The multinational pharma companies (MNCs) in Maharashtra have established strong brand image and good reputation, thanks to the research and development support from their holding companies abroad. Now these companies are adopting cost cutting measures and focusing more on outsourcing. During the past couple of years, MNCs have sold their fixed assets, reduced work force and built up strong reserves to grab future opportunities in the country. However, on the profitability front, Indian companies in Maharashtra are far better off than existing MNCs in the state.
With high cost of manufacturing and research activities in the foreign countries, several MNCs are entering the Indian market through tie up with Indian companies for outsourcing, research or marketing. The contract manufacturing and research services (CRAMS) business for Indian companies is increasing double-fold in the last couple of years. However, the MNCs are moving cautiously and adopting wait and watch policy in respect of government decision on Drug Price Control Policy (DPCO) and awaiting more clarity in respect of patent laws. Once these decisions will take final shape, MNCs will start bringing their blockbuster products to India.
The clinical trials segment, which is very costly in Western countries, is another area for MNCs for future growth. The important factors like growing middle class population, increasing healthcare awareness, opening up of insurance sector, huge untapped rural markets and robust growth of Indian economy, are attracting new MNCs to the country. With the rise of hospital chains and rising pathological labs, it is very easy and cost effective to undertake clinical trials in the country.
Aventis Pharma, part of sanofi-aventis, the third largest pharma company in the world, is undertaking several clinical trials in India to generate new evidence or to strengthen existing indications. The company has completed a large-scale practice survey of diabetes management across the country as a first wave in over 100 centres coving 1300 patients. The second wave of this study will be conducted in 2007 in another 80 diabetic centres.
Aventis has also completed another clinical survey in patients of gastric cancer in over 300 cases in four cancer hospitals in India. Two major studies to evaluate the prophylactic use of its product clexane in immobolised patients, who are at high risk of developing thromboembolism, was completed in over 400 patients. Another study was carried out in over 500 diabetic patients in India who failed to respond to oral treatment to observe the effects of insulin treatments including company's product lantus. A study of lantus in fasting patients of diabetes demonstrated its safety and the results were presented in an international conference held in Morocco.
GlaxoSmithKline Pharma, a leading MNC in India with net sales over Rs 1550 crore during 2006-07, has made excellent progress in its clinical operations during last three years. The company has proven its quality, speed and cost effectiveness as demonstrated by successful regulatory inspections by external bodies. The company has participated in 16 global clinical studies. Out of it, 11 are in phase II and 5 are phase III studies, spanning across 6 therapy areas and involving over 200 patients. Over the last few years, it has also trained more than 100 investigators on ICH GCP guidelines, contributing to the improvement of quality of clinical trials in India.
Over the years, Indian pharma segment has developed strong research base and now is in a position to undertake research in New Chemical Entity (NCE). The cost of developing NCE and longer time for outcome is putting pressure on financials. Further, there is a risk of high uncertainty regarding the final outcome. During last couple of years, the new blockbuster product development is very slow worldwide as compared to rising investment in R&D by leading companies. Thus, the MNCs are looking for cost effective areas like India with better infrastructure. India is fast turning into the preferred manufacturing location for MNCs.
Out of top eleven listed MNCs in the country, nine companies have set up business operations in India.
The net sales of nine MNCs viz., Abbott India, Aventis Pharma, Fulford (India), GlaxoSmithKline Pharma (GSK), Merck, Novartis India, Pfizer, Solvay Pharma India and Wyeth, increased marginally by 5 per cent to Rs 5,064 crore during the 2006-07 from Rs 4,823 crore in the previous year. The companies' net profit moved up by 15.4 per cent to Rs 1,226 crore from Rs 1,062 crore.
The government regulated pricing mechanism is one the impeding factors for the slow growth of the MNCs. Further, the launch of new product in the country is also very slow and Indian companies are giving stiff competition to MNCs with cost effective products.
The MNCs in Maharashtra have built up strong reserves and are in very sound financial position. This reflects in the market value of these companies. For instance, GSK scrip is moving around Rs 1,260 on the Bombay Stock Exchange as against its 52-weeks highest level of Rs 1,340 and lowest of Rs 939. Aventis Pharma share of Rs 10 each is quoted around Rs 1,420. The scrip reached at its highest level at Rs 1886 and lowest level at Rs 1,161.
The MNCs, with over 50 per cent shareholding with their parent companies, declared handsome returns to shareholders. GSK paid equity dividend of 310 per cent during 2006-07, up from 280 per cent in the previous year. Aventis pushed its dividend to 320 per cent from 160 per cent. Abbott India and Fulford (India) maintained equity dividend at 175 per cent and 30 per cent, respectively.
GSK Q1 net up by 9.96 per cent to Rs 111 crore
GlaxoSmithKline (GSK) Pharmaceuticals, among the top ten leading multinational pharmaceuticals, has performed well in the first quarter ended 2007. The company's net profit has increased 9.96 per cent to Rs 111.32 crore from Rs 103.43 crore in the year-ago quarter. However, the company's net sales decreased, as it failed to meet the accelerated demand for certain products in the anti-infective and pain segments.
The company's pharmaceutical segment's net sales increased by 4.92 per cent to Rs 399.40 crore from Rs 380.65 crore, while its profit before tax and exceptional items was 7 per cent. The figures for the current quarter are not comparable with those of the previous quarter in view of the sale of the animal health business on July 31, 2006.
During the quarter, GSK issued a pipeline update. At the end of February 2007, the company had 158 pharmaceutical and vaccine projects in clinical development, comprising 94 NCEs, 41 PLEs and 23 vaccines. In addition, so far in 2007, GSK has completed 6 regulatory filings and received approval for launch of 6 new products.
Aventis Pharma net up by 16.7 % in 2006, dividend at 320%
Aventis Pharma, the Indian arm of Sanofi-aventis, the world's third largest pharmaceutical company, has achieved better performance during the year ended December 2006, despite lower exports. The company's net profit increased by 16.7 per cent to Rs 169.30 crore from Rs 145.1 crore in the previous year. The net sales increased by 9.4 per cent to Rs 884.0 crore from Rs 807.8 crore. The earning per share worked out to Rs 73.51, up from Rs 63 in the previous year.
The company's sales in India increased by 13.7 per cent to Rs 658.2 crore from Rs 579.1 crore in the previous year. Its exports declined slightly by 1.3 per cent to Rs 225.8 crore from Rs 228.7 crore.
The board of directors has not recommended any final dividend for the year ended December 2006 in view of the earlier declarations. The company paid first interim dividend of Rs 3.50 per equity share in August 2006 and second interim dividend of Rs 28.50 per share (inclusive of a special one-time Golden Jubilee dividend of Rs 16 per share) in March 2007. Thus the total dividend for the year 2006 worked out to 320 per cent.
Novartis' net jumps 66 per cent in FY'06
Novartis India announced impressive growth of 65.7 per cent in its net profit during the year ended March 2006. The net profit, with the help of significant jump in other income, reached at Rs 107.89 crore from Rs 65.12 crore in the previous year. The EPS improved to Rs 33.76 from Rs 20.38. The company's net sales increased by 11.5 per cent to Rs 525.92 crore from Rs 471.49 crore in the previous year.
The company's board of directors recommended equity dividend of 200 per cent and additional dividend of 100 per cent on account of 10th anniversary of the formation of Novartis.
Its other income went up sharply by 67.6 per cent to Rs 66.01 crore from Rs 39.38 crore due to profit on sale of certain structures and portion of land at Goregoan site, Rifampicin bulk drug business with its facility situated at Mahad, insurance claims towards inventory of finished goods and samples damaged due to floods in Mumbai.
Pfizer net moves up by 50.3% in 2006
Pfizer Ltd, a leading multinational company and part of world's largest US based pharma company, achieved better performance during the year ended November 2006. Its consolidated net profit, after taking into consideration working of its subsidiary Duchem Laboratories Ltd, has taken a quantum jump of 50.3 per cent to Rs 106.33 crore from Rs 70.73 crore in the previous year. The consolidated net sales moved up only by 10.6 per cent to Rs 666.79 crore from Rs 603.03 crore. With smart gain in net profits, the earnings per share for the year worked out to Rs 35.63, compared to Rs 23.70.
Pfizer's pharmaceuticals sales (including services) increased by 11.5 per cent to Rs 605.27 crore from Rs 542.78 crore in the previous year. Its sales from clinical development operations improved marginally to Rs 25.66 crore from Rs 24.78 crore, while the company's sales from animal health amounted to Rs 61.99 crore from Rs 62.13 crore.
The company's other income went up 44.8 per cent to Rs 59.47 crore. The operating profit before interest, depreciation and taxation reached at Rs 199.05 crore from Rs 149.24 crore, registering a growth of 32.4 per cent. Pfizer provided Rs 23.37 crore for VRS during 2006 and 2005, respectively.
During the year ended November 2006, Pfizer sold its Hyderabad property for the total consideration of Rs 12.21 crore and included the amount in other income. Similarly, the company sold its Ankleshwar assets for the total consideration of Rs 5.75 crore. Pfizer is also disposing off the Chandigarh property and entered agreement with a prospective buyer during the quarter ended November 30, 2006. The company received Rs 27.80 crore as advance and is now awaiting government clearances.
The company's parent company announced the global divesture of the consumer healthcare business during June 2006 to Johnson & Johnson, except or few market like India. The company is evaluating the various options available for smooth restructuring of the said business in India.