India's fourth largest drug maker Cipla's net profit growth remained muted at Rs 447.2 crore in the first quarter ended June 30 due to the decline in sales from India and South Africa that constitutes nearly half of the company's sales.
Kedar Upadhye, global chief financial officer at Cipla, shared his views and outlook for the business going forward.
“We have spoken about remodelling of our trade generic business in India during the first quarter. It is going on track. As we had planned, it will take another quarter or so to stabilize things fully... we have done the realignment of the distribution for our trade generic business and its going on as we had planned. Towards the end of Q2, we believe, the order from the new empanel stockists would help us compensate the loss of business from the earlier stockists. And as the Q3 begins, we believe that we will get on track with respect to our existing runrate of sales before the remodelling began,” he said.
Speaking about Cipla's growth rate, he said: “Q2 will see soft landing of generic business and for the second half which is Q3 and Q2 put together, our target is to revert to the earlier growth rate before the remodelling began.”
On the impact of new generic drugs entering pharmaceutical market, Upadhye said: “The domestic pharma market is seeing all kinds of disruption and with our equity and our network spread throughout the country with our established brand whether for the prescription business or for the trade generics business, I believe we are geared to tackle these many disruptions.
"The number of generic brands that are entering into the market is a function of low barrier to entry and the fact that some of the regional player are strong in a particular region. What I believe is companies like us should take this as part of our operating plan and our ability to connect with the customers, with the stockists and with the larger stakeholders in the distribution chain should help us retain our franchise and deal with this increased flow of the generics.”
On alternate generic brands, he said: “There is no alternate generic brand. We have our own product brands. At this point of time there is no plan of any alternate generic brand to be launched.”
On the growth of Cipla's US business, Upadhye said: “Q4 and Q1 benefitted from generic cinacalcet. Q2 will see significant moderation of the cinacalcet. There have been multiple competitive entries and I think in a way, the best business would get demonstrated from Q2 onwards. Our hope is to get back to our pre-cinacalcet revenues from this quarter onwards and as second half onwards sees a number of launches that we have planned, the business grows on a year-on-year (YoY) basis.