MUMBAI (Reuters) - Indian drugmaker Cipla Ltd’s third-quarter profit beat estimates due to higher sales in the United States, and the company said it was looking for licensing deals and acquisitions to build its speciality medicines pipeline in that market.
The country’s fifth-largest drugmaker by sales reported a roughly 21 percent rise in revenue from North America for the October-December period.
It said money from a previously announced 40 billion rupees ($596 million) fundraising would be used to scale up its U.S. business that so far makes up about 18 percent of its total revenue.
Cipla bought two U.S. generic drug producers, Invagen and Exelan, for about $550 million last year in its first big move to expand in a market where most of its local peers already have a large presence.
The company’s U.S. push comes at a time when the U.S. Food and Drug Administration (FDA) has increased scrutiny of foreign exports. Cipla’s Goa drug factory failed manufacturing standards during an FDA inspection last year.
CEO Vohra said on Wednesday those problems had been fixed and a regulatory clearance on the Goa plant was expected by the first quarter of fiscal 2018, following a reinspection.
“We have a fair number of products that are going to be launched from that facility, and our correspondence with the FDA does not indicate that the facility at this point in time is a bottleneck for us to secure approvals,” Vohra said.
Cipla gets most of its revenue from India, but dwindling sales in Europe and emerging markets have hit its profits over the past year. The company has said it is working on exiting some emerging markets due to “complexities”.
A key area of focus for Europe is its respiratory pipeline, under which it plans to launch Seroflo, a generic form of GlaxoSmithKline’s Advair asthma device, which won UK approval in December after months of delay.
Analysts at Kotak expect Cipla’s device could add about $30 million to its fiscal 2018 sales. CEO Vohra declined to comment on sales expectations on Wednesday, but said the hope was to capture market share “gradually” after the launch this quarter.
“We look at respiratory as a very attractive (area) ... most of the products that are going off-patent in the U.S., we already sell in India,” Vohra said.
Third quarter revenue from the company’s home market grew 19 percent, hurt by a cash crunch caused by the government’s ‘demonetisation’ move in November that rendered currency notes of 500 rupees and 1,000 rupees illegal tender. Vohra said sales in India were expected to be back to normal in about two months.
Overall net profit for the October-December quarter rose to 3.75 billion rupees from 2.61 billion a year earlier, beating the average forecast of 3.70 billion rupees from 23 analysts, according to Thomson Reuters I/B/E/S.
($1 = 67.0800 Indian rupees)
Reporting by Zeba Siddiqui; Editing by Jason Neely and Mark Potter