NEW DELHI : Lupin Ltd has made its second impairment provision for its subsidiary Gavis Pharmaceuticals in the October-December quarter. The impairment of Rs1,580 crore was one of the major reasons for the Indian pharmaceutical major reporting a consolidated net loss of Rs835 crore in the quarter.
“I would say that it (the writeoffs) is done, and what we have left on the books in terms of intangible assets is $100 million, which is also supported by the business we have in place," chief executive officer Vinita Gupta said in a conference call with journalists.
The company had to incur its first impairment on assets of Gavis Pharma in January-March 2018. Lupin had acquired US-based Gavis in 2016.
Lupin’s sales for the quarter declined 2.8% on year to Rs3,716 crore, primarily on account of a fall in sales in North America and of active pharmaceutical ingredients.
Another factor leading to the company’s consolidated net loss in October-December was the sharp rise in tax outgo to Rs767 crore from Rs245 crore, primarily on account of the impairment and its divestment of Japan-based subsisidary Kyowa Pharmaceutical Industry Co Ltd. The divestment led to a net pre-tax gain of Rs1,291 crore.
Lupin also had to incur large spends on remediation, research and development, and marketing impacted the company’s profitability for the October-December quarter, with its operating margin contracting to 14.1% from 18.9% in the corresponding period last year.
The company plans to invite the US Food and Drug Administration (FDA) to re-inspect its manufacturing plant at Goa and that of its subsidiary Gavis Pharmaceuticals at Somerset in the US within three months, beginning its journey of revamping of its quality control systems, the company’s management said.
“As far as Goa and Somerset are concerned, we believe that we are close to the finish line. In the next three months, we believe we will be ready to offer both these sites for reinspection," Lupin managing director Nilesh Gupta said.
“As far as the other sites are concerned--obviously we are not happy with the fact that five sites have an OAI (official action indicated) status right now--we have a much deeper programme ongoing called ‘Quality First’...," Gupta said.
Gupta said that the company’s remediation costs over the coming quarters will continue to be ‘significant’ as it undertakes remediation measures at its plants.
The Indian pharmaceutical major currently has three plants—at Goa, and Pithampur and Mandideep in Madhya Pradesh—under the regulator’s warning letter, with a few more plants, including the Somerset unit, being in serious violation of the US FDA’s current good manufacturing practices.
