India's top 50 pharmaceutical companies have posted satisfactory financial performances during the first nine months of current year ended December 2012 and set to achieve top line as well as bottom line growth between 18-20 per cent by end of March. The economic slowdown in Europe, stringent approval norms and higher interest burden put pressure on their overall working, but lower provision for forex losses helped them well to mark double digit growth in bottom line.
As per the Pharmabiz study of 50 listed pharmaceutical companies for the nine months, the net sales increased significantly by 22.1 per cent to Rs.80,101 crore from Rs.65,581 crore in the corresponding period of last year. The leading five companies viz. Dr Reddy's Laboratories (DRL), Sun Pharmaceutical, Lupin, Cipla and Cadila Healthcare registered strong top line growth followed by other players. However, companies like Orchid Chemicals and Pharmaceuticals, Ind-Swift Laboratories, Panacea Biotec, Twilight Litka Pharma, AstraZeneca Pharma India suffered heavy setback on revenue growth and their net sales declined between nine per cent to over 44 per cent during the period under review.
The study excluded nine pharma companies like Ranbaxy Labs, GlaxoSmithKline Pharmaceutical, Strides Arcolab, Plethico Pharma, Abbott India, Sanofi India, Claris Lifesciences, Merck and Fulford (India) as their year ended in December 2012. The consolidated net sales of these nine companies for the full year ended December 2012 increased by 13.8 per cent to Rs.23,454 crore for the year ended December 2012 from Rs.20,603 crore in the previous year and EBDITA by 11.1 per cent to Rs.4,972 crore from Rs.4,477 crore. However, the net profit of these nine companies declined by 29.5 per cent to Rs.2,931 crore on account of higher income from adjustments in the previous year.
During the first nine months of 2012-13, the other income and operating income of 50 companies increased only by two per cent to Rs.2,416 crore from Rs.2,368 crore in the same period of last year. The raw materials cost, including stock adjustments and purchases, increased by 18.9 per cent to Rs.32,668 crore from Rs.27,471 crore. The staff cost also increased by 19.3 per cent to Rs.12,332 crore from Rs.10,034 crore. The other expenditure went up by 21.4 per cent to Rs.17,461 crore from Rs.14,385 crore. Thus, the total expenditure, excluding depreciation and interest provisions, increased by 20.4 per cent to Rs.62,461 crore from Rs.51,890 crore in the similar period of last year.
The Earnings Before Depreciation, Interest, Taxation and Adjustments (EBDITA) of Pharmabiz sample of 50 companies recorded strong growth of 26.7 per cent to Rs.20,057 crore from Rs.15,835 crore in the same period of last year. The depreciation provision increased by 18.7 per cent to Rs.3,153 crore from Rs.2,656 crore. However, interest burden jumped up by 32 per cent to Rs.2,216 crore from Rs.1,679 crore. The EBDITA of Sun Pharma, Lupin, Wockhardt, Piramal Healthcare, Unichem Laboratories, Aarti Drugs, Ajanta Pharma, Arvind Remedies and Fresenius Kabi Oncology moved up smartly by over 50 per cent during the first nine months of 2012-13.
The EBDITA of Orchid Chemicals, Ind-Swift Laboratories, Parabolic Drugs and Twilight Litaka Pharma declined over 50 per cent. Panacea Biotec posts loss of Rs.42.41 crore before depreciation, interest, taxation and adjustments as against a profit of Rs.30.89 crore. Similarly, AstraZeneca also registered loss of Rs.44.90 crore as compared to EBDITA of Rs.83.74 crore in the similar period of last year.
The tax provision of 50 companies went up sharply by almost 80 per cent to Rs.3,377 crore from Rs.1,881 crore mainly due to significant higher tax provision by Sun Pharmaceutical (Rs.643 crore), Lupin (Rs.476 crore), Cipla (Rs.400 crore), Cadila Healthcare (Rs.178 crore), Wockhardt (Rs.166 crore), Jubilant Life Sciences (Rs.110 crore), Glenmark Pharmaceuticals (Rs.106 crore) and Pfizer (Rs.165 crore). Due to significant higher provisions for interest and tax, the net profit before adjustments and forex loss was under pressure and improved only by 17.6 per cent to Rs.11,312 crore from Rs.9,620 crore.
During the nine months of 2012, the total adjustment/ exceptional items of 50 companies worked out to a loss of Rs.578 crore as against gain of Rs.12 crore in the similar period of last year. Sun Pharmaceutical has provided Rs.584 crore for patent infringement litigation related to generic version of Protonix as against nil in the same period of last year. Further, its minority interest amounted to Rs.394 crore. Pfizer has shown consolidated exceptional income of Rs.409 crore as a gain from sale of Animal Health business and sale of investments. Aurobindo Pharma put Rs.320 crore as exceptional loss in the previous period as against almost nil in the current period under review and Glenmark has registered Rs.132 crore as exceptional expenditure in the last period. J B Chemicals has included income of Rs.761 crore from sale of Russia-CIS OTC business in same nine months of last year.
The forex loss of 11 players from Pharmabiz sample of 50 companies, during the first nine months, declined to Rs.452 crore from Rs.852 crore in the corresponding period of last year. The forex loss of Aurobindo Pharma declined to Rs.162 crore from Rs.327 crore and that of Jubilant Life moved down to Rs.132 crore from Rs.202 crore. Similarly, the forex loss of Orchid Chemicals declined to Rs.21 crore from Rs.70 crore, J B Chemicals to Rs.10 crore from Rs.45 crore, Ajanta Pharma to Rs.2 crore from Rs.12 crore and Shasun Pharmaceuticals nil against Rs.26 crore in the same period of last year. This lower loss from foreign exchange pushed the overall profitability of 50 pharma companies during nine months period ended December 2012.
Based on the growth rates achieved during nine months, these companies will able to generate sales and profit growth of 18-20 per cent in the 2012-13. Investment in R&D, cost effective products and better product approval rate in regulated markets will give necessary boost. Despite competition, quality norms and legal problems, Indian pharmaceutical companies are well set to spread there presence in lucrative regulated market.
Financial Highlights for nine months ended Dec 2012 & 2011 (Tables)