Top pharmaceutical companies in India are seriously building a strong fixed assets base by investing heavily in land,buildings, plant and machinery, patents, etc. over the last couple of years. The objective is to overcome the growing competition and to tap new opportunities in the global markets. With increased investment in assets, these companies have already started generating modest growth in revenues and profits during last two years.
Most of the increased investments in fixed assets were actually made by Indian companies. Multinational pharma companies,on the other hand, have cut down their investments in fixed assets, but generated higher growth in top line and bottom line as compared to Indian companies.
The gross fixed assets including land, buildings, plant and machinery, equipments, furniture, goodwill, patents, trade-marks, licenses and other assets of 40 leading pharmaceutical companies, including 11 MNCs, increased by 15.9 per cent to Rs.63,090 crore during the financial year ended in March 2011 from Rs.54,434 crore in the previous year. The net fixed assets, after depreciation provision, moved up by 13.1 per cent to Rs.41,272 crore from Rs.36,479 crore. The provision for depreciation increased by 21.5 per cent to Rs.21,818 crore from Rs.17,954 crore. The 29 Indian companies achieved 17.5 per cent growth in gross fixed assets to Rs 54,315 crore, and that of 11 MNCs increased by 7 per cent to Rs 8,775 crore
After adding capital work-in-progress, the total net assets of 40 companies increased by 13.5 per cent to Rs.49,513 crore during the year ended March 2011 from Rs.43,626 crore in the previous year. The net sales of 40 companies increased by 14.6 per cent to Rs.86,332 crore from Rs.75,334 crore. The ratio of net sales to net fixed assets remained same at 1.7 points during 2010-11. The net fixed assets as per cent of net profit worked out to 26.7 per cent as compared to 21.4 per cent in the last year. This shows that the growth in fixed assets is generating similar growth in revenues and profit level for these 40 companies.
Ranbaxy Laboratories, a subsidiary of Daiichi Sankyo Company of Japan, remained on top among 40 companies in ranking of total net assets at Rs.4,930 crore in 2010-11, followed by Jubilant Life Sciences (Rs.4,669 crore), Dr Reddy's Laboratories (Rs.3,990 crore), Wockhardt (Rs.3,990 crore) and Cipla (Rs.3,380 crore). There are 15 companies with total net assets of over Rs.1,000 crore.
The capital work-in-progress of 40 companies saw a growth of 15.3 per cent and reached at Rs.8,240 crore as compared to Rs.7,148 crore in the previous year. The investment in new facilities and assets by few major companies like Biocon, Strides Arcolab, Ipca Laboratories, Divi's Laboratories, Indoco Remedies is likely to give necessary push for their business operations in the near future. Further, Sun Pharmaceutical, Cadila Healthcare, Torrent Pharma, Claris Lifesciences, Fresenius Kabi Oncology, Jubilant LifeSciences, Lupin, Elder Pharma, etc are investing huge funds over expansion programmes.
The capital work-in-progress of Biocon increased by 138 per cent during 2010-11 to Rs.179.57 crore from Rs.75.52 crore and that of Ipca Laboratories jumped by 196 per cent to Rs.113 crore. Strides Arcolab's capex moved up by 126 per cent to Rs.191.46 crore. Few companies viz, Ranbaxy Laboratories, Dr Reddy's Laboratories, Cipla, Panacea Biotec, FDC, Sharon Bio-Medcine, Aventis Pharma, GlaxoSmithKline Pharma reduced their capital work-in-progress. Ranbaxy's new investment in expansion declined by 38.7 to Rs.382 crore from Rs.623 crore in the previous year. Similarly, Dr Reddy's Laboratories and Cipla shown a reduction of 21 per cent and 58 per cent in capital work-in-progress during financial year 2010-11.
The investment of 40 companies in land and buildings increased by 24.3 per cent to Rs.12,204 crore and the same in plant and machinery increased by 16.4 per cent to Rs.29,495 crore. Investment in equipments, furniture and other assets moved up by 16.3 per cent to Rs.5,121 crore from Rs.4,402 crore. Further, assets in respect of goodwill, patents, trade-marks, licenses increased by 9.5 per cent to Rs.16,269 crore from Rs.14,864 crore.
The gross fixed assets of 11 MNCs viz., Ranbaxy Laboratories, GlaxoSmithKline Pharma, Aventis Pharma, Pfizer, AstraZeneca Pharma, Merck, Abbott India, Wyeth, Novartis India, Fulford India and Fresenius Kabi Oncology increased only by 7 per cent to Rs.8,775 crore as compared to 15.9 per cent by remaining 29 Indian pharma companies to Rs.63,090 crore. The capital work-in-progress of 11 MNCs declined by 27.1 per cent to Rs.535 crore during 2010-11 as against growth of 15.3 per cent by 29 Indian companies to Rs.8,240 crore. The total net assets of 11 MNCs declined by 1.3 per cent to Rs.6,130 crore, but that of 29 Indian companies increased by 16 per cent to Rs.43,383 crore.
The contribution of total net assets, after addition of capital work-in-progress but net of depreciation, of 29 Indian companies worked out to 87.6 per cent during 2010-11 as against 85.8 per cent in the previous year, but that of 11 MNCs declined to 12.4 per cent from 14.2 per cent. Excluding Ranbaxy Laboratories, the 10 MNCs total net assets improved by 9.4 per cent to Rs.1,201 crore from Rs.1,098 crore. With this small fixed assets base, 10 MNCs generated revenue of Rs.8,417 crore and earned a net profit of Rs.1,579 crore. Ranbaxy's total net assets declined by 3.6 per cent to Rs.4,930 crore from Rs.5,114 crore in the previous year. However, its net sales moved up by 18 per cent and it earned net profit, after adjustment, of Rs.1,497 crore.
Fixed assets of 40 Pharma Cos in 2010-11