Cipla is among the top three companies in the Indian retail drug market and has presence in formulations and bulk drugs manufacturing. All the bulk drug manufacturing facilities of the company have been approved by the US FDA and the formulation facilities have been approved by regulatory authorities in the UK, South Africa and Australia and other international agencies. Cipla has strategic alliances with major global generic companies such as Watson, Mylanbarr, Barr and Teva / Ivax for supply of bulk drugs and has a very wide product range in the domestic market.
Cipla clocked a robust 25% YoY topline growth during FY09, which was largely owing to the strong performances of both its domestic and exports formulation businesses. Sales from the domestic business grew by 15% YoY driven by the anti-asthmatics, cardiovascular, antibiotics and anti-retrovirals segments. Formulation exports clocked a healthy 40% YoY growth. Revenues from the API business failed to impress as the same grew by a mere 6% YoY during FY09 due to lower sales of certain key bulk drugs in the last two quarters. Operating margins, expanded by 3.9% largely due to the fall in raw material costs fuelled by improved export realisations as also changes in the product mix. The bottomline grew by 9.5% YoY and was lower than the 49% YoY growth in operating profits largely due to forex losses of Rs 2.3 bn incurred during the year.
Cipla's focus on contract manufacturing should gather momentum in the future, keeping in mind the global generics potential. In the domestic market, the company is likely to maintain its strength with its strong field presence and strong brands. However, in the longer term, the company's minimal focus on R&D is likely to remain a cause for concern.
|Financial performance: A snapshot|
|Operating Profit (EBITDA)||2,031||3,592||76.9%||8,614||12,832||49.0%|
|Operating Profit Margin (%)||18.1%||26.3%||20.4%||24.3%|
|Profit before tax||1,771||3,057||72.6%||7,717||11,419||48.0%|
|Profit after tax/(loss)||1,795||2,529||40.9%||7,014||7,678||9.5%|
|Net profit margin (%)||16.0%||18.5%||16.6%||14.6%|
|No. of shares (m)||777||777|
|Diluted earnings per share (Rs.)||6.9|
|P/E ratio (x)||27.3|
|Other operating income|
|Total income from operations||11,428||13,802||20.8%||43,091||53,315||23.7%|