Zydus Lifesciences quarterly profit falls sharply as costs surge

Zydus Lifesciences (ZYDU) reported a near-third drop in first-quarter profit last month, as surging costs erased the benefit of robust sales growth across its domestic and consumer wellness operations.

Consolidated net profit fell to 9.40bn rupees ($98.5mn) for the quarter ended June 30, down from 14.67bn rupees in the same period a year earlier. While overall revenue climbed 22% to 80.17bn rupees, total expenses rose at a sharply faster pace of 41.4%, dragged by a more than 32% jump in research and development costs and a 47.5% increase in other operating expenses.

The Ahmedabad-based company's domestic India sales rose 19.5% to 18.16bn rupees, while its consumer wellness division — home to brands including Glucon-D — surged 67.2% to 14.29bn rupees.

North America, however, remained a weak spot, with sales in the region slipping 2.6% to 30.98bn rupees. Indian generic drugmakers derive a significant share of revenue from the US market but have struggled with soft pricing amid intense competition. Zydus was not alone in facing US headwinds during the quarter: larger rivals Dr. Reddy's Laboratories (REDY) and Cipla (CIPL) also reported subdued American sales.