With major regulatory approvals for facilities and products in the kitty, the pharmaceutical and biotech players in Andhra Pradesh have established a strong presence in India and international market. The Andhra Pradesh has emerged as a major hub for the pharmaceutical manufacturers with easy availability of skilled workforce, proper infrastructure and better government support. The pharma units are expanding their business especially in API, branded formulations, generics and customs pharmaceuticals services.
The major players like Dr Reddy's Laboratories, Aurobindo Pharma, Matrix Laboratories and Divi's Laboratories are expanding their presence in the domestic as well as international market. Further, medium size players like Granules India, Kerbs Biochemicals, Suven Life Sciences, Vimta Labs, Natco Pharma and Zenotech Lab are expanding their operations in Andhra Pradesh. These companies are investing huge amounts in R&D and focusing more on highly regulated markets. The investors are also offering better support in the form of improved profitability and higher returns.
The biotech segment is also well set to establish itself in the state. Several reputed institutions, companies with international stature and foreign research based companies are entering into various partnership with Indian biotech companies. The important institutions such as Centre for Cellular and Molecular Biology (CCMB) and Indian Institute of Chemical Technology are conducting workshops on a regular basis to push up the biotech segment
Biotech companies, including Bharat Biotech and Shanta Biotech have placed Hyderabad on the biotech map. Several companies are looking for capital funds to set up new biotech park in the Andhra Pradesh. The ICICI Knowledge Park (IKP) with an estimated investment of Rs 7,224 crore feature as may as 20 companies.
The state government has recently allocated 300 acres of land for the Phase III works of Shapoorji Pallonji Biotech Park to facilitate additional activities in the Genome valley. The third phase is being developed by Andhra Pradesh Industrial Infrastructure Corporation and will be located at Karkapatla, Genome Valley. The state government is planning to introduce its own biotechnology policy.
In line with other sectors, the market capitalisation of pharma units have improved during the last couple of months and investors are getting better returns. Currently, Dr Reddy's scrip is quoted in the range of Rs 660-670 on the BSE with market capitalisation of over Rs 11,000 crore. Aurobindo scrip is moving around Rs 615 with market capitalisation of Rs 3275 crore. The shares of Divi's Lab traded at Rs 2830, while Matrix in the range of Rs 158-160.
During the first nine months of the current year, pharma majors have posted improved financial results. However, financial results of the few companies came under pressure, largely due to competition in the international market.
Dr Reddy's posts Q3 revenues of Rs 1,543 cr
Dr Reddy's Laboratories has notched up excellent performance during the third quarter ended December 2006. Its net profit has taken a quantum jump to Rs 187.9 crore from Rs 62.8 crore in the corresponding period of prior year. Its total revenue increased by 160 per cent to Rs 1543 crore from Rs 593 crore in the same period of the last year. The company's revenues from international markets increased by 241 per cent and stood at Rs 1320 crore. Dr Reddy's said that revenues from international markets represented 86 per cent of the total revenues as compared to 65 per cent in the similar period of the last year.
The company has launched Ondansetron tablets (generic version of Zofran) with a 180-day marketing exclusivity in December 2006 and captured 55 per cent share of the total market. Its revenues from core businesses, (excluding the contribution from authorized generics and acquisition) increased by 38 per cent to Rs 820 crore from Rs 590 crore in the prior year period. The company's quarterly revenues from the API business increased by 29 per cent to 270 crore from Rs 210 crore in the year-ago quarter. Supported by sound branded formulation business in India and China, Dr Reddy's posted revenues from branded formulations of Rs 320 crore, up 18 per cent from Rs 270 crore last year.
Commenting on the performance, G V Prasad, CEO, said, "Fiscal 2007 has been a truly extraordinary year for Dr Reddy's in many ways. For the first time in the history of the company we have crossed US$ 1 billion in revenues. "
Matrix swings to net loss in Q3
Matrix Laboratories swung to a consolidated net loss in the third quarter ended December 2006 from a net profit in the similar period of the last year, largely impacted by adverse performance of Docpharma N.V, a wholly owned subsidiary of the company. The consolidated net loss amounted to Rs 0.90 crore as compared to a net profit of Rs 15.9 crore in the year-ago quarter. The company's quarterly sales increased by 5.9 per cent to Rs 395.30 crore from Rs 373.2 crore in the corresponding quarter of the previous year.
The company's third quarter profit before interest, depreciation and taxation amounted to Rs 41.60 crore, down 11.7 per cent from Rs 47.10 crore in the same quarter of the prior year. The figures are not strictly comparable mainly due to acquisitions at different points of time during the last year.
The company attributed its third quarter loss to lower than expected earnings from Docpharma N. V. and increased R&D spend. Docpharma recorded revenues of Rs 86.2 crore as against Rs 92.2 crore last year. Matrix said that costs related to expansion activities in France and Italy had an adverse effect on the financial results of Docpharma. The company expects sales revenues from these countries to boost the earnings in future.
Additionally, unfavorable variances resulted from the deferment of certain out licensing contracts, price decrease for a key product in the Netherlands, one time inventory provision and restructuring charges with respect to the hospital business have impacted the third quarter results negatively.
Rajiv Malik, CEO of Matrix, said, " We are extremely excited about the progress we are making to realign and adjust our company's focus as we prepare to be a global source of API, finished dosage forms and other product opportunities. During the past quarter we have begun this process and, now with the closing of the transaction with Mylan, we are in a position to accelerate this realignment further. We continue to look forward to the future where all of our shareholders will realize the benefits of a fully integrated company."
The generic API business contributed Rs 142 crore to the consolidated net sales in third quarter of 2006-07, which represents a sequential growth of 13 per cent. The growth in generic API business can be attributed to supply of certain generic APIs, which are scheduled for launch in the US market during the coming quarters. The consolidated net sales of the anti-retro virals portfolio improved sequentially 30 per cent to Rs 92 crore.
Matrix's revenues in the CRAM business declined to Rs 15.3 crore for the quarter under review from Rs 30.8 crore primarily due to deferment in shipment of certain key intermediates as the intended manufacturing facilities were utilised for strategic filings in FDF space.
Aurobindo posts higher profit
Aurobindo Pharma, one of the Indian pharma majors, reported a third quarter net profit of Rs 60.12 crore, up over 91 per cent from Rs 26.19 crore in the corresponding period of the last year. The company's net sales improved by 29.2 per cent to Rs 528.40 crore from Rs 409.02 crore, while its other income went up to Rs 26.33 crore from Rs 7.95 crore in the year-ago quarter. With significant jump in profits, Aurobind's earning per share stood at Rs 11.28, compared to Rs 4.92 last year.
The company's export rose by 30.4 per cent to Rs 304.89 crore during the third quarter of 2006-07 from Rs 233.80 crore in the prior year quarter.
For the nine months period ended December2006, Aurobindo Pharma's net profit jumped up by 374 per cent to Rs 150.97 crore from Rs 31.84 crore in the same period of the last year. The company's net sales for the period were Rs 1446.96 crore, up 43.4 per cent from Rs 1009.16 crore in the previous year period. The company's other income increased to Rs 70.14 crore from Rs 19.15 crore
During the quarter, the company has acquired Hyderabad-based Senor Organics Pvt Ltd, a profit making small pharma manufacturing company. Also, in an attempt to expand its marketing presence in Europe with a dependable infrastructure, the company has acquired Netherlands-based Pharmacin International B. V., a profit making generic pharma company, through its WOS at Netherlands. Aurobindo is now planning to merge APL Life Sciences Ltd and Senor Organics Pvt Ltd., both wholly owned subsidiary companies, with the company.
Suven Life Q3 net profit rises 19 per cent
Suven Life Sciences, a Hyderabad based life sciences company and pioneer in CRAMS, achieved satisfactory performance during the third quarter ended December 2006. Its net sales increased by 19 per cent to Rs 32.25 crore from Rs 27.112 crore in the similar period of the prior year. The net profit rose by 19 per cent to Rs 3.83 crore from Rs 3.21 crore in the year-ago quarter. Its exports for the quarter increased by 21 per cent.
For the nine months ended December 2006, Suven Life Sciences' revenues amounted to Rs 85.85 crore, up 35 per cent from Rs 83.01 crore in the corresponding period of the previous year. The company's net profit grew by 35 per cent to Rs 8.76 crore from Rs 7.24 crore in the first nine months of last year. The company's R&D cost reached at Rs 14.43 crore, constituting 17 per cent of the total revenue.
The company said it completed the merger with Asian Clinical Trials Ltd during the quarter. The Board has recommended the issue of bonus shares at 1:1 ratio apart from considering a stock split of the Rs 2 per share to Rs 1 per share.
Granules India Q2 profit surges
Granules India, a leading pharmaceutical formulation intermediates company, achieved impressive performance during the second quarter ended December 2006. The company's net profit jumped up by 37.4 per cent to Rs 3.045 crore from Rs 2.22 crore in the same period of the last year. The company's quarterly net sales were Rs 50.21 crore, up 13 per cent from Rs 44.44 crore in the year-ago quarter. The operating profit before interest, depreciation and taxation worked out to Rs 8.31 crore as compared to Rs 6.21 crore in the last period. On a per share basis, the company's earnings increased to Rs 2.46 from Rs 1.80 in the prior year quarter.
For the six-month period, Granules India posted net sales of Rs 95.60 crore, up 13.4 per cent from Rs 84.27 crore in the comparable period of the previous year. The company's net profit increased by 20.7 per cent to Rs 5.08 crore from Rs 4.21 crore, while its earnings per share rose to Rs 4.10 from Rs 3.42 in the same period of the prior year.
Highlighting the performance, Krishna Prasad, managing director, said, "Our additional investments towards the international markets are paying off. Revenues from the Europe registered a 122 per cent growth on quarter-to-quarter basis, while revenues from the Asia-Pacific region grew at 153 per cent during the period."
Metformin API and PFI's have contributed to a large extent for the growth. We expect the remainder of the year to showcase even better performance in sales, he added. During the quarter under review Granules signed a MOU with Hubei Biocause Heilen Pharmaceutical Company (Biocause) of China. Granules acquired a 50 per cent stake in the company to manufacture and sell APIs starting with Ibuprofen. Biocause is one the biggest ibuprofen manufacturers and exporters in the world.
During December 2006, PharmaMatch B.V. and Granules signed a MOU to develop, manufacture and market formulations in the European market jointly. This arrangement kicked-off with the transfer of existing marketing authorizations by PharmaMatch to Granules for products like Paracetamol where Granules has the basic and the necessary skill sets to deliver the same. In January 2007, the company signed its first Master Services Agreement with GlaxoSmithKline Consumer healthcare R&D for product development.
Divi's Labs posts higher profit in Q3
Divi's Laboratories has clocked impressive financial performance during the third quarter ended December 2006. The company's net profit has taken a quantum jump of 73.2 per cent to Rs 32.73 crore from Rs 18.90 crore in the corresponding period of the last year. Its net sales amounted to Rs 149.62 crore, up 38.6 per cent from Rs 107.98 crore in the prior year quarter. The company's earning per share was Rs 25.54, compared to Rs 14.74 in the year-ago quarter.
For the nine-month period, Divi's laboratories posted a net profit of Rs 90.76 crore, up 90.8 per cent from Rs 47.58 crore in the comparable period of the previous year. The company's net sales surged 85.7 per cent to Rs 471.83 crore from Rs 254.02 crore in the last year. The company said the US Food and Drugs Administration has successfully inspected its plant at Chippada, Bheemunipatnam Mandal near Visakhapatnam.