(Reuters) – Indian drugmaker Zydus Lifesciences reported a 14% rise in second-quarter profit on Tuesday, helped by strong demand for generic drugs in its key United States and Indian markets.
The company’s consolidated net profit rose to 9.11 billion rupees ($107.93 million), in line with analysts’ average estimate of 9.13 billion rupees, as per data compiled by LSEG.
Its total revenue climbed 20% to 52.37 billion rupees, boosted by a nearly 30% growth in its U.S. market and a 10% climb in its India business. The two markets contribute about 85% to Zydus Life’s total revenue.
For further earnings highlights,.
KEY CONTEXT
Indian generic drugmakers, which earn a major chunk of their revenue from the U.S., have benefitted from strong demand for their copycat versions of cancer drugs, especially that of Revlimid – Bristol Myers Squibb’s blockbuster cancer drug.
Strong sales for this drug have consistently boosted U.S. revenue for Zydus and its peers.
However, they have also been grappling with a slowdown in the U.S. due to delayed approvals for new generic drug applications, lower pricing amid stiff competition and increased inspections of generic drug manufacturing facilities by the U.S. Food and Drug Administration, according to analysts.
Zydus Life’s rivals Cipla and Lupin beat second-quarter profit estimates on strong U.S. demand.
PEER COMPARISON
Estimates (next 12 Analysts’ sentiment
months)
RIC PE EV/EBI Revenue Profit Mean # of Stock to Div
TDA growth (%) growth rating* analyst price yield
(%) s target** (%)
Zydus 20.79 14.79 9.92 9.11 Hold 27 0.85 0.31
Lifesciences Ltd
Alembic 26.03 16.66 11.07 20.77 Buy 9 0.88 1.02
Pharmaceuticals
Ltd
Cipla Ltd 26.10 16.41 8.19 9.92 Hold 33 0.97 0.82
Lupin Ltd 29.26 17.87 11.62 34.21 Hold 32 1.06 0.38
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY TO SEPTEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 84.4060 Indian rupees
(Reporting by Kashish Tandon in Bengaluru; Editing by Janane Venkatraman)
