Cipla expects to end FY25 exceeding margin guidance, beats Q3 earnings estimates | Company Business News

Pharma major Cipla Ltd on Tuesday posted its highest-ever quarterly revenue and Ebitda margin, as robust sales in India, Europe and emerging markets outweighed weakness in its US business.

Cipla expects to end the ongoing fiscal year exceeding its margin guidance, managing director and global CEO Umang Vohra said, as the Mumbai-based drugmaker beat estimates for revenue and profit for the third quarter ended December.

Ebitda stands for earnings before interest, taxes, depreciation, and amortization, and is a key measure of profitability.

The company reported an Ebitda margin of 28.1% in the quarter ended December, up from 26.3% a year ago, which Vohra said was on the back of a seasonally-strong quarter, with higher respiratory drug sales. 

“The margin improves every time we sell more respiratory products, which was the case in quarter three…this margin percentage is not a sustainable margin percentage for Cipla. Quarter four typically is always a weak margin percentage for us because there is reverse seasonality in India,” he said at a post-earnings media briefing.

The management had guided for a margin of 24.5% to 25.5% for the full fiscal year, and Vohra said the company would surpass it.

“It surprised on margins as the business mix was better, other operating income was higher and R&D spend was slightly lower during the quarter,” Amey Chalke, pharma research analyst, JM Financial Institutional Securities, told Mint. “However, we expect the management to provide more clarity on US launches in particular for next two years which could drive growth in the business,” he added.

Cipla, which has been facing delays in key drug launches in the US due to regulatory actions at its Goa facility, received a ‘Voluntary Action Initiated’ (VAI) status from the US Food and Drug Administration in the last quarter, and is beginning to secure approvals for some of its products filed from the facility. “We’ve also had two inspections since [the VAI status] and we’re awaiting their classifications based on the timelines that the agency sets for these,” Vohra said.

Cipla’s stock settled 2.2% higher at ₹1,427 on Tuesday on the National Stock Exchange.

The company expects to launch its breast cancer drug Abraxane, which was originally slated for a rollout in FY25, by the second half of next fiscal year, Vohra said. For its respiratory drug Advair, which is being filed from its US plant, the launch timeline depends on the regulator (USFDA). “We’re filing the data from our facility in the US…the facility will be inspected and it will be six to nine months from there,” he said.

The two drugs are expected to somewhat offset the loss of exclusivity for generic Revlimid by January 2026.

The company reported a 48% year-on-year (y-o-y) jump in its consolidated net profit to ₹1,571 crore in October-December, while its total revenue from operations rose 8% to ₹7,073 crore. The company’s Ebitda increased 16% y-o-y to ₹1,989 crore. Analysts polled by Bloomberg had estimated Cipla’s Q3 revenue at ₹6,967 crore and a net profit of ₹1,207 crore.

The company’s One India business grew at a healthy 10%, while the Emerging Markets and Europe businesses delivered a substantial revenue growth of 20% YoY. The company also recorded a growth of 21% in South Africa in local currency terms.

Its US revenue fell 2% y-o-y to $226 million due to supply issues in its tumour drug Lanreotide. However, the company expects supply challenges to ease by the first quarter of next fiscal year. “The good news is that we’ve started getting supply, but this is a pretty large supply chain [so] it takes a while from the time that the supply starts to the time we receive it,” Vohra said.