After Surprise Loss, Lupin Expects Much-Better Earnings In Second Half Of FY23
While Q4 is always a weaker quarter for India, the U.S. market was plagued with recalls and price erosion, says CFO Swaminathan.
Underperformance in Lupin Ltd.’s key markets, the U.S. and India, weighed on the drugmaker’s fourth quarter, according to Ramesh Swaminathan.
While Q4 is always a weaker quarter for India, the U.S. market was plagued with drug recalls due to impurities and price erosion, typically in the range of 8-12%, in some products, the executive director and group chief financial officer at the company told BQ Prime’s Sajeet Manghat in an interview. Also, there was no sale across the entire range of acute therapy products in the quarter, he said.
Lupin posted a Rs 518-crore after-tax loss in the three months ended March. Its revenue fell 5.5% sequentially but rose 3% year-on-year.
According to Swaminathan, the top line was “not moving” until recently. “We now have most things coming up such as complex generics in the inhalation space, complex injectables and biosimilars.”
All efforts being taken towards correcting cost inefficiencies such as reduction of selling, general and administrative expenses and idle time of plants should bear result over the next two to three quarters, he said. “Until then, there is going to be pain.”
He expects Lupin’s results to be much better from the third and fourth quarters.
The drugmaker has had one-off impairments and losses relating to recall and litigation in the past couple of quarters. Swaminathan said while the company has taken all necessary precautions to not have issues of this kind, it could never be sure of no recalls.
Goa Plant
There are 23-24 products expecting approval from the Goa plant, and now that the plant has been cleared of its official action indicated status, Swaminathan expects a lot of these products to be approved.
He, however, expressed concerns as to whether a lot of these products will retain their potency. “Some of these submissions happened a while ago and they might not garner the same value as they would have, had they been launched a while ago.” But the company is on track with the expected new product launches.
On diagnostics foray, he said, it isn’t going to be a dominant theme for the company in India. Swaminathan expects the new chemical entity ramp-up to be completed by FY23.
Watch the full interview here: