Cipla Limited is a pharmaceutical and biotechnology company.

Cipla strengths in the respiratory,

anti-retroviral, urology, cardiology, anti-infective and CNS segments are well-known.

Main business drivers are prescription, generic and API.

Financial Performance: -
Performance in different regions:-
India: - There is a strong presence in Cipla has 1 st position in respiratory, urology and anti-virals. It
has 4th position in Cardiology & 2nd in the chronic segment.

Asian markets:- No 1. in Respiratory in Sri Lanka1 , No 1. in Asthma and CNS in Morocco1 , No 1. in

Respiratory in Nepal, No 1. in Anti-Retrovirals in Myanmar1

South Africa, Sub-Saharan Africa:- Cipla became the 3rd largest in South Africa as private market
company. They are trying to increase their presence and create strong market in other African
countries.

North America:- It contributed 21% to the Company’s revenues, a total of USD 488 million
registering a growth of 18% over FY 17-18 driven by sales ramp-up in new launches and contribution
from the phased and IPenabled launch of generic Sensipar® (Cinacalcet). With a conscious focus to
improve our DTM presence, the DTM market grew (~1.5x over FY 17-18).

Opportunities: -They are huge scope of respiratory products in USA if it gets FDA approval. They
want to expand to china as future growth market. They are trying to expand their FMCG business
.There is huge spending on R&D on new products and API. There is a joint venture between Cipla
and Manipal Group has been focused towards driving cutting edge Stem Cell research. They are
developing Anti-Diabetic & Inhaled Insulin in partnership. There has been reduction of inventory
and decrease in dead stock.
Risk: - The plant does not work up to U.S FDA standers they won’t be able to export to USA. The
emerging markets have import restrictions and high currency fluctuations. In the Europe, the
uncertainties around Brexit will continue to present a challenging regulatory environment.
In India there is National List of Essential Medicines (NLEM) expanded to cover more life-saving
drugs under price regulation.
Financial Performance: -

Source of Revenue

Q3 2020 (in cr.) Q3 2019 (in cr.) Q2 2020 (in cr.) Q2 2019(in cr.)
PAT 351 332 471 377
EBITDA 758 720 909 753
REVENUE 4371 4008 4396 4012

 ROCE & EPS has been increasing from past 3 years.

 Debt to equity has been decreasing from last 4 years it has come down to 0.10 in 2018-19 ,
loan of US$ 110mn repaid during the Q2-20 quarter, one year ahead of schedule.
 Total Non-current have been reduced from 9156.80 cr in the year 2018 to 8940.16 cr in the
2019.
 Total current assets have increased from 7,938.17 cr in the year 2018 to 9,476.65 cr in the
year 2019.
 There is total increase in assets 1383.84 cr from the year 2018 to 2019.
 The liability of the company has increased little but the main reason was increase in equity
shareholders and all other borrowings have decreased majorly.

Management’s Focus: - They are expecting strong growth from new product
launches and try to continue their R&D in same speed. They want to shift their product from generic
to specialised products & consumer health business. They want to make cipla as a global brand
name and franchise globally.

Interpretation from conference call: -

 The management is expecting increase in profits because of reduction in inventory cost and
reduction in expired products by 200 basis points.
  The company will has got the approval from USFDA for 6 out of 8 plants, Goa & Bengalore is
pending.
 Company focused on establishing businesses in China, other than the markets of Australia,
New Zealand, Algeria, Morocco and some parts of Southeast Asia.
 Company wants to give more focus to prescription & otc products than generic.
 Company will use 1% of sales to buy companies through M&A or other process & continuous
to spend 7% or more on R&D on products.
 Cipla has 63.5 % the gross margin for the business.
 They will get approval to launch new products next year in us markets as it takes 1.5 yrs to
get approval.

Positive & Negative for the stock

Positive Negative
 Extremely low debt just 0.04 %  Extreme competition in generic
business and paper-thin margin.
 Huge focus on R&D  Depends heavily on china for raw
materials.
 Tries to be market leader in its  High interference from govt for
segment price control
 Focusing on prescription, otc,  Not getting approval from FDA and
specialized business various other agencies to sell the
product.
 Global presence with strong  Unitability in emerging markets &
portfolio in various types of import quota restrictions.
segments.
