Pricing pressure in US easing, confident of 23% EBITDA margin for FY24: Cipla
Pricing pressure in US easing, confident of 23% EBITDA margin for FY24: Cipla
In the June quarter, North America contributed 29 percent to Cipla’s topline. The US business reported the highest ever revenue of $222 million, up 43 percent YoY. The pharma major’s EBITDA margin came in at of 22 percent
Pricing pressure in the US generic drug market is easing, Cipla’s managing director and global chief executive officer Umang Vohra told analysts during a conference call to discuss the pharma company’s first quarter earnings, which saw the American business reporting record revenue.
“A large number of US companies are either amalgamating, merging, or are going bankrupt,” Vohra said last week when asked by analysts the reasons behind the strong performance of the pharma company’s North American business.
“That is eliminating certain number of people in the system. It’s also having an impact on certain channels in the US, which only buy products which are made domestically. So we are seeing a rebalancing of the supply chain happening because of which our base families are actually growing.”
In the first quarter of FY24, North America contributed 29 percent to Cipla’s topline. The US business reported the highest ever revenue of $ 222 million in the quarter, up 43 percent from the year-ago period.
The company on July 26 reported a 45.1 percent year-on-year increase in consolidated net profit in the June quarter at Rs 995.7 crore. Revenue was up 17.7 percent year on year at Rs 6,328.9 crore
Vohra said The company was also seeing a resurgence in its share of products like lanreotide, which is used for treating patients with acromegaly and gastroenteropancreatic neuroendocrine tumours.
Operating margins
Cipla reported an Earnings Before Interest Taxes, Depreciation and Amortisation (EBITDA) margin of 22 percent for the June quarter. The company is confident that it can do 23 percent for the full year.
“We’ve had a good quarter, this quarter 1. So it gives us some confidence that we can take up that target of delivering 23 percent for the year. And you have to bear in mind that, seasonality of each quarter as well. So that also plays a role,” Vohra told analysts.
India business strategy
In the generic drugs segment, the company’s strategy was to be strong in the distribution side of the Tier 2 to 6 markets, which are seeing a large amount of volume growth.
“We have a good portfolio family. So this market continues to expand,” Vohra said.
In the prescription drugs segment, Vohra said Cipla’s branded drugs were doing “really well” and they were increasing market share.
“Our respiratory therapy we are growing share. Cardiac, diabetes we used to be nowhere. We’re now number 8. We’re still growing strong, addition of portfolio through Galvus,” Vohra said.
In the cardiac segment, the company was focusing on heart failure and structural heart diseases. In urology, the company had fixed execution issues and was bouncing back, the CEO said. “So almost all therapies are firing on all cylinders,” Vohra said.
Sales rep additions
The company said it would have added close to 400-500 sales representatives by the end of the second quarter.
“We will be at 500 net additions by Quarter 2 and then we would stop because our programme started sometime in Quarter 4 of the previous year. So we have already added some reps in that time, then we’ve added 250 in this quarter, and then we’ll add perhaps another 150 to 200 in the next quarter,” Vohra said.
At 11.51 am, the stock was trading at Rs 1,181.50, up 0.55 percent from the previous close.
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