The Gujarat- based leading five pharmaceutical companies viz., Sun Pharmaceutical, Cadila Healthcare, Torrent Pharmaceutical, Dishman Pharmaceutical and Alembic have strengthened their business operations during 2009-10 and are moving ahead strongly. The market capitalisation of these companies worked out to over Rs 57,000 crore on Bombay Stock Exchange (BSE) as against their aggregate equity capital of Rs 257 crore as at the end of March 2010. They have created strong reserves and surplus base of Rs 11,156 crore as compared to Rs 9,707 crore in the last year and recommended higher rewards to their shareholders.
For the first quarter ended June 2010, these five companies net profit has taken a quantum jump of 154 per cent to Rs 865.39 crore from Rs 341.43 crore in the corresponding period of last year. Their net sales also moved up by 31.6 per cent to Rs 3,445 crore from Rs 2,617 crore. Sun Pharma, Cadila Healthcare and Torrent Pharma achieved impressive growth in profitability during first quarter of 2010-11. These companies are now focusing on highly regulated markets like US and Europe, and also spreading their business operations in emerging markets.
These companies have adopted impressive strategies to overcome recessionary economic conditions and competition in the international market and is all set to capture new opportunities with investment in expansion, research & development, launch of innovative products and entry into new markets. Though the world economic crisis had an adverse impact during 2009-10 and margins were under tremendous pressure, these companies reorganized their operations and implemented de-mergers, amalgamations and acquisitions in other markets. Further, to focus on new markets, they incorporated new subsidiaries in other parts of the world. The overall economic situation has started showing positive results and the expiration of patented drugs may further aid growth.
The leading five companies with registered office in Gujarat and revenues above Rs 900 crore, are spreading their operations with more and more approvals from highly regulated markets. These companies are entering new tie-ups with international giants in the field of research and CRAMS activities.
Besides, there are several other mid-size pharma companies viz., Themis Medicare, Lincoln Pharmaceuticals, India Gelatin & Chemicals, Sun Pharma Advance Research, Ambalal Sarabhai Enterprise, Core Healthcare, Alkem Laboratories, Intas Pharmaceutical, Kamron Laboratories, Claris Lifesciences, etc., are progressing well. Further, India's leading companies like Ranbaxy, Glenmark, IPCA, Lupin, J B Chemicals, Cipla, Wockhardt, Dr Reddy's Laboratories have also established their manufacturing units in Gujarat. With the strict implementation of Schedule M norms in Gujarat, several small-scale units are now providing good support to overall pharma segment in India.
The year 2009-10 was very difficult in terms of financial working on account of recessionary conditions in the world market, especially in US and Europe. Further, foreign exchange adjustments and mark-to-market losses also put pressure on profitability of pharma companies. Several countries had cut down their healthcare cost drastically and taken measure to further cut costs due to economic conditions. Further, stringent approval systems in the US and Europe also have aggravated the situation. These factors impacted the overall working of Gujarat based companies during 2009-10.
The aggregate net sales of five leading companies in Gujarat improved only by 6.1 per cent during the year ended March 2010 to Rs 11,563 crore from Rs 10,900 crore in the previous year. The net profit, however, declined by 8.9 per cent to Rs 2,244 crore from Rs 2,462 crore mainly due to lower profit posted by Sun Pharma and Dishman Pharmaceuticals. Sun Pharma's working was affected by loss of revenues on Caraco manufactured products compounded by additional costs related to inventory reserve as well as all costs of regaining FDA compliance. Dishman Pharma's sales from CRAMS activities and marketable molecules declined significantly. However, Cadila Healthcare, Torrent Pharma and Alembic have recorded satisfactory growth in top line as well as bottom line during 2009-10.
The market capitalisation of Sun Pharma worked out to Rs 37,243 crore and that of Cadila's touched Rs 12,727 crore. Sun Pharma scrip is currently moving around Rs 1798 on BSE with yearly high at Rs 1,846 and low of Rs 1,122. Similarly, Cadila scrip of Rs 5 face value is moving around Rs 625 with 52-weeks high of Rs 681 as against low of Rs 279 on the BSE.
Despite margins being under pressure, Sun Pharma and Dishman Pharma maintained equity dividend at 275 per cent and 60 per cent respectively. However, Cadila Healthcare, Torrent Pharma and Alembic stepped up equity dividend to 100 per cent, 120 per cent and 25 per cent respectively during 2009-10 from 90 per cent, 80 per cent and 20 per cent.