29 February 2024

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Cipla’s Q1 net profit exceeds expectations due to strong US sales growth.

Cipla’s performance in the April-June quarter exceeded expectations, owing largely to strong US sales performance. The net profit of 996 crores, up 45.1% year on year (YoY), exceeded Bloomberg consensus analysts’ expectations of 860.4 crores. 

Cipla’s operating income of 6,329 crores was up 17.7% year on year. The reported Ebitda of 1,494 crore increased by 30.7% year on year.

North American sales in constant currency were $222 million, up 43% year on year, and higher than the prior quarter’s $204 million. Analysts expected some sequential decline in the US business due to increased competition in a major respiratory product. Other product contributions, however, are likely to have contributed assistance. North American revenues were up 52% year on year in rupee terms, at 1,822 crore, accounting for 29% of total revenues.

According to the corporation, its pipeline and execution have been significant drivers of this increase. Lanreotide’s key asset has increased its market share to 18%. The emphasis remains on restricted competitive releases. Analysts believe that generic versions of the multiple myeloma therapy medicine Revlimid contributed to the increase in US sales.

In a press conference following the results announcement, Umang Vohra, MD and global CEO of Cipla, stated that there has been some decline in market share in the respiratory inhaler Albuterol generics during the last four months. However, on a year-over-year basis, market share may be similar and likely to remain stable. Despite persistent pricing pressure, the basic business in the United States is doing nicely, according to Vohra.

Cipla’s Performance In Domestic Market

Meanwhile, despite the fact that the season was not favorable for the acute section of products, Cipla’s performance in the domestic market remained robust. Other treatments, such as respiratory and cardiology, fared substantially better. India sales, which contributed over 44% of total revenues at 2,772 crores, increased 11.6% year on year.

The South African market, which had been a weak link in recent years, also recovered nicely. According to the corporation, the South African Private Market business expanded by 13% year on year in local currency, with double-digit growth in both prescription and OTC businesses.

Cipla's

Moving forward, the India business is expected to maintain its momentum, with the September quarter being seasonally favorable for a wide range of items. New product introductions (30-35 per year) are also expected to help revenue growth.

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Launch of New Respiratory Medication

However, the launch of another respiratory medication, Advair generics, in the United States is contingent on FDA approval of the Indore facility. If the facility is approved, the launch might come soon. However, if the facility is not cleared, the product’s introduction from another site may be delayed. The USFDA must approve the site transfer, and the completion of procedures may cause the product launch to be delayed by a year.

However, the introduction of new goods and the expansion of the base business are anticipated to continue to underpin US sales growth. Vohra anticipates that US revenues would remain stable at $210-215 million per quarter.

In addition, Cipla’s intend to introduce four to five peptides, with two products expected to be submitted within the next 18 months.

“We expect Cipla to work towards establishing a strong foundation for growth in the upcoming quarters, led by the continued leadership in chronic therapies in the branded prescription business in India,” said Prathamesh Masdekar, Research Analyst at StoxBox. Its developing differentiated pipeline in the US company and high demand inside South African private business continues, with the goal of becoming South Africa’s largest prescription business. Also, management’s continuous emphasis on cost-cutting initiatives.”

Cipla’s stock price closed 2.30% higher on the NSE on Wednesday.