Drugmaker Cipla has seen growth across key geographies such as India and US, which together account for 60 percent of its total sales.
Its India business bounced back after some disruptions in the trade generic business in Q2FY20, growing 13 percent YoY in the quarter ended December 2019. India prescription business showed second consecutive quarter of 14 percent growth.
The US business registered a steady 11 percent YoY growth, but was flat QoQ, possibly due to competition in key drugs (Sensipar generic).
Cipla, on February 5, registered a 6 percent year-on-year growth in profit at Rs 351.03 crore and 9.1 percent rise in revenue at Rs 4,371 crore in Q3FY20.
At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 7.2 percent to Rs 758.3 crore, margin fell 40bps YoY to 17.3 percent during the quarter.
Here are the highlights of Cipla's earnings call, compiled by Narnolia Financial Advisors:
Management participants: Umang Vohra–MD & Global CEO, Kedar Upadhye-Global CFO
The US business grew by 13 percent YoY to $133 million and the India business by 12 percent. India prescription business grew 14 percent YoY, while the trade generics business recorded growth of 7 percent over the previous year.
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The top three products of the US business contributed around 25-30 percent to the overall American revenues. The US base business stands at $120-130 million.
The company is progressing well on trials for Advair. It expects to file the product soon but as the expected review time is two to two-and-a-half years, the approval is expected in that time frame. Albuterol launch has also been shelved to second half of FY21.
US Specialty: NDA for IV Tramadol NDA submitted in December via Avenue Therapeutics.
India in-licensed portfolio contributes Rs 250 crore on an annualised basis, majority being for diabetes and cardiology.
Among the key therapies in India, in respiratory, Cipla grew by 14 percent versus market growth of 12 percent. In Cardiology, Cipla grew 14 percent versus a market growth of 11 percent and in urology, the company grew 12 percent against market’s 14 percent.
South Africa private business reported 20 percent growth YoY, while the Sub-Saharan Africa business and CGA business grew by 12 percent and 7 percent YoY over the last quarter.
The revenue from emerging markets declined by 17 percent as the order shipment was pushed to Q4FY20. The company expects to see recovery in the next quarter.
For the emerging markets, the company is on track to filing Biosimilars. In the European market, the share now stands at 15 percent.
Gross margin impacted by 200 bps YoY this quarter on account of Cinacalcet price erosion, and adjustments towards overheads due to reduction in finished goods inventory.
Regulatory front: Closely working with USFDA to comprehensively address Goa observations.
The major strategy is to invest aggressively in the established branded market franchisee of India, focused investment in the South Africa market and calibrating R&D investments in the US generics and specialty segment in order to improve the ROCE in the long run.
Major strategies for key geographies
India business: One India Strategy integrates India prescription, trade generics and consumer health businesses under one capital allocation framework. The major focus being strong synergies across portfolio, distribution and consumer focused initiatives.
South Africa: Continue to strengthen market leadership in the OTC space.
Emerging markets: The strategy would be to further consolidate its presence in the priority markets. The major focus will be on establishing business in China.
US business: Generics R&D investments to be focused towards select value accretive assets.
US specialty: Focused investments towards institutional business; CNS assets to be out-licensed. The company from FY21 expects to limit spends at 1 percent of sales and less than 5 percent of EBITDA for the specialty portfolio.
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