Renata continued its earnings momentum in the first quarter of FY27, reporting a 37% year-on-year increase in profit to Tk 1.02 billion, driven by higher sales, improved operating efficiency, and lower finance costs. The drug maker’s profit rose by Tk 276 million during the July-September quarter, while net finance costs were reduced by Tk 150 million through strategic capital restructuring and foreign-exchange risk management. The company attributed the earnings growth to improved gross margins, efficient procurement, and tighter expense management.
Revenue and Cost Management
Renata’s consolidated revenue increased 11.4% year-on-year to Tk 12.60 billion, driven by strong local and export demand for pharmaceutical products, particularly lifesaving drugs, amid outbreaks of diseases like measles and dengue. The pharmaceutical segment, accounting for 78.7% of total revenue, grew 8.6%, while the animal health segment surged 10.4%. Contract manufacturing revenue more than doubled to Tk 650 million during the quarter compared with the same quarter a year earlier. Export revenue, including that of subsidiaries, surged 58.8% to Tk 1.09 billion, reflecting the company’s efforts to diversify its overseas markets. The company now has a presence in 77 international markets across multiple continents.
However, the cost of sales rose 10.5%, slightly below the revenue growth rate, while the cost of materials increased 13% year-on-year. The higher materials cost was primarily attributed to a change in sales mix, with a greater contribution from products requiring higher-value raw materials.
Challenges and Opportunities
Energy costs increased 27%, including a 32.4% rise in diesel prices and an 18.6% increase in industrial electricity tariffs. Net finance costs fell 35.2% year-on-year, mainly due to lower borrowing costs and reduced foreign-exchange losses, supported by a shift from short-term borrowing to lower-cost long-term funding.
Strategic Focus and Future Prospects
Renata is focusing on redeveloping existing products for regulated markets, including the USA, Canada, Europe, and Australia, while expanding its pipeline of differentiated products, particularly injectables, anticancer formulations, and other specialized medicines. The company’s portfolio of 100 bioequivalent products, particularly those addressing chronic and non-communicable diseases, has helped secure product registrations and regulatory approvals across international markets.
The company’s annual profit surged 64% year-on-year to Tk 3.64 billion in FY26 despite modest revenue growth, supported by stronger operating performance and lower financing costs following its capital restructuring initiative. Despite adverse macroeconomic conditions and pricing constraints, Renata maintained its earnings momentum through effective cost management, operational efficiency, and a strategic focus on differentiated products. Akramul Alam, head of research at Royal Capital, noted that people now prioritize healthcare spending more than before, contributing to higher sales and profitability of drug makers.
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