It looks like the unstoppable growth has finally hit a snag; for the first quarter ended FY17, Ferozsons Laboratories has reported an enormous 58 percent fall in its top line year-on-year, while the bottom line dropped 71 percent.
The Lahore-based pharma giant had been reporting unprecedented growth figures since the introduction of Sovaldi - the breakthrough Hepatitis C drug from US multinational Gilead Sciences Inc. However, it seems the sales have lost their initial steam (even though the current quarter's top line is roughly twice what it was pre-Sovaldi; i.e. 1QFY15).
The slowdown comes amid lower-priced generics of Sovaldi being introduced in the market. Ferozsons introduced its own authorized generic - Savera - in June of this year. However, it seems to be in tough competition from other generics, as other manufacturers have introduced their own versions as well.
Gross margins inched up over last year, which further testifies to fewer sales of the low-priced Sovaldi. However, a corresponding decrease in SG&A expenses was not seen, and thus net margins took a hit of nearly 800 basis points. As for the deal with GE Healthcare signed earlier in the year (whereby Ferozsons would officially market its equipment in Pakistan), it is progressing slowly and did not have any significant impact on the company's financials during the period under review.
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