Cipla's Q4 loss narrows to Rs 62 crore, scales down biotech business

Result was way below street estimates, which was anticipating Rs 200-300 crore quarterly profit

Cipla is scaling down its biotech business after a weak fourth quarter which saw Rs 61.8-crore loss. The company had posted Rs 93-crore loss in the year-ago period.

While the loss declined on a year-on-year basis, the result was way below Street estimates which were anticipating Rs 200-300-crore quarterly profit. Income from operations rose eight per cent to Rs 3,582 crore, largely led by growth in the US market but sales slowed down in India and other emerging markets.
 

The impairment charge of Rs 260 crore in relation to its biotech business and litigation for certain products in the US contributed to the loss.
 

“Operationally the quarter was in line with our guidance,” Cipla's chief executive officer Umang Vohra said. He added the reported 14 per cent earnings before interest, taxes, depreciation and amortisation (Ebitda) margin included the one-off impact of impairment and forex loss. 

Vohra said the company would not manufacture biosimilars and will outsource production of or look for in-licensing opportunities.

The company has also put on hold its plans to set up a biotech plant in South Africa but is not exiting the segment.

Vohra said the company would continue to grow in its core markets, India, US and South Africa, and focus on select therapies such as respiratory and oncology. 

Cipla's US business has a low base (only 18 per cent of revenue comes from the market) and is targeting a “disproportionate” growth from the US in FY18 with product launches and 20 new product filings. Vohra, however, declined to give a guidance for FY18 sales and profit citing volatility across markets.

Last year, Cipla switched from direct to market to business-to-business (B2B) in Europe resulting in profitability from operations and also sold its animal health business in South Africa as it increases focus on key growth areas.