CIPLA(Chemical, Industrial & Pharmaceutical Laboratories) was established by Khwaja Abdul Hamied in 1935 who gave it an upstart giving access to his intellectual property rights in drug formulations and manufacture. It is one of the oldest pharmaceutical companies in India. It is India’s second largest pharmaceutical firm and has recently displaced Glaxo SmithKline in its upward journey.

Today, CIPLA is a leading player in manufacture of anti-infective, anti-asthmatic formulations, steroids and hormones. In 1968, it became the first Indian company to manufacture Ampicillin.In collaboration with the National Chemical Laboratory, it synthesized 2 anti-cancer drugs Vinblastine and Vincristine in the year 1983 from the Rose, Vinca Rosea.Later in the year 1993,it pioneered the manufacture of the anti-retroviral drug zidovudine in association with the Indian Institute of Chemical Technology. In 1997, it became the first company in the world to make Rotahaler, a dry powder inhaler device. In 1998, it launched the final component of retroviral combination therapy, Lamivudine. With this launch it became the one of the few companies in the world to offer a comprehensive treatment aids to persons suffering from bronchial disorder. It has been approved to make non-nucleoside reverse transcriptase inhibitor, nevirapine for treating AIDS.

Cipla is spending 4% of its revenues on research. It has been filing for number of approvals to protect intellectual property rights in US and elsewhere. Its presence in AIDS treatment is significant as it helps treating more than 2 lakh persons infected with AIDS. Significantly it has collaborated with Clinton foundation to treat ailing young people in a social responsibility move CIPLA has business relations with nine  companies covering 125 products that underpins its access to alien markets. Its collaboration with Pentech Pharma of US has opened up a window for marketing a large range of generic products besides pursue efforts in developing therapies for enhancing living style and comfort. This high value and large margin segment is expected to help its growth in US and other developed markets. Presently exports account for more than 50% of its revenues it exports more than 180 countries being a cost effective maker of many drugs especially AIDS and inhalers etc. It has received many awards for its healthcare products and corporate excellence in promoting low cost cure.

It has manufacturing facilities at six locations including Mumbai and Bangalore. CIPLA has many firsts to its credit in drug manufacturing. Bulk drug for general infections, anti cancer, medicinal aerosols, AIDS cure, CFC free inhalers are some of the basic drug or formulations it has offered to the consumers. Its product range includes OTCs to animal health. Research based active pharmaceutical ingredient or bulk drugs also form a large part of it production and turnover.

Financials

Cipla has announced quarterly results recently.

Rising input costs and regulated prices are affecting its margins in last quarter. There has been healthy growth in turnover. The large equity capital is constraining earnings growth. The growth in earnings however are impressive at 43% over the previous although the growth in sales has been low at 19%. This was possible as the margins have improved by more than 15%.

Stock Outlook

The shares of CIPLA are trading at Rs. 210. Price chart reveals a side wise movement of the stock. Pharmaceuticals stocks are not very much affected by inflation and interest rates as health care spending are unlikely to change despite price rises. Long term investors can accumulate this stock at price falls from the current levels to benefit from the company’s continued good performance.