Glaxosmithkline Pharmaceuticals (GSK Pharma) reported a net loss of Rs 661.16 crore in Q3 December 2019 as against a net profit of Rs 113.67 crore in Q3 December 2018.
Shares of GSK Pharma slumped 11.06% to Rs 1465.25. The stock declined 13.24% to hit the day's low at Rs 1429.25, its lowest intraday level since 4 November 2019.
Pre-tax loss stood at Rs 634.32 crore in Q3 December 2019 as against a pre-tax profit of Rs 170.48 crore in Q3 December 2018.
Net sales declined 5.7% to Rs 778.59 crore in Q3 December 2019 from Rs 825.35 crore in Q3 December 2018.
Total expenses of the company increased by 104.6% to Rs 1408.10 crore in Q3 December 2019 from Rs 688.20 crore in Q3 December 2018. Employee expenses rose 32.77% to Rs 166.69 crore year-on-year (YoY).
The results were impacted due to voluntary global recall of ranitidine products including Zinetac in India and trigger-based impairment charges primarily towards the firm's manufacturing facility at Vemgal, Karnataka.
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Following the recent decision to initiate a global voluntary recall (pharmacy/retail level) of ranitidine products including Zinetac in India, GSK is continuing with investigations into the potential source of the NOMA and has initiated a comprehensive strategic review of the impact of this recall on all related assets in India.
Exceptional items recognized in the quarter include the financial impact related to the voluntary recall of Zinetac.
As part of this review, GSK India has assessed the current financial impact of the voluntary recall and has taken a financial impairment of Rs 640 crore connected to the under-utilization of GSK India's manufacturing facilities; and Rs 97 crore on account of other related assets/ costs. As part of this strategic review, GSK India will explore future options for the Vemgal facility including a potential sale of the site.
The reported sales number for the quarter declined due to portfolio optimization and voluntary recall of Zinetac. Adjusting for the same the underlying sales growth is +6%.
The company's YTD underlying sales growth stands at +13% and EBIDTA margins have improved on account of various operation efficiencies, cost saving and working capital initiatives taken during the year.
Commenting on the results, A. Vaidheesh, managing director, GlaxoSmithKline Pharmaceuticals said, Our global innovation, performance & trust (IPT) strategy underpinned by our culture, has guided investment of our resources in focus therapies which is continuing to show encouraging results with our promoted brands recording +11 % growth for the quarter. The results were impacted due to voluntary global recall of ranitidine products including Zinetac in India and trigger-based impairment charges primarily towards our manufacturing facility at Vemgal.
Our YTD underlying sales growth stands at +13% with our key promoted brands recording +20% growth. We continue to witness strong performance of Nucala (Mepolizumab) which is a humanized monoclonal antibody and indicated as an add-on treatment for severe refractory eosinophilic asthma in adult patients. We successfully launched Menveo vaccine for protection against meningococcal disease.
At GSK we operate a global manufacturing network and keep our operations under regular review to ensure we deliver high-quality products that our patients need and deliver on our Innovation, Performance and Trust priorities. The strategic review and its outcomes will not affect GSK India's broader commitments to improving public health in India. We will continue with our existing - commitments that support the government's larger vision of addressing the disease burden in India," Vaidheesh added.
GlaxoSmithKline Pharmaceuticals is a subsidiary of GlaxoSmithKline pie, one of the world's leading research-based pharmaceutical and healthcare companies.
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