Lupin Forecasts 17-18% Ebidta Margin In Q4, Says Executive Director Ramesh Swaminathan


Lupin Ltd. expects to be close to 17–18% Ebitda margin by the end of this fiscal, according to its Executive Director and Chief Financial Officer Ramesh Swaminathan.

The company reported 4% expansion in top line year-on-year in Q3, and its consolidated Ebitda margins came in at 11.9% for the quarter, as compared to estimates of 13.4%.

In terms of its Q4 margin target, the company is counting on new product launches, including gSpiriva, and will continue to work on reducing expenses, Swaminathan told BQ Prime.

The company is awaiting approval from the U.S. FDA on the gSpiriva launch.

While there has been some delay, the company is in conversation with the U.S. FDA and expects the approvals to come in soon, Swaminathan said.

Lupin is targeting an overall reduction in expenses to the extent of Rs 600 crore in the medium term.

“We should see results by the end of this fiscal and from next fiscal, they are expected to return to normalised levels, in line with competition,” he said.

According to Vishal Manchanda, pharma analyst at Systematix, the Q4 target is ambitious and it would be a surprise if the same were met.

“There seems to be a lack of visibility, considering the delay in the big U.S. launch, which has not yet happened in Q4 and we are already halfway through the quarter.”

Swaminathan has guided for 18-20% Ebitda margin in the medium term, which is around the margin range of a majority of formulation-makers exporting to the U.S.

U.S. Business

In the U.S., the oral solid generics business is continually facing headwinds and there is price erosion, he said. However, they are pivoting towards complex products for injectables and inhalations, and that will be a large part of the portfolio in the quarters to come, Swaminathan said.

“The intensity of competition (in these products) is also not that severe, while the oral solids portfolio will continue to erode.”

He guided for a normalised revenue in the U.S., in the range of $170 million (at par with current quarterly levels), until they launch the newer products in the market.

In the next three to five years, the injectables portfolio and inhalation products are expected to move the needle in terms of U.S. revenues, he said.

U.S. FDA Update

Lupin is working on the resolution of U.S. FDA-related issues around their Mandideep and Tarapur facilities and are confident of addressing it in the near future. Their Somerset and Goa facilities have been cleared, Swaminathan said.

While the Pithampur inspection has not yet happened, they do not expect a delay in the gSpiriva launch, he said.

“We do not expect much surprise around the Pithampur facility, which has not been inspected yet, and are confident about its prospects.”

Lupin’s injectable facility in Nagpur and its biotech manufacturing facility in Pune also have lapses identified by the U.S. FDA.

The stock was trading 4.59% lower at 2:05 p.m. on Friday, compared to a 0.24% decline in the BSE Sensex.


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