Cadila Healthcare’s Q3 net profit plunges 35% on subdued sales
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Mumbai: Cadila Healthcare Ltd’s consolidated net profit declined 34.6% to Rs281.6 crore in the quarter ended December from Rs430.5 crore a year ago because of lower sales, particularly in the US market.
The Ahmedabad-based pharmaceutical company’s gross sales were Rs2,302.3 crore for the quarter—down 0.7% from Rs2,318.0 crore in the corresponding period a year ago. US sales fell 17.2% year-on-year to Rs886.9 crore because of pricing pressure and regulatory issues at its Moraiya plant in Gujarat.
The company’s Moraiya plant had received a warning letter from the US Food and Drug Administration (US FDA) in December 2015 for violations of good manufacturing practices, which disrupted supplies from the facility to the US market.
A Bloomberg survey of 20 brokerages had estimated Cadila Healthcare’s net profit at Rs352.8 crore and sales at Rs2,432.9 crore for the December quarter.
Sales in domestic market were up 10.7% at Rs796.8 crore, while emerging markets business grew 20.6% to Rs113.9 crore.
The company’s active pharmaceutical ingredients (API) and animal healthcare businesses also performed well during the quarter.
“The results were disappointing on all fronts. US sales were much below Street expectations and margin has also come down because of the business mix. Until the Moraiya plant’s supply bottleneck is cleared, we may not see traction in US sales,” a Mumbai-based research analyst, said.
Total expenditure of the company rose 8.3% on year to Rs2,049.3 crore. Operating margin shrunk to 17.1% from 24.6% a year ago.
Shares of Cadila Healthcare closed down 7.02% to Rs349.25 on the BSE, while the benchmark index Sensex was down 0.70% at 27,655.96 points.