Lupin reports 25% fall in pre-tax profit at Rs 412 cr in Q4 on low sales

Mumbai-based drug major Lupin on Friday reported a 25 per cent dip in profit before tax (before exceptional items) in the fourth quarter of 2019-20 financial year at Rs 412 crore, as its sales declined marginally year on year (YoY) to Rs 3,791 crore.
 
On a sequential basis, however, the company fared better, both in terms of sales and profits.  The stock ended day’s trade at Rs 869.8, down 1.3 per cent.
 
Analysts said this was an operationally weak quarter led by other income and exceptional gains from the sale of the Kyowa business in Japan. Lupin had divested its Japanese injectables business to Neo ALA Co for Rs 3,702 crore. The deal announced last year was to strengthen the company's balance sheet reduce its net debt to Rs 1,129 crore from Rs 4,361 crore.
 
The exceptional items during the quarter included profit on divestment of Kyowa Pharmaceuticals of Rs 121 crore, loss on divestment of Kyowa Criticare (Rs 28.4 crore) and impairment of intangible assets (Rs 9.6 crore), the company noted.

 
Lupin’s India business did well, posting 13.3 per cent growth, during the fourth quarter, while it declined compared to the third quarter by 8.1 per cent. The US business, on the other hand, fell on a YoY basis to Rs 1,579 crore but registered growth on a sequential basis (14.7 per cent). The US accounts for 38 per cent of Lupin's global sales and it stood at Rs 5,821 crore for the full year 2019-20. Lupin launched six products in the US during the quarter.

India business roughly accounts for 34 per cent of Lupin's global sales.
 
The company's Europe, Middle East and Africa (EMEA) region, too, posted YoY growth in sales during the quarter (7.4 per cent), but the Latin America, Asia Pacific, and rest of the world markets saw a decline in sales 2.3 per cent, 15.5 per cent and 36.8 per cent, respectively. The active pharmaceutical ingredients (API) business, however, clocked almost 13 per cent growth in sales YoY.
 
Ankit Hatalkar, analyst with Edelweiss, felt the US sales of $212 million came in ahead of their estimate of $190 million for the quarter and the company rebounded to its $200 million run-rate after two subdued quarters. He said Lupin now had 43 first-to-file (FTF) opportunities in the US, including 14 exclusive FTF opportunities. The Asia Pacific business accounts for less than 5 per cent of sales after the sale of the Kyowa business, Hatalkar said.

 
Lupin Managing Director Nilesh Gupta said, “We closed the year with strong growth across all our key markets, and significant strengthening of our profitability and balance sheet. We have had strong momentum in our two major markets, the US and India, and on compliance across our facilities. Importantly, in the current times, we have been able to ensure business continuity while safeguarding the health and safety of our employees.”
 
During the quarter, many of Lupin's manufacturing sites received establishment inspection reports (EIRs) from the US drug regulator, including the Coral Springs, Florida unit, Aurangabad unit here apart from Nagpur, Pithampur unit 1, Vizag plant etc.
 
On a quarter-on-quarter basis, the company posted a 2 per cent rise in sales and 128 per cent growth in PBT.
 
For the full financial year, the sales were up 5.8 per cent YoY to Rs 15,142 crore, while the profit before tax came in at Rs 1,505 crore, down 14 per cent.