Cipla's net profit muted at Rs 447.2 crore in Q1FY20

India's fourth largest drug maker Cipla's net profit growth remained muted at Rs 447.2 crore in the first quarter ended June 30 due to the decline in sales from India and South Africa that constitutes nearly half of the company's sales.

The net profit grew 0.4 percent year-on-year (YoY) in Q1FY20. The drug-maker posted a net profit of Rs 445.6 crore in the year ago period.

Revenues declined 1 percent to Rs 4,067.39 crore in Q1FY20, compared to Rs 4,109.10 in the year ago period.

The results did not meet analyst estimates. An analysts’ poll of Reuters estimated the net profit at Rs 492.9 crore and revenues at Rs.4461.6 crore.

Cipla's India business declined 12.2 percent YoY to Rs 1,355 crore due to the realignment of distributors in the trade generics. Around one-third of Cipla's sales comes from the domestic formulation market.

North America that is predominantly US sales grew 67 percent YoY to Rs 1,119 crore, led by new approvals and base business growth.

Revenues from South Africa, Sub-Saharan Africa and Global Access (SAGA) declined 17 percent YoY to Rs 691 crore on softness of tender business, despite the sales from the private market in South Africa continued to grow.

The emerging market sales too dropped by steep 41 percent YoY to Rs 279 crores in Q1FY20.

Europe business saw a YoY jump of 50 percent to Rs 201 crore in Q1FY20 while the active pharmaceutical ingredient (API) business dropped 9 percent to Rs 182 crore.

“We witnessed a muted first quarter in FY’20 owing to a combination of external volatility and some conscious business decisions taken with the long-term sustainability in mind," said Umang Vohra MD and Global CEO, Cipla.

"Our secondary growth in our flagship therapies in India and in the South Africa private market remained impressive, and our base business in the US saw y-o-y growth with increased revenue from recent high-value launches," Vohra said.

Vohra said that the business fundamentals of the company remained strong and the overall base business profitability was maintained at healthy levels despite the volatility.

"Our growth drivers remain on track with sustained expansion of our basket of biosimilars in emerging markets, entry into new markets such as China to set up our respiratory franchise, and further depth in our U.S. specialty pipeline with ZEMDRI,” he added.

Acquires Eight Roads stake in CHL

Cipla said it had acquired the minority stake held by private equity investor, Eight Roads Ventures – formerly called as Fidelity Growth Partners – in CHL for Rs 350 crore. CHL houses the consumer health business of Cipla.

"The development comes in view of Cipla's growing focus on consumer-facing products, and the high potential for synergy between the CHL and Cipla in-house portfolios," Cipla said in a statement.

CHL has a turnover of Rs 148 crore for the financial year ended March 31.

CHL markets smoking cessation brand Nicotex, along with Cofsils, ActivKids lmmunoBoosters and probiotic UnoBiotics.