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Cipla Q4 Results: Profit Falls 33%, Margin Contracts

Cipla’s profit fell 33% year-on-year to Rs 246 crore in the March quarter on the back of revenue that fell 1% to Rs 4,376 crore.

Vaccine vials enter the conveyor of a machine during inspection and screening for defects.  (Photographer: Sanjit Das/Bloomberg)
Vaccine vials enter the conveyor of a machine during inspection and screening for defects. (Photographer: Sanjit Das/Bloomberg)

Drugmaker Cipla Ltd.’s profit declined in the March quarter on account of a high base and relatively lower sales amid the coronavirus lockdown.

Net profit fell 33 percent over the previous year to Rs 246 crore in the quarter ended March, according to its exchange filing. Analysts’ estimates tracked by Bloomberg had pegged profit at Rs 368 crore.

The drugmaker’s revenue fell 1 percent year-on-year to Rs 4,376 crore. That compares with the Rs 4,336-crore consensus estimate by analysts tracked by Bloomberg.

Cipla had reported a sharp jump in its top line in the comparable quarter last year, aided by sales of a generic hyperparathyroid drug Sensipar. The drugmaker lacked a similar boost in the reported period because of lack of new approvals.

The company’s operating profit fell 34 percent to Rs 634 crore. Operating margins narrowed 730 basis points to 14.5 percent from 21.8 percent. Analysts had pegged the figure at 17.6 percent.

The pneumonia-causing novel coronavirus, which has so far killed more than 2,000 people in India and infected over 80,000, forced the nation to announce the world’s harshest lockdown to combat its spread. While that initially triggered panic buying of medicines, the extension of shutdown hurt sales. India’s pharmaceutical sales, according to data released by AIOCD-AWACS, grew 9.7 percent year-on-year in the January-March period.

“Our key markets continued to demonstrate strong growth momentum in the quarter,” said Umang Vohra, managing director and global chief executive of Cipla. “The U.S. FDA approval for generic Albuterol MDI and the successful completion of the Phase 3 clinical study of generic Advair Diskus has strengthened our respiratory franchise in the U.S. market; furthering our aspirations of becoming the lung leaders of the world.”

Cipla’s India business grew 12 percent over the previous year, with its generics unit growing 15 percent in the same period. Its South African business grew 10 percent. However, the key U.S. market fell 25 percent mainly due to the high-base effect from the comparable quarter. The active pharmaceutical ingredients business grew 42 percent.

Other Highlights

  • Margin was impacted by a 200-basis-points Covid-19-related cutoff.
  • Repaid loans of $275 million in FY20 ahead of schedule.
  • Working with U.S. FDA to resolve all observations received by Goa facility.
  • Research and development costs stood at 7.1 percent of the total sales.

Shares of Cipla closed 0.11 percent higher, ahead of the results, while the benchmark BSE Sensex ended largely flat.