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Home / Markets / Stock Markets /  Sun, Cipla’s US show tops Dr Reddy’s, Lupin in Q1
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NEW DELHI : The June quarter results of the four large pharma companies recently have shown the impact of rising costs on profitability. Domestic growth also remained subdued on a large base of last year that had seen greater contribution of covid treatment drugs. The competitive intensity in the US market remains high as was evident from Dr Reddy’s Laboratories and Lupin’s North America sales, which fell 11% and 28.7% sequentially respectively, pulling down overall earnings growth. Sun Pharmaceutical and Cipla nevertheless managed to report growth as their product portfolio of niche products helped take care of competitive intensity in the US.

Pricing pressure continues to remain a key headwind to the US growth of pharma companies. Dr Reddy’s Laboratories, which earns a third of its overall sales from North America, saw sales from the region grow just 2% year-on-year (y-o-y). Lupin saw a deeper impact with North America sales falling 24.2% y-o-y. Analysts said Dr Reddy’s US business was impacted by competition in generic Vascepa and generic Copaxone used for treating dyslipidaemia and Multiple Sclerosis. For Lupin, the competitive intensity was more severe.

Sun Pharma, which also gets about 30% of revenues from the US, however, recorded 10.7% y-o-y growth in US formulation sales in Q1. The company’s unfolded speciality portfolio continues to do well. In fact, Sun’s global specialty business grew 29% y-o-y. For Cipla, US sales also grew 13% y-o-y helped by contribution from respiratory and peptide assets, despite the company also facing competition in the base business. However, for Cipla, the North American business contributes just 22% to overall revenues, while India contributes about 46%. Cipla’s domestic formulation sales declined by 9% y-o-y. This coupled with a 57% drop in the active ingredients business meant that overall revenues for Cipla ( 5,375 crore) declined. Higher costs meant Ebitda at 1,143 was also down 15% y-o-y. Net profits were down 4% y-o-y to 686 crore though ahead of Bloomberg consensus analysts’ estimate of 628 crore due to improved US growth.

For Dr Reddy’s the upshot for revenues was provided by Domestic formulation business growth of 26% y-o-y driven by the divestment of a few non-core brands, revenue contribution from the products acquired/in-licensed from Novartis and new launches. This not only helped the company tide over pressure in North American business but 1% y-o-y decline in the Emerging market business.

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