The overall performance of North India based pharma companies will remain under pressure during 2015-16 due to warning letters in respect of quality problems from US FDA, stiff competition, stagnant revenues, volatile exchange rates, limited outcome from R&D investments, changes in DPCO and rising input costs including interest burden. Several major pharmaceutical companies had set up manufacturing facilities in this region, especially in Baddi, Himachal Pradesh due to tax and other concessions offered by central as well as state governments.
The major attraction for investors included 100 per cent outright excise duty exemption for a period of 10 years from the date of commencement of commercial production (the past budget stipulated it to industries starting on or before March31, 2010), 100 per cent income tax exemption for an initial period of five years and thereafter 30 per cent for companies for a further period of five years, capital investment subsidy of 15 per cent on plant and machinery subject to a ceiling of Rs 30 lakhs, applicable also to existing units. Besides, the state government also announced a slew of attractive investment schemes, including single- window clearance for projects.
The leading North India based global pharmaceutical entity Ranbaxy Laboratories was acquired by Sun Pharmaceutical Industries during 2014-15 for a total consideration of US$4 billion. After acquisition of Ranbaxy, Sun Pharmaceutical registered consolidated net sales of Rs 27,287 crore for the year ended March 2015. Other 10 listed North India based major pharma players, with net sales above Rs 100 crore during the first nine months ended December 2015, include Jubilant Life Sciences, Nectar Lifesciences, Ind-Swift Laboratories, Panacea Biotec, Venus Remedies, Ind-Swift Ltd, IOL Chemicals and Pharmaceutical, Poly Medicure, Morepen Laboratories and Jagsonpal Pharmaceuticals.
The aggregate net sales of these 10 companies remained stagnant at Rs 8,009 crore during first nine months ended December 2015 as compared to Rs 8,039 crore in the corresponding period of last year. For the full year ended March 2015, the net sales of these companies amounted to Rs 10,820 crore. Based on first nine months sales figures, the net sales for the full year ended March 2016 may decline by 2-3 per cent to Rs 10,600 crore.
The net sales of Jubilant Life Sciences declined during the first nine months ended December 2015 to Rs 4,220 crore from Rs 4,253 crore and that of Nectar Lifesciences moved down by 1.5 per cent to Rs 1,202 crore from Rs 1,219 crore. The sales of Ind-Swift Laboratories, Venus Remedies and Ind-Swift Ltd also declined during first nine months of 2015-16. Venus Remedies' net sales declined by 15.7 per cent to Rs 296 crore and that of Ind-Swift's declined by 31 per cent to Rs 234 crore, which put pressure on overall sales growth of 10 companies. Panacea Biotec managed a small gain in net sales of 1.6 per cent to Rs 432 crore. IOL Chemical registered significant higher growth of 41 per cent to Rs 438 crore. Similarly Morepen Laboratories has also clocked 16.5 per cent growth to Rs 317 crore.
The earnings before depreciation, interest, tax and adjustments (EBDITA) of these 10 companies increased sharply by 48.1 per cent to Rs 1,517 crore from Rs 1,024 crore in the similar period of last year basically sharp jump in EBDITA of Jubilant Life Sciences. Nectar Lifesciences, Panacea Biotec IOL Chemicals and Morepen Laboratories also generated higher EBDITA. However, EBDITA of Ind-Swift Laboratories, Venus Remedies and Poly Medicure declined.
These 10 companies earned a net profit of Rs 220 crore during the first nine months of 2015-16. Jubilant Life's net profit stood at Rs 361 crore as against a loss of Rs 100 crore. Ind Swift Laboratories, Panacea Biotec, Ind-Swift Ltd, IOL incurred heavy net loss. Further, net profit of Venus Remedies declined to Rs 1.55 crore from Rs 22.70 crore and that of Poly Medicure to Rs 32.90 crore from Rs 48.91 crore.
Thus the overall performance was not upto the mark and it is also reflected in the market price of these companies. As against the total equity capital of Rs 288 crore, the market capitalisation of 10 companies worked out to Rs 10,514 crore on May 5, 2016. Jubilant scrip is moving around Rs 375-380 on BSE with m-cap of Rs 5,984 crore. The scrip touched to 52-weeks high level at Rs 455. Nectar Life, Panacea Biotec, Venus Remedies, Ind-Swift Ltd, Poly Medicure, and Jagsonpal Pharma scrips are moving near to their 52-weeks low level on BSE.
Jubilant Life Sciences net profit at Rs 117 cr in Q3
Jubilant Life Sciences, a Rs 5,775 plus crore pharma major from Uttar Pradesh, has generated consolidated net profit of Rs 117 crore during the third quarter ended December 2015 as against a net loss of Rs 112 crore in the corresponding period of last year. EBIDTA went up by 61.5 per cent to RS 310 crore from Rs 192 crore. Its net sales declined by 6.5 per cent to Rs 1,337 crore from Rs 1,430 crore. With improvement in profits, EPS improved to Rs 7.34 from negative Rs 0.70 in the last period. Despite satisfactory growth in profits, Jubilant scrip declined by 2.9 per cent or over Rs 10 on BSE to Rs 354 in the afternoon session.
Shyam S Bhartia, chairman and Hari S Bhartia, co-chairman and managing director, said, “We are happy to report another quarter of consistent performance with significant improvement in profitability in our business segments. We have been able to sustain the momentum generated in the last few quarters and major initiatives undertaken by the company have started yielding results. Our commitment to the highest level of quality and compliance has been ably demonstrated by the successful inspection of all our facilities by the US FDA during the year. This will hold us in good stead to grow our business in the future.”
The company has completed US FDA inspection successfully of API facility in Nanjangud and CMO and Radiopharmaceutials facilities in Montreal. It received approval for five ANDAs and it launched two new products in the US during the quarter under review.
For the first nine months ended December 2015, Jubilant's consolidated net sales declined by 0.8 per cent to Rs 4,220 crore from Rs 4,253 crore in the similar period of last year. It registered a net profit of Rs 361 crore as against a net loss of Rs 100 crore. EPS for the nine months worked out to Rs 22.65 as against negative Rs 6.31 in the last period.
Its pharmaceuticals sales improved by 15 per cent to Rs 2,215 crore from Rs 1,919 crore and that of life science ingredients declined by 12 per cent to Rs 2,086 crore from Rs 2,370 crore. Pharmaceutical sales contributed 52 per cent to its total sales. International revenue reached Rs 3,129 crore contributing 73 per cent to overall mix. Its sales in US & Canada increased by 15 per cent to Rs 1,805 crore. However, its sales in Europe and Japan declined by eight per cent to Rs 809 crore and that in China and ROW declined by 10 per cent to RS 515 crore. Its domestic sales declined by seven per cent to 1,172 crore.