The financial performance of pharmaceutical industry so far in the current year continues to be just satisfactory with moderate growth in sales but net profit remaining lower. A study of the performances of 75 listed pharma companies during first nine months ending December 2011 indicate this position. The lower profit growth is mainly attributed to the volatile foreign exchange rates, interest burden, redemption of FCCBs and stiff competition.
The 75 players registered better growth of above18 per cent in sales and profit before adjustments. The net profit before adjustments increased by 17.7 per cent to Rs.9,553 crore from Rs.8,115 crore in the corresponding period of last year. However, net profit after adjustments, including foreign exchange gain and loss, improved only by 4.3 per cent to Rs.7,948 crore.
As per the Pharmabiz study, the net sales of 75 companies jumped by 18.2 per cent to Rs.66,001 crore from Rs.55,848 crore with impressive sales growth of over 25 per cent by major companies like Dr Reddy's Laboratories, Sun Pharmaceutical Industries, Jubilant Life Sciences, Glenmark Pharmaceuticals, Ipca Laboratories, Divi's Laboratories, Elder Pharmaceuticals, Nectar Lifesciences, Parabolic Drugs, Hikal, etc. Relatively small companies like Aarti Drugs, Ajanta Pharma, Aananeya Lifecare, Vivimed Labs, Anuh Pharma, Smruthi Organics, Suven Life Sciences, etc., also notched up smart gain in sales.
Few major companies like Cadila Healthcare, Unichem Laboratories and Natco Pharma registered only single digit growth. However, Panacea Drugs, Parenteral Drugs, Anu's Laboratories, Albert David, SMS Pharma, Ankur Drugs, Themis Medicare, Kiltch Drugs, Jupiter Bioscience, Astec Lifesciences and Medicamen Biotech suffered setback on sales front.
This Phamabiz study excludes few important MNCs like Ranbaxy Laboratories, GlaxoSmithKline Pharma, Aventis Pharma, Fulford (India), Abbott India, Merck and Indian companies like Stride Arcolabs, Claris Lifesciences, Sharon Bio-Medicine as there accounting year is ending other than April-March. Further, the study has not included Piramal Healthcare, Alembic Pharmaceutical and J B Chemicals on account of restructuring or divestment of part of business during the first nine months ended December 2011 or in the similar period of last year.
The other income, including operating income, of 75 companies increased by 17.3 per cent to Rs.2,092 crore during the first nine months ended December 2011 from Rs.1,783 crore in the similar period of last year. The other income of Cadila Healthcare went up sharply to Rs.774 crore during the first nine months ended December 2012 from Rs.608.61 crore. Cipla also recorded significant higher income of Rs.213.13 crore as against Rs.207.98 crore in the corresponding period of last year. Similarly, Divi's Laboratories, Pfizer, Fresenius Kabi Oncology and Bliss GVS Pharma posted higher other income. The other income of Dr Reddy's, Sun Pharma, Glenmark and FDC decline during the period under review.
The raw material cost, including stock adjustments and purchases, increased by 14.7 per cent to Rs.28,387 crore during the nine months ended December 2011 from Rs.24,754 crore in the last period. The staff cost of 75 companies increased by 22.8 per cent to Rs.8,550 crore from Rs.6,962 crore and other expenditure went up by 22 per cent to Rs.15,544 crore from Rs.12,736 crore. The earnings before depreciation, interest, tax and adjustments (EBDITA) of these 75 companies increased by 18.5 per cent to Rs.15,612 crore from Rs.13,179 crore. The EBDITA as percentage of net sales improved slightly to 23.7 per cent from 27.6 per cent in the last period.
The EBDITA of Dr Reddy's Laboratories went up sharply by 50.6 per cent to Rs.1,789 crore from Rs.1,188 crore in the corresponding period of last year. Wockhardt, Sun Pharma and Jubilant Life Sciences also registered smart gain of 56.3 per cent, 47.3 per cent and 49.5 per cent respectively. Ipca Labs and Divi's Labs posted strong EBDITA growth of 43.9 per cent and 41.3 per cent. The EBDITA of Aurobindo, Biocon, Dishman Pharma, Unichem Labs, Panacea Biotec, FDC Fresenius Kabi Oncology, Parenteral Drugs, Wanbury, Shilpa Medicare, Anu's Laboratories, Albert David, RPG Life Sciences Jupiter Bioscience declined during the first nine months of FY 2012.
The higher interest burden put pressure on profit before tax and adjustments. The interest cost of 75 companies increased by 28.8 per cent to Rs.1,706 crore from Rs.1,325 crore in the corresponding nine months of last year. The interest cost of few majors like Cadila Healthcare, Jubilant Life, Aurobindo Pharma, Surya Pharma, Orchid Chemicals, Ind-Swift Labs, Nectar Lifesciences, Dishman Pharma, Panacea Biotec increased sharply. Wockhardt provided lower interest cost of Rs.166 crore as against Rs.177 crore in the last period. However, Dr Reddy's Labs and Sun Pharma earned interest income and Pfizer, Novartis India, Wyeth, Cipla, Torrent Pharma, Divi's Labs, Unichem Labs, FDC incurred very small amount of interest cost as compared to there business volume.
The depreciation provision touched to Rs.2,705 crore as against Rs.2,285 crore in the similar period of last year, registering a growth of 18.4 per cent. With lower investment in plant and machinery, the leading MNCs like Pfizer, Novartis and Wyeth have provided very small amount for depreciation of Rs.7.24 crore, Rs.1.91 crore and Rs.4.93 crore during the first nine months ended December 2011. The depreciation provision of Dr Reddy's Labs, Sun Pharma, Lupin, Cipla and Aurobindo Pharma was at Rs.381 crore, Rs.209 crore, Rs.157 crore, Rs.212 crore and Rs.146 crore respectively. The tax provision of 75 companies worked out to 13.4 per cent to Rs.1,648 crore during the first nine months period ended December 2011 from Rs.1,453 crore in the similar period of last year.
The adjustments, including foreign exchange gains or loss, went up sharply by 226 per cent to Rs.1,605 crore from Rs.493 crore. This impacted adversely the bottom line of 75 companies and posted small growth of 4.3 per cent to Rs.7,948 crore from Rs.7,623 crore. The total foreign exchange (forex) loss or mark-to-market loss worked out to Rs.877 crore as compared to Rs.111 crore in the last period. The forex loss of Aurobindo Pharma reached at Rs.326.74 crore during the first nine months ended December 2011 and redemption of FCCBs amounted to Rs.319.86 crore. Due to this, it incurred a heavy loss of Rs.231.50 crore as against a net profit of Rs.438.33 crore in the corresponding period of last year. Jubilant Life's forex loss worked out to Rs.202 crore as compared to gain of Rs.26 crore and that of Wockhardt amounted to Rs.76.24 crore as compared to gain of Rs.22.84 crore.
Excluding the impact of forex loss adjustments, 75 companies are set to achieve top line growth of 15 to 18 per cent during the full year ending April-March 2012 and similar growth in adjusted profit despite several odds. The cGMP problem for few companies may put some pressure on sales, but new product launches will help to maintain growth momentum.
Highlights of 75 Pharma Companies (Nine Months ended)