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Strides Arcolab Doubles Its Profits, Settles Regulatory Issues With Mylan for $70m

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Strides Arcolab – a pharmaceutical company engaged in differentiated pharma generics, branded generics, and bio-pharma products.
Driven by Formulations business growth of 20%, Star reported 9% growth in revenues at Rs. 870 crore against Rs. 710 crore. Net Profits jumped to Rs. 85.53 crore from Rs. 37.53 crore.

  • Global Business Pharma in all 3 regions i.e. Regulated, Emerging (While the new plants in Sudan, Cameroon and Mozambique are on track, Africa continues to face macro headwinds and currency challenges) and Institutional Business (driven by a healthy performance in the anti-malarial portfolio) clocked double digit growth with the lowest at 18%.
  • A significant infrastructure upgrade was performed at both its API facilities in Pondicherry and Cuddalore which caused a planned/temporary suspension of production leading to less than 50% capacity.

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  • Both Australia and North America witnessed increased market share.
    • Australian business growth was on the back of improved compliance for Arrow portfolio with increasing realizations.
    • North American performance was driven by a healthy sales traction for new molecules and a strong 15-20 product approvals are expected over the next 12 months.
  • For the first half of the year, the company has had 5 product approvals including Polyethylene Glycol 3350, Powder for Solution (OTC) (MV US$ 260 Mn) and Ranitidine tablet (MV US$ 125 Mn).
  • Guidance for H2 FY 2017 – EBITDA range would be Rs. 440 crore to Rs. 475 crore (combination of volume and margin) and ANDA filings between 10 to 12 products. The company will start commercial supplies of one of the key products Sevelamer Carbonate to its launch partner in H2 FY 17
  • Star has expensed close to $90 million related to the Agila Settlement (as mentioned here).

Arun Kumar, Executive Vice Chairman and Managing Director, stated

It has been a comeback quarter for the emerging markets with the strategic intervention over the last few quarters yielding the desired outcome. The regulated markets and the institutional business continue to deliver healthy growth with an improved sequential performance on a higher revenue base. API performance during the quarter was impacted due to planned /temporary suspension of production at company’s facilities in Pondicherry and Cuddalore for a significant upgrade of infrastructure. Both the plants are back in operations at full swing.