Web Sify
Follow us on
Mail
Print

Cipla surges 4.1% to record as FDA approves US sales

Source : BUSINESS_STANDARD
Last Updated: Wed, Nov 07, 2012 04:10 hrs

Shares of Cipla Ltd surged to a record after India’s third-largest drugmaker by market value got US regulatory approval to export to the world’s biggest economy from its second-biggest plant.

Cipla advanced 4.1 per cent to Rs 395.95, its highest ever, and traded at Rs 391.3 at 10:10 am in Mumbai, the best performer on the benchmark BSE India Sensitive Index. Thee Food and Drug Administration (FDA) approved the company’s plant at Indore a week ago, Chief Financial Officer V S Mani said yesterday after Cipla reported a record second-quarter profit.

The FDA permission for the facility in central India may prompt Cipla to switch to making drugs for the more profitable US market, according to Hitesh Mahida, an analyst at Fortune Equity Brokers India Ltd. The plant, which began production in April 2010, has been exporting medicines to Europe and Africa.

“This is a major trigger for the stock,” Mumbai-based Mahida said. “US and Europe contribution to sales will increase, whereas Africa’s will decrease.”

The Indore plant, which accounts for about 15 percent of Cipla’s exports, will contribute “much much more” after the approval, Chairman Yusuf K Hamied said in an interview to Bloomberg TV India on Tuesday. Cipla shares have increased 22 per cent this year, compared with a 33 per cent gain in the 17-company BSE Healthcare Index.

The company reported a profit of Rs 500 crore ($92 million) in the quarter ended September 30, up from Rs 309 crore a year earlier. That exceeded the Rs 369-crore median of 27 analyst estimates compiled by Bloomberg. Sales climbed 24 per cent to Rs 214.5 crore.

‘Big Upside’
Profit surged because of increased sales of the generic version of the anti-anxiety drug Lexapro to Teva Pharmaceutical Industries Ltd, said Bino Pathiparampil, an analyst at IIFL Institutional Equities. Israel’s Teva had exclusive rights in the US to sell copies for the first six months after patents on the Forest Laboratories Inc drug expired in March. Cipla has a profit sharing arrangement with Teva, Cipla’s Mani said.

“The big upside this quarter was entirely because of Lexapro,” Pathiparampil said in an interview.

“The margins will drop in the next quarter” because this is a one-time opportunity, he said yesterday. At NSE, the scrip settled at Rs 396.30, up 4.23 per cent. The stock was the top performer among the BSE 30-stock index, Sensex. The market value of Cipla moved up by Rs 1,276 crore to Rs 31,823 crore.




More from Sify:
blog comments powered by Disqus
most popular on facebook
talking point on sify finance