Lupin’s 40 per cent profit jump in a difficult quarter for India Inc came from selling more high-margin products in the US, cost control and a sizeable forex gain.
The company’s operating profit margins climbed by a good 3.5 percentage points to 23.8 per cent for the latest June quarter. The appreciation of the yen against the rupee helped the company’s Japanese arm gain on unsold inventory. The quarter saw a sedate nine per cent rise in revenues.
The company’s US revenues posted healthy growth driven by strong traction in the generics business even as branded drug sales declined during the quarter. The generics business was helped by ramp-up in products such as Tricor, a lipid-control drug. The branded business struggled as its cholesterol drug Antara faced competition. Lupin’s India formulations business, like that of its peers, was sluggish with sales falling this quarter. De-stocking by dealers due to implementation of the New Drug Pricing Policy and withdrawal of two brands from the market dampened the company’s sales on the home turf. However, the management expects revenues to bounce back over the next few quarters.
Even as Kyowa Pharma, Lupin’s key Japanese subsidiary, managed to grow 12 per cent in yen terms, the sharp fall in rupee against Japanese yen depressed the subsidiary’s performance reported in rupee. Revenues from its step-down Japanese subsidiary I’rom Pharma declined due to postponement of sales. While I’rom performance may continue to be sluggish, better sales at Kyowa may help Lupin sustain lower double-digit growth in the Japanese market.
Other semi-regulated markets also delivered slow growth this quarter, partly impacted by depreciation of rupee against respective currencies.
Lupin recently inked an agreement with US-based Romark to promote and distribute the suspension version of the latter’s anti-diarrhoea brand Alinia in the US. Despite the brand being small today, it has potential to grow manifold over the next few years.
With the new management taking over recently, Lupin is targeting $5 billion in revenues by 2018.
This compares to revenue of $1.7 billion in FY13. With 91 products pending approval, the company targets $2 billion in revenues from the US market alone, a five-fold increase over the next five years.
nalinakanthi.v@thehindu.co.in