The price erosion that most people talk about in the US market gets noticed when there are no new launches. So, for us, as the launch momentum begins to accelerate, we will begin to see growth in that part of the business, says Umang Vohra, MD & Global CEO, .
You have got a healthy set of numbers in Q1. Could you talk about the India business which has been led by Covid related drugs?
We reported a very strong quarter. Revenues are up by 27%, EBITDA by 28% and profit after tax (PAT) by 24%. There has been a pretty strong performance across most of our markets India included and of course there was a tailwind from Covid drugs. We are quite confident about our earning trajectory over the next couple of quarters.
What about your India business ex-Covid, That segment has done pretty well. What led to the recovery?
There are a couple of factors. There was a base effect of the previous year because in the previous year, almost everything was under lockdown but if you look at the numbers, the share of non-Covid drugs was 40% and even if one normalises some of the other drugs that may have gone up for Covid, we have still delivered very strong numbers in India. We feel confident about our ability to grow the India market going forward.
What is happening as far as the US business is concerned? Also in terms of the non-Covid business in India, are things like to be completely back to normal?
They come back to relatively normal in periods such as these but then depending on the waves, it begins to react. In normal periods, the market should begin to show growth of more than 10% and at Cipla, we will try and peak the market growth by and large over the next couple of quarters.
Things are looking stagnant in the US business end. Can you tell us more about that?
The US business is most responsive to launches. We were about $100 million about two years back. We have reached $140 million a quarter now and our next big launch momentum is coming in a few quarters from now which is largely in the next year. We have launches this year as well and they will probably move up the trajectory but the big step function launches will happen in the year ahead. The price erosion that most people talk about in the US gets noticed most when there are no new launches. So, for us, as the launch momentum begins to accelerate, we will begin to see growth in that part of the business.
What about the inhaler Albuterol? It has been a year since it was launched?
We have about 18% odd generic share in Albuterol, about 15% of the total market. That market is steady and has shown marginal growth every year. It is a market that is expanding slowly and we feel confident about trying to push our share slightly higher of the total market, not so much just the Albuterol category, but the overall market.
What sort of fillip has Covid-19 given in terms of cost savings for your company?
I do not think we have too much of cost based savings on account of Covid because realistically the last year base was also significantly lower due to Covid. Even without the impact of the Covid drugs, the margins are broadly in line with the balance we have given. We feel confident about the margin profile of the company and we are hoping to maintain that in the quarters going forward.
How should you prepare for the third wave so that if there is any issue, overnight supplies can be increased for a lot of these key essential products?
Firstly, I hope we do not see the third wave like we have seen in the second wave. But most companies like ours, have reached a level of preparedness where we can scale up pretty significantly in terms of medicine supply and this depends on the nature of the wave. The type of medicines that may be required in the third wave could be quite different from the second wave. We also do not think that hospitalisations may be at the same level that we have seen in Covid 2.0. Our product portfolio is available and we are ready to scale it up. We are already running at a slightly higher inventory level than we used to because it helps when the market needs the product.
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