Pharma giant Lupin has come out with its Q1 performance yesterday and has investors panicked in no time. One of the largest generic pharmaceutical companies by revenue globally, Jhunjhunwala’s Stock Lupin has been facing pressure in the form of unresolved USFDA matters and the effects have spilled over to the Indian markets as well.
The company’s consolidated net profit in Q1FY22 shot up to Rs 542.46 crore from Rs 106.9 crore, while revenue increased 21% to Rs 4,270.19 crore from Rs 3,527.6 crore, YoY. Revenue from operations rose to Rs 4,237.39 crore in Q1 against Rs 3,468.63 crore for the same period a year ago.
But the crux of the matter here is the company’s performance in North America and especially the US. North America sales for Q1FY22 were $172 million, down 10.8 percent compared to $195 million, QoQ, and $157 million, YoY. The US sales account for 35% of Lupin’s global sales.
The US business on the other hand is witnessing price erosion, which is expected to lead to a not so bright Q2. With the current price slashes in the US, the company has lowered its EBITDA projection for the remainder of FY22 to around 17 percent from 19-20 percent levels earlier.
Lupin’s Q1FY22 performance was below expectations due to a dip in US sales and a lower gross margin. It believes US sales would remain under pressure and multiple ongoing USFDA issues would weigh on new approvals.
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Also, another matter to be considered here for the underperformance is the increased competition in g-Famotidine and pricing pressure in the base business, the failure to supply products due to supply disruption on account of COVID. However, the company has consolidated its market share in the region marginally.
The profits reported in the quarter were mainly because of the one-off Boehringer Ingelheim MEK program, despite a tough operating environment, they see substantial room for growth.
Jhunjhunwala’s Stock Lupin anticipates significant improvement from Q3 onwards and remains focused on bettering the margins through driving strong double-digit revenue growth and optimizing costs.
