Lupin’s Q2 profit soars 58% driven by strong sales in US
Mumbai: Lupin Ltd’s fiscal second-quarter profit surged 58% from a year ago on strong sales growth in the US, the drugmaker’s biggest market.
Net profit at India’s third largest drugmaker rose to Rs662.19 crore for the quarter to September. Net sales rose 32% to Rs4,211.18 crore. US formulation sales increased 70% to $292 million, while sales in India, Lupin’s second largest market, were up 12.1% at Rs995.8 crore.
However, Lupin’s September-quarter earnings cannot be directly compared with the year-ago quarter because of the acquisition of US-based Gavis Pharmaceuticals, which the firm completed in March 2016.
Sequentially, net profit and net sales fell 24.9% and 3%, respectively, because of a drop in US sales and a rise in spending on research and development (R&D), Lupin said in a note on Wednesday. “The company continues to invest ahead of the curve, be it research or manufacturing. This quarter’s profits were impacted on account of higher research spend and forex,” managing director Nilesh Gupta said in the statement.
Expenditure on R&D stood at Rs571.6 crore, which was 13.6% of net sales. In the June quarter, it spent Rs499.4 crore or 11.6% of net sales on R&D.
R&D spending in the year to March is likely to be 14-15% of sales, Gupta said in an interview.
Research expenses have increased as the firm is working to expand its product pipeline, especially in the complex generics and specialty drugs’ space, said an analyst who did not want to be named.
“Lupin has delivered a mixed set of numbers. They are slightly below our estimates but the positive is that it has held gross margins sequentially. The operating margin has reduced because last quarter it had the benefit of exclusivity for Glumetza generic,” the analyst said.
The company had a marketing exclusivity of six months starting 1 February in the US for its generic version of diabetes drug Glumetza.
Gross margin in the September quarter was 70.5%, as against 70.7% in the preceding June quarter and 64.8% in the year earlier period. Operating margin was 24.4% against 20.8% last year and 30.1% in the June quarter.
During the quarter, the company received approval for nine products from the US Food and Drug Administration. Lupin has filed abbreviated new drug applications (ANDA) for 338 products in the US and had received approval for 196 drugs as on 30 September.
“We expect to file about 40 ANDAs in the current fiscal, which will significantly boost our pipeline,” Gupta said.
Lupin’s sales in Japan, its third biggest market, rose 10.4% to 6.7 billion yen. Total sales in Latin America fell 8.9% on year to Rs98.6 crore, and combined sales in Europe, Middle-East and Africa rose 6.2% to Rs235.5 crore during the quarter.