Staff costs of pharmaceutical companies, particularly that of Indian companies are shooting up in the country along with a spurt in their sales. As per the Pharmabiz study of top 75 companies, the staff cost went up by 12.7 per cent to Rs 3130 crore during the financial year 2005-06 from Rs 2777 crore in the previous year. The net sales of the companies moved up by 18.5 per cent to Rs 36059 crore as against Rs 30440 crore.
Out of 75 companies, staff costs of eight companies went up by over 50 per cent during 2005-06. The companies are Arch Pharmalab, Dabur Pharma, Elder Health care, Hiran Orgochem, Ind-Swift Ltd, Jupiter Bioscience, Lincoln Pharma, and Venus Remedies and increase was in the range of 52 to 202 per cent. The Venus Remedies' staff cost, though very small went up by 202 per cent during 2005-06 to Rs 2.63 crore from Rs 0.87 in the previous year. Similarly, the staff cost of the Elder Healthcare and Arch Pharmalab moved up by 121 per cent and 137 per cent respectively. Net sales of both the companies also increased by 85.7 per cent 58 per cent.
The eight companies' manage to reduce staff cost during 2005-06. The leading Indian pharma company Ranbaxy Labs has restricted its, staff cost at Rs 319 crore as against Rs. 328 crore in the previous year. The net profit of the company also declined to Rs 231 crore from Rs.528 crore in the previous year. The loss making Kopran Ltd, has reduced its staff coast by 23.2 per cent to Rs 10.49 crore. Granules India, with net sales of Rs 134 crore was also managed to reduce its staff cost by 11.7 per cent.
The leading multinational company, Wyeth has successfully reduced the staff cost by over 50 per cent to Rs 41.45 crore during 2005-06. The company's net profit increased smartly to Rs 67.72 crore from Rs 39 crore. In case of other MNCs operating in India namely Abbot India, AstraZeneca Pharma, Aventis Pharma, Fulford India, GlaxoSmithKline Phrama, Merck Ltd, Novartis India and Pfizer Ltd staff cost has gone up in the range of 1.4 per cent to 21 per cent. The staff cost of the Pfizer Ltd increased by 21.3 per cent to Rs 100.14 crore from Rs 82.55crore.
Out of the leading top ten Pharma companies, staff costs of Cipla, Dr Reddy's, Lupin, Aurobindo Phrama, Sun Pharma and Wockhardt went up by double digit during 2005-06. Tremendous growth in operations of Cipla has also resulted in a sharp rise in the staff cost by 26.4 per cent to Rs 147 crore from Rs.117 crore. Similarly, Lupin and Sun Pharma also witnessed a rise in their staff cost by 23.9 per cent and 22.9 per cent to Rs 156 crore to Rs126 crore and Rs 102 crore to Rs 83 crore.
As per the Pharmabiz study of 50 major pharmaceutical companies in the first half of the 2006-07, the employees cost went up by over 31 percent to Rs 1279 crore from Rs 976 crore in the corresponding period of last year. Companies like Cipla, Dr Reddy's Labs, Sun Pharma and Lupin have experienced a rise of their staff costs by 36.8 per cent, 29.4 per cent and 53.5 per cent respectively during the first half 2006-07. This trend is seeing in all major pharma companies and likely to continue the coming years. However, the multinational companies are not spending amount on staff cost as compared to Indian companies.
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