Business changes paying off for Indies Pharma
Price adjustments and inventory reorganisation are boosting the bottom line at pharmaceutical company Indies Pharma Jamaica. Commenting on the company’s improved out-turn, CEO Dr Guna Muppuri said changes to inventory management practices and workarounds for logistical arrangements also helped to bolster third-quarter performance.
“In some instances, we had surplus inventory to meet market needs, and in cases where the products sold well, that was good for us,” Muppuri told the Financial Gleaner, following the release of the company’s financial results.
For the third quarter ended July 2022, Indies Pharma recorded $265 million in revenues, an increase of $57 million, or 28 per cent, over the corresponding three months of 2021. For Muppuri, the correctness of the business changes implemented in the aftermath of the COVID-19 pandemic, is now becoming apparent. The changes are now rewarding shareholders, he said, noting that operational expenditure has plateaued, allowing increased revenues to flow to the bottom line.
Net profit for the three-month period is up 71 per cent to $73 million, from $43 million for the corresponding period in 2021.
“What we’ve done is to use long-term planning and projections, factoring all plausible delays and negatives. In addition, we have done a lot to identify and cauterise the bleeding edges,” according to the medical doctor and businessman.
Those “bleeding edges” Muppuri identified as items that represented a drag on other more profitable ones, depleting resources through overstocking, obsolescence and, in some instances, underpricing.
“A lot of that had to do with getting some of the non-performers out of the basket, so that they would not eat into the profitability of the stable performers,” he added.
He says the company had to resort to withdrawing some products, the prices for which have mushroomed since the pandemic and did not sell well at the increased price tags.
“Just by not supplying those items at 2019 prices, we were able to save a lot and not have the increases affect us,” the Indies Pharma CEO said, noting that the full effect of that action will not become apparent before 2023.
For the nine months ended July 31, 2022, Indies Pharma saw its net profit jump 81 per cent to $188 million, up from $104 million for the similar period in 2021 and already ahead of the $178.5 million for the full financial year ended October 2021.
“The trend is looking consistent. We are presently doing above 40 per cent year-on-year increase in profits,” said Muppuri.
“What we want is a smooth performance. What’s important is long-term sustainability and a positive impact on investments. Ultimately, we want to be consistently paying our shareholders dividends,” he said.