Cipla, India’s third-largest drugmaker by revenue, reported a weaker-than-expected fourth-quarter profit on Wednesday, as sharp weakness in its U.S. business and higher costs outweighed strong domestic demand.
The drugmaker’s consolidated net profit fell 54.6% on-year to 5.55 billion rupees ($58 million) in the quarter ended March
31, missing analysts’ average estimate of 7.05 billion rupees, according to data compiled by LSEG.
Total revenue from operations fell 2.8% to 65.41 billion rupees, below the average expectations of 67.49 billion rupees, hurt by a sales decline in its key North America market.
Revenue from India, Cipla’s biggest market by sales, jumped 15% to 30.07 billion rupees, while revenue from North America fell 26% to 14.14 billion rupees.
The Indian and North American markets account for roughly three-fourths of the drugmaker’s total sales.
Total expenses rose nearly 8.5% to 18.82 billion rupees, driven by higher costs.
The company also recorded an impairment charge of about 420.2 million rupees on its associates, adding to cost pressures.
Analysts at Jefferies said in a pre-earnings note that they expect U.S. sales to decline in the near term due to erosion in key products, with margins likely to remain under pressure until new launches scale up.
The company declared a dividend of 13 rupees per share. Rival Dr Reddy’s reported a sharp drop in quarterly profit on Tuesday, hurt by an impairment charge linked to its discontinued cancer therapy program.
However, Cipla shares were trading 4.23% higher in the afternoon. The stock has fallen about 14.3% so far this year.