MOSL: GSK PHARMA (Neutral)-Lower margins impact earnings, despite healthy sales growth
GSK Pharma: Lower margins impact earnings, despite healthy sales growth
(GLXO IN, Mkt Cap USD3.3b, CMP INR1402, TP INR1330, 5% Downside, Neutral)
- Sales grew at robust rate of ~17% YoY to INR8.3b as against our est. of INR7.7b, led by better traction in dermatology and hormones category. Gross margin (GM) declined sharply by ~650bp YoY and ~360bp QoQ to 53.6% due to change in product mix. EBITDA margin contracted by ~350bp YoY to 16.6%, primarily due to decline in GM. This was off-set to some extent by lower employee expense/other expenses, which were down ~240bp/~60bp (as % of sales) YoY. EBITDA declined ~3% YoY to INR1.4b as against our est. of INR1.6b. Despite margin contraction, PAT increased ~26% YoY to INR1.1b due to better revenue growth, one-time income of INR230m from property sale, and INR50m from non-core brand divestments. Adjusting for exceptional income, PAT declined by ~5% YoY to INR949m as against our est. of INR1.2b. For 9MFY19, sales stood at INR23.8b (+11% YoY), EBITDA at INR4.4b (+25% YoY) and PAT at INR3b (+29% YoY).
- Healthy performance in GLXO’s top therapy and products: GLXO’s secondary sales grew by 6.5% YoY as against 9.5% growth in the Indian Pharmaceutical Market (IPM). Most of GLXO’s top 10 products grew at a healthy rate during the quarter. Its largest product — Augmentin, grew by ~11% YoY, while its third largest product — Synflorix, grew by ~13% YoY. Of GLXO’s top three therapies (contribute ~60% to overall sales), Derma registered highest growth of 13.5%, followed by Anti-infectives (+6% YoY) and Vaccines (+4% YoY).
GlaxoSmithKline Pharmaceuticals Limited is a pharmaceutical company. The Company and its subsidiary are engaged in the business of manufacturing, distributing and trading in pharmaceuticals. The Company develops a range of products in approximately three areas, including pharmaceuticals, vaccines and consumer healthcare. The Company's product portfolio includes prescription medicines and vaccines. The Company's prescription medicines range across therapeutic areas, and it also offers a range of vaccines for prevention of life-threatening diseases, such as pneumococcal disease, meningitis, hepatitis, rotavirus, whooping cough, small pox and influenza. It provides healthcare solutions to patients, with a range of prescription medicines across areas covering anti-infectives, dermatology, gynecology, diabetes, oncology, cardiovascular disease and respiratory diseases. The Company's manufacturing unit is located at Nashik, and its clinical development center is located in Bangalore.
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