Indian Pharmaceutical industry continues to perform well despite worldwide economic crisis, steep erosion in rupee value and tough competition in the international market. A study of financial performances of 100 pharmaceutical companies with net sales above Rs.70 crore conducted by Pharmabiz confirms this trend. The sales of these 100 companies have recorded a 18.4 per cent growth at Rs.120,762 crore (around US$ 23 billion) in 2011-12 from Rs.101,964 crore achieved in the previous year. The net profit before adjustments, (forex and exceptional items) of these companies improved by 13.2 per cent to Rs.15,443 crore from Rs.13,644 crore in the previous year.
However, as per the audited/unaudited results, the net profit after provision for forex loss/gain and exceptional items declined sharply by 35.3 per cent to Rs.8,740 crore from Rs.13,512 crore. These companies incurred a massive foreign exchange loss of Rs.2,451 crore during 2011-12 as against a gain of Rs.785 crore mainly on account of redemption of FCCBs. Further, adjustments regarding exceptional items put additional pressure of Rs.4,252 crore on bottom line as compared to Rs.917 crore in the previous year.
Out of the Pharmabiz sample of 100 listed pharma companies, 30 major companies registered net sales of Rs.1,000 crore or more during 2011-12 and their net sales worked out 80.3 per cent of total net sales of 100 companies. Remaining 70 pharma companies from sample achieved net sales of Rs.23,805 crore during 2011-12 and this worked out to 19.7 per cent of total net sales of 100 companies. Thus, the leading 30 companies are controlling huge share of Indian pharma segment.
The study did not include Piramal Healthcare and J B Chemicals, with net sales of Rs.2,084 crore and Rs.776 crore respectively during 2011-12, due to selling of their part of business to other pharmaceutical entities during 2010-11 or 2011-12, and the financial figures are not strictly comparable.
Ranbaxy Laboratories, a subsidiary of Daiichi Sankyo, Japan, has maintained its first rank with net sales of Rs.9,958 crore followed by Dr Reddy's Laboratories (DRL) Rs.9,674 crore, Sun Pharmaceutical Industries Rs.8,006 crore, Lupin Rs.6,960 crore and Cipla Rs.6,808 crore. Ranbaxy clocked a net sales growth of 16.7 per cent during 2011-12 and DRL registered stronger growth of 29.5 per cent. Sun Pharma with acquisition of Taro Pharmaceuticals, posted net sales growth of 39.9 per cent and Lupin marked the sales growth of 22 per cent.
There are 11 multinational companies (MNCs) in Pharmabiz sample viz., Ranbaxy Laboratories, GlaxoSmithKline Pharma (GSK), Abbott India, Aventis Pharma, Pfizer, Novartis, Wyeth, Merck, AstraZeneca Pharma India, Fresenius Kabi Oncology and Fulford India. The net sales of these MNCs increased by 13 per cent to Rs.19,230 crore during 2011-12 from Rs.17,015 crore in the previous year. Five MNCs notched up net sales of above Rs.1,000 crore. MNCs' sales in 2011-12 worked out to 16 per cent of 100 companies net sales as against 16.7 per cent in the previous year. Pfizer and Wyeth reported previous year period of 16 months and AstraZeneca for 15 months period and there financial performance is not strictly comparable.
Few important companies. with net sales above Rs.475 crore, viz., Strides Arcolab, Divi's Laboratories, Abbott India, Parabolic Drugs, Hikal, Vivimed Labs and Aanjaneya Lifecare achieved smart gain of over 40 per cent in net sales. Strides Arcolab's net sales went up by 48.9 per cent to Rs.2,594 crore from Rs.1,696 crore, Divi's Laboratories net sales jumped by 41.8 per cent to Rs.1,859 crore and that of Abbott moved up by 46 per cent to Rs.1,446 crore. Vivimed Labs' net sales surged by over 60 per cent to Rs.668 crore and that of Aanjaneya Lifecare by around 50 per cent to Rs.480 crore.
The net sales of Aurobindo Pharma, Orchid Chemicals and Pharmaceuticals, Sterling Biotech, Plethico Pharma, Surya Pharmaceutical and Unichem Laboratories improved only by single digit during 2011-12. Further, the net sales of Claris Lifesciences, Panacea Biotec, FDC, Wanbury, Parenteral Drugs, Anu's Laboratories, SMS Pharmaceuticals Themis Medicare, Marksans Pharma, Ankur Drugs and Pharma, Hiran Orgochem, etc., declined during 2011-12 and put pressure on overall growth of net sales of Pharmabiz sample of 100 companies.
The earnings before depreciation, interest, tax and adjustments (EBDITA) of 100 companies improved by 16.6 per cent despite significant rise in raw material cost, staff cost and other expenditure. The cost of raw material, including stock adjustments and purchases, increased by 16.4 per cent to Rs.52,384 crore from Rs.45,017 crore in the previous year. The raw material cost as percent of net sales worked out to 43 per cent. The staff cost increased by 19.6 per cent to Rs.16,859 crore from Rs.14,097 crore and this worked out 14 per cent of total net sales for the both the years. Other expenditure moved up by 21.9 per cent to Rs.27,839 crore . Thus, the total expenditure, excluding depreciation and interest, reached at Rs.97,082 crore as compared to Rs.81,960 crore.
The depreciation provision of 100 companies increased by 21.9 per cent to Rs.4,875 crore from Rs.3,999 crore. Their interest burden went up by 30.6 per cent to Rs.3,585 crore from Rs.2,746 crore putting significant pressure on profit before tax. Due to higher interest burden, the profit before tax and adjustment improved only by 13.1 per cent to Rs.18,988 crore from Rs.16,794 crore. Tax provision of 100 companies increased by 12.5 per cent to Rs.3,545 crore from Rs.3,150 crore.
The net profit before adjustments of 100 companies surged by 13.2 per cent to Rs.15,443 crore, but net profit after adjustments declined sharply by 35.3 per cent. The provision for forex loss of Ranbaxy reached at Rs.1,658 crore as against gain of Rs.578 crore and the forex loss of Aurobindo went up to Rs.544 crore as compared to gain of Rs.37 crore in the previous year. Similarly, Jubilant Life Sciences, incurred a forex loss of Rs.162 crore, Ipca Laboratories Rs.53 crore, Shasun Pharmaceutical Rs.14 crore, Hikal Rs.26 crore, Panacea Rs.13 crore and Ankur Drugs Rs.27 crore. Wockhardt provided Rs.21 crore for forex loss as compared to gain of Rs.37 crore.
Further, Ranbaxy has provided hefty amount of Rs.2,627 crore as exceptional items during 2011-12 putting burden on overall net profit of 100 companies. Similarly, Sun Pharmaceutical, Wockhardt, Jubilant Life Sciences, Glenmark Pharmaceuticals, GlaxoSmithKline Pharma, Torrent Pharmaceuticals, Sterling Biotech, Plethico Pharma, provided significant higher amounts for exceptional items during 2011-12.
With satisfactory performance, several pharma companies declared handsome dividend to stake holders. DRL recommended equity dividend of 275 per cent, Divi's Laboratories 650 per cent, Sun Pharma 425 per cent, Lupin 160 per cent, Jubilant Life 300 per cent, GlaxoSmithKline 450 per cent, Glenmark 200 per cent, Cadila Healthcare 160 per cent, Aventis 330 per cent, FDC 200 per cent and Torrent Pharma 170 per cent. Cipla, Biocon, Aurobindo Pharma declared equity dividend of 100 per cent. Major companies like Ranbaxy and Wockhardt failed to declared equity dividend for the year 2011-12.
Considering the expiration of patents, tie-up with international players, investments in R&D, easy availability of talent pool, higher product approvals from highly regulated markets and cost effectiveness will play crucial role in future growth of Indian pharma segment and these factors will assist well to overcome several odds in the coming years. Further, early government policy regarding mergers and acquisitions by MNCs and FDI will see some protection for the Indian pharma segment.
Financial Highlights for 100 Cos & Performance of 100 companies 2011-12 & 2010-11