Q1 Results: Stress In Distribution Channels Hurt Cipla’s India Sales
A file photo of a Cipla factory. Cipla Q1 Results 2019-20 showed its profit grew 6 percent year-on-year to Rs 478.20 crore on the back of revenue that rose 1.3 percent to Rs 3,989 crore. (Photographer: Santosh Verma/Bloomberg)

Q1 Results: Stress In Distribution Channels Hurt Cipla’s India Sales

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Cipla Ltd.’s sales in India fell as the drugmaker took “conscious measures to realign distributors in trade generics”, according to Managing Director Umang Vohra.

“There was stress in the (distribution) system. We have chosen to churn some distribution centres and...that has impacted this quarter,” Vohra, who is also the global chief executive officer at the company, told BloombergQuint during an interaction.

The trade generics segment, he said, forms 25-30 percent of Cipla’s overall business in India. Vohra expects the trade generics business to gradually recover and “normalise” in the third quarter.

Cipla’s sales in India, which fell 12 percent year-on-year in the first quarter, was also impacted by the “deferral of branded generics sales”, he said, adding the impact of this will be included in the ongoing quarter.

Also read: Q1 Results: Brokerages Cut Cipla’s Target On Weak India Performance

Key Highlights From Cipla MD Umang Vohra Interview

  • Sensipar witnessed a slight decline sequentially.
  • Seeing stress in tender business.
  • Expects launches of limited competition drugs to resume by the end of second quarter or beginning of third quarter in the next financial year.
  • Currently focusing on top line growth, rather than margin expansion.
  • Pricing and margin continue to remain under pressure in the U.S.

Cipla Q1 Results 2019-20: Key Highlights (YoY)

  • Net profit rose 6 percent to Rs 478.2 crore.
  • Revenue rose 1.3 percent to Rs 3,989 crore.
  • Ebitda increased 24.5 percent to Rs 904.6 crore.
  • Margin stood at 22.7 percent against 18.4 percent.

Watch the full interview here:

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