cipla share information on pharmaceutical companies

Cipla Ltd (updated - 24 Aug 2010)
After falling 14 per cent over the last fortnight, Cipla’s stock jumped 4.2% in the last trading sessions, in anticipation that the company will announce a special dividend after its board meeting on Wednesday. While the announcement came on Monday and is positive (the stock closed two per cent higher at `317.30), concerns regarding near-term growth persist.

Cipla has come a long way in 75 years to become a market leader in the domestic anti-asthma, anti-viral, urological segments, with blockbuster products like Ciplox and Norflox. These products contribute about 35 per cent to its domestic revenues and have reached the maturity stage of their product lifecycles. Being promoted through franchisees, they have limited growth prospects. Adding to the woes are the generic products contributing 15 per cent to the domestic revenues, which are barely growing. The silver lining comes from the remaining 50 per cent of revenues, being actively promoted and growing at 18-20 per cent. Thus, overall domestic sales that contributed 46 per cent to consolidated revenues in 2009-10 are likely to grow 1012 per cent in FY11.

Export formulations and generics hold promise. Export formulations grew 14.4 per cent (Rs 626 crore) in the June quarter, led by anti-asthma and anti-retroviral segments. The company’s betting big on asthama/inhalation products, eyeing a nine per cent increase in Salbutamol shipments to Europe. In addition, Cipla is also launching Salmeterol for Europe to tap the $150-million market. Of eight CFC-free inhalers developed for Europe, six approvals have been filed targeting a $3-billion market. The export segment accounts for half the revenues and will be a strong long-term growth driver.

Looking at the above, the growth for Cipla’s domestic segment remains capped for some time and gains from the international markets are likely to accrue only in 2011-12. The stock trades at 21 times and 17 times its 2010-11 and 2011-12 estimated earnings. While it looks fairly valued from a near-term perspective, investors with a longer-term horizon may consider it, too.
source - business standard

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The net revenues of `1,615 crore during the September quarter were primarily aided by a robust growth in domestic formulations, which grew 21 per cent after a lacklustre performance in the past four quarters. However, analysts attribute this growth to ailments associated with an extended monsoon and believe it is not sustainable.

The commercialisation of its new plant at the Indore SEZ helped formulation exports grow 14.1 per cent y-o-y, but this new plant also resulted in higher operating expenses. Besides, the 3.3 per cent rupee appreciation during Q2 also pulled down operating margins down 320 basis points to 22.7 per cent. The Indore SEZ is likely to contribute to a revenue growth but only after all regulatory approvals. However, the approvals may take up to 18 months and till then the estimated expenses of `30 crore every quarter on the SEZ will continue to exert pressure on its margins.

While these concerns continue to weigh on Cipla in the near term, there can be multiple triggers that can help improve its financial performance over the medium term. It has a strong generics pipeline with 22 partnerships for 118 products.

Cipla Ltd (updated - 20 Nov 2010)
While the BSE Healthcare index has gained 2.3 per cent since the beginning of November, Cipla has lost 2.2 per cent. The downslide came with growing concerns on growth opportunities and profitability. Even the double-digit growth of 12 per cent posted by Cipla in the second quarter did not impress investors, as margins came under pressure leading to a 4.6 per cent y-o-y decline in net profit to `263 crore. The top line growth over the next few quarters is also likely to remain capped in this 10-12 per cent range, said analysts at Anand Rathi.

Of the 100 approvals that Cipla has filed with the US FDA for generics, 55 medicines are approved, and 35 of these have already been commercialised. Its strong prowess in inhalation therapy for asthma and its pursuit for launching CFC-free inhalers in the US and Europe can be strong long-term triggers.

With adequate manufacturing capacities, strong R&D capabilities and a large range of inhalers, Cipla has a strong potential for entering into longterm supply arrangements with any multinational company. This would provide the drug major strong longterm revenue opportunities. In the past four trading sessions, the Sensex has declined five per cent, while Cipla has gained three per cent and is trading at 21 times the FY12 estimated earnings.
source - business standard