The profit margins of 100 top pharmaceutical companies have shown dismal growth during the quarter ended June 2011 on account of marginal growth in net sales, rising inputs costs and interest burden. There net profit increased only by 6.4 per cent to Rs.3,445 crore as against Rs.3,237 crore in the corresponding period of last year and net profit margins worked out to 13.1 per cent as compared to 13.8 per cent in the last period. Their earnings before depreciation, interest, tax and adjustment (EBDITA) increased by 3.1 per cent only to Rs.5,710 crore from Rs.5,541 crore and EBDITA margins declined to 21.7 per cent from 23.7 per cent.
The net sales during the quarter ended June 2011 of Phamabiz sample of 100 companies increased by 12.5 per cent to Rs.26,321 crore from Rs.23,390 crore in the similar period of last year. The net sales of 19 companies declined and 16 companies posted single digit growth in net sales. The financial performance major companies like Ranbaxy, Cipla, Sun Pharmaceutical, Aurobindo Pharma, Biocon, Orchid Chemicals, Dishman Pharma, Panacea Biotec, Nectar Lifesciences, Unichem Laboratories, Fresenius Kabi Oncology, etc., was not upto the mark during quarter ended June 2011 and put pressure on aggregate working of 100 companies.
The net sales of Ranbaxy declined by 1.8 per cent to Rs.2,054 crore from Rs.2,091 crore and that of Piramal Healthcare by 47.6 per cent to Rs.441 crore from Rs.842 crore on account of sale of formulation and diagnostic business. The net sales of Panacea Biotec went down by 13 per cent to Rs.221 crore from Rs.254 crore, Ankur Drugs by 84.6 per cent to Rs.43.11 crore from Rs.279.82 crore, Parenteral Drugs by 54.1 per cent to Rs.45.29 crore from Rs.98.75 crore and Themis Medicare by 53.5 per cent to Rs.30.71 crore from Rs.66.11 core in the same period of last year.
The net sales of Abbott India have gone up significantly by 57.6 per cent to Rs.351.42 crore from Rs.223. crore in the same period of 2010. Elder Pharmaceuticals also clocked strong net sales growth of 54.2 per cent to Rs.299.66 crore. The net sales of Divi's Laboratories jumped by 36.6 per cent to Rs.358.55 crore, Ind-Swift Laboratories by 34.3 per cent to Rs.266.70 crore, Parabolic Drugs by 46.1 per cent to Rs.186.19 crore, Vivimed Labs by 41.8 per cent to Rs.120.54 crore. Besides, relatively small companies like Bliss GVS Pharma, Smruthi Organics, Anuh Pharma, RPG Lifescience, Elder Healthcare, Bafna Pharma, etc., achieved better growth of over 30 per cent during the quarter ended June 2011.
The interest cost of 100 companies increased by 12.1 per cent to Rs.601.88 crore during the quarter under review from Rs.536.72 crore. The few companies like Cadila Healthcare, Dr Reddy's Laboratories (DRL), Wockhardt, Piramal Healthcare and Ankur Drugs managed to reduced interest burden. The interest provision of Cadila Healthcare declined by 64.7 per cent to Rs.11.15 crore from Rs.31.55 crore, DRL's interest burden moved down by 73.8 per cent to Rs.4.65 crore from Rs.17.74 crore and that of Wockhardt lower by 9.3 per cent to Rs.58.46 crore from Rs.64.43 crore. The interest burden of Piramal Healthcare declined to Rs.10.69 crore from Rs.38.34 crore.
However, Ranbaxy's borrowings cost went up by over 50 per cent to Rs.16.61 crore during the quarter ended June 2011. Similarly, the interest burden of Jubilant Lifesciences moved up by 123 per cent to Rs.43.38 crore from Rs.19.47 crore in the similar period of last year. Glenmark's interest cost increased to Rs .12.95 crore from Rs.8.47 crore and that of Stride Arcolabs up by 28.4 per cent to Rs.46.66 crore. The interest burden of Surya Pharma, Dishman Pharma, Panacea Biotec, Nectar Lifesciences, Parabolic Drugs and Twilight Litaka increased significantly by over 50 per cent during the quarter. With rising interest rates on borrowings, the interest cost will be deciding factor in the profit level of pharma companies in 2011-12.
During fiscal year 2010-11, these 100 companies recorded net sales of Rs.1,00,796 crore and earned a net profit of Rs.26,481 crore. Though this is too early to say, it seems that the year 2011-12 will be very difficult one as the growth in sales will be only 5 per cent and the profit growth may turn negative.
Table of Quarter ended June 2011 & 2010