Overcoming several odds like competition, stringent approval system from highly regulated bodies, litigations and global slowdown successfully during 2012-13, the Gujarat - based pharma majors have posted better growth with investments in research and development (R&D) as well as expansion in facilities. These pharma units are all set to capture upcoming opportunities and gain entry into newer emerging markets.
The continuous upgradation and adoption of newer technologies helped the segment to have better production process, better yields, better quality of the end products and cost reduction. The Gujarat based pharmaceutical giants have pursued a policy of building capabilities and infrastructure for pre-clinical development and clinical trials required for New Chemical Entities aggressively.
With increasing urbanization, lifestyle changes & higher stress levels , there is a noticeable rise in incidences of chronic diseases. Further, growing population, increase in drug penetration levels, increased awareness regarding new types of treatments, insurance penetration and higher income levels helped pharmaceutical companies to maintain growth rates. The incidence of lifestyle related diseases such as diabetes, oncology and cardiovascular disease are likely to increase in near future. Gujarat is offering much needed better infrastructure facilities like raw materials, electricity, roads and ports with easy availability of talent pool. The CRAMS business is also moving fast with existence of small and medium players.
The 10 leading listed pharmaceutical companies, with registered office in Gujarat viz., Sun Pharmaceutical and Industries, Cadila Healthcare, Torrent Pharmaceuticals, Alembic Pharmaceuticals, Dishman Pharmaceuticals, Claris Lifesciences, Lincoln Pharmaceuticals, Themis Medicare, Lyka Labs and Gujarat Terce Laboratories, have registered net sales growth of 18.3 per cent during the quarter ended April-June 2013 to Rs 7,043 crore from Rs 5,954 crore in the corresponding period of last year. The EBDITA of these 10 companies moved up by 19.9 per cent to Rs 2,383 crore from Rs 1,988 crore. Further, the net profit before adjustments and forex loss jumped by 35.6 per cent to Rs 1,803 crore.
However, due to higher adjustments, these 10 companies incurred a net loss of Rs 836 crore during the quarter ended June 2013 as against a net profit of Rs 1,196 crore in the last period basically due to hefty provision of Rs 2,517 crore by Sun Pharmaceutical for settlement agreement with Pfizer Inc., Wyeth LLC and Nycomed GmbH with respect to patent infringement litigation related to generic versions of 'Protonix'. Due this provision, Sun Pharmaceutical incurred a net loss of Rs 1,276 crore as against a net profit of Rs 796 crore in the similar quarter of last year. The net profit of Dishman Pharma, Claris Lifesciences, Lyka Labs and Gujarat Terce Laboratories were under pressure.
The two major pharma players viz Sun Pharmaceutical and Torrent Pharmaceuticals rewarded its investors with liberal bonus shares in the ratio of 1:1 during 2012-13 and distributed handsome dividends to shareholders. With strong growth in reserves and surplus position, these players set to move fast in coming years. The Ahmedabad based Sun Pharmaceutical may jump in sales ranking to the No 1 spot in the current year displacing Ranbaxy Laboratories.
With volatile share price movements on stock exchanges on account of sluggish economic indicators, political issues and global economic situation, the share prices of these 10 companies are under pressure and moving to lower levels. Sun Pharmaceutical scrip of Re 1 per share is moving around Rs 525 on Bombay Stock Exchange as against its 52-weeks highest level of Rs 581 and Cadila Healthcare scrip at Rs 642 as against its yearly highest level of Rs 964.
While commenting on quarterly performance, Dilip Shanghvi, chairman and managing director of Sun Pharmaceutical, said, “All our businesses continue to perform in line with our expectations. We remain focused on strengthening our existing businesses and developing a differentiated and speciality driven product basket. We also continue to review opportunities to expand and strengthen our global footprint.”
The major pharma companies are investing heavily on R&D to capture upcoming opportunities emerging through loss of exclusivity of patents. Sun Pharma's consolidated R&D expenditure stood at Rs 205 crore during first quarter ended June 2013, which worked out 6 per cent of sales. It filed four ANDAs and its cumulative ANDAs filings reached at 453 products with US FDA. It received approval for nine products during the quarter, taking the total number of approvals to 320 as at the end of June 2013. ANDAs for 133 products now await US FDA approval, including 19 tentative approvals. The company filed total 791 patent applications, with 503 patents granted upto the end of June 2013.
During the second quarter ended June 2013, Claris Lifesciences, a Rs 750 crore plus pharma major from Gujarat received approvals for 42 product registrations and applied for 31 product registrations. Out of the 42 approvals, eight have been received in the regulated markets, which includes two in the US. It commercialized 58 product registrations across 24 countries in international markets. It has finalized and commenced a product development plan for 31 products out of which 20 have been targeted for the regions of the US and EU. Claris has three manufacturing facilities at its campus on the outskirts of Ahmedabad.
Alembic Pharma's international generic sales moved up sharply by 86 per cent to Rs 85 crore from Rs 46 crore in the similar quarter of last year. Desvenlafaxine base extended release tablets has started receiving attention from key customers in the US and sales is expected to pick up slowly in the next few quarters. It received approvals for two ANDAs during the quarter under review and its cumulative ANDA/NDA filings stood at 57 and total approval stands at 26 as at the end of June quarter. It filed one US DMF during the quarter under review and cumulative figures reached at 61. The company is planning to commercialize 8-10 product annually for the next three years. In the current year i.e. 2013-14, the company is planning to commercialize 11 speciality APIs.
For the full year 2012-13, the net profit of 10 Gujarat based pharma companies increased by 15.4 per cent to Rs 4,468 crore from Rs 3,874 crore in the previous year. Except Claris Lifesciences, all other companies pushed the bottom line in upward direction. Torrent Pharmaceuticals has posted strong net profit growth of 52.5 per cent and Lincoln Pharma of 88.7 per cent.
The net sales of these 10 companies moved up by 25.2 per cent to Rs 24,524 crore during 2012-13 from Rs 19,686.41 crore. Sun Pharmaceuticals remained on top with net sales of Rs 11,239 crore and followed by Cadila Healthcare Rs 6,155 crore, Torrent Pharma Rs 3,054 crore, Alembic Rs 1,517 crore and Dishman Pharma Rs 1,267 crore. Claris Lifesciences has posted small increase in net sales for the year ended December 2012 to Rs 763 crore from Rs 739 crore in the previous year.
These companies are focusing on exports to highly regulated markets like the US and Europe. Torrent Pharmaceutical has incurred R&D expenditure of Rs 118 crore during 2012-13 which worked out to 4.5 per cent of turnover. It received 6 ANDAs approval and plans to launch five to six products every year. It has 43 ANDA approvals and its pipeline consists of 24 pending approvals. Its US sales increased sharply by 64 per cent to Rs 355 crore from 217 crore in the previous year. Its sales from contract manufacturing segment touched Rs 300 crore. The company is now setting up a new formulation and API manufacturing facility at Dahej SEZ in Gujarat.