Lupin Q2 Earnings Meet Estimates Despite Pricing Pressure In The U.S.

Lupin Ltd.’s quarterly earnings met analyst estimates on increased operational efficiency, despite a substantial drop in sales in its largest market, North America.

Net profit fell 31 percent year-on-year to Rs 455 crore in the July-September quarter, according to the drugmaker’s stock exchange filing. This matched the Rs 443 crore estimated by analysts tracked by Bloomberg.

Lupin’s revenue fell nearly 8 percent to Rs 3,952 crore as compared to the same quarter last year, falling short of the Bloomberg consensus estimate of Rs 4,055 crore. The topline was dragged by a 32 percent drop in sales in North America, which accounts for 35 percent of its total revenue. Sales in India, which accounts for 29 percent of its total revenue, rose 16.4 percent.

The Indian pharmaceutical sector has seen pricing pressure in the U.S. due to regulatory issues. “In Q2 we have recorded strong growth in all our markets but for the US generic business where we continue to see pricing pressure, as expected,” Nilesh Gupta, managing director at Lupin said in the company’s media statement. The management expects the pressure to increase, especially given the consolidation between Walmart and McKesson for generic products. Revenue will see a single-digit decline for the financial year 2017-18, the management said at the press conference to announce earnings.

For the second quarter, earnings before interest, tax, deprecation and amortisation fell 17 percent to Rs 851 crore year-on-year while Ebitda margin contracted by 240 basis points. The operational performance was also in line with analyst estimates.

Lupin’s shares rose as much a 8 percent to Rs 1,090 after the earnings announcement. The Nifty Pharma Index rose 1 percent in comparison.