Gland Pharma Q2 result: Net profit fell 20% to Rs 194 cr on higher expenses

Indian generic injectables maker Gland Pharma posted a weaker-than-expected second-quarter profit on Monday, as higher employee expenses eclipsed strong sales in key markets.

The company, majority owned by China’s Shanghai Fosun Pharmaceutical Group Co, said its consolidated net profit fell nearly 20% to Rs 194 crore ($23.3 million), falling short of analysts’ average expectation of Rs 213 crore per LSEG data.

Analysts were expecting generic drugmakers to benefit from new product launches and easing price competition in the United States, which accounts for bulk of the revenue for Indian pharmaceutical companies.

Moreover, the waning impact of high-cost inventories also helped these companies, they said.

Gland Pharma reported a nearly 32% jump in revenue from operations to Rs 1,373 crore, driven by higher sales from the acquisition of the French pharmaceutical group Cenexi in January.

Sales in Europe rose a whopping 379% to Rs 2,488 crore after Cenexi acquisition.

Sales rose 9% in the US and 21% in India.

US and India contributed 54% and 6%, respectively, to the company’s total revenue.

The Hyderabad-based company, which primarily sells to other businesses, earns 70% of the revenue from core markets such as the US, Europe, Canada, Australia and New Zealand.

Revenue from core markets, excluding the U.S., increased 64% to Rs 356 crore.

However, a nearly 45% jump in total expenses ate into the profit growth after employee benefit costs tripled.

Excluding the gains from Cenexi acquisition, the company’s total revenue fell 3% to Rs 1,015 crore.

Last month, larger generic drug makers including Cipla and Dr Reddy’s Laboratories beat second-quarter profits estimates, helped by higher sales in the U.S.

Shares of the company closed 4.3% higher, ahead of the results. The stock climbed nearly 58% in the September quarter, compared with an about 12% rise in the pharma index.