Helped by new launches and improved realisations in base business and volume traction, domestic sales were up 13 per cent YoY. Emerging markets, which contribute just over a fifth of revenues, grew by 19 per cent YoY, led by Russia among other markets. Though Europe has a smaller share of the revenue pie, it boosted overall growth with 52 per cent YoY uptick.
The disappointment was the delay in the launch of the generic Nuvaring (contraceptive) which forced the company to take impairment charges. Despite this, earnings before interest, tax, depreciation and amortisation (Ebitda) at Rs 1,074 crore was still ahead of consensus estimates of Rs 916 crore. The firm’s efforts on cost controls and rationalisation are boosting profitability. Margins, excluding impairment charges and other intangibles of Rs 1,320 crore, expanded 263.4 bps to 23.5 per cent. Adjusted net profit grew 56.2 per cent YoY to Rs 781 crore, ahead of analyst estimates of Rs 492 crore.
Barring the Nuvaring generics delay, the company’s product base in the US is getting traction, as is its control on costs. Among the products which hold promise are Cubicin (antibiotic), Remodulin (hypertension), Treanda (oncology), and Sensipar (Thyroid) in the near term, followed by generics of Dexilant (acid reflux treatment), Copaxone and Kuvan (blood disorder) in FY21.
Analysts at ICICI Securities in a post-result note believe that the key growth driver in the near term are new launches in the US market, growth in the global generics market (excluding the US and Europe), and clearance of the Srikakulam intermediary plant in Andhra Pradesh (USFDA inspections underway).