

In Nov 2022, Gland Pharma announced the acquisition of Cenexi, a company which deals in contract development and manufacturing organisation and specialises in injectables. Since then, Gland Pharma has been trying to restructure Cenexi's operations and turn it into a profitable venture. However, frequent plant shutdowns and the addition of new production lines have hampered efforts and hurt the consolidated performance of Gland Pharma.

For Apr-Jun, excluding Cenexi operations, Gland Pharma's consolidated net profit was at 2.25 bln rupees on a revenue of 10.13 bln rupees. Cenexi clocked 286 mln rupees of operating loss on revenue of 3.88 bln rupees, impacting the company's overall performance. In a post-earnings conference call, the company management said Cenexi is a few quarters away from turning profitable.

While stress in Cenexi operations is higher than expected, the company’s performance in the core business, which includes regions such as the US, Europe, Australia, and Canada, was also below analysts' expectations. US revenue for the quarter was up 27% on year to 7.6 bln rupees, Europe clocked 15% on-year growth at 2.6 bln rupees. Canada, Australia, and New Zealand together reported 72% on-year growth to 447 mln rupees of revenue.

India sales fell 19% on year to 527 mln rupees, against the expectation of flat revenue from the domestic markets. Rest of the world sales also declined 3% on year to 2.8 bln rupees.

Gland Pharma's June quarter consolidated earnings before interest, tax, depreciation, and amortisation, or EBITDA, margins were at 19%, against 25% a year ago. The EBITDA for the quarter was 2.7 bln rupees. Analysts had expected Gland Pharma's EBITDA margin in the 23.6-24.8% range, while EBITDA was seen at 3.7 bln rupees.

Gland Pharma said the company's restructuring efforts at Cenexi plants located in Paris and Normandy in France and Belgium are likely to yield results by the March quarter, helping the company to post a positive EBITDA. The company is aiming for 200 mln euros in revenue from Cenexi in 2025-26 (Apr-Mar), Gland Pharma said.

The company spent 489 mln rupees for the quarter, 5% of total revenues. The capital expenditure for the quarter was 637 mln rupees.

Gland Pharma said the company has filed nine products in China, of which three have been approved and one has been commercialised. China's Fosun Pharma Group is the major stakeholder in the company and analysts are keen on the company's China business. Today, shares of Gland Pharma ended at 2,106.95 rupees on the National Stock Exchange, down 0.4% over Monday.  End

Edited by Manisha Baxla

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