US business slowdown pulls Lupin's Q1 revenue down by 43% to Rs 2 billion

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A slowdown in US business pulled Lupin's June quarter revenue down by 43.4 per cent year-on-year (YoY) to Rs 2.02 billion. The sales growth was down marginally (by 0.8 per cent) to Rs 37.74 billion. 

“The first quarter of the ongoing financial year has been subdued, primarily on account of the US and Japan,” Nilesh Gupta, Managing Director of Lupin, said in a statement. The company added that rise in the tax rate to 47 per cent (from 21 per cent in the corresponding quarter) also hit earnings. 

The US business that accounts for 31 per cent of Lupin's overall revenues was down by 26 per cent YoY. The company said in post results call that the US business was impacted in the quarter as a generic version of gynaecological drug Methergine saw increased competition, sales from Tamiflu (influenza medicine) tapered off with seasonality apart from price erosion in the diabetes drug Metformin. The management indicated that the second half of the year would see launches of some limited competition products (around two) that would boost the gross margins. 

Another key global market for Lupin, Japan saw a dip in sales from 8.5 billion yen in Q1FY18 to 8.1 billion yen in Q1FY19. Overall, the Asia Pacific sales saw a muted growth of around 1.5 per cent. 

The India business, however, grew by 31 per cent (adjusted for excise duty) to Rs 11.92 billion during the June quarter. Domestic business accounts for nearly 32 per cent of Lupin's turnover. 

For the quarter, the operating profit was down by 31.4 per cent during the quarter under review to Rs 5.2 billion, while the Ebitda was down 11 per cent to Rs 7.1 billion. Material cost increased by 17.2 per cent YoY to 38.3 per cent of sales. 

Global active pharmaceutical ingredients (API) sales increased by 27.5 per cent to Rs. 3.5 billion during the quarter as compared to Rs 2.8 billion in the corresponding quarter. It accounted for 10 per cent of Lupin's global sales. 

ICICI Direct said, "Resolution of warning letters for Goa and Indore plants and pricing pressure in the US base business is likely to weigh on stock performance in the near term." The stock ended day's trade at Rs 825.85 a piece on BSE, down 4.5 per cent. 

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