Cipla expects India growth to normalise at 10-12% in next 2-3 quarters

Drug major Cipla, on Tuesday, posted a 7.6 percent increase in its consolidated net profit to Rs 712 crore for the second quarter ended September 30, 2021. In the corresponding quarter last year, the company posted a net profit of Rs 661.8 crore. Consolidated revenue from operations increased by 9.6 percent to Rs 5,519.8 crore from Rs 5,038.3 crore in the corresponding quarter of 2020-21. Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA) grew by 4.2 percent to Rs 1,226.2 crore as against Rs 1,176.7 crore in the corresponding period last year. In an interview with CNBC-TV18, Umang Vohra, MD & Global CEO, Cipla, discussed the company’s outlook.

On India business growth, he said, “India growth over the next two to three quarters should come back to normal 10 to 12 percent range. I think supply will hope to do better than the market. Market probably is moving towards the 10 to 12 percent. We have had bump ups on account of COVID, non-COVID across the last year, and therefore the base effect will begin to make a difference. But I am quite confident that we should be able to beat market growth as market begins to stabilize back to normal levels in the next one to two quarters.”

On tie-up with Moderna, Vohra said there has not been much progress on that, and they are still open for collaboration.

“There are various issues with regard to the import of the vaccine, some around indemnity, some around the fact that the opportunity now in India may have reduced considering the fact that we have got a significant number of people vaccinated,” he mentioned.

On price pressure, he said, “The price pressures will be somewhere around 5 to 8 percent on the base portfolio on an annual basis. We are currently looking at this launch calendar shaping up after about two to three quarters, more like in the second half of the next year as some of our big launches are lined up and that is when we materially see the US ramp-up.”

With regard to launch of new drugs - Abraxane, Revlimid, Advair Generic Vohra said these are to be next year’s second half launches.

On margins, Vohra said, “We have levers and we are trying to control the margin trajectory as much as we can. In the last quarter, practically COVID from an India perspective is almost down to a level which I would think is close to base. The input costs are something that we have to worry about. A large portion to some extent were in Q2, but I do expect it to be slightly higher in Q3 and the other variable for us will be our R&D costs. So we might see a percent or a percent-and-a-half kind of pressure on the EBITDA margin, but I think we have operating leverage and synergies to be able to drive momentum out of those.”