US sales lift Lupin's net in Q3

Net sales rose 21% to Rs 2,983 cr from Rs 2,466 cr in the year-ago period

Mumbai-based drug maker Lupin’s net profit grew 42 per cent to Rs 476 crore in the third quarter ended December from Rs 335 crore in the year-ago period on the back of strong formulation sales in the US, the world’s largest pharmaceutical market. Net sales rose 21 per cent to Rs 2,983 crore from Rs 2,466 crore in the year-ago period.

On Monday, Lupin’s shares closed at Rs 921.9, up 4.5 per cent on the BSE exchange.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) grew 28 per cent year-on-year to Rs 806 crore. The Ebitda margin increased to 27 per cent from 26 per cent in the year-ago quarter; it would be higher if a forex loss of Rs 55 crore is left out. Spending on research and development, up nine per cent year-on-year, is expected to remain high, given the company is looking at acquisitions.

US formulation sales increased 31 per cent to Rs 1,356 crore against Rs 1,039 crore in the year-ago period. Sales in that country contributed 45 per cent of the overall sales. Brands business was 11 per cent of the total sales in that country, while the generics business contributed 89 per cent. Lupin has launched 5 generics products in the US during the quarter and now has 62 products in the world's largest market.

The US brand business has suffered because its brand Antara started facing generic competition. Though Lupin has been able to manage its market share by launching authorised generics, however the brand sales have declined.

Its brand as Suprax also saw soft sales at $24 million. Management attributes the same to seasonal factors and says that there is sequential improvement is sales (28% growth in suspension and 26% in tablets). The Suprax drops that were added to the portfolio in Q4'FY13 have not been pushed aggressively till now and Vinita Gupta, CEO, Lupin, adds that moving forward the emphasis will come on the drops too.

Locoid (steroidal cream) and Alinia (anti-diarrhea) saw a good response during the quarter post the launch. Vinita Gupta added that Alinia will gain traction as summer season sets in. Besides, the company has three products in the pipeline (two in respiratory and one in dermatology) which could get launched by 2016-17. Management aspires to increase share of branded business to 15%-20% of the overall US sales.

On Monday, shares of Lupin closed at Rs 921.9, up by 4.5 % on BSE.

Nilesh Gupta, Managing Director, Lupin Limited, said, “We have had a robust quarter with record profits, driven in particular by strong business growth in the US. Other markets like India are getting back on track also. In addition, our consistent focus on ramping up operational efficiencies has led to higher margins and better profitability."

The Indian formulations business contributed 22 % of the Company’s overall revenues for the quarter. The India formulation business grew by 14 %, recording revenues of Rs 650 crore, as compared to Rs 570 crore.

Lupin’s Japan sales was at Rs 372 crore during the quarter. Japan now contributes 13% to Lupin’s consolidated revenues. The Japanese growth of just two % in rupee terms was however better than revenue decline of 12 % and 6 % recorded by the company during the first two quarters of FY2014. In Yen terms though, the sales were up 10 % year-on-year in the Japan business.

Though the company's Japanese subsidiary Kyowa is doing better, it faces challenges with its other subsidiary I'rom in the back of lower contract manufacturing orders.

Company's API business contribution has grown to 11 % and it marked a growth of 26 % year-on-year.