By Rishika Sadam and Kashish Tandon
HYDERABAD/BENGALURU (Reuters) -Cipla, one of India’s largest drugmakers by sales, reported a bigger-than-expected third-quarter profit on Tuesday helped by strong domestic demand, and said the U.S. freezing aid for some drug programs would not hurt its results.
The company’s consolidated net profit increased nearly 49% to 15.71 billion rupees ($181.6 million) in the October-December quarter, beating analysts’ estimate of 12.12 billion rupees, as per data compiled by LSEG.
Revenue from its key India market jumped 10% to 31.46 billion rupees, aided by demand for drugs used to treat respiratory and urology-related conditions.
That more than made up for a 1% drop in sales in North America, Cipla’s second-biggest market, and helped the company’s total revenue climb 7.1% to 70.73 billion rupees, surpassing market estimates of 69.51 billion rupees.
These U.S. sales are usually driven by tumour drug Lanreotide, Cipla’s second-biggest revenue generator. However, the company had warned in October that certain supply chain issues related to the drug would last until the fourth quarter.
“U.S. is flattish due to supply issues in Lanreotide. If we adjust for those supply issues, then the U.S. would have had demand as well,” Global CEO Umang Vohra said in a post-earnings call.
Over the past two days, India pharma stocks have been hit by fears of losing revenue as the U.S. paused foreign aid, including for an anti-HIV program (PEPFAR).
However, Vohra said Cipla, which has 25 AIDS drugs approved under PEPFAR, should not see a big impact.
“PEPFAR is not a big component of our business. There’s not much margin in PEPFAR products sold by Cipla.”
The company’s stock rose 3% after the results, offseting the 1% decline on Monday after the U.S. funding pause. The pharma index, however, is down 5% since the move.
The U.S. funding pause is an added headache for Indian generic drugmakers already struggling with slowing U.S. sales amid lower pricing, stiff competition and delayed approvals for new drug applications. ($1 = 86.5325 Indian rupees)
(Reporting by Rishika Sadam in Hyderabad and Kashish Tandon in Bengaluru; Editing by Eileen Soreng, Mrigank Dhaniwala and Savio D’Souza)
