Cipla has reported a stupendous 53.8% growth in the net profit in the third quarter of the current year on the back of a 47% growth in the topline. The topline growth has outpaced the domestic pharmaceutical growth of 11% by a mile. This growth has been led primarily by a 150% growth in exports, which also partially explains the effective tax rate of 26%. As far as the domestic antibiotic market is concerned Cipla has attacked the fiercely competitive market by way of unbranded generics and this strategy has succeeded to a great extent.
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Exports are likely to get a further boost after October 2001 when the company starts exporting omeprazole, the bulk drug for an anti–ulcer drug to Andryx Corporation, which has bagged a six month period of exclusivity after the patent of Astra expires in October 2001. The company's proposal to export its anti–AIDS drug to the original patent holders viz Glaxo and Boeringer Ingelheim does not however, seem to have cut much ice although the management is still hopeful of its success. The South African government seems unlikely, at this stage to impose a compulsory licensing regime which has possibly prompted Cipla to approach the original patent holders.
As far as R & D is concerned, the company is working on two New Chemical Entities which are undergoing trials in New Zealand. The company has however conciously chosen a different route to R & D and that is to develop better processes for the manufacture of difficult to synthesise molecules. It is offering these intermediates and bulks to innovators and major generic companies. For this purpose it has filed 33 Drug Master Files in areas such as asthma, cardiology and oncology.
The stock quotes at Rs 1,100 which implies an earning multiple of 30.8 times 3QFY01 annualised earnings.
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