The Indian pharmaceutical companies have successfully maintained the growth in top line as well as bottom line during the quarter ended September 2006. These companies are gearing up for further expansion in operations and filing more and more ANDAs and DMFs in highly regulated markets with higher spending on research and development. However, the working of ten multinational companies operating in India failed to sustain the strong growth rates.
The financial performance of listed 75 Indian pharmaceutical companies, with net sales over Rs 5 crore for the quarter ended September 2006, showed a robust growth in net sales and net profit. Their net profit has taken a quantum jump of 35.9 per cent to Rs 2,065 crore from Rs 1,519 crore in the corresponding period of last year. The net sales went up by 24.2 per cent to Rs 11,288 crore from Rs 9,086 crore in the similar period of last year. These results are very strong as compared to performance of international giants with only single digit growth.
Out of the PHARMABIZ sample of 75 pharma companies, the financial performance of 10 MNCs were not upto the mark and their net sales increased only by 2.5 per cent to Rs 1,400 crore in the quarter ended September 2006 as against Rs 1366 crore in the corresponding period of last year. The net profit of 10 MNCs declined during the quarter by 3.4 per cent to Rs 473.34 crore from Rs 491.63 crore.
Indian Pharmaceutical companies have consolidated their position and are set to grab future opportunities in the domestic as well as international markets. Several companies are entering aggressively in the highly regulated market by mergers and acquisitions, marketing tie-ups, R&D collaborations and also offering contract manufacturing services to multinationals. With several approvals for facilities from regulatory authorities, Indian companies are well set to launch new products and boost their business operations in near future.
The leading companies viz., Ranbaxy Laboratories, Cipla Ltd, Dr Reddy's Laboratories, Sun Pharmaceutical, Lupin Ltd, Aurobindo Pharma, Nicholas Piramal India, Cadila Healthcare and Wockhardt Ltd achieved excellent performance during the quarter ended September 2006 and assisted the overall growth of 75 companies. However, GlaxoSmithKline Pharma, major MNC in India, suffered setback and its net sales as well as net profit declined during the quarter under review. Alembic Ltd received setback due to one time payment of interest to ONGC and VRS programme.
India's largest pharma company Ranbaxy Laboratories posted 33.8 per cent growth in net sales during the quarter ended September 2006, followed by Cipla (33.3 per cent), Dr Reddy's Lab (61.7 per cent), Sun Pharma (29.1 per cent) Lupin (21.2 per cent), Aurobindo Pharma (50.2 per cent) and Nicholas Piramal (26.9 per cent). Cadila and Healthcare and Wockhardt also recorded a growth of 17.1 per cent and 30 1 per cent respectively. Though Jubilant Organosys is appearing in the top list, its pharmaceutical sales are 48 per cent of total net sales of Rs 409 crore. These top companies also recorded a net profit growth of over 20 per cent during the quarter.
Dr Reddy's Lab gained 154 per cent growth in net profit to Rs 272.66 crore during the quarter from Rs 107.54 crore in the similar period of last year, basically due to merger of Betapharm, a leading generics pharmaceuticals company in Germany. Cipla notched up net profit growth of 47 per cent and its net profit touched to Rs 180.28 crore from Rs 122.60 crore. Ranbaxy Laboratories earned a net profit of Rs 97.31 crore as against a net loss of Rs 10.77 crore in the last period. Aurobindo pushed its net profit smartly to Rs 54.64 crore as against Rs 3.64 crore. This shows that the leading companies performed well during the quarter ended September 2006.
Ranbaxy Lab reduced its Research and Development (R&D) expenditure to Rs 108.70 crore from Rs 153.21 crore in the last quarter ended September 2005. Dr Reddy'sR&D spending increased to Rs 40.68 crore from Rs 34.22 crore. Nicholas also incurred higher R&D expenditure of 19.90 crore, Lupin's at Rs 31.80 crore, Torrent Pharma's at Rs 20.97 crore and Matrix at Rs 16.33 crore.
Higher exports helped the companies to push up bottom line. Ranbaxy's exports increased to Rs 733 crore from Rs 493 crore and that of Aurobindo Pharm to Rs 280.17 crore from Rs 150.62 crore. Nicholas Piramal's exports increased by 48 per cent to Rs 79.01 crore from Rs 53.36 crore. Glenmark's formulations business in US earned revenues of Rs 33.80 crore However, exports of few companies like Aventis Pharma, Torrent Pharma and Matrix Laboratories were slightly under pressure and declined marginally. Indoco's exports reached at Rs 11.16 crore from Rs 6.68 crore in the last period.
Further, Ipca Laboratories, Glenmark Pharmaceuticals, Panacea Biotec, Ankur Drugs, Venus Remedies and Makers Laboratories achieved net profit growth of more than 100 per cent during the quarter ended September 2006.
Divi's Laboratories, Elder Pharmaceuticals and Nectar Lifesciences also pushed their net profit by over 85 per cent. Out of 75 companies, 18 companies could not manage to maintain the profit level during the quarter. Few important companies like GSK, Alembic, Matrix Laboratories, Novartis India, Stride Arcolab, Merck, Ind-Swift Laboratories, Marksans Pharma, Fulford India, RPG Life Sciences, etc., received major blow and their net profit declined during the quarter under review.
Out of 75 companies, the net sales of 13 companies declined during the quarter ended September 2006. The net sales of GSK declined by 5.1 per cent to Rs 399 crore and that of Matrix Laboratories moved down by 18.4 per cent to Rs 142.34 crore. Few important companies like Orchid Chemicals, Alembic, Pfizer, Novartis, Surya Pharma, Fulford and Jupitor Bioscience recorded single digit growth in net sales.
The other income of 75 companies increased by 26.1 per cent to Rs 406 crore from Rs 322 crore in the last quarter ended September 2005. Ranbaxy's other income was negative at Rs 19.09 crore as compared to Rs 67.01 crore in the corresponding period of last year, basically due to adverse exchange rates. Dr Reddy's other income went up sharply to Rs 112.51 crore from Rs 25.76 crore due to significant growth in licence fees. Its licence fees and services income increased to Rs 91.91 crore from Rs 4.35 crore. The other income of Lupin, GSK, Aurobindo Pharma, Sun Pharma and Aventis has also gone up substantially.
The raw material cost, including stock adjustment, increased by 20.5 per cent to Rs 5010 crore from Rs 4157 crore in the corresponding period of last year. Among the 75 companies, the raw material cost of GSK, Matrix Labs, Alembic, Novartis, J.B Chemicals, Elder Pharmaceuticals, Merck, Ind-Swift Lab and Marksans Pharma declined during the quarter ended September 2006. Raw material cost of 10 MNCs increased only 5% to Rs 632 crore.
The staff cost during the quarter went up by 26.4 per cent to Rs 959.11 crore as against Rs 759.20 crore in the last period. This worked out to 8.5 per cent of aggregate net sales. The staff cost of few important companies Cipla, Dr Reddy's Lab, Aurobindo, Sun Pharma, Wockhardt, Torrent Pharma, J B Chemicals, Panacea Biotec, Dishman Pharmaceuticals and Divi's Lab increased by more than 40 per cent during the quarter. The spending on staff by MNCs amounted to Rs 142 crore during the quarter ended September 2006 as against Rs 132 crore, a growth of 7.4 per cent only.
The profit before interest, depreciation, taxation and extra-ordinary items (EBDIT), of 75 companiesincreased smartly by 41.7 per cent to Rs 2,890 crore from Rs 2,039 crore in the last period. The EBDIT of ten MNCs increased only by 0.1 per cent to Rs 449.09 crore from Rs 448.64 crore. The interest and depreciation burden of 75 companies increased by 15.3 per cent and 21.8 per cent respectively to Rs 181 crore and Rs 369 crore.
The profit before tax and extra-ordinary items moved up by 41.9 per cent to Rs 2,240 crore from Rs 1,579 crore. The taxation amount increased significantly by 43.7 per cent toRs 411 crore as compared to Rs 286 crore in the last period. This put some pressure on bottom line. Further, the provision for extra-ordinary items was lower at Rs 137 crore as compared to last period amount of Rs 226 crore.
Several companies received approvals for new products in US and Europe during the quarter ended September 2006. Ranbaxy filed 9 ANDAs during the quarter and its total ANDA filings in USA stand at 178, with 62 ANDAs pending approval. Zydus Cadila filed 2 ANDAs and 5 DMFs taking the total to 41 ANDA filings and 45 DMFs. So far it has received 17 approvals of which it launched 7 products in USA. Now the company is entering the world's second largest market Japan by establishing its own subsidiary.
Lupin filed three ANDAs, two DMFs and three MAAs (EU) taking the total to seven ANDAs and four DMF respectively. Glenmark Pharma signed a deal with Merck KGaA of Darmstadt, Germany for its DPP-IV inhibitor, GRC 8200 a treatment for type II diabetes giving it exclusive development, registration and commercialization rights for the North American, European and Japanese territories. It has four more molecules in the pipeline and plans to take three of them to the clinics in this fiscal year.
Strides Arcolab received two ANDA approvals for Stavudine and Nevirapine under the expedited review provision of the President's Emergency plan for Aids Relief Programme for the US FDA. The company filed 10 ANDA/NDAs with USFDA in the quarter ended September 2006 and its total filings reached to 21. Shasun filed one ANDA and its partners have filed 2 more ANDAs. Orchid received 3 US FDA approvals for ANDAs and its total reached at 18.
Orchid filed 4 DMFs during the quarter and its cumulative count to 35 DMFs and 32 ANDAs..
Thus considering the investments in R&D, increasing number of filing of ANDAs and DMFs, investment in mergers & acquisitions as well as expansion plans and aggressive entry into highly regulated market will give necessary support for growth. If the Government will offer some more support and clear the picture regarding its policy, the companies will be able to grow at a faster rate.