Cipla's Profits Surge by 43% Driven by Strong Growth in India and Key International Markets

28 Oct, 2023

Cipla's Profits Surge by 43% Driven by Strong Growth in India and Key International Markets

Cipla Ltd has reported a remarkable 43.4% increase in consolidated net profit for the quarter ending in September, reaching ₹1,130.91 crore, in contrast to ₹788.90 crore during the same period last year. The company attributes this substantial growth to its robust performance in India, the United States, and South Africa, as disclosed in an official exchange filing made on Friday.

According to Umang Vohra, Managing Director and Global CEO of Cipla, "These results reflect the strength of our core business across key markets of India, North America, and South Africa. We reported our highest-ever quarterly revenue with Ebitda margins scaling up to 26%. One-India business grew at a healthy 10% year-on-year, with continued market-beating performance in the branded prescription and trade generics business. In South Africa, the private market business grew in double digits driven by strong execution across prescription and OTC. Our pipeline is progressing well with key milestones achieved in Respiratory and Peptide assets. We will continue our focus on driving profitable growth across businesses."

Earnings before interest, taxes, depreciation, and amortization (Ebitda) during the reviewed quarter surged by 33.1% year-on-year to ₹1,734 crore, accompanied by an Ebitda margin of 26%. Cipla maintains a robust balance sheet, with a net cash position of ₹5,850 crore, while its total debt stood at ₹961 crore at the close of the September quarter. The company anticipates that the margin will remain stable during the next quarter, although Q4 might exhibit variations due to reverse seasonality in India.

Vohra indicated that the company typically allocates around ₹1,500 crore for capital expenditure. "We will continue investing in respiratory capabilities, expanding both in India and the US. The company is also in the process of enhancing its API facilities, which will constitute a significant portion of our capital expenditure plans," he stated. "New product activity will continue to flourish across our markets."

Cipla's US business posted its highest-ever revenue of $229 million, marking a 28% year-on-year growth driven by strong momentum and key milestones achieved across differentiated portfolios. The market share of Cipla’s Lanreotide reached 20%, according to IQVIA’s August 2023 data. Vohra anticipates that the US business will sustain a trajectory in the range of $220-225 million on a sustainable basis, with slight fluctuations in December and Q4 due to distinct buying patterns.

In South Africa, the private market business witnessed a 12% year-on-year growth in local currency, supported by robust performance in prescription and over-the-counter (OTC) segments. The OTC market share is expected to expand further following the acquisition of Actor Pharma.

Cipla's research and development (R&D) investments increased by 13% year-on-year to ₹379 crore, representing 5.7% of sales. This growth was driven by progress in clinical trials of key pipeline assets and other developmental efforts.

The One India business recorded a 10% year-on-year growth across branded prescription, trade generics, and consumer health. The branded prescription business expanded by 11%, driven by key therapies in the chronic portfolio. The company's share of chronic grew by 140 basis points year-on-year to 60% in the quarter. Cipla maintained its theme of 'Big Brands Bigger,' with 22 brands generating over ₹100 crore in revenue.

Cipla's trade generic business, despite weak seasonality, achieved double-digit growth, with margins supported by declining raw material costs. The company is expanding its presence through investments in field force and customer engagement, leveraging both physical and digital capabilities.

The company reported that the quarterly performance of Cipla's health franchise was affected by inconsistent weather patterns, although the core portfolio remained strong, with five brands generating over ₹100 crore in sales over the past twelve months.

Regarding reports of a promoter stake sale, Vohra clarified, "The company and the promoters are separate entities. We maintain the stance that it is speculative, and we haven't heard of deal finalization."