Drugmaker Cipla reported a net profit of Rs 566.04 crore for the quarter ended June, an increase of 26.58% on the back of robust sales.

In the same quarter a year ago, the company reported a net profit of Rs 447.15 crore, analysts expected the company to report a drop in profit to Rs 338 crore.

Revenue from operations grew by 9% to Rs 4346.2 up from Rs 3987.34, according to analysts company would report revenue from operations of Rs 4184 crore.

The company is closely monitoring the impact of the pandemic on all aspects of its business, including the impact of a pandemic on the customers, employees, vendors and business partners.

On the operating front, consolidated earnings before interest, tax, depreciation and amortization (EBITDA) increased 15.9 percent to Rs 1,048.8 crore and margin expanded 140 bps YoY to 24.1 percent. A CNBC-TV18 poll estimated EBITDA at Rs 720 crore and margin at 17.2 percent for Q1.

India business showed a 10 percent YoY growth at Rs 1,608 crore. South Africa, Sub-Saharan Africa and Cipla Global Access (SAGA) business grew 10 percent to Rs 763 crore. Emerging markets registered a 64 percent jump in business at Rs 457 crore and Europe showed a 19 percent rise to Rs 240 crore.

However, North America business fell 9 percent YoY but grew 19 percent sequentially to Rs 1,021 crore in Q1 FY21.

“During the quarter, our businesses actively re-imagined their operating models to drive strong growth across markets of India, South Africa, the US and focused execution on cost optimization helped drive the quarter EBITDA to 24%,” Cipla MD and Global CEO Umang Vohra said.

The company is also at the forefront in combatting COVID-19 through its strategic partnerships and a spectrum of offerings in its portfolio, he added.

“Our global lung leadership aspirations continued to gain momentum along with limited competition launches in the US,” Vohra said.

Covid-19 impact on Indian Pharma Industry

The impact on the cash flows has led many of the companies in the pharma sector to impose a freeze on the hiring process. Currently, no layoffs have been considered by companies and further decisions on increments are yet to be finalized and have been put on hold. However, unlike the other industries, the pharmaceutical industry is expected to see a positive impact, on an overall basis, on its growth in this year. The market expectations are on similar lines as indicated by the stock prices which for many pharma companies had risen. The situation will vary with the portfolio and size of the companies.

Some very small companies may find themselves under stress and could become a source of the additional capacity that the larger players with deeper pockets are looking at. Some companies that are seeing increased demand for their portfolio and have also started incentivizing employees especially in the production function who are supporting plant operations during this COVID period. However, like all others, pharma companies to are deploying methods of “trimming the fat”, revisiting capital expenditure, looking at renegotiating rentals, looking for new sources of income from owned assets as well as using digital mechanisms for meetings and conducting business.

Challenges faced by the Indian Pharma Industry

• Manufacturing units/warehouses not working at full utilization, due to unavailability of staff.
• Non-Availability or disrupted supply of raw materials and packing materials.
• The absence of seamless internet data connectivity with staff is creating issues in day to day work.
• Marketing staff facing issues in generating sales as they are unable to conduct in-person sales calls as they used to in the pre-COVID scenario.
• The companies that have operations across the globe are facing issues with regard to their operations and staff in those locations. Every country has devised its own policies and guidelines.
• As with all industries, implementing effective and robust cybersecurity measures is a challenge in the work from home scenarios.