An employee inspects tablets as they move along the production line at the Lupin Ltd. pharmaceutical plant in Salcette, Goa, India. (Photographer: Dhiraj Singh/Bloomberg)

Lupin Q4 Profit Halves Owing To Forex Loss, One-Time Provision

Shares of pharmaceutical company Lupin Ltd. fell over 6 percent after net profit for the January-March quarter halved due to a one-time provision and loss on account of a stronger rupee.

Net profit fell nearly 50 percent to Rs 380.2 crore in the fourth quarter, way below the Bloomberg consensus estimate of Rs 643 crore. The profit decline was the first in four quarters and the highest in seven. Revenue grew only a marginal 1.3 percent to Rs 4,253.2 crore on a year-on-year basis, India’s second largest drugmaker by market value said in a stock exchange filing.

Lupin Q4 Profit Halves Owing To Forex Loss, One-Time Provision

Earnings before interest, tax, depreciation and amortisation fell 40.6 percent over the same quarter last year, dragged by a one-time provision of Rs 156 crore as compensation for patent litigation towards its Isabelle generic launch in Australia and a foreign exchange loss of Rs 168 crore. EBITDA margins contracted almost 1300 basis points to 18.4 percent

Lupin Q4 Profit Halves Owing To Forex Loss, One-Time Provision

The company is however, confident of sustaining its growth momentum in the medium to long term.

Steady progress on our complex generic pipeline, our impeccable record of compliance and focus on operational excellence will help sustain our growth momentum in the mid to long-term.
Nilesh Gupta, Managing Director, Lupin

Geographical Performance

  • North America sales declined to Rs 1,900.7 crore from Rs 2,190.1 crore year-on-year.
  • Sales in India increased 13.8 percent to Rs 878.80 crore
  • Sales in Asia Pacific increased 35 percent from the same quarter last year to Rs 611.80 crore
  • European sales increased 22.8 percent to Rs 301.20 crore
  • Sales in Latin America increased 37.3 percent to Rs 126.90 crore
  • Global API sales declined 4.7 percent during the quarter to Rs 281.5 crore

Lupin’s volumes in the U.S. market declined as its Glumetza drug competed with a new authorised generic. The realisations were lower on account of a stronger rupee. Consequently, the base portfolio in the U.S. saw a 6-8 percent price erosion in the fourth quarter of this fiscal, said Ramesh Swaminathan, chief financial officer and executive director at Lupin told BloombergQuint.

“There is further consolidation in the channel end in U.S. so there is going to be pricing pressure in America for sure.
Ramesh Swaminathan, CFO and ED, Lupin

Lupin is looking to launch 25-35 new products in the U.S. in 2018 and may also look at some acquisitions, Swaminathan said.

Yes, we would be looking at assets in America because it’s a constant endeavour but the price proposition should be compelling. Prices have come down in America but just because they have come down, doesn’t mean it is necessarily attractive for us.
Ramesh Swaminathan, CFO and ED, Lupin

Shares fell as much as 6.64 percent, the most since November last year to Rs 1,167.60 on the National Stock Exchange.