Cipla Surpasses Q3 Profit Expectations with Robust Domestic Demand Overcoming Weak US Sales

By Rishika Sadam and Kashish Tandon

Cipla, one of India’s top pharmaceutical companies, announced impressive third-quarter profits. The company, which is known for its wide range of medications, benefited from strong sales in its home market. Cipla’s CEO, Umang Vohra, reassured investors that recent U.S. funding pauses for some drug programs would not have a significant negative impact on their performance.

In the October to December quarter, Cipla’s net profit soared nearly 49%, reaching 15.71 billion rupees (around $181.6 million). This figure was much higher than analysts had predicted, who expected about 12.12 billion rupees. The company’s revenue from India increased 10%, totaling 31.46 billion rupees, thanks to rising demand for medications related to respiratory and urology issues.

Despite facing a slight 1% decline in North American sales, Cipla’s overall revenue grew by 7.1%, hitting 70.73 billion rupees and exceeding market predictions. The dip in U.S. sales was largely due to supply chain issues affecting their tumor drug, Lanreotide. In a recent earnings call, Vohra mentioned that if not for these challenges, the demand in the U.S. would have been much better.

Concerns have surfaced in the Indian pharmaceutical sector due to the U.S. halting foreign aid programs, including significant funding for anti-HIV efforts. However, Vohra stated that Cipla’s business would not feel considerable effects, as the PEPFAR program is a minor part of their overall operations, with low profit margins on those specific products.

Following the good news, Cipla’s stock climbed by 3% after the profit report, bouncing back from a 1% drop earlier in the week due to the funding issues. Despite this minor recovery, the larger pharmaceutical index has seen a 5% decline in response to the U.S. funding pause.

This funding halt comes at a tough time for many Indian generic drugmakers, who are already facing pressures from lower U.S. sales. Challenges include fierce competition, price reductions, and delays in drug approvals. As Cipla navigates these waters, its strong domestic performance offers a silver lining in a complicated market environment.

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Cipla, India's largest drugmakers, third-quarter profit, U.S. funding pause, domestic demand