India's top ten pharmaceutical companies are moving ahead strongly, powered by R&D efforts, easy availability of talent pool and launch of new generics in the regulated markets. These companies are spreading their marketing activity through their strong manufacturing base. Despite several odds like tough approval laws in regulated market, currency appreciation and legal fights with cash-rich multinationals, Indian companies have established a strong brand image in the international area and created neck-to-neck competition for MNCs.
These companies are now looking for mergers and acquisitions, marketing tie-ups, technology upgradation and contract research & manufacturing activities for future growth. Over the years, top Indian companies have created strong reserves to grab up-coming opportunities in the new patent regime. The cost-effective products by Indian companies are playing a crucial role.
After passing through a difficult year in 2004-05, Indian companies have improved their financial performance during the first quarter of 2005-06. The net sales of top ten companies i.e. Ranbaxy Laboratories, Cipla, Dr Reddy's Laboratories, Nicholas Piramal, Lupin, Sun Pharma, Cadila Healthcare, Aurobindo Pharma, Wockhardt and Ipca Laboratories improved by 16.9 per cent to Rs 4289 crore from Rs 3668 crore in the corresponding period last year. Their net profit went up by 14.2 per cent to Rs 630 crore from Rs 551 core. Despite stiff competition, the companies have maintained good show on export front. These companies have offered good dividends to their shareholders and are enjoying high investor confidence.
The market capitalization of these ten companies on October 19, 2005 worked out to Rs 64,071 crore. Ranbaxy's market capitalization moved down to Rs 15,302 crore as its share was hit by the adverse decision of a UK court in respect of Pfizer's Lipitor brand. The share price touched a low of Rs 405 on October 19. Cipla's share with a face value of Rs 2 was quoted at Rs 382, down from its 52 weeks highest level of Rs 401. Its market capitalization worked out to Rs 11,485 crore. Sun Pharmaceutical's (Rs 5) share is currently traded at Rs 641 with a market capitalization of Rs 11,892. Dr Reddy's (Rs 5) share recently hit its 52 weeks peak level at Rs 975 but the volatile movements in the Indian stock markets during first half of October pushed it down to Rs 816 with a market capitalization of Rs 6252 crore.
To meet the future competition, top Indian companies are filing Drug Master Files (DMFs) as well as Abbreviated New Drug Applications (ANDAs) in the highly regulated markets. Indian companies filed the highest number of DMFs in the first quarter of current year. Dr Reddy's Laboratories filed 12 US DMFs during the quarter taking the total number of filings to 77. Aurobindo filed 6 ANDAs in US, 4 dossiers in Europe and 5 dossiers with WHO, taking total filings in the quarter to 15. It filed 5 DMF in US and 4 DMFs/ CoS in Europe.
Several companies have developed patents, which are at various stages of regulatory approval process. Leading companies have set up cGMP plants and received approvals from regulatory authorities like US FDA, MHRA, ANVISA, EDMF, MCC, etc. Several products manufactured by these companies are going through clinical trials.
Besides highly regulated markets like USA, Europe and Japan, Indian companies are spreading their operations in the countries like Russia, Ukraine, China, CIS, Africa, Middle East, Brazil and Latin America. They are restructuring their marketing operations by forging new relationships with large distributors. Further, Indian companies are expanding their overseas field staff.
Ranbaxy has taken over RPG (Aventis) in France and begun operations in France as one of the top 10 generic companies. It joined the elite club of billion dollar companies, achieving global sales of US$ one billion. Dr Reddy's Laboratories acquired Trigenesis Therapeutics Inc in US and Wockhardt acquired espharma in Germany. Sun Pharma, Nicholas and Cadila Healthcare also invested funds and acquired companies.
Considering the high cost of marketing in the US and Europe, Indian companies have established their own subsidiaries to look after regulatory affairs as well as new contracts. A few companies have established manufacturing facilities in Brazil, China, US and Europe. The subsidiaries have started generating income and boosting margins.