Gland Pharma Q3 Results: Profit Falls, Misses Estimates

Gland Pharma Ltd.'s third-quarter profit declined, missing analysts' estimates.

The net profit of the Hyderabad-based generic injectable manufacturer fell 17% year-on-year to Rs 192 crore in the three months through December, according to an exchange filing. That compares with the Rs 261-crore consensus estimate of analysts tracked by Bloomberg.

Sequentially, the profit dropped 1%.

Gland Pharma Q3 Highlights (YoY)

• Revenue rose 65% to Rs 1,545 crore (Bloomberg estimate: Rs 1,482 crore).

• Operating profit rose 23% to Rs 356 crore (Bloomberg estimate: Rs 379 crore).

• Operating margin stood at 23.06% as against 30.86% a year ago (Bloomberg estimate: 25.6%).

Managing Director and Chief Executive Officer Srinivas Sadu in the exchange filing said that:

• In the ex-Cenexi base business, the performance has been encouraging with the introduction of new products and improved volume of the current basket.

• In the Cenexi business, the company reported a negative Ebidta of Rs 17 crore—largely due to one-off expenses—which, if adjusted, would have resulted in a break-even at the operational level.

Other Highlights (YoY)

• U.S. revenue came in at Rs 822 crore, a 41% rise over the December quarter last year. This contributed to 53% of total revenue.

• Revenue from Europe surged 435% to Rs 325 crore. This was due to the Cenexi acquisition.

• Other core markets—including Canada, Australia, and New Zealand—reported a rise of 101% over the December quarter last year.

• India sales fell 7%, accounting for 5% of total revenue.

• The rest of the world's market revenue jumped 46% to Rs 284 crore, contributing 18% of total revenue. The growth was due to the acquisition of Cenexi.

• The drugmaker's research and development expense was 5% of the revenue at Rs 53 crore and its total capex outlay was Rs 81 crore during the quarter.

“Our post-merger integration review is now mostly complete, and we have identified areas where Cenexi would need investments and significant improvements,” Sadu said in the filing.

"Our partner order book is healthy, and we have significant opportunities through the signed contracts to play out long-term growth. However, in the near term, we continue to face issues with operational performance, leading us to rebalance our capacity and shift certain products to different lines, which will take time due to regulatory processes. We target realising our acquisition thesis over the next 12–15 months," he said.

Overall, he said that they are confident that FY24 will end on a high note.

Shares of Gland Pharma closed flat on Wednesday prior to the results being announced, as compared with a 0.37% rise in the benchmark Sensex.