Net Loss On Weak Show In Major Markets, Higher Opex


Lupin Ltd. reported net losses in the first-quarter, missing forecasts on account of higher operating expenses and weak show in major markets, especially the U.S.

The drugmaker reported a net loss of Rs 89 crore in the April-June period as against a net profit of Rs 542 crore in the previous year, according to its exchange filing.

That compares with the Rs 138-crore consensus profit estimated by analysts tracked by Bloomberg.

Pre-tax profits fell 99.7% to Rs 23 crore from Rs 750 crore.

Lupin Q1 FY23 Highlights (YoY)

  • Revenue fell 12% to Rs 3,744 crore against the Rs 4,035-crore forecast.

  • Operating profit stood at Rs 164 crore, down 82%, against an estimate of Rs 412-crore.

  • Margin contracted to 4.4% from 21.7%. Analysts had projected it at 10.2%.

Despite the muted numbers in this quarter, the company expects a strong bounce-back from Q2 onwards, Nilesh Gupta, managing director at Lupin, said in the exchange filing.

“Our U.S. sales took a significant dip as we took several strategic decisions to pave the way for building a sustainable and profitable business. During the quarter, we pared down inventories and took shelf-stock adjustments on select products.”

While the company continues to see price erosion in the U.S. business and inflation in input materials, the India business continues to do well, growing ahead of the market, he said. Other geographies, too, continue to perform well.

The company has implemented several optimization measures, including addressing workforce in operations and supporting functions to improve cost position and ensure competitiveness, he said.

“While the benefits of this optimization will start accruing from Q2 onwards, we are now focused on getting back on the growth path, driven by growth in key markets like India and multiple important complex generic launches in the U.S. and other developed markets.”

On the compliance front, Lupin has satisfactorily addressed the Establishment Inspection Reports for both Goa and Somerset, and continues efforts to be best in class in quality and compliance across their network, Gupta said.

Other Highlights (YoY)

  • India sales fell 9% to Rs 1,492 crore, contributing 41% to the total revenue.

  • U.S. business fell 24% to Rs 1,010 crore, contributing 28% of total revenue.

  • Lupin’s Europe, Middle-East and Africa sales rose 28%, making up for 9% of the total revenue.

  • Bulk drugs business rose 4%, accounting for 7% of the total revenue.

  • Growth markets (Latin America and APAC) saw a 27% rise, while the rest of the world sales surged 63%, accounting for 12% and 3% of the revenue, respectively.

  • The company had a one-time licensing income of Rs 373 crore in June quarter last year, which was not there in this quarter.

  • Research and development expenses stood at 9.6% of sales this quarter.

  • Net debt-equity, as on June 30, stood at 0.21.

The company filed four abbreviated new drug applications in the U.S. this quarter, received four approvals from the U.S. Food and Drug Administration, and launched one product in the quarter.

The company said that as per IQVIA MAT June 2022, it continues to be the third largest pharmaceutical player in both U.S. generic market and U.S. total market by prescriptions and the sixth largest in India.

Shares of Lupin closed 1.64% lower before the results were announced compared with a 0.37% rise in the benchmark Sensex.


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