Cipla's net profit dips 44%, announces new CEO

Overall revenue falls 6%; international business drops 14%

Drugmaker Cipla’s net profit fell 44 per cent to Rs 365 crore in the quarter ended June against Rs 649 crore in the year-ago period. Cipla announced changes in its top management on Friday after the dissapointing numbers, even as it maintained its  margin guidance for the current financial year.

Chief Operating Officer Umang Vohra will take over as chief executive officer and managing director, as incumbent Subhanu Saxena is leaving the company for personal reasons. Samina Vaziralli, executive director and niece of Cipla chairperson Y K Hamied, has been named as the executive vice-chairperson. The changes will be effective September 1.

The firm’s revenue, too, was  lower on a year-on-year business on account of price caps in the domestic market and impact of currency fluctuations. Overall, revenue fell six per cent to Rs 3,594 crore while international business dropped 14 per cent to Rs 2,051 crore. Domestic market contributes around 40 per cent to Cipla's revenue and domestic business grew five per cent on a y-o-y basis.

Vohra, however, said growth in domestic business is expected to pick up in the second quarter. He announced 16-18 per cent Ebitda (earnings before interest, tax, depreciation and amortisation) margin forecast for the current financial year and said the company would maintain strong growth in key markets such as India and South Africa. The company will spend about seven per cent of revenue on research and development.

He added integration of InvaGen and Exelan with Cipla was on track and the company will launch eight-10 products in the US market this year. Last year, the company acquired the two companies in a $550 million deal to grow its presence in the US.

Vohra said the company had carried out remediation measures for its Indore plant, which had an adverse observation (form 483) from US Food and Drugs Administration and was expecting a positive response from the US drug regulator.