Leading pharmaceutical company Cipla showcased a strong performance in the first quarter ended June 30, 2023, reporting a significant 45% increase in net profit, amounting to ₹995 crore. The positive results were driven by robust growth in key markets such as India, the US, and South Africa.
Cipla’s total revenue for the quarter stood at ₹6,329 crore, marking a notable 18% rise from the corresponding period last year. The company’s One-India business played a pivotal role in this growth, recording an impressive 12% increase, driven by branded prescription, trade generics, and consumer health.
One of the primary drivers of Cipla’s outstanding performance was its US-based business, which witnessed remarkable growth of 43% year-on-year, contributing to 29% of the company’s total sales. The US market’s success was attributed to continued market share gains for the peptide assets, particularly the Lanreotide injection, where Cipla’s market share exceeded expectations, surpassing 18%.
Despite the ongoing remediation process for two of its sites in Indore and Goa, the company’s top management expressed confidence in their de-risked strategy for critical product filings from two sites. They also acknowledged the US Food and Drug Administration’s stringent oversight, noting the need for heightened scrutiny of products coming from China and India, as raised by representatives of the US Congress.
Cipla’s Managing Director and Global Chief Executive, Umang Vohra, highlighted the company’s growth trajectory, indicating that their focus on a differentiated portfolio has strengthened their US business, achieving its highest-ever quarterly revenue of $222 million.
Looking ahead, Cipla plans to drive its chronic therapies branded prescription business in India, expand its differentiated pipeline in the US, and target growth in the South African prescription market.
Despite a few regulatory setbacks in the previous fiscal year, Cipla’s management remains optimistic about their near-term outlook. They anticipate rolling out Advair (asthma drug) and Abraxane (oncology drug) in FY25, following successful remediation measures at the Pithampur and Goa plants.
With a positive outlook for the US base business and a strengthening domestic market in India, analysts suggest Cipla’s medium-term earnings growth is well-supported. However, the company will continue to closely monitor any regulatory challenges that may arise.
At present, Cipla’s stock trades at 13x EV/EBITDA FY25e, with a visibility for steady earnings growth, leading experts to recommend investors to accumulate shares, acknowledging the potential risks associated with regulatory setbacks.
In conclusion, Cipla’s remarkable performance in Q1 FY24 and its promising growth strategies position the company for continued success in the global pharmaceutical market.
FAQs
What were Cipla’s financial results for the first quarter of FY24?
A: Cipla reported a net profit of ₹995 crore, marking an impressive 45% increase compared to the same period last year. The company’s total revenue for the quarter stood at ₹6,329 crore, showing a significant 18% growth from the corresponding period in the previous year.
Which markets contributed significantly to Cipla’s strong performance during Q1 FY24?
Cipla experienced healthy growth across its key markets, including India, the US, and South Africa. The US-based business, in particular, recorded a remarkable 43% year-on-year growth, contributing to 29% of the company’s total sales.
What were the factors contributing to Cipla’s growth in the US market?
The growth in the US market was primarily supported by continued market share gains for the peptide assets, specifically the Lanreotide injection. Cipla’s market share for Lanreotide injection exceeded expectations, reaching over 18%.
How did Cipla plan to address regulatory challenges and product rollouts?
Despite facing regulatory setbacks in the previous fiscal year, Cipla remains confident about its near-term prospects. The company plans to roll out products like Advair (asthma drug) and Abraxane (oncology drug) in FY25 after successfully implementing remediation measures at its Pithampur and Goa plants.
What is the outlook for Cipla’s future earnings and market expansion?
Analysts view Cipla’s future earnings growth favorably, considering the positive outlook for the US base business and the strengthening domestic market in India. The company aims to focus on chronic therapies branded prescription business in India, expand its differentiated pipeline in the US, and target growth in the South African prescription market. Investors are advised to accumulate shares given the potential for steady earnings growth, although regulatory setbacks remain a key risk to monitor.
At 14.30PM IST, Cipla is trading at Rs.1168 per share, up 9.31% in the day. Current marketcap is ₹94,435 Crore and current P/E is 24.3
What did we learn?
- 1 FAQs
- 1.1 What were Cipla’s financial results for the first quarter of FY24?
- 1.2 Which markets contributed significantly to Cipla’s strong performance during Q1 FY24?
- 1.3 What were the factors contributing to Cipla’s growth in the US market?
- 1.4 How did Cipla plan to address regulatory challenges and product rollouts?
- 1.5 What is the outlook for Cipla’s future earnings and market expansion?
Twitter
