India's Gland Pharma misses Q2 profit view on higher expenses

Gland Pharma

06/11/2023 11:38

BENGALURU, Nov 6 (Reuters) - Indian generic injectables
maker Gland Pharma  GLAD.NS  posted a weaker-than-expected
second-quarter profit on Monday, as higher employee expenses
eclipsed strong sales in key markets. 
    The company, majority owned by China's Shanghai Fosun
Pharmaceutical Group Co  600196.SS , said its consolidated net
profit fell nearly 20% to 1.94 billion rupees ($23.3 million),
falling short of analysts' average expectation of 2.13 billion
rupees per LSEG data. 
    Analysts were expecting generic drugmakers to benefit from
new product launches and easing price competition in the United
States, which accounts for bulk of the revenue for Indian
pharmaceutical companies. 
    Moreover, the waning impact of high-cost inventories also
helped these companies, they said. 
    Gland Pharma reported a nearly 32% jump in revenue from
operations to 13.73 billion rupees, driven by higher sales from
the acquisition of the French pharmaceutical group Cenexi in
January. 
    Sales in Europe rose a whopping 379% to 24.88 billion rupees
after Cenexi acquisition. 
    Sales rose 9% in the U.S. and 21% in India. 
    U.S. and India contributed 54% and 6%, respectively, to the
company's total revenue. 
    The Hyderabad-based company, which primarily sells to other
businesses, earns 70% of the revenue from core markets such as
the U.S., Europe, Canada, Australia and New Zealand.
    Revenue from core markets, excluding the U.S., increased 64%
to 3.56 billion rupees.
    However, a nearly 45% jump in total expenses ate into the
profit growth after employee benefit costs tripled.
    Excluding the gains from Cenexi acquisition, the company's
total revenue fell 3% to 10.15 billion rupees.    
    Last month, larger generic drug makers including Cipla
 CIPL.NS  and Dr Reddy's Laboratories  REDY.NS  beat
second-quarter profits estimates, helped by higher sales in the
U.S. 
    Shares of the company closed 4.3% higher, ahead of the
results. The stock climbed nearly 58% in the September quarter,
compared with an about 12% rise in the pharma index  .NIPHARM .

($1 = 83.1945 Indian rupees)

 (Reporting by Kashish Tandon in Bengaluru; Editing by Dhanya
Ann Thoppil)
 ((Kashish.Tandon@thomsonreuters.com;))