Cipla Q3 net up 10% to Rs 801 cr, posts highest ever quarterly sales in US

Revenue up 6% to Rs 5,810 cr; firm expects US FDA audit at Goa unit

Mumbai-based drug maker Cipla posted a 10 per cent year-on-year rise in net profit to Rs 801 crore for the third quarter of the financial year 2022-23, riding on the back of a six per cent surge in total revenue from operations to Rs 5,810 crore.

Cipla posted an Ebitda of Rs 1,408 crore for the quarter with a resulting Ebitda margin of 24.2 percent.

The firm's stock ended 2.12 per cent down, at Rs 1,039 on the BSE.

Kunal Randeria, analyst with Nuvama Research, said the revenue was due to emerging markets and active pharmaceutical ingredients (API) performance, and Covid-19 contribution to the base. He felt the margins during the quarter were good.

As for geographies, the US market saw the highest ever quarterly revenue of $195 million, up 30 per cent YoY. The growth came from market share expansion in key respiratory and peptide injectable products. 

Umang Vohra, MD and Global CEO, Cipla said the US business would continue to grow with launches in the future, and Cipla would maintain a base business of $185-190 million in that market.

Cipla’s Goa unit is under an official action indicated (OAI) status from the US FDA. “We have submitted our corrective and preventive action plans (CAPA) to the US FDA, and the Goa facility will be audited again,” Vohra said.

The company has a generic Advair launch lined up for H2FY23, which is expected to be a limited competition product over the next two years, with potential market size of $700 million. However, with OAI at Goa site, generic Advair launch may get delayed by a few months.

In India, Cipla posted 11 per cent YoY growth ex-Covid-19 business. The branded prescription business grew by 11 per cent, while the consumer health business was up 16 per cent. The trade generics business saw traction in volumes.

ICICI Direct analysts pointed out that the India business grew by just 1.8 percent, but after adjusting for Covid19 base, the growth was at 11 percent. "Cipla numbers missed our expectations on the revenue front but were upbeat on the margin front. The India business continued its strong performance on the back of strong growth across all therapies but missed our expectations. US business performed well, driven by solid execution on differentiated portfolios in the US including the launch of generic Revlimid. South Africa private market recovery is on track and has grown in double digits. We remain positive on the growth story, especially relying on the new complex launches in the US and continuing momentum in Domestic branded formulations," the analysts added. 

Cipla said that the dollar-revenue impacted by currency volatility impacted the international markets including emerging markets and EU. There was a 3.3 per cent growth during the quarter.

Vohra said that the South Africa market had a difficult quarter as stock levels are re-adjusting.

The API business saw a decline of 1.7 per cent YoY to Rs 147 crore with some offset in growth in the emerging markets due to normalisation in inventory levels for European customers.

Cipla continued to invest in respiratory, biosimilar and other projects and the R&D spend during Q3FY23 was Rs 363 crore, up 39 per cent YoY.