The major pharmaceutical companies in the northern parts of India reported a mixed bag of fortunes during 2007-08 and the quarter ended June 2008, largely due to rupee appreciation and increased investments in plants, machines and research and development (R&D), while small and mid cap companies in the region are still battling for their existence with poor turnovers. However, most of the major companies in the region stepped up dividend to their stake holders, thanks to the steady rise in the share prices of these companies during the first eight months of 2008.
But the overall market capitalisation of the major companies remained under pressure with the volatile movements. An analyst, who doesn't want to be identified, pointed out that the government support will boost the overall business operations with higher returns in the coming year. "Exports from these units will also see higher volume. Besides, with current good manufacturing practices (cGMP) compliant plants as per US Food and Drug Administration (FDA) norms in their kitty, these companies will attract multinational companies to invest or tie-up for cost effective products," the analyst added.
Since the Northern India enjoys a strong manufacturing base, several multinational companies are rushing to this region. Recently Daiichi Sankyo of Japan acquired Ranbaxy Laboratories, while German multinational Fresenius Kabi took over Dabur Pharma. There may be several more deals like these in the near future, as this region is very cost effective as compared to other parts of India.
Ranbaxy goes Japanese
The original promoters of Ranbaxy Laboratories, the India's leading pharmaceutical giant with a consolidated revenue of Rs 7090 crore, have decided to sell their entire stake (34.8 per cent) to Daiichi Sankyo of Japan. Further, Daiichi plans to acquire up to 9,25,19,126 fully paid-up equity shares of face value of Rs 5 each from the remaining shareholders (other than the parties to the Share Purchase and Share Subscription Agreement (SPSSA)) of the Ranbaxy, representing 20 per cent of the emerging voting capital of the Ranbaxy at a price of Rs 737 for each fully paid up equity share, payable in cash and in accordance with the regulations, subject to the terms and conditions mentioned in the offer.
During the second quarter ended June 2008, Ranbaxy Laboratories reported consolidated net profit of Rs 161 crore excluding the foreign exchange gains or losses on translation, almost on the same lines of the previous year, while its net sales increased by 13 per cent to Rs 1830 crore from 1624 crore in the corresponding period of the last year.
Commenting on the company's performance, Malvinder Mohan Singh, chief executive officer (CEO) and managing director (MD), Ranbaxy, said, "Most striking has been our path-breaking deal with Daiichi Sankyo, which I believe will substantially alter the rules of the game and re-define the global pharmaceutical landscape. We have the early mover advantage and are best placed to gain from the complementary strengths of our partner in capitalising on the opportunities available across the entire pharmaceutical value spectrum. We expect performance to be stronger as we move through the rest of the year."
The company's consolidated sales improved by 11 per cent to US $440 million during the quarter under review. Developed market led by USA and Canada contributed 40 per cent of its global sales, while the emerging markets contributed 53 per cent of its global sales. While developed markets registered a growth rate of 12 per cent, emerging markets recorded a growth rate of 9 per cent. The company's active pharmaceutical ingredient (API) business reported a growth of 31 per cent, while international sales of dosage forms increased by 12 per cent to $318 million.
Ind-Swift reap profits
The Rs 450 crore plus Ind-Swift Laboratories has performed well during the first quarter ended June 2008. The company's net profit moved up sharply by 88.6 per cent to Rs 10.05 crore from Rs 5.33 crore in the similar period of the last year. Its net sales also increased by 35.1 per cent to Rs 139.76 crore from Rs 103.48 crore.
Nectar Lifesciences' earnings swoop
The Mohali-based Nectar Lifesciences, an Rs 735 crore pharma company, reported a quantum jump of 40.9 per cent in its net profit in the first quarter ended June 2008. The company posted a net profit of Rs 24.10 crore, up 40.9 per cent from s 17.11 crore in the corresponding period of the previous year. The company's net sales increased by 16.9 per cent to Rs 185.44 crore from Rs 158.59 crore in the first quarter of the last year.
Venus Remedies - Eyeing Kenyan pie
One of the fastest growing pharma companies in this region, Venus has received good manufacturing practices accreditation from the Pharmacy and Poisons Board, Ministry of Health, Kenya for its manufacturing facilities at Baddi Campus after detailed inspection.
This certification has opened the Kenyan markets for the company's products. The company filed 28 product dossiers for its range of cephalosporin, carbapenem and oncology formulations for registration in Kenya. Out of these, the company has already registration for 8 products. Also, Venus has tied up with one of the leading pharmaceutical distributors of Kenya.
Fresenius' Dabur dreams
Dabur Pharma, which makes anti-cancer drugs, is now worth about 10 per cent higher than its market capitalisation of $273 million, thanks to the takeover by German multinational Fresenius Kabi, a global health care group with products and services for dialysis, hospital and the medical care of patients at home.
German multinational Fresenius Kabi, which has completed the takeover of Dabur Pharma, is expected to invest Rs 190 crore in the next couple of years to double the capacity of active pharmaceutical ingredients (API) plant and expand Dabur Pharma's oncology business globally.
"We will invest up to EUR 30 million to double the capacity of API manufacturing facility of Dabur Pharma located in Kolkata and also in getting regulatory approvals for newly built formulation plant in Baddi," said, Rainer Baule, president and chief executive officer (CEO), Fresenius Kabi.
Also, Fresenius Kabi is working on increasing the business of Dabur Pharma to regulated markets such as Europe and North America. Founded in March 2003, the fully integrated pharmaceutical business of Dabur Pharma covers the oral and injectable finished dosage forms and active pharmaceutical ingredients and intermediates. The company has its manufacturing units for finished dosage forms in Bordon (UK) and Baddi (India), while the active pharmaceutical ingredients (APIs) are manufactured in Kalyani (India).
Jubilant Organosys - Time of setbacks
Jubilant Organosys, one of the largest custom research and manufacturing services (CRAMS) company, suffered heavy setback during the first quarter ended June 2008 on account of unrealised exchange loss. The company's consolidated net profit declined sharply to Rs 12.76 crore from Rs 142.86 crore in the corresponding period of last year.
The company has shown exceptional item of unrealised exchange loss of Rs 107.59 crore on restatement of foreign currency borrowings, including FCCBs in the current quarter, compared to unrealised gain of Rs 87.88 crore in the similar period of the last year.
However, the company's profit before exceptional items, interest and taxation increased by 59.5 per cent to Rs 139.58 crore from Rs 87.53 crore, despite significant rise in staff cost.
Its pharmaceutical sales increased to Rs 522 crore from Rs 303 crore, while its sales of industrial and performance products went up to Rs 304.87 crore from Rs 237.37 crore in the corresponding quarter of the prior year.
Panacea -- Sinking?
Panacea Biotec, the second largest vaccine producer in India, has two plants in New Delhi and one each in Punjab and Himachal Pradesh. Its brands reach more than 35 countries globally. Currently, more than 250 scientists are working in the company's four state-of-the-art R&D centres. The company has successfully commissioned soft gelatine capsules facility at Baddi with a capacity of around 15 lakh capsules per year.
During the first quarter ended June 2008, the company's net profit fell 27.9 per cent to Rs 34.05 crore from Rs 47.25 crore in the corresponding period of the prior year. The company stated that the net profit has been adversely affected due to exchange fluctuation loss of Rs 21.82 crore as against exchange fluctuation gain of Rs 6.28 crore in the last period.
The company's net sales also declined on account of lower sales of vaccines. The net sales declined by 3.8 per cent to Rs 224.48 crore from Rs 233.43 crore. Also, Panacea's sale of vaccines declined by 13.4 per cent to Rs 159.67 crore from Rs 184.30 crore in the same period of the last year. However, its net sales of formulations moved up by 33.1 per cent to Rs 66.70 crore from Rs 50.11 crore.
Notwithstanding poor financial performance, Panacea has successfully pre-qualified by World Health Organisation (WHO) for its innovative pentavalent combination vaccine for paediatric immunisation - Easyfive (DTP-HepB-Hib). The company has commissioned its vaccine formulations plant at Baddi and launched a new injectable vaccine, Polprotec (inactivated polio virus) in pre-filled syringe device from this facility.
During the quarter, Panacea has collaborated with Umkal Group to set up a 220 bed super speciality hospital in Gurgaon with the most modern equipment.