The Gujarat- based pharmaceutical 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, like Sun Pharmaceuticals and Industries, Cadila Healthcare, Torrent Pharmaceuticals, Alembic and Dishman Pharmaceutical 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 earnings before depreciation, interest, taxation and adjustments (EBDITA) also declined by 5.6 per cent to Rs 3056 crore from Rs 3236 crore in the previous year on account of lower EBDITA by Sun Pharma, Dishman Pharma and Alembic. Cadila's EBDITA went up sharply by 31.9 per cent to Rs 825 crore from Rs 626 crore and that of Torrent Pharma increased by 64.1 per cent to Rs 430 crore from Rs 262 crore.
With continuous uptrend in the stock markets, the market capitalisation of these five companies touched to almost Rs 57,000 crore during the first week of August 2010.The aggregate equity capital of these five companies remained at Rs 257 crore. The market capitalisation of Sun Pharma worked out to Rs 36,520 crore and that of Cadila's touched Rs 13,206 crore. Sun Pharma scrip is currently moving around Rs 1760 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 650 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.
Cadila Healthcare focusing on higher approvals
With strong growth, Cadila Healthcare management recommended an equity dividend of 100 per cent on an enlarged share capital base after the bonus issue in the ratio of 1:2. The earning per share worked out to Rs 36.87 after considering enhanced equity capital as against Rs 19.48 in the last year.
Cadila formulation business in India increased by 12 per cent in 2009-10. It launched more than 30 new products and similar number of line extensions. 17 of the new product launches were first-in-India. During the year, it strengthened its position in the cardiovascular segment with the launch of a new division 'Zydus Cardiva”. The company commenced clinical trials of its H1N1 vaccine. Multi-centric trials have been conducted at Ahmedabad, Bangalore, Jaipur and Pune and the company is expecting to launch the vaccine after the necessary approvals are in place.
The group filed 14 ANDAs taking the total to 106 ANDA filings. The group also filed 14 DMFs during the year, taking the cumulative number of 90 DMFs. It received 12 ANDA approvals during the year 2009-10 taking the total to 54 product approvals. The company filed 35 additional dossiers for new products in the European markets, including 22 for Spanish market, taking cumulative number of new product dossier filings to 89. It filed 9 dossiers in South Africa and 14 dossiers in Brazil.
Cadila Healthcare has recorded all-round growth in financial performance during the first quarter ended June 2010 on account of strong growth in US operations. Its consolidated net profit has taken a quantum jump if 59.6 per cent and touched to Rs 199.18 crore from Rs 124.79 crore in the corresponding period of last year. Its consolidated net sales increased by 19.9 per cent to Rs 1055.09 crore from Rs 880.31 crore. With handsome growth in profits, its earnings per share moved up to Rs 9.73 from Rs 6.09 in the last period.
Torrent Pharma investing in new facilities
Torrent Pharmaceuticals' sales outside India at Rs 946.69 crore reflect a growth of 15 per cent during 2009-10. Its sales in India moved up by 16 per cent to Rs 920.61 crore from Rs 793.57 crore. The sales of branded business in India touched to Rs 729.13 crore from Rs 628.18 crore, a growth of 16 per cent and that from contract manufacturing reached at Rs 189.70 crore from Rs 163.85 crore.
The board has stepped up equity dividend to 120 per cent (Rs 6 per share for face value of Rs 5 each) for the year 2009-10 from 80 per cent in the 2008-09. The aggregate amount of equity dividend proposed to be distributed is Rs 59.20 crore including tax on distributed profits Rs 8.43 crore. As against the equity capital of Rs 42.31 crore, its reserves & surplus stood at Rs 788.67 crore.
During the first quarter ended June 2010, Torrent Pharma's consolidated net sales increased by 12.8 per cent to Rs 525.42 crore from Rs 465.83 crore in the similar period of last year. Its net profit jumped to Rs 74.22 crore from Rs 16.12 crore. The company has filed 48 ANDAs and 19 DMFs with US FDA as part of is US operations. It received 20 ANDA approvals so far. Significant investment in product development is being made to support the build-up of US, Brazil and European operations. The total revenue expenditure on R&D was 5.8 per cent of consolidated net sales and operating income.
Alembic net under pressure in Q1
Alembic Ltd has suffered a setback during the first quarter ended June 2010 due to lower API exports. Its consolidated net profit declined by 6.3 per cent to Rs 11.48 crore from Rs 12.25 crore in the similar period of last year. Its net sales also moved down by 4 per cent to Rs 279.07 crore from Rs 290.64 crore. Export of formulations went up sharply by 44 per cent to Rs 26.97 crore from Rs 18.73 crore and domestic formulations sales increased by 5 per cent to Rs 145 crore from Rs 137 crore.
Alembic's consolidated net sales increased only by 2 per cent to Rs 1138.15 crore during the year ended March 2010 from Rs 1116.06 crore in the previous year. . The penicillin prices again continue to be subdued at around $7.5 BU for quarter and has become a major drag on the company's profits. Company's efforts for government intervention on implementing anti dumping duty on penicillin imports in country has not yielded results. Its formulations exports sales declined by 4 per cent to Rs 45.76 crore from Rs 47.65 crore and that of APIs dropped by 3.3 per cent to Rs 71.98 crore from Rs 74.44 crore..
Sun Pharma net zooms by 244% in Q1
Sun Pharmaceuticals and Industries has clocked strong performance during the first quarter ended June 2010. Its consolidated net profit took a quantum jump of 244 per cent to Rs 564.32 crore from Rs 163.84 crore in the corresponding period of last year. Its net sales went up by 77.7 per cent to Rs 1399 crore from Rs 787.59 crore. With strong growth in profits, its earnings per share touched to Rs 27.2 as against Rs 7.9 in the last period.
In the first quarter, ANDAs for four products were filed, 2 by Sun Pharma and 2 by Caraco. Counting these, cumulatively ANDAs for 211 products have been filed by Sun Pharma and Caraco with US FDA. The consolidated R&D expenditure touched to Rs 57 crore.