Bengaluru: Cipla, the third-largest generic drugmaker in India based on sales, reported a higher-than-anticipated increase in profit for the second quarter on Friday. This was largely due to strong performance in both its primary market in India and its business in North America.
In the quarter ending September 30, the company’s consolidated net profit surged by 43.4 percent to 11.31 billion rupees ($135.90 million). This exceeded the average estimate of 9.75 billion rupees made by analysts, according to data from LSEG.
Total revenue from operations grew by nearly 15 percent to 66.78 billion rupees, mainly driven by a 13.4 percent increase in its core pharmaceutical division. Cipla manufactures generic respiratory and cancer drugs, as well as consumer-branded products such as the pain reliever Omnigel.
Sales in North America experienced a substantial upswing with growth of almost 32 percent, while other key markets such as India and South Africa saw growth rates of 10 percent and 3.7 percent, respectively.
Analysts believe that Cipla’s sales in the North American market were boosted by an expanded market share in cancer drugs Revlimid and Lanreotide, as well as a decrease in price erosion.
“The impressive performance of Cipla sets a positive tone for the results of other major pharma companies in the remaining quarter,” said Shrikant Akolkar, an analyst at Asian Markets Securities. Akolkar further added that gross margins also benefited from the decline in raw material costs.
On the other hand, Cipla’s strong performance in the domestic market can be attributed to price increases and the addition of medical representatives who promote and sell pharmaceutical products to healthcare professionals.
The founding family of Cipla intends to sell their entire 33.4 percent stake in the company.
Last month, it was reported that Torrent Pharmaceuticals, an Indian pharmaceutical company, is in talks with private equity funds such as CVC Capital Partners and Bain Capital to raise up to $1.5 billion in order to bid for Cipla, according to Reuters.
If the deal goes through, it would be the largest transaction in the Indian pharma sector, according to analysts.
Cipla’s shares surged by as much as 4.1 percent following the announcement of the results, and were up 1.9 percent as of 3:20 p.m. IST.
In the September quarter, the company’s shares rose by nearly 17 percent, surpassing the 12 percent increase in the Nifty Pharma index.
Dr Reddy’s Laboratories, a peer company, is also expected to release its quarterly results later in the day.
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