Cipla's operating profit margin vaulted to 21.4 per cent (a four percentage point improvement year-on-year) in the latest March quarter, helped mainly by a superior product mix.

Cipla's 13 per cent sales growth for the quarter was driven by better-than-expected domestic growth (14.3 per cent) and export formulation growth (15.1 per cent).

Domestic formulations expanded in-line with the market, helped by strong off-take in the anti-asthma (inhalers), expectorants, antibiotics and anti-inflammatory segments. Export formulation growth was largely helped by higher inhaler sales.

The company's product rejigs and rationalisation efforts have paid off well.

Focus on high margin inhalers and conscious scale down of low margin Anti-retroviral (ARV) business has enabled operating profit margin expansion.

Despite tax rate being higher by 530 basis points, impressive gross margin improvement (650 basis points) due to superior product mix helped Cipla post 36.3 per cent growth in net profit.

Cipla has commenced supplies of generic Lexapro ($2.8 billion annual branded sales) to Teva (first-to-file exclusivity holder) in the last quarter, as part of the supply agreement with Ivax (acquired by Teva in 2006).

However, meaningful contribution is expected to flow in the next two quarters. The potential size of the opportunity may be $60 million (Rs 312 crore) over the same period. Product rationalisation coupled with Lexapro sales is likely to drive Cipla's growth over the next two quarters.

>Nalinakanthi.venkataraman@thehindu.co.in

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