The Gujarat based pharmaceutical companies have entered into new markets during last couple of years and stepped up R&D activities in a big way. The pharma companies were able to foray into the new therapy segments with absorbing new technology. These companies are focusing important markets like US, Europe, Japan, Brazil, Mexico, etc., and spreading there presence through mergers and acquisitions, and joint ventures. With various acquisitions Gujarat based companies aims to gain access to a difficult-to-develop product pipeline, expertise and infrastructure that will add value to there operations. These companies are set to create new windows of opportunities with the help of talent pool and robust product pipeline.
The patent protection of several block-buster branded drugs of 'big pharma' companies will expire in next couple of years. By 2015, branded drugs of over $200 billion sold by big pharma MNCs are expected to lose patent protection. This provides a huge opportunity for generic players, with low cost product development and manufacturing capabilities, to tap the market for these drugs. Gujarat based major companies are moving cautiously to tap these opportunities through acquisitions. Sun Pharmaceutical successfully acquired Taro Pharmaceutical after long battle and Cadila Healthcare, through its subsidiary acquired the assets of the US based Nesher Pharmaceuticals Inc.
To overcome the stiff competition and gain higher market share Gujarat based pharmaceutical companies have invested huge funds in R&D activities. These investments paid them rewards through higher approval in highly regulated markets. The R&D expenditure of Cadila Healthcare increased sharply to Rs. 302 crore during FY2010-11 from Rs. 218 crore and that of Torrent Pharma went up to Rs. 134 crore. Sun Pharm Advance Research Co, a demerged company of Sun Pharmaceutical, stepped up its R&D to Rs. 70 crore from Rs. 64 crore.
Sun Pharm's total R&D expenditure reached at Rs. 93 crore during the first quarter ended June 2011 and worked out to 6 per cent of sales. It filed 6 ANDAs and cumulative filing of ANDAs reached at 383 products with US FDA. It received total approval for 232 products and awaiting approval for 151 products, including 19 tentative approvals. Further, its cumulative total of DMF reached at 209 with 132 approval as at the end of June 2011. Torrent Pharma has made significant investment in product development to support the build-up of US, Europe and Brazil operations. The total revenue expenditure on R&D was 5.1 per cent of consolidated net sales and operating income during the first quarter ended June 2011.
The Gujarat based pharmaceutical companies have posted mixed financial performance during the first quarter ended June 2011 on account of overall slowdown in US and Europe, investments in R&D activities and higher input costs. The leading five companies viz., Sun Pharmaceutical and Industries, Cadila Healthcare, Torrent Pharmaceuticals, Dishman Pharmaceuticals and Lincoln Pharmaceutical reported aggregate net sales of Rs. 3,565 crore during the quarter ended June 2011 as against Rs. 3,060 crore in the corresponding period of last year, representing a modest growth of 16.5 per cent. However, their net profit declined by 3.3 per cent to Rs. 848 crore from Rs. 876 crore basically due to lower profit by Sun Pharma.
Alembic Ltd has demerged its pharmaceutical business into a new subsidiary
Alembic Pharmaceuticals Ltd during 2010-11.
For the full year ended March 2011, these five pharma majors posted strong growth in net sales and net profit with focus on highly regulated markets. The net sales of these five companies moved up by 29 per cent to Rs. 13,489 crore from Rs. 10,457 crore in the previous year and their net profit up by 32.5 per cent to Rs. 3,163 crore from Rs. 2,388 crore. The net profit of Sun Pharma jumped up by 34 per cent to Rs. 1816 crore and that of Cadila Healthcare's went up by 46.8 per cent to Rs. 991 crore.
Besides, there are several other pharma companies viz., Themis Medicare, India Gelatin & Chemicals, Sun Pharma Advance Research, Ambalal Sarabhai Enterprise, Core Healthcare, Alkem Laboratories, Intas Pharmaceutical, Kamron Laboratories, Claris Lifesciences, etc., are progressing well. Further, India's leading companies like Ranbaxy, Glenmark, IPCA, Lupin, J B Chemicals, Cipla, Wockhardt, Dr Reddy's Laboratories have also established their manufacturing units in Gujarat. With the strictly implementation of Schedule M norms in Gujarat, several small scale units are now providing good support to growth of pharma segment in India.
Though these companies achieved strong performance, the volatile share price movements put pressure on returns to investors during last three months. Cadila scrip is currently moving in the range of Rs. 820-825 as against its 52-weeks highest level of Rs. 983 and Sun Pharma scrip of face value of Re 1 per share is quoted around Rs. 490 as compared to its peak level of Rs. 538 on Bombay Stock Exchange. Torrent Pharma scrip touched to its yearly highest level at Rs. 686 but now moving around Rs. 585. The price movements of Dishman suffered heavily due to poor performance and recently touched to its lowest level at Rs. 63 as against its 52-weeks highest level of Rs. 203.
Claris Lifesciences scrip, which entered capital market during November 2010 with IPO of Rs. 300 crore, is quoted in the range of Rs. 110-120 on BSE as against its highest level of Rs. 232. Claris Lifesciences, a Rs. 750 crore plus pharma company from Ahmedabad, is one of the major Indian sterile injectables pharmaceutical company with a presence in 76 countries worldwide. It products offering comprise 128 products across multiple markets and therapeutic areas.
Sun Pharma net falls by 11%
Sun Pharmaceutical Industries has suffered setback during the first quarter ended June 2011 and its consolidated net profit declined by over 11 per cent to Rs. 501 crore from Rs. 564 crore in the similar period of last year as the company included financial working of Taro Pharma in the current quarter but the same were not included in the same period of last year. The company's consolidated net sales increased by 19.9 per cent to Rs. 1,636 crore from Rs. 1,365 crore. With fall in profit, its earnings per share declined to Rs. 4.8 for the face value of share of Re 1 each as against Rs. 5.4 in the last period. The face value of equity share change to Re 1 from Rs. 5 in the last period.
Cadila net rises by 15 %
Cadila Helathcare, a Rs. 4,450 crore plus pharm major from Ahmedabad, has managed to generate higher consolidated net profit during the first quarter ended June 2011 on account of lower interest and tax burden. Its consolidated net profit increased by 15.4 per cent to Rs. 229.82 crore from Rs. 199.18 crore in the corresponding period of last year. The EBDITA increased only by 2.8 per cent to Rs. 308.70 crore from Rs. 300.22 crore. The earnings per share worked out to Rs. 11.22 as against Rs. 9.73 in the last period.
The company's consolidated net sales increased by 11.3 per cent to Rs. 1,174 crore from Rs. 1,055 crore in the similar period of last year. The company launched 20 new products in domestic formulation market. Its formulation business in Europe increased by 22 per cent and that in Brazil and Japan moved up by 21 per cent and 29 per cent respectively. Its other income from operations declined by 7.6 per cent to Rs. 72.18 crore from Rs. 78.09 crore. Its employees cost increased by 24 per cent to Rs. 161.47 crore from Rs. 130.17 crore.
Torrent net zooms by 38%
Torrent Pharmaceuticals has posted strong net profit growth of 38.1 per cent during the first quarter ended June 2011 to Rs. 102.52 crore from Rs. 74.22 crore in the corresponding period of last year with significant additions by dossier development and licensing fee. Its EBDITA also moved up by 36.1 per cent to Rs. 155.57 crore from Rs. 114.35 crore. The company's consolidated net sales increased by 16.7 per cent to Rs. 613.39 crore from Rs. 534.88 crore. With smart improvement in profits, its earnings per share touched to Rs. 12.12 as against Rs. 8.77 in the last period.
The board of directors has recommended equity dividend of 120 per cent and a special equity dividend of 40 per cent for the year ended March 2011. Thus the total dividend worked out to Rs. 160 per cent for the face value of Rs. 5 per share.
Claris Lifesciences' consolidated net sales for the first half ended June 2011 reached at Rs. 348 crore and it earned a net profit of Rs. 57.61 crore. The company has deployed Rs. 110 crore for setting up of new facilities, including R&D, till the end of June 2011. As against the equity capital of Rs. 63.82 crore its reserves stood at Rs. 904 crore. Claris has already received 125 approvals in Europe, while another 105 are in the pipeline. Further, it has received 95 approvals for Propofol across different geographies and another 60 registrations are in the pipeline.