Gland Pharma Q3 Revenue Down 10.4%, French Unit Cenexi Continues to Bleed

Gland Pharma's shares fell 3.3% as Q3 revenue dropped 10.4% due to production setbacks at its French unit Cenexi. Cenexi's sales declined due to regulatory inspections, pushing breakeven back by a year. Jefferies and InCred Equities downgraded their ratings, while Citi maintained a "sell" rating due to the company's inability to optimize its manufacturing setup.

Gland Pharma Ltd, a prominent drug firm based in Hyderabad, India, reported a decline in revenue for the third quarter that ended December 31, 2024. The company's shares fell by 3.3% in response to the news [1]. The revenue drop was attributed to production setbacks at Cenexi, a European contract development and manufacturing organization (CDMO) acquired by Gland Pharma in 2022.

Cenexi's Fontenay site in Paris faced unannounced inspections by the French health authority, ANSM, leading to production disruptions [1]. However, the site's new high-capacity ampoule line began production as scheduled, increasing ampoule manufacturing capacity by 40-50 million units. This expansion is expected to enhance customer service and mitigate the impact of the regulatory inspections.

The revenue decline also pushed Gland Pharma's breakeven back by a year [1]. As a result, Jefferies and InCred Equities downgraded their ratings on the stock, while Citi maintained a "sell" rating due to the company's inability to optimize its manufacturing setup [1].

Despite the revenue drop, Gland Pharma reported a 6.7% year-on-year increase in net profit at ₹204.7 crore for the third quarter [1]. The company launched 13 new molecules during the quarter, including chlorpromazine, dexamethasone, phenylephrine, phytonadione, and diphenhydramine [1]. Gland Pharma also filed four ANDAs (abbreviated new drug applications) and received approvals for eight during the quarter [1].

The company's R&D expenses for the quarter stood at ₹437 million, accounting for 4.3% of revenue [1]. Gland Pharma received establishment inspection reports (EIRs) from the FDA for its Dundigal and Pashamylaram facilities in Hyderabad, confirming the successful closure of recent inspections [1]. The company incurred a total capital expenditure of ₹1,379 million during the quarter ended December 31, 2024 [1].

In conclusion, Gland Pharma's shares experienced a decline on the news of a revenue drop and production setbacks at Cenexi. However, the company reported a net profit increase and made progress in launching new molecules and expanding its manufacturing capacity.

References:
[1] "Gland Pharma share price, Q3 results: Net profit, EBITDA margin up; revenue dips." CNBCTV18. February 3, 2025. https://www.cnbctv18.com/market/stocks/gland-pharma-share-price-q3-results-net-profit-ebitda-margin-up-revenue-dips-19551905.htm