Indies Pharma hit by some logistics challenges, unavoidable COVID-19 costs
Pharmaceutical company grows revenues but profits shrinkWednesday, June 16, 2021
BY DURRANT PATE
Montego Bay-based pharmaceutical company Indies Pharma is still suffering the effects of COVID-19, as the company has been hit with logistics challenges and unavoidable costs due to the pandemic.
For the half-yearly period ended April 30, 2021, the company blamed global and local safety measures that led to some logistics challenges and unavoidable costs for its gross profit declining by seven and 20 per cent for the second quarter. This is due to higher costs caused by logistical challenges and unavoidable costs.
Indies Pharma advised shareholders that, “these costs are firstly, increased sea and air freight charges, which were further compounded by the urgent need to acquire, by air freight, some out-of-stock items. Secondly, the company was also impacted by the cessation of in-store and outdoor marketing activities as well as lower consumer disposable income that led to a one-off writing-off of expired goods which had been launched pre-pandemic. These were primarily non-prescription over-the-counter herbal supplements.”
In an effort to drive channel loyalty while supporting customers, Indies Pharma made the strategic decision of distributing short shelf-life products to customers, free of cost.
Net profit down 40%
Net profit for the half year was down 40 per cent to $68 million compared to the $109 million for same period in 2020. For the second quarter 2021 net profit was $20.4 million compared to $69 million in 2020. Net profits for 2021 was also impacted by higher finance cost associated with the bond issued in the second half of 2020.
For the half year period, Indies Pharma's gross revenues were slightly up amounting to $424.2 million compared to $400.9 million in the comparable period in 2020. The second quarter ended April 2021 shows a decrease of three per cent from $207.2 million to $200.7 million compared the similar quarter ended 2020.
Indies Pharma's co-founder, executive director & COO Vishnu Muppuri advised that, “the company continues to maintain a steady performance and remains healthy and consistent, even though net profit during this period was impacted in support of the customer loyalty, the write off of expired goods, as well as the interest expenses associated with the bond issue, benefits of which the company expects to reap in the short to mid term.”
She contends that, “Indies Pharma continues to do its best in this challenging business environment through strengthening its intellectual property (new drug approvals for the US market), tangible assets (prime real estate) and relations with customers, shareholders and its employees.”
Earnings per share (EPS) for the six-month period was $0.05 cents per share compared to $0.08 cents in the prior period 2020. For the second quarter EPS was J$0.02 compared to J$0.05 last year. The 2021 year to date total assets stood at J$1.6 billion compared to J$1.4 billion in the comparative period 2020.
Long-term liabilities climbing
Shareholders' equity was $709 million compared to $875 million last year, which was due to dividend payments over the period. Long-term liabilities increased to $964.6 million from $567 million in the prior comparative period and as stated in previous quarters this is as a result from the $805-million bond attained towards “Growth Capital” which was used to repay the loan of J$398 million used for the purchase of real estate and to fund the development and approval of two new drugs at the US FDA for the United States market.
Additionally, the adoption of IFRS 16 'leases' continues to affect liabilities which requires a lease liability to be recorded.
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