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Pricing pressure seems to be universally there across markets in the US, India or Japan, says Nilesh Gupta, Lupin Managing Director, tempering growth expectations on the year ahead.
The forthcoming financial year will be flat, but it will pick up in the subsequent year, says Gupta referring to competition and channel consolidation in the US that was putting pressure on prices.
In fact, the company's financial performance for the three months or Q4 ended March 31 saw its net profit almost halve at ₹380 crore compared to ₹747 crore in Q4 last year. Net sales in the quarter under review marginally increased 1.3 per cent to ₹4161 crore compared with ₹4,109 crore in Q4 FY2016.
The company's overall performance has been as per expectation, says Gupta. The profits were a “shock”, he says, because of the one-time payment following a patent challenge in Australia on a contraceptive product, forex (currency) fluctuations, pricing pressures and a higher provisioning for research in the quarter.
Lupin made a provision for liability towards its Australian subsidiary amounting to ₹155 crore towards compensation for patent litigation on its Isabelle generic launch in Australia. And its investment in research for the quarter stood at 16 per cent of sales, ₹670 crore. The net impact of foreign exchange fluctuation on EBITDA was a loss of ₹168 crore during Q4 FY2017 compared to a gain of ₹26 crore last year, the company explained.
Lupin’s annual North America sales increased by 39.5 per cent to ₹8,262 crore, accounting for 48 per cent of Lupin’s global sales. And its Q4 sales this year stood at ₹1,900 crore compared to ₹2,190 crore during Q4 FY2016.
The muted growth in the United States market will continue this year, he said. On the regulatory observations from the US drug regulator on its Aurangabad plant, he said, the company was on the right foot as far as compliance was concerned.
The recently announced GST rates, Gupta said, could cause some disruption during the transition period, but was good in the long run for the industry.
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