Cipla, one of India’s leading pharmaceutical companies, reported a third-quarter profit that exceeded expectations, driven by robust domestic demand. The company’s consolidated net profit surged nearly 49% to 15.71 billion rupees ($181.6 million) for the October-December quarter, surpassing analysts’ predictions of 12.12 billion rupees, according to data from LSEG. Revenue from its primary market in India rose by 10% to 31.46 billion rupees, bolstered by increased demand for medications addressing respiratory and urology-related conditions. This growth compensated for a 1% decline in sales in North America, Cipla’s second-largest market, contributing to an overall revenue increase of 7.1% to 70.73 billion rupees, exceeding market forecasts of 69.51 billion rupees.
Typically, U.S. sales are driven by the tumor drug Lanreotide, which is Cipla’s second-largest revenue source. However, the company had previously indicated that certain supply chain challenges related to this drug would persist until the fourth quarter. Global CEO Umang Vohra noted in a post-earnings call that the U.S. market remained flat due to these supply issues, but demand would have been stronger without them.
Recent concerns regarding a U.S. pause on foreign aid, including for an anti-HIV program (PEPFAR), have negatively impacted Indian pharmaceutical stocks. Nevertheless, Vohra reassured that Cipla, which has 25 AIDS drugs approved under PEPFAR, is unlikely to experience significant repercussions, stating, “PEPFAR is not a big component of our business. There’s not much margin in PEPFAR products sold by Cipla.”
Following the earnings announcement, Cipla’s stock rose by 3%, recovering from a 1% decline on Monday due to the U.S. funding pause. However, the pharmaceutical index has seen a 5% drop since the announcement. The U.S. funding halt adds to the challenges faced by Indian generic drug manufacturers, who are already grappling with slowing sales in the U.S. market amid price reductions, intense competition, and delays in new drug application approvals.
