India’s Zydus Q2 profit jumps on strong domestic, US demand

HYDERABAD (Reuters) – Indian generic drugmaker Zydus Lifesciences Ltd reported a better-than-expected 53.3% jump in quarterly profit on Tuesday, led by the strong sales in the domestic market and the United States.

Consolidated net profit was 8.01 billion rupees ($96.2 million) in the quarter ended Sept 30, compared with 5.23 billion rupees a year earlier. Analysts, on an average, expected a profit of 7.58 billion rupees, per LSEG data.

Total revenue from operations rose 9.1% to 43.69 billion rupees, boosted by the strength in U.S. formulation segment, which constitutes 44% of the business.

India’s generic drug makers, which draw a significant share of revenue from the crucial U.S. market, are recovering from the effects of eroding prices in the largest drug market in the world.

Zydus’ U.S. formulation revenue rose 9.2%. The company had in August said the business will be boosted by the sales of lenalidomide capsules, a copy of popular cancer drug Revlimid, through the year.

The company, which also makes complex biological drugs biosimilars and vaccines, reported a 4.8% rise in India revenue.

“Going ahead, differentiated launches in the U.S., in addition to a rebound in India business growth which was constrained by delayed seasonality, will be critical drivers,” Managing Director Sharvil Patel said in a statement.

Patel expects sustained growth in profit this fiscal year, with a more than 24% margin on earnings before interest taxes, depreciation and amortisation.

Shares of Zydus rose 1.34% after the results, compared to a 1.12% rise in the Nifty Pharma index.

On Monday, unit Zydus Wellness Ltd, which makes consumer brands, reported a more than 30% drop in second-quarter profit, hit by a one-off tax expense.

Last month, rivals Dr Reddy’s and Cipla, topped quarterly profit estimates, led by strong U.S. demand.

($1 = 83.2580 Indian rupees)

(Reporting by Rishika Sadam; Editing by Dhanya Ann Thoppil)