Mumbai: Indian drug makers that reported their December quarter financial results on Tuesday either met or beat analysts’ expectations as local sales rose and a weak rupee boosted export earnings.
Glenmark Pharmaceuticals Ltd reported an almost fivefold growth in net profit at Rs.231 crore for the quarter ended 31 December, beating analyst estimates. Revenue grew 34% to Rs.1,381 crore during the same period. Analysts had expected Glenmark’s profit at around Rs.170-180 crore and revenue at about Rs.1,250 crore.
Income from a research out-licensing deal and a general increase in profitability during the December quarter led to substantial growth in profit, said an analyst from a foreign brokerage on Tuesday, who did not want to be named.
The company’s speciality and generic business segmentsgrew more than 30% during the December quarter, the company said. The company’s sales from the Asian and African markets grew by about 67% while domestic business gained 30%.
Glenmark reported a one-time income of Rs.49 crore in the December quarter as it had signed a research molecule out-licensing deal with US-based Forest Laboratories Inc. The depreciation of the Indian currency against the dollar over the past one year helped the company, which gets a significant share of its revenue from the US market, to record a higher profit.
“Glenmark’s sales grew 34% year-on-year at Rs.1,381.3 crore which was above our expectation of Rs.1,296.6 crore, majorly due to better than expected performance in India and ROW (rest of the world) markets,” said Hitesh Mahida, an analyst at Fortune Equity Brokers (India) Ltd. Glenmark’s domestic business growth was the biggest surprise as it posted growth of 29.9% year-on-year against an industry growth of 9.1% during the quarter, he said.
According to Mahida, Glenmark continues to gain significant market share in all the therapeutic segments domestically, and ROW (Asia, Africa, Middle East and CIS) region growth was also exceptional at 66.7% year-on-year. “Overall, the results were above our expectations,” he said.
The rupee depreciation against the dollar has helped most drug makers that focus on foreign markets. The rupee fell 3.7% during the last 12 months since December 2011. Besides, an aggressive plan to enhance operational efficiency through a new product mix and cost savings has had a positive impact on the industry’s margins.
Ahmedabad-based Torrent Pharmaceuticals Ltd posted a 33% growth in profit at Rs.112 crore from a year earlier. Its revenue grew 15% to Rs.798 crore.
Jubilant Life Sciences Ltd posted a profit of Rs.27 crore during the December quarter from a year-earlier loss of Rs.78 crore. Revenue rose 19% to Rs.1,036 crore.
Mumbai-based Indoco Remedies Ltd’s December revenue increased to Rs.150 crore in the three months ended December from Rs.141 crore a year earlier. However, net profit fell to Rs.7.38 crore from Rs.8.3 crore a year ago.
Indoco’s domestic formulation business registered a growth of 11% as against the industry growth of 9.1% during the quarter, the company said in a statement. “Our domestic business has performed better than the industry,” said Suresh G. Kare, executive chairman, Indoco.
“All emerging markets such as other Asian markets, the African region, Russia and Latin America are growing in double digits,” said Ranjit Kapadia, senior vice-president (institutional research) at Centrum Broking Pvt. Ltd. “Though the domestic market was expected to slow down in anticipation of the pricing policy, the uncertainty in it has led to a temporary growth in stock purchase by the distributors. So the domestic market also contributed to the overall sales growth, although the anti-infective segment has seen a dip.”
On Tuesday, shares of Glenmark ended trading unchanged at Rs.504.05 on BSE, while the exchange’s benchmark Sensex fell 0.56%. Shares of Torrent Pharma fell 0.84% to Rs.728. Jubilant Life Sciences shed 1.72% to close at Rs.219.10 and Indoco declined 0.32% to Rs.61.70, while the BSE Healthcare index fell 0.33%.
All the earnings mentioned in this report, except Glenmark, were declared after market hours.