Pharmabiz
 

Sluggish growth in sales and profit by 75 pharma cos in first half of 2009-10

Sanjay Pingle, MumbaiMonday, November 30, 2009, 08:00 Hrs  [IST]

Indian pharmaceutical sector has failed to generate any noticeable growth in top line and bottom line during the first half of the year ended September 2009 as per a Pharmabiz study covering 75 leading companies. The two main reasons for the lackluster performance are the general recessionary conditions in the international markets and higher interest costs. Increased tax burden also contributed to lower profit growth. The net sales of these companies increased only by 11 per cent to Rs 33,069 crore during the first half of 2009-10 as against Rs 29,785 crore in the corresponding period of last year. Though the net profit, after forex and other adjustments, increased by 26.5 per cent to Rs 4,449 crore from Rs 3,517 crore, the net profit before these adjustments improved marginally by 1.4 per cent to Rs 4,450 crore from Rs 4,390 crore. The Pharmabiz Study of 75 listed companies, with their financial year ending in March, revealed that consolidated working of major companies like Dr Reddy's Labs, Cipla, Lupin, Cadila Healthcare, Aurobindo Pharma, Biocon, Bilcare, Opto Circuits, FDC, Hikal, Aarti Drugs, Ajanta Pharma, Zandu Pharma improved significantly during the period and set to achieve better performance during the year 2009-10. However, the performance of major companies like Sun Pharma, Glenmark Pharmaceuticals, Orchid Chemicals, Alembic, Divi's Laboratories, Marksan's Pharma, Neuland Laboratories, SMS Pharmaceuticals, Suven Life Sciences, Kiltch Drugs, Bal Pharma, etc., was not up to the mark during the first half and that has put pressure on aggregate working. Further, the profit, before forex and other adjustments, of Jubilant Organosys, Piramal Healthcare, Torrent Pharma, Ankur Drugs, Nectar Lifesciences, Ind-Swift Laboratories, Unichem Laboratories, Elder Pharmaceuticals, J B Chemicals, Anuh Pharma, etc., declined during the period under review. Few important multinational companies like Ranbaxy Laboratories, GSK Pharma, Aventis Pharma, Pfizer, AstraZeneca Pharma, Solvay Pharma, Merck, Abbott, Fulford and Indian companies like Wockhardt, Stride Arcolab, Sterling Biotech and Plethico Pharma are not included in study as these companies are closing their accounting year in November-December. Matrix Laboratories has de-listed recently from stock exchanges and thus not included in the study. Out of 75 companies, net sales (consolidated or standalone) of 18 companies declined during the first half of 2009-10 and that of 16 companies improved only by single digit. Dr Reddy's Laboratories (DRL) remained on top among the 75 companies with consolidated net sales of Rs 3,579 crore during the first half as against Rs 3,057 crore in the similar period of last year, representing a growth of 17.1 per cent. Similarly, Lupin's net sales moved up smartly by 24.26 per cent to Rs 2,200 crore from Rs 1,771 crore. The net sales of Cipla, the second largest company in Pharmabiz sample, has notched up sales growth of only 9 per cent and its net sales reached at Rs 2,696 crore. Sun Pharma's suffered heavy setback and its net sales declined by 11.1 per cent to Rs 1,973 crore from Rs 2,220 crore. Similarly, the sales of Divi's Laboratories dip by 27.4 per cent to Rs 431 crore from Rs 594 crore. Cadila Healthcare, Aurobindo and Biocon reported net sales growth of 26 per cent, 25 per cent and 19.2 per cent respectively. Relatively small companies like Bafna Pharma, Shilpa Medicare, Smruthi Organics, Arvind Remedies, Parenteral Drugs, Vivimed Labs Granules India and Twllight Litaka Pharma achieved better sales growth during the first half. The net sales of Bafna Pharma went up by 123 per cent to Rs 30.58 crore and that of Shilpa Medicare moved up by 47 per cent to Rs 123 crore. Both the companies improved their bottom line during the period. The other income of 75 companies increased by 28.8 per cent to Rs 881 crore from Rs 684 crore in the corresponding period of last year. The total income increased by 11.4 per cent to Rs 33,950 crore from Rs 30,469 crore. These companies implemented vigoursly cost cutting measures during the period under review and their total expenditure increased only by 11.2 per cent to Rs 26,221 crore from Rs 23,571 crore. The total raw material cost of these companies increased by 13 per cent to Rs 14,391 crore from Rs 12,733 crore, of which purchases increased by 24.7 per cent to Rs 2,376 crore from Rs 1,905 crore. The staff cost went up by 16.5 per cent to Rs 3,992 crore from Rs 3,426 crore in the same period of last year. Other expenditure, including marketing and selling, moved up only by 5.7 per cent to Rs 7,838 crore. With focus on cost control, these 75 companies recorded EBDITA (earnings before depreciation, interest, tax and adjustments) of Rs 7,728 crore as compared to Rs 6,898 crore in the same period of last year. The major companies like DRL, Cipla, Lupin, Cadila, Aurobindo Torrent Pharma Dishman Pharma, Hikal, etc, reported strong growth in EBDITA. DRL's EBDITA increased by 62.5 per cent to Rs 841 crore and that of Cipla went up by 70 per cent to Rs 747 crore. Aurobindo, and Torrent Pharma notched up a EBDIT growth of 71 per cent and 60 per cent respectively. The EBDITA of Sun Pharma, Jubilant Organosys, Glenmark, Orchid Chemicals, Alembic, Divi's Lab, J B Chemicals, and few others remained under pressure during the first half of 2009-10. The interest cost of 75 companies increased by 39.7 per cent to Rs 893 crore from Rs 639 crore and depreciation provision increased by 14.6 per cent to Rs 1,383 crore from Rs 1,207 crore. The interest cost of Orchid Chemical went up by 76 per cent to Rs 108 crore during the first half from Rs 61.47 crore. Glenmark and Jubilant Organosys interest cost went up sharply by 161 per cent and 115 per cent to Rs 89.45 crore and Rs 77.01 crore respectively. Similarly, the interest cost of Piramal Healthcare, Cadila Healthcare, Ankur Drugs, Surya Pharma Elder Pharma Panacea Biotec and Cipla also increased over 50 per cent. Sun Pharma received interest income during the period under review. The higher interest cost put pressure on profit before tax and adjustments (PBT) during the first half. The PBT increased only by 7.9 per cent to Rs 5,453 crore from Rs 5,052 crore in the similar period of last year. The tax provision of 75 companies went up by 51.7 per cent to Rs 1,004 crore from Rs 662 crore in the corresponding period of last year. This impacted the net profit after tax, before adjustment, which improved marginally by 1.4 per cent. The 75 pharma companies reported aggregate gain from foreign exchange transactions of Rs 61 crore during the first half ended September 2009 as against a loss of Rs 885 crore. This inflated their profit by 26.5 per cent to Rs 4,449 crore from Rs 3,517 crore. Thus the real profit is under pressure and not from the manufacturing activities. Based on present half yearly performance, the outlook for the full year of 2009-10 is not very promising for the short term and the top line as well as bottom line will be under pressure. Though the several blockbusters are loosing patents in the near future, the competition is intensifying. The Indian companies are fighting several odds and moving ahead but the cost cutting measures adopted by several developed nations will put pressure on overall business operations. View Highlights for 75 companies View Table Leading 75 Cos (Half year ended September 2009 &2008)

 
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