News Analysis

Cipla: New launches in the US boost revenue

Dhuraivel Gunasekaran | Updated on May 22, 2019 Published on May 22, 2019

Pharma major Cipla has reported a strong set of numbers in the fourth quarter of 2018-19, driven by new launches in the US market and improved sales in key therapies in India.

The company’s consolidated net profit has more than doubled in the fourth quarter by 106 per cent to Rs 367 crore, as against Rs 179 crore reported in the same quarter last year. The consolidated net sales for the quarter came in at Rs 4,404 crore, up 19 per cent YoY.

Over the past few quarters, Cipla’s overall revenue growth was impacted by delays in launches, supply issues, competitive pressure in the tendering process in South Africa and regulatory actions. However, ramp-up in launches, with limited competition and recent approvals in the US, improved sales in key therapies in the domestic market. Traction in non-institutional sales in South Africa have supported the overall revenue growth of the company in the fourth quarter.

Strong growth in domestic business

Sales from India, which contributed around 34 per cent of Cipla’s overall revenues, grew 11 per cent Y-o-Y to Rs 1,500 crore. The company has registered healthy performances in the domestic market over the last few quarters (barring GST disruptions), driven by both prescription and generics businesses. The company retains its No.1 position in respiratory, urology and paediatrics, and holds No.4 and No.5 positions in cardiology and central nervous system, respectively. In chronic therapies, Cipla became the second largest player, growing over 18 per cent in FY19 as against the market growth of 13 per cent.

Ramping up US sales

Sales from North America, which accounts for 26 per cent of the overall sales, grew 41 per cent Y-o-Y, driven by product rationalisation and ramp-up of new generic drugs launches, including Pulmicort, Voltaren, Isuprel and Sensipar. The company has a strong pipeline of pending abbreviated new drug applications (ANDA) in the US. Of the 253 ANDAs filed, many are limited-competition products and may help generate Para IV Filing opportunities, primarily in respiratory, oncology and dermatology.

In April 2019, Cipla entered into an agreement with Pulmatrix Inc to co-develop and commercialise Pulmazole (treats the allergic bronchopulmonary aspergillosis in patients with asthma). Pulmazole is a first-in-market inhaled anti-fungal drug, which is estimated to have around $1.5 billion revenue potential in the US.

Three new assets were added to the speciality pipeline during FY19 in the areas of CNS, Respiratory and institutional business. Cipla believes that such a speciality segment would be a potential growth driver going ahead, which would generate significant revenue to the company in the medium to long run.

Sales from the South African region (contributes 19 per cent of sales) grew by 30 per cent Y-o-Y during the quarter due to low base and significant offtake in its private business.

Operating profit stood at Rs 972 crore during the quarter. Operating margin came in at 22.1 per cent during the quarter, 700 bps higher Y-o-Y, mainly due to cost optimisation and strong growth from new launches in US and high-margin Indian business.

Published on May 22, 2019
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