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.