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Cipla’s revenue grows 59% as Covid-19 pandemic creates new markets

While most manufacturers saw a decline in productivity rate, at Cipla, operations and output were maintained at “near normal” during the Covid-19 lockdown period.
posted onNovember 17, 2020
nocomment

Cipla Quality Chemical Industries Limited (CiplaQCIL) announced its revenue had grown by 59.7% from Shs76.7 billion to Shs122.6 billion in the six months ended September 30 compared to the same period in the previous year.

According to an unaudited condensed interim financial statement signed off by Emmanuel Katongole, the executive chairman and Nevin Bradford, the chief executive officer – the company’s normal manufacturing sales grew by 34.9% from Shs76.7bn in the previous period to Shs103.5bn due to new customers in the export segment.

On the other hand, lower margin contract manufacturing and raw material sales rose to Shs19.1 billion.

There was no contract manufacturing and raw material sales in the previous period.

While most manufacturers saw a decline in productivity rate, at Cipla, operations and output were maintained at “near normal” during the Covid-19 lockdown period.

“Provision of accommodation for key workers, company transport and rigorous COVID-19 preventative regimes enabled the Company to maintain a greater than 98% attendance record and increase output to meet additional demand,” reads the statement.

This also helped the company supply ARV’s and malaria treatments to countries that couldn’t maintain supplies.

For instance, Cipla delivered a US$6.5 million TLD order to Botswana (one million packs) which was facing supply challenges from its normal ARV suppliers.

It also continued to deliver essential lifesaving ARV’s and ACT’s overland to Southern African Countries such as Malawi, Zambia and Zimbabwe and by air to South Africa, Nigeria and Botswana amongst others.

According to official information, in the first half of the year, exports at $18.9 million represented 58% of sales.

Cipla exported ARV’s worth $7 million to South Africa, $6.5 million to Botswana and ACT’s worth $1 million each to Malawi and Kenya.

It also exported ACT’s to Nigeria and Rwanda for the first time.

The medicine maker has also secured regulatory approvals in 15 African markets and made new applications to the Democratic Republic of Congo and Madagascar.

CiplaQCIL received WHO Pre-Qualification approval in September 2020 for its first line ARV, TLD, officials said.

The company says it’s still productively engaging the government of Zambia (“GoZ”) on payments and it also made an additional and final impairment allowance of $2.6 million in line with the requirements of IFRS 9.

“The GoZ has reiterated its intent to clear the outstanding receivables as soon as possible,” reads the statement.

“Any reduction and/or clearance of the outstanding balances from GoZ will result in a reversal of the impairment allowance in H2 to that extent.”

Cipla’s gross margins reduced to 8.5% in the current period from 20.1% in the previous period mainly due to increased production costs resulting from the higher cost of raw materials.

The increase in the cost of raw materials was mainly due to international supply shortages during the COVID-19 lockdowns of suppliers’ countries, officials said.

General and administrative expenses increased by 16.9% to Shs20.6 billion in the current period mainly due to additional costs to manage staff safety risks associated with the Covid-19.

The impact of the additional costs was partially offset by savings on international travel expenditure, say officials.

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