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Informist, Thursday, Nov. 7, 2024

 

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--Lupin Jul-Sept South America, Asia-Pacific sales INR 4.9 bln, up 11.8% YoY 
--Lupin Jul-Sept Europe, Africa & West Asia sales INR 5.69 bln up 19.6% YoY 
--Lupin Jul-Sept consol EBITDA margin 25.2% vs 19.4% year ago 
--Lupin Jul-Sept R&D expense INR 4.48 bln vs INR 3.76 bln year ago 
--Lupin Jul-Sept R&D expense INR 4.48 bln, 8.2% of sales 
--Lupin Jul-Sept India sales INR 20.10 bln, up 18.8% on year 
--Lupin Jul-Sept North America sales INR 19.71 bln, up 5.6% on year 
--Lupin Jul-Sept consol EBITDA INR 13.83 bln vs INR 9.58 bln year ago 
--Lupin Apr-Sept consol revenue INR 112.73 bln vs INR 98.53 bln year ago 
--Lupin Apr-Sept consol net profit INR 16.54 bln vs INR 9.42 bln year ago 
--Lupin Jul-Sept consol revenue INR 56.73 bln vs INR 50.39 bln year ago 
--Lupin Jul-Sept consol net profit INR 8.53 bln vs INR 4.90 bln year ago 
--Analysts saw Lupin Jul-Sept consol net profit INR 7.26 bln 
--Lupin Jul-Sept consol net profit INR 8.53 bln 
 

 

By Apoorva Choubey 

 

MUMBAI – Lupin Ltd. managed to surpass the Street's expectations on September quarter earnings on all fronts--net profit, top line and operating margin. The earnings were underpinned by higher-than-estimated revenue growth in Indian operations, healthy sales from the US business, and a likely recovery in prices of generic drugs.

 

The city-based drugmaker's consolidated net profit for Jul-Sept jumped a whopping 74% on year to INR 8.53 billion, higher than the consensus average estimate of INR 7.26 billion. During Jul-Sept, Lupin's consolidated revenue from operations rose 12.6% from a year ago to INR 56.7 billion. The Street had projected the sales at INR 55.6 billion.

 

Operating margin, defined as earnings before interest taxes, depreciation and amortisation, expanded a massive 580 basis points on year to 25.2% for the September quarter. The profitability was expected to widen 276-360 basis points, driven by new launches, which led to a better product mix for the company. Lupin's consolidated operating profit soared over 44% from a year ago to INR 13.83 billion.

 

"The second quarter of FY25 reflects continued strength in our business across regions," Managing Director Nilesh Gupta said in a press release. "With 40% of our U.S. revenues now coming from complex generics, India back to double-digit growth and our pipeline delivering consistently, we aim to continue improving our performance aided by sustained operating efficiencies and investment in technology," he said.

 

SEGMENTS

The highlight of Lupin's September quarter earnings was the better-than-expected performance of the India business, which accounted for 37% of overall sales. India formulation sales for Jul-Sept jumped nearly 19% to INR 20.1 billion, likely driven by the chronic therapy portfolio, complex drug launches, and higher field force activity.

 

Analysts had estimated sales from India to rise 9-12% on year during Jul-Sept. India region formulation sales grew 11% for the quarter, the company said. The company launched five brands across diabetes, neurological, gastrointestinal, cardiac, and gynaecology therapies during Apr-Sept. Lupin is the seventh-largest company in the Indian pharmaceutical market.

 

The other big market for the company, the US, also fared well. For Jul-Sept, the company's US sales rose 3% on year to $220 million. The high-margin North American business, which largely comprises the US operations, is an important market for Lupin as it accounts for around 36% of the total revenue pie, and is deemed to be a bigger contributor to overall profitability.

 

The company's sales from the region were seen in the range of $220 million–$245 million, up from $213 million a year ago. The drugmaker, earlier this year, had guided for a quarterly revenue run rate of over $200 million in the US.

 

Price recovery, strong traction in niche products such as asthma medication Spiriva and new launches like urinary control drug Mirabegron are likely to have supported Lupin's US sales during Jul-Sept. Revenues from North America increased 5.6% on year to INR 19.7 billion.

 

Latin America and Asia-Pacific region revenue rose 12% on year to INR 4.9 billion, while Lupin's Europe, Africa and West Asia sales surged 19.6% on year to INR 5.69 billion during the September quarter. Revenue from the global active pharmaceutical ingredient segment improved 10% from a year ago to INR 2.9 billion.

 

OTHER METRICS 

The drugmaker's total expenses rose nearly 5% on year to INR 46.6 billion for Jul-Sept, as raw material, employee and other expenses rose while currency-related gains were seen. Employee benefit costs rose 17% on year to INR 10.1 billion, coming in at 18.3% of sales.

 

Raw material costs increased 13% on year to INR 11.2 billion during the reporting quarter. This is the sharpest increase in employee costs in at least 17 quarters but the growth in input material costs is slowest in four quarters.  

 

Manufacturing and other expenses rose 7% to INR 16.7 billion, accounting for 30.3% of sales. Research and development spending for the quarter was INR 4.48 billion, 8.2% of sales. In the same quarter a year ago the company had spent INR 3.76 billion or 7.6% of sales on R&D.

 

On a quarter-on-quarter basis, the company's Jul-Sept net profit rose over 6% while net sales were 1% higher. For Apr-Sept, Lupin's revenue rose 14% to INR 112.73 billion, while net profit jumped 76% to INR 16.54 billion.

 

The company detailed its earnings after market hours. Thursday, the company's shares ended 2.5% lower at INR 2,111.50 on the National Stock Exchange.

 

When the company hosts a conference call on Friday, investors will watch out for comments on demand, revenue guidance, product pricing environment, new launch pipeline and operating costs in the backdrop of challenging macroeconomic conditions. The company expects to grow the US business in high single digits during 2024-25 (Apr-Mar). For the medium-term, Lupin's aspiration is to clock $1 billion in US sales by 2025-26, with the help of launches of pancreatic hormone drug Glucagon and asthma medication Dulera.  End

 

US$1 = INR 84.37

 

Edited by Ashish Shirke

 

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