Q3 Results: Cipla's Net Profit Rises By10%, Consolidated Revenue At 5,810 Cr

Cipla Limited, the Indian pharmaceutical major headquartered in Mumbai has reported its earnings for the quarter that ended on 31st December 2022, the Indian pharma giant has registered a rise of 6 per cent in its consolidated revenue to be recorded at Rs 5,810 crores in the Quarter Three of Financial Year 2022(Q3FY22) up from Rs 5,479 crores in the corresponding quarter last year. 

Whereas the pharma company recorded a 0.3 per cent dip in its revenues compared with the previous quarter (Q2FY22) where the company posted revenue of 5,829 crores. 

The pharmaceutical company’s net profit also jumped by 10 per cent year on year (YoY) in Q3FY22, the company recorded a net profit of Rs 801 crores in the December quarter. The company saw an increase of Rs 73 crores from the earnings of the same quarter last year which stood at Rs 728 crores.

The pharma major's EBITDA saw a 13.2 per cent rise in year-on-year (YoY) growth to be recorded at Rs 1,408 crore against Rs 1,243 crore reported in the corresponding quarter last year.

The company's US business reported the highest-ever quarterly revenue of USD 195 million, up by 30 per cent YoY growth led by strong traction in the differentiated portfolio including market share expansion in key respiratory and peptide injectable products. 

The company's sales in the South African region did below expectations owing to changes in demand patterns, Vohra said the company might have fallen short on overall revenues but the profits are on course from the region. The Cipla MD said the company is also looking to close a few more deals in the biological science space after having recently invested in the Germany-based company Ethris.

"Our Q3FY23 performance reflects sustained momentum in core One-India and US businesses driving our overall revenue growth of 6 per cent reported and 11 per cent on an ex-Covid basis. Our One India franchise delivered strong performance across therapies and segments with double-digit market-beating growth in prescription on a Covid adjusted base. We achieved the highest-ever quarterly revenue for the North American region of USD 195 million driven by the contribution of differentiated products and market share expansion in flagship respiratory and peptide franchises.

Vohra further said that the company's reported operating profitability of 24.2 per cent reflects focused efforts on navigating external headwinds and continued higher R&D spending stemming from ongoing respiratory trials and initiation of biosimilar programs.

Quality Controls

The Indian pharmaceutical industry is faced with a new challenge of putting in place effective quality measures to retain its position as the pharmacy of the world. The recent lapses at several drug manufacturing facilities such as Marion Biotech and Maiden Pharma have brought a bad name for the country globally. 

Highlighting effective quality measures, Vohra stated that similar quality measures should be enforced by all companies as well as should be enforced on all companies, and a full scan of the excipients and chemicals that are used in most products should be the course going forward.

Speaking on the regulatory action Vohra further said I do not know whether the regulatory action needs to step but I do think that the regulations need to be enforced by all companies and on all companies. Cipla can do that on its own but there are many companies which can benefit from a little handholding from big IPA companies like ours. And of course, if the government decides that they would also like to enforce regulations on companies then obviously more surveillance and more regulations can be imposed.

Giving an update on Cipla's Goa facility which is under USFDA's scrutiny since September 2019, Vohra said the facility will be going through a reinspection soon by the USFDA soon for future product approval from the site which is presently restricted. The Goa facility received an OAI (Official Action Indicated) status from the USFDA in November last year.

R&D Investments 

Cipla's R&D investments for the December quarter stood at Rs 363 crores or 6.2 per cent of sales which is a 39 per cent increases year on year, the company said the research investments were driven by ongoing clinical trials on a respiratory asset and other developmental efforts continuing including biosimilars.

We are spending on clinical trials for new respiratory products that we are hoping to launch, we are spending on trials of peptide products, and hence our number of research projects is increasing depending on the requirements of each of our markets. And I believe we will always be a 5-7 per cent of sales research investment company as we cannot afford more than 7 per cent of sales.