BENGALURU (Reuters) – India’s Gland Pharma, an injectables manufacturer, posted a surprise drop in quarterly profit on Tuesday, hurt by high employee costs and lower prices for its products in the United States.
Its consolidated net profit fell almost 26% to 1.44 billion rupees ($17.2 million) for the quarter ended June 30. Analysts had expected profit to rise to 2.09 billion rupees, as per LSEG data.
The company’s U.S. sales increased 27% to 7.63 billion rupees, its slowest growth in four quarters. Employee benefit expenses, which account for about 29% of total costs and is the second-largest expense, shot up 40%.
KEY CONTEXT
Gland Pharma acquired French pharmaceutical group Cenexi, a sterile and injectable pharmaceutical products maker, in January 2023. This helped boost its sales in Europe, which contributes 18% to overall sales.
Still, the U.S. is its largest source of revenue, accounting for 54% of overall sales.
Most of India’s generic drugmakers derive a significant chunk of revenue from the United States, where lower drug prices amid stiff competition have been weighing on companies’ margins.
Gland Pharma’s rival Dr Reddy’s posted a quarterly profit drop, while Sun Pharma and Cipla beat estimates.
PEER COMPARISON
Valuation Estimates Analysts
(next 12 (next 12 ‘
months) months) sentimen
t
RIC PE EV/EBI Revenue Profit Mean # of Stock to Div
TDA growth growth rating* analyst price yield
s target** (%)
Gland Pharma 32.69 19.10 12.66 24.92 Hold 12 1.14 0.95
Dr Reddy’s 19.61 12.33 10.36 3.34 Hold 33 1.04 0.59
Laboratories
Cipla 25.25 15.73 8.88 9.88 Hold 31 0.95 0.86
Sun Pharmaceutical 35.23 26.02 10.26 13.39 Buy 31 1.00 0.78
Industries
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
APRIL-JUNE STOCK PERFORMANCE
— All data from LSEG IBES
— $1 = 83.8780 Indian rupees
(Reporting by Varun Hebbalalu in Bengaluru; Editing by Sonia Cheema)
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