My Cipla Holdings - looking for advice and opinions

Market Volatility :,factor%20when%20pricing%20options%20contracts.

13:00 news today :

“got to nibble some qty” : to buy ( note am not an SEBI analyst nor this is a recommendation )

“wind sailing ship due to news” : there will be movement in price of the shares based on the news -its one;s rational to think in terms of price movement based on the business industry understanding.

Hi @nithin_Shenoy,

Thank you for your reply.

Yes, I know what market volatility means. I just wondered what you were specifically referring to here. Since I have a lot of shares in a single company (planning to sell them, but haven’t done so yet), I tend to panic when the share price drops sharply for no apparent reason. I realise investors are not supposed to pay much attention to local price movements.

The news about Cipla being licensed to manufacture and sell Remdesivir was actually officially announced on Saturday 24th June. But I think it had been expected for some time. The stock price jumped up briefly on Monday morning, probably largely because of that news, but fell back quickly again. I expected it to go back down, but was surprised by how quickly it did so. So it wasn’t relevant to market movements today, Tuesday.

I’d appreciate feedback about whether to create a separate thread for Cipla. This seems reasonable to me, but there is no point if there is not sufficient interest.

Cipla is a well discovered widely covered stock in VP .Therefore a seperate thread at this stage will not generate enough debate. Secondly these significant movements on either side in shares is nothing new and there are various contributing factors.However to insulate oneself from these durations ,it’s always good to divide to kitty to 10-15 stocks from different sectors as best of stock can go to unimaginable levels and there is a chance of losing the substantial amount

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Hi @faheem With a comparatively small holding i am getting jittery, can only imagine what you must be going through… Last i heard your broker was asking to hold till 700, but now with this super quarterly results, keen to know what are they advising you. besides if you have read through the recent quarterly/annual results, whats your personal take on how far can this rally last Or have you already started booking some profits…Thanks!

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Cipla Q1 Concall notes -

  1. Company is working proactively to reduce its import dependence by diversifying its sourcing.
  2. Company has achieved a zero net debt status…a signifigant milestone. Cost saving initiatives drove the EBITDA margins to alomst 24 pc. Company expects lower operating expenses to the tune of 400-500 cr for the entire FY 21.
  3. India business ( branded presciptions , trade generics, OTC ) grew 16pc. Presciptions up 9pc, trade generics up 46 pc despite slowdown in actute portfolio. SA branded business grew 24 pc in constant currency terms. US business at $135 million backed by albuterol ramp up.
  4. Remdisivir sales started in Jul. R&D costs lower at 4.6 pc of sales due commercialization of albuterol and COVID impact. EBITDA margins at 24 pc, PAT margins at 13.3 pc. PAT at 660 vs 478 cr. Long term debt at $317 million due acquisition of Invagen ( in US ) and Mirren ( in SA ) and some other op-requirements.
  5. India rank in chronic therapies- 2nd, mkt share at 7.4 pc…company is strong in inhalation, respiratory, urology. Two brands - Naselin and Clocip transferred from trade generics to CHL franchise ( OTC ). Good traction seen in Ciphands ( OTC - hand sanitiser )
  6. Launched dihydroergotamine nasal sparay in US with 180 day exclusivity. Approval granted for Icatibant ( injection used to treat herditary angioadema…a key product ). Company has a strong pipeline of complex respiratory products.
  7. SA OTC growth at 9.3 pc vs mkt degrowth of 0.5 pc. Emerging mkt business up 50 pc YoY. Europe business up by 9 pc in dollar terms. Continue to engage with USFDA for Advair ( salmeterol ) approval.
  8. India business has been strong till now…in Q2. Plus last yr’s Q2 base was also low. Albuterol is a huge mkt ( 55-60 million units ). Pricing is also quite stable. Except for Lupin, no other competitor is likely to come in any time soon.
  9. Cipla is second highest seller of inhalation products across the world, behind GSK. Company intends to maintain and solidify its respiratory franchisee. Large portion of company’s resources and capital allocation would go in that direction.
  10. Company seeing good levels of stickiness in the India OTC brands. However, this is a small portion of business as of now. Areas where company plans to build up in OTC space are- nicotine replacement, Pain management, Vitamins etc. OTC area is gonna get a lot of management attention, its a key focus area for the. Some populatr brands- Clocip, Nicotex,Cofsils, Activ Kids etc.
  11. Cipla’s triple combo anti retroviral drug - TLD , doing well in SA. Company didnt disclose about its US launch as its an IP product.
  12. Company to license a number of bio similars and sell them in emerging mkts. A lot of filings have been made, partnership arrangements concluded. Value unlock may take 2-3 yrs.
  13. Company to ramp up certain selected APIs for captive as well as third party sales.

Disc: invested from Rs 630 levels.


Since I worked with Cipla (and with various pharma cos over my 35 yrs work life), I can give some qualitative inputs

  1. Cipla is one of the founders of pharma in India. What I mean is they have literally incubated many names . Dr Hamied had helped Ranbaxy in API manufacturing
  2. The two brothers Dr Yusuf Hamied and M K Hamied ran the company for the last 50 years
  3. They operated more from a patient centric approach and in my career in Cipla not once did the issue of profits etc come up (in contrast to many other pharma cos)
  4. The philosophy had percolated and permeated across the organization
  5. As a long term outcome, the company is a leader in many categories of chronic therapies,
    by a wide margin
  6. The two brothers are now in retirement from executive functions and the only som Kamil Hamied, is not working in the company. His sister Samina Vazirally joined the company a few years ago and is the chairperson
    7.Over the last 6 to 7 years, Cipla has tried to bring professional managers to run the company
    This had reduced skin in the game from an operations perspective, and also brought about the typical numbers and profit orientation, like any other company The spark is missing

This according to me, is the big difference


Strangely, to some companies the bringing of professional managers is many times a positive turnaround. Typically, period of stagnancy under family managers is followed by professional managers turning around the business. Why do you feel this as a negative event for long term? Are promoters and their next generation going to eventually distance from the company?

I had a question that never experienced off - the remdesivir wherein cipla & Jubiliant life sciences has taken into consideration to sell across India, Japan, South Africa & USA.

Can i consider this that government will have some slice of pizza? as the government had stepped in to ensure equal distribution of the medication across countries - how will the company instance do in this case?

  • Market tanked 9% when this news of Government came in that mentioned they will take in charge of distribution - surely not willing to bid speculative. I want to be sure.

Gilead is aiming to sell 2 billion remdesivir across the countries by 2020.

Am considering cipla, jubiliant, alkem would do well hand to hand for treatment and antibiotics (alkem)

There is no skin in the game
Professional mangers move from quarterly results to quarterly results
In case of Cipla’s promoters the main focus was serving patients
This was the fundamental differentiator in a cluttered pharma sector

Gilead the innovator has licensed many cos from emerging markets to manufacture and market remdesivir inj.

These licensed cos can sell the inj only in 122 countries
USA, EU GCC etc are not part of these counties

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update on a possible big drug for ciplas subsidiary

Cipla has posted robust q2 2021 performance both QoQ & YoY.

Cipla expects Surge in Demand for respiratory drugs & Inhalers in winter, says Mr Kedar Upadhye-CFO , Cipla…

During Q2 ,2021, it Ranks no.1 in Inhaler with market share of 68.7%. In Respiratory also it Ranks no.1 with market share of 28%.

Cipla Q2 concall highlights -

  1. Company has been able to sustain a good share of cost optimizations initiated in Q1 into Q2. EBITDA at 1177 cr, margins at 23.4 pc. Revenues up 15 pc yoy at Rs 5038 cr, India revenues up 17 pc yoy , PAT at 665 cr at 13.2 pc of sales, weakness in acute portfolio more than overcome by COVID and chronic portfolio, private branded South Africa mkt grew by 9 pc, tender business grew 28 pc, US generics reported a revenue of $ 141 million supported by Albuterol, healthy margin expansion in US business.
  2. Overall contribution of COVID products - less than 5 pc in revenues and EBITDA. R&D costs at 226 cr, all priority projects on track , expect R&D spends to increase going fwd as respiratory assets progress in clinical trials.
  3. Cipla’s rank in domestic respiratory segment -1, overall rank - 02 in chronic therapies. Consumer health ( OTC ) revenues at 180 cr for H1 - seeing very healthy growth.
  4. US business well supported by Albuterol, Esomeprazole oral suspension, DHE nasal sprays ( for migraine headaches ). Launched dimethyl fumarate ( for multiple sclerosis ) in Q2 - a limited competition product. Across the three Albuterol products - Proventil, Proair, Ventolin…Cipla’s generic mkt share at 11 pc. Generic pipeline - Advair and other complex inhalation products progressing well. US business profitability trending almost same as overall business inspite of Cinacalcet being in base.
  5. Cipla’s mkt share in SA ( private mkt ) - 7 pc, in SA OTC - 8.2 pc. Fastest growing pharma company in SA. Have entered in exclusive partnership with Alvotech ( a biopharma company ) for commercialization of 5 biosimilar candidates in immunology and oncology. European ops grew 24 pc YoY.
  6. Excluding COVID products, India presciption growth at similar levels as that of IPM ( mid single digits ). Including them, India presciption business grew by a mid teens.
  7. As of now, company doesnt believe that pricing is too much of an issue with Albuterol in US. Intend to keep gaining mkt share, at a gradual pace.
  8. Company hoping to save more than 400 - 500 cr this yr due digital technologies and maintain the same henceforth. Growth in South Africa mkt growth - sustainable. The same has been happening for last 8-9 qtrs.
  9. Truvada ( used for HIV / Hep B treatment ) - launched by Teva ( FTF - big opportunity ). Cipla is the API supplier. Its a descent product for the company.

Cipla investor PPT summary -

Overall sales - 5038 cr - up 15 pc YoY, India sales up 17 pc YoY, US sales at $ 141 million vs $ 135 million YoY, SA sales up 14 pc YoY

Ebitda - 1177 cr- up 29 pc YoY, margins at 23.4 pc up 266 bps, PAT - 665 cr - up 41 pc.

India revenues - 41 pc
US - 21 pc
SAGA - 18 pc
Europe - 5 pc
Emerging mkts - 9 pc
APIs - 4 pc

Cash balance - 3623 cr vs 2008 cr in Mar 2020, Net Cash - 453 cr vs (-) 807 cr in Mar 2020

Disc : invested


Cipla settled the case for Revlimed. I think no one had anticipated it. However I am unable to understand how will Natco, Dr Reddy and Cipla will make money out of it if even more players get an approval now?

Cipla Q3 concall highlights -

  1. EBITDA margins at 24.8 …highest ever in company’s history. On ground field activity has resumed, still digital adoption and tight cost controls- continue. On track to save 400-500 cr of operating costs.

  2. Strong cash flow generation. Repaid 137 million dollars raised earlier for Inva Gen acquisition. Also repaid 300 cr of working capital loans in India. So…thats about 1300 cr of lesser debt. Sep 20 …debt was at aprox 3200 cr. Long term operating margin guidence- between 17-20 pc. This Qtr sales included Covid related sales which may signifigantly moderate going fwd.

  3. Q3 sales at 5169 cr, up 18 pc. Gross margins at 61.4 pc, down 93 bps yoy. EBITDA at 1281 cr, margins at 24.8 pc. PAT at 748 cr, margins at 14.5 pc.

  4. India presciption business grew 25 pc !!! It was aided by COVID portfolio. Without the COVID portfolio, growth would have been arounf 6-7 pc. Respiratory portfolio grew 14 pc, Urogoly grew 8 pc, Derma grew 15 pc.

India Trade generics grew 7 pc.

Consumer healthcare recorded 9 month revenue of 250 cr.

US generics sales grew 6 pc to 141 million dollars. Good traction in Albuterol. Cipla now ranks no 1 in Proventil with mkt share of 86.4 pc. Overall albuterol mkt share at aprox 14 pc. US respiratory sales have crossed $ 100 million in 9 months.

US EBITDA margins are now close to company level EBITDAs.

Two complex assets in generics space are in pipeline. Clinical trials to begin shortly. These trials to cost a lot lesser vs what was spent in case of Advair. Advair TAD ( target action date ) date expected towards end of Q4.

South Africa - flattish sales growth in Q3. SA mkt rank -03, Mkt share at 7 pc. OTC mkt share at 6 pc, mkt rank -03.

Sub Saharan region growth at 15 pc.

Africa Tender business grew by 63 pc.

EM business grew 45 pc. European business up 28 pc.

API business grew 18 pc.

  1. In the next 12 to 18 months, expect highest ever number of launches in company’s history. Expect R&D spends to go up from FY22…say around 6-7 pc of revenues.

  2. One of company’s long term objectives in India and SA - to take up the consumer and OTC business to 10-12 pc of global sales.

  3. Over next 3-4 yrs, US sales expected to go up by 300-500 million dollars ( say 2200-3600 cr ). This range accounts for negative and positive outcomes.

  4. Company’s biosimilar play in EM is via in-licensing route, maintaining threshold margins. A lot of these are lined up for launches in next 2 yrs. This is expected to be a limited competition business and is expected to be decent in size as well.

Disc: invested.


Cipla – Q4FY21 Concall Update.
Outlook – Positive
The management sounded confident of sustaining and improving margins going forward. India business would see uptick from ramp up in Covid drugs whereas US is likely to grow on account of new launches

The stock is trading at 26.4xFY22E our earnings

• For full year the margins range has moved from historical 16-19% to 22% in FY22 and which, per management, is sustainable and likely to get improved hereon
• Gross margins were 60% - had ~200 bps impact due to inventory writeoff and certain overhead charge offs and one time sale adjustment for Albuterol. also due to product mix and seasonality, margins are lower in Q4; there is no structural changes in the business
• R&D – Rs 277 cr – as percent of sales, it is likely to moderate going forward
• On full year basis, Covid medicine contributes ~4% of total revenues
Going forward
o Ramping up Covid portfolio supply to increase availability and maximize patients reach
o Scaling up businesses across branded and generic DTMs of Europe and Emerging markets through execution on organic and partnered launches including biosimilars
o Expanding lung leadership globally and maximising value opportunity in US complex generics by prioritizing key launches with focused execution and collaborating with regulatory authorities
o Maintain market beating growth in large branded and unbranded generic franchises of India, South Africa and augment consumer wellness franchise

• Healthy volume trends emerging in core portfolio
• Witnessing strong volume trends across acute and respiratory portfolio
• Trade generics business - Healthy order flow across regions during the quarter; Strong demand tailwinds emerging across portfolio
• Consumer Health Biz – Rs 360 cr rev in FY21 - Continued traction in consumer brands post transfer from trade generics business;
Witnessing strong tailwinds which are likely to play out in Q1 and onwards on back of surge in Covid drugs, including Remdesivir and expected pick up in the antibody cocktail

US Generics
• $138 mn Q4 rev; FY21 $551 mn
• Had one time shelf stock adjustments for Albuterol due to entry of a competitor
• Continued market share expansion in overall Albuterol market and growth in institutional business - see some more expansion in Albuterol going forward - currently has 16.5% market share
• US’s full year profitability is very close to company level profitability
• Closely working with USFDA on gAdvair –would take 2-2.5 yrs for approval from the filed date which was May’20
• 2 Partnered peptide injectable filings during in FY21; includes one new drug application
• Full year FY21 EBITDA margins tracking close to overall company level
Reasonable launches in FY22 to drive the growth in US however big launches in FY23
• Paclitaxel is likely to launch in next few months and Lanthanum Carbonate is likely to get launched in 2HFY23

• South Africa - Solid momentum in private business; tender business in-line with expectations

Other markets
Emerging markets - Continued healthy demand across all regions; Expanded partnership for 4 biosimilars in Australia & New Zealand
Europe - grew 7% yoy in Q4, Front-end market entry into Spain
API - Continued traction with global seedings & lock-ins

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Cipla gets Key Diabetic Products portfolio from Eli-Lilly