Lupin net profit drops 51.3% on sliding US biz and forex loss

Lupin on Tuesday posted 51 .3 percent decline in net profit to Rs 221.7 crore in the third quarter ended December, much below analyst expectations due to slide in US generics business and forex losses.

Lupin posted Rs 455 crore net profit in the same period of previous year. The company's revenues dropped 11.3 percent on year-on-year (YoY) basis Rs 3975.7 crore in the third quarter.

The foreign exchange loss stood at Rs. 82.1 crore and the company also took a one-time charge of 36 crore related to changes in tax rate in US from 35 percent to 21 percent.

Lupin has brought down the R&D expenses by 17 percent to Rs 476 crore on YoY basis.

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The company's EBITDA margin stood at 18.4 percent in the December quarter, below company’s projected target of 21 percent in FY18.

The results didn’t meet analyst estimates. A CNBC-TV18 poll estimated net profit at Rs 426.6 crore and revenues at Rs.3935.4 crore.

“The quarterly performance was muted on the back of business mix as well as forex losses,” said Nilesh Gupta, Managing Director, Lupin.

“We continue to grow strong in all our markets while the US business is now starting to stabilise at the current level,” Gupta added.

Gupta said the near-term priorities for Lupin is to successfully commercialize Solosec – used in treatment of bacterial vaginosis, resolving the warning letter on Goa and Indore Unit 2 and continue to evolve complex generic pipeline.

Lupin paid USD 150 million for Solosec which has received US FDA approval. The drug is expected to be launched in mid-2018 is expected to have peak sales of US 100 million in three years or so.

Lupin’s North America business that contributes 37 percent of the global sales decreased by 34.2 percent to Rs 1432.1 crore on YoY basis, while on sequential basis the company was able to grow 5.2 percent.

Lupin has reaped windfall in US market during December quarter last year on account of limited competition for its generic version of diabetes drugs Glumetza and Fortamet.

The company now faces intense competition for these two drugs from other generic players, leading to steep erosion of prices.

The company launched three products in the US market during the quarter. It now has 149 products in the US generics market.

Lupin filed 5 abbreviated new drug applications (ANDAs) and received 6 approvals from the US FDA during the quarter. Cumulative ANDA filings with the US FDA stood at 382 as of December 31 with the company having received 231 approvals to date. Lupin now has 33 First-to-Files (FTF), including 16 exclusive FTF opportunities. Cumulative drug master file (DMF) filings stand at 190 as of December 31.

Lupin’s India formulation sales increased 7.8 percent to Rs 1068.8 crore on YoY basis, however the sales saw decline of 7.8 on sequential basis indicating that company’s post GST sales recovery may take longer time.

Lupin’s Asia Pacific (APAC) sales largely led by Japan grew 20.4 during Q3 on YoY basis. APAC accounts 17 of Lupin’s global sales, Europe, Middle East and Africa (EMEA) rose 6.5 percent to Rs 272.1 crore.

Shares of Lupin dropped 5.90 percent to close at Rs 801.65.

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