Diagnostic market helps Morepen Labs report 107% rise in Q3 net profit

Morepen Laboratories Ltd has reported yet another growth-filled quarter by registering 107 per cent rise in its net profit in Q3 of FY 2017-18 at Rs. 96.7 million, despite a marginal rise in its net sales revenue at Rs. 1.39 billion, compared to the corresponding quarter of the previous fiscal.

The Q3 FY 2017-18 financial results were taken on record at a meeting of the company's board of directors here on Monday.

Domestic sales were up by 24.8 per cent at Rs. 1.03 billion in Q3 FY 2017-18, whereas exports were lower at Rs. 365.8 million. EBIDTA during the quarter grew by over 18 per cent at Rs. 181.7 million.

Furthermore, the company did well in controlling its interest cost in the quarter. The interest cost in Q3 FY 2017-18 amounted to just Rs. 900,000 registering a fall of 60 per cent compared to corresponding quarter of the previous fiscal.

As a result, the cash profit during the period rose by 32 per cent at Rs. 172.7 million. The overall depreciation and amortisation charge was also lower by around 10 per cent at Rs. 76 million during the same period.

In the bulk drugs category, Montelukast recorded highest growth of 25 per cent in its sales numbers at Rs. 223.7 million followed by Atorvastatin, which registered a handsome growth of 23 per cent in Q3 FY 2017-18 sales at Rs. 158.2 million vis-a-vis corresponding quarter in the previous fiscal. The overall API business sales remained stable at around Rs. 800 million in Q3 FY 2017-18 over Q3 last year.

The Home Diagnostic category did extremely well with an overall growth of 53 per cent in Q3 sales in FY 2017-18 at around Rs. 280 million. Within the Home Diagnostic category, Blood Pressure Monitors' sales went up by 99 per cent and that of Blood Glucose Monitors by 61 per cent in Q3 FY 2017-18.

Meanwhile, the Formulations segment registered a revenue drop of five per cent in Q3 FY 2017-18 compared to corresponding quarter in the previous fiscal.

"During the quarter, the focus was on high value drugs, cost reduction and improving margins, The growth in Montelukast and Atorvastatin business in Q3 FY 2017-18 has helped the API business to make up for fall in sales revenues recorded by other products in this category. We are working on consolidation of our product portfolio so as to remain focused on high value APIs and also expand Self Health brand Dr. Morepen which is consistently registering phenomenal growth across all the product segments," said Sushil Suri, Chairman and Managing Director, Morepen Laboratories Ltd.

In the nine months ended December 31, 2017, the company has reported a rise of 38 per cent in its net profit at Rs. 220 million on net sales of Rs. 3.97 billion. The domestic sales revenue during the nine-month period grew by around 16 per cent at Rs. 2.61 billion, however, the exports turnover was lower at Rs. 1.35 billion.

EBIDTA in the 9M FY 2017-18 stood at Rs. 490 million, interest cost came down by 45 per cent at Rs. 35 million and depreciation expense was lower by 6 per cent at Rs. 236.3 million.

The overall bulk drugs sales remained flat in the nine-month period at Rs. 2.44 billion, but the Home Diagnostic category's sales grew by 36 per cent at Rs. 786.3 million.

Within the home diagnostic category, sales of blood glucose monitors went up by 45 per cent at Rs. 481.3 million and that of blood pressure monitors by 86 per cent at Rs. 166.4 million. The Formulations segment registered a revenue drop of 14 per cent at Rs. 724.9 million.

During Q3 FY 2017-18, Morepen Labs achieved a major breakthrough as the United States Food and Drug Administration (USFDA) cleared its anti-asthma bulk drug Montelukast Sodium for sale in the US market. This development has provided Morepenan entry into the Rs 20 billion (Approx. $ 300 million) US market for Montelukast Sodium. The first commercial orders for the bulk drug are expected in Q2 of FY 2018-19.

The company also entered into a tie-up with Vesale Pharma International of Belgium to strengthen its position in the Rs 10 billion Probiotics market in India. An agreement to this effect between the two pharma leaders was officially signed in the august presence of the King and the Queen of Belgium who were recently on their State visit to the Republic of India.