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Cipla Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from Cipla Limited (CIPLA) Q2 FY24 Earnings Concall

  • Financial Performance
    • Highest ever quarterly revenue of INR6,678 crores, up 15% YoY.
    • EBITDA margin stood at record 26%.
    • Profit after tax was INR1,131 crores, about 17% of sales.
    • Cash balance stood at around INR6,811 crores post dividend payment.
    • Debt primarily comprises ZAR720 million in South Africa.
  • Growth Across Core Markets
    • Double-digit growth in India, North America and South Africa.
    • One India franchise grew 10% YoY despite weaker anti-infective sales.
    • North America delivered highest ever revenue of $229 million, up 28%.
    • South Africa grew 9% in local currency led by private market and OTC.
  • Focus on Chronic Therapies
    • Share of chronic therapies in India portfolio improved by 140 bps to 60%.
    • Growth in India driven by branded prescriptions focus on chronic therapies.
    • South Africa private market growth aided by focus on oncology, CNS and other chronic therapies.
  • New Product Launches
    • Multiple new product launches in India across branded prescription and OTC.
    • Good traction seen in new launches in South Africa private market.
    • Progress made on pipeline for North America with focus on complex generics.
    • Semaglutide oral and injectable launch planned for India market.
    • Generic Symbicort filing planned from multiple facilities.
  • India Business Growth
    • Expects 12% CAGR growth for India business over next few years.
    • Growth driven by strong performance in key therapies like pediatric, respiratory, urology, anti-infective, cardiac.
    • Branded prescription business grew around 12% YTD despite muted volume growth.
    • Cipla aims to increase Albuterol market share to 16-17% by building share for its specific variant.
  • US Business Outlook
    • Seeing volume and price improvement in select US products.
    • Shortage situation in US market preventing price erosion in some products.
    • Differentiated portfolio now comprises 70-75% of pipeline.
  • Margin Expansion and Impairments
    • Gross margin improvement driven by favorable product mix and pricing.
    • Chronic portfolio expansion improving margin profile in India.
    • INR43 crore impairment related to non-operational domestic facility.
    • Additional impairment due to intangibles write-down for acquired US product.
  • Cipla’s US Albuterol Market Share Trends
    • Cipla has seen slight increases in Albuterol share recently after previous declines.
    • Share gains are incremental over time rather than large deltas.
  • Lanreotide US Outlook
    • Cipla sees scope for incremental gains in Lanreotide like they’ve seen historically.
    • The gains don’t tend to be large deltas but rather creep up slowly over time.
  • India Margin Outlook
    • India margins last quarter were highest ever, largely due to favorable mix, not sustainable changes.
    • More anti-infectives in winter months will likely reduce margins from the highs.
    • Investment in complex products and new launches may impact mix and pressure margins.
    • Q4 typically has seasonally lower margins in India business.
  • South Africa Growth Strategy
    • Focus is on growing private market where they are currently #2 and targeting #1.
    • Growth calibrated for profitability, not just volume gains.
    • Shift from tender to private market and new OTC launches will drive profitable growth.
    • Synergies from acquired Actor Pharma portfolio also a source of growth.
  • US Revlimid Sales Trend
    • Revlimid sales have been broadly steady after initial launch period.
    • Expect similar levels through H2 with no major gains projected.
  • Strong Performance Of Subsidiary/Access Markets
    • Sales in subsidiary and access markets (South Africa, sub-Saharan Africa) doubled quarter-on-quarter.
    • This was driven by growth in QCIL in Uganda, as well as South Africa and other sub-Saharan markets.
    • However, the growth is not expected to be sustainable long-term as it is tender-driven and lumpy.
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