The aggregate net profit of 75 leading pharma companies dropped by 22.4 per cent during the quarter ended September 2011 due to higher foreign exchange losses. The net profit declined to Rs.2,551 crore from Rs.3,286 crore in the corresponding period of last year. These companies incurred a forex loss of Rs.1,115 crore during the quarter as against a gain of Rs.376 crore in the similar period of last year, impacting the overall earnings. The working of these companies during the first half was also not showing any promising trend at net level.
The global economic outlook is challenging at the moment with economic recessionary conditions. Several countries are taking measures to curb healthcare expenditure to overcome economic problems. Further rising interest and input costs also impacting profit margins. The slower returns from investment in R&D is also giving tough time to these companies.
The net sales of Pharmabiz sample of 75 companies, with net sales above Rs.35 crore during the quarter, registered strong growth of 18.6 per cent to Rs.27,927 crore from Rs.23,546 crore in the quarter ended September 2010. The earnings before depreciation, interest, tax and adjustment (EBDITA) moved up by 17.2 per cent to Rs.6,342 core from Rs.5,412 crore in the similar period of last year. Thus these companies have improved their working on operational level during the first quarter. The interest burden of these companies went up sharply by 38.6 per cent to Rs.779 crore from Rs.562 crore in the last period and staff cost by 22.7 per cent to Rs.3,925 crore. The continuous rise in interest rates by RBI may impact future working adversely.
Few companies like Sun Pharmaceutical Industries, Lupin, Wockhardt, Strides Arcolab, Abbott India, Divi's Laboratories, Elder Pharmaceutical, Sharon Bio-Medicine, Arvind Remedies and Aanjaneya Lifecare, with net sales above Rs.100 crore during the quarter, have registered excellent all round performance in respect of sales, EBDITA and net profit. However, Ranbaxy Laboratories, Cadila Healthcare, Aurobindo Pharma, Glenmark Pharmaceuticals, Ipca Laboratories, GlaxoSmithKline Pharma, Biocon, Surya Pharmaceuticals, Sterling Biotech, Plethico Pharmaceuticals, Nectar Lifesciences, Dishman Pharmaceuticals, Panacea Biotec, Unichem Laboratories, Twilight Litaka, Merck, Granules, Indoco Remedies, etc., have received setback in respect of profitability.
The profitability of few relatively small companies companies like Smruthi Organics, Elder Healthcare, Mangalam Drugs, Suven Life Sciences and Avon Organics achieved better growth in sales EBDITA and net profit. But overall performance of companies with net sales below Rs.100 crore was under pressure during the quarter ended September 2011.
The performance of 11 Multinational Companies (MNCs) viz., Ranbaxy Laboratories, GlaxoSmithKline Pharma (GSK), Abbott India, Aventis Pharma, Pfizer, Novartis India, Merck, Wyeth, Fressinus Kabi Oncology, AstraZeneca Pharma and Fulford (India) was also not upto the mark and these companies incurred a aggregate net loss of Rs.11 crore as against the net profit of Rs.721 crore. This is mainly due to severe setback to Ranbaxy Laboratories which registered a net loss of Rs.464 crore during the quarter ended September 2011 as compared to a profit of Rs.308 crore. The loss is basically due to provision of Rs.651 crore for forex losses as compared to a gain of Rs.261 crore in the preceding period. The profitability of GSK, Merck and Fulford India was also under pressure during the quarter under review. GSK's net profit declined by 7.6 per cent to Rs.146 crore from Rs.158 crore and that of Meck's came down by 19.3 per cent to Rs.20 crore from Rs.25 crore.
For the first half ended September 2011, the net profit growth of 75 companies worked out to only 4.2 per cent to Rs.5,259 crore as compared to Rs.5,047 crore in the corresponding period of last year. The EBDITA growth is restricted to13.7 per cent to Rs.10,038 crore as against Rs.8,829 crore. The net sales improved by 16.9 per cent to Rs.43,444 crore from Rs.37,174 crore in the similar half of last year. The sample of 75 companies for the quarter and half year ended September 2011 is different due to year ending. For instance Ranbaxy, GSK, Aventis, Merck, Astra Zeneca Pharma, Strides, Fulford India, Sterling Biotec, Abbott India, Plethico Pharma and Sharon Bio-Medicine closed their accounting year in September or December. Thus these companies are not included in the half year working as they announced performance for nine months period.
Few companies have achieved strong growth despite several odds, but few companies put pressure on overall working of 75 companies. For the first half ended September 2011, DRL's consolidated net sales increased to Rs.4,246 crore from Rs.3,554 crore, a growth of 19.5 per cent. Its net profit surged by 14.9 per cent to Rs.570.54 crore from Rs.496.37 crore. Its sales of pharmaceutical services and APIs improved by 21.9 per cent to Rs.1,294 crore and that of global generics increased by 19.5 per cent to Rs.3,055.97 crore. Jubilant Lifesciences' consolidated net sales increased by 18.8 per cent to Rs.1,992 crore from Rs.1,677 crore in the similar period of last year. Its net profit has taken strong jump of 26.3 per cent and reached at Rs.156.48 crore from Rs.123.89 crore. The international business contributed 69 per cent to net sales and reached at Rs.1,383 crore. Sales from regulated markets of USA, Canada, Europe and Japan were together at Rs.1,130 crore and amounted to 57 per cent of the net sales.
Panacea's net sales declined by 12.1 per cent during the first half ended September 2011 to Rs.445.41 crore from Rs.506.47 crore in the similar period of last year. It incurred heavy net loss of Rs.16.92 crore as compared to net profit of Rs.49.42 crore in the last period. Vaccines sales declined by 22.9 per cent to Rs.267.32 crore from Rs.346.57 crore mainly due to the de-listing of pentavalent vaccine from the WHO's list of pre-qualified vaccines, following a routine site audit by a WHO team in July 2011. Aurobindo's consolidated net sales improved by 5.8 per cent to Rs.2,152 crore from Rs.2,034 crore in the similar period of last year. However, it reported net loss of Rs.202.96 crore as compared to net profit of Rs.249.82 crore. The foreign exchange loss reached at Rs.182 crore as against a gain of Rs.34.42 crore.
Cadila's consolidated net sales increased by 10.7 per cent to Rs.2,393 crore from Rs.2,161 crore in the similar period of last year. Its EBDITA improved marginally by 1.4 per cent to Rs.556.81 crore from Rs.548.92 crore. However, its net profit declined by 10.1 per cent to Rs.332.50 crore from Rs.370.02 crore.
Wockhardt's net sales increased by 16.2 per cent during first half to Rs.2,164 crore from Rs.1,862 crore and its net profit worked out to Rs.321.54 crore as against a net loss of Rs.212.96 crore in the similar period of last year. Wockhardt USA received 8 approvals taking the overall tally to 84 approvals and Morton Grove Pharmaceuticals has 34 approvals till date. The infusion of new product launches will see Wockhardt USA breaking new ground in this market.
Several companies have stepped up there R&D expenditure and received higher product approvals in the highly regulated markets during the first half of 2011-12. DRL launched 28 new generic products and filed 17 new product registration and 11 DMFs globally. It received final approval of its olanzapine 20 mg tablets,the generic version of Eli Lilly's Zyprexa from the US FDA. As at the end of September the cumulative ANDA filings reached at 177 and a total of 76 ANDAs are pending for approval with the US FDA. Its Research and Development (R&D) expenditure for the quarter touched to Rs.145.94 crore as compared to Rs.126.98 crore, a growth of 14.9 per cent. Lupin stepped up its R&D expenditure to Rs.137.99 crore from Rs.115.65 crore. Its revenues in India increased to Rs.555.03 crore from Rs.484.31 crore, a growth of 14.6 per cent. Lupin launched metformin ER tablets after US FDA approval. Its cumulative filings reached at 153 ANDAs and it received 3 ANDA approvals in the quarter, which takes the total approvals to 54.
Orchid Chemicals' cumulative filings of Certificate of Suitability (CoS) for the European market stood at 21 which includes 14 cephalosporin space, 6 in NPNC space and one in the betalactam segment. The company's cumulative ANDA filings stand at 43. In the EU region the cumulative count of marketing authorizations filed stood at 25. So far, it received 28 ANDAs approvals from US FDA. In the API space, Orchid's cumulative filings of DMFs stood at 86. Torrent Pharma's R&D expenditure amounted to Rs.31.71 crore as against Rs.32.89 crore.
Based on half yearly performance of 75 companies, the net sales for the year 2011-12 are likely to move only by 10-12 per cent to around Rs.87,000 crore and net profit may be marginally higher by 2 per cent to Rs.11,000 crore. The net sales of Pharmabiz sample of 75 companies reached at Rs.78,785 crore during the full year ended March 2011 and these companies earned a net profit of Rs.10,320 crore. This is excluding working of few important companies like Ranbaxy, GSK, Aventis Pharma, Stride Arcolab, etc. on account of year ending. The rupee depreciation against US Dollar may pushed exports value as several companies are exporting more than 50 per cent of their sales. However, their import bill may move up significantly, impacting earnings. Further, any rise in interest rates as well as additional forex loss may put extra burden in the remaining part of the year.
Highlights of 75 Pharma Companies
Highlights of 75 Cos. for Quarter ended Sept. 2011 & 2011