During the quarter ended March 31, 2006, the Indian pharmaceutical industry has registered sales of Rs30,146.6m. An analysis of quarterly performance of the bulk drug industry by taking into consideration 20 major companies have shown that the net sales have increased by 29.1% to Rs30146.6m in Mar'06 as compared to the same period the previous year. Most of the major bulk drugs manufacturers have revealed their sales and margins in an increasing trend excepting J K Pharmachem Ltd.
The hefty performance of the pharmaceutical companies in domestic markets and exports to regulated markets has resulted in this sales upsurge. The operating profit has grown by 26.34% as compared with the same quarter of the previous year. This was due to minimal increase in raw material cost and staff cost. Some of the companies have been moving to excise free zones for tax exemption. This was the main reason why tax has decreased to Rs664m in Q4 FY06 as compared with same period in the previous year. The profit after tax reported a growth of 41.67% to Rs3654.3m in the period ended March 31, 2006 as against the same quarter of the previous year. The reasons attributed to this significant decrease being the declining of tax of 25.18%.
Lifestyle disorder drugs dominate
Of the seven drugs that were launched during the quarter ended March 31, 2006, most of them were drugs, which are used for the treatment of lifestyle disorders such as anti-cancer, anti-diabetic and anti-asthmatic. Anglo French and Ranbaxy lead the new product launch race with three and two products respectively. Ranbaxy's Volix is used in the treatment of diabetes and its Osonide is an inhaler used in the treatment of asthma.
Investors up stakes
Of the total number of stake increase or purchase by the investors in the pharmaceutical company from Jan to April 2006, Fidelity International Ltd alone has made three of the total seven buyouts, accounting to 50 per cent, of the total buyouts.
A closer look at these stake increases revealed the fact that most of these pharmaceutical companies were focusing more on exports. Pharmaceutical exports accounted for more than 50% of their revenue in all these pharmaceutical companies for the year FY05.
Indian firm on global hunt
The appetite of Indian companies to go on a global acquisition hunt has increased. The ratio of Indian companies' outbound deals to foreign companies acquiring domestic firms has risen sharply. After the largest ever Dr. Reddy's-Betapharm of Germany deal for US$324m, there has been no stopping by the Indian pharma companies who are vying for more and more acquisitions. Many Indian firms are now on the lookout for consolidations in the European market as there is intense price competition in the generics segment in the US market. Ranbaxy made three acquisitions in a week and all of them were European pharmaceutical companies.
API exports
India has largest number of USFDA approved facilities outside the US. Apart from about 75 US FDA approved facilities, 19 facilities are approved by TGA (Australia), 45 plants by MCA (South Africa) and three EDQM(Europe)approved plants.
Indian pharma industry manufactures over 400 APIs, over 10,000 formulations and meets up to 95 per cent of the domestic requirement. Total pharmaceuticals production is estimated to be about $ 8 billion and India today is among top five global producers of APIs.
As of 2004-05, API exports account to about 7,780 crore registering a growth rate of about eight per cent compared to the previous year. India exports to about 220 countries and the top 20 countries constitute about 60 per cent of the pharmaceutical exports.
Indian pharmaceutical companies view China as a major sourcing destination for various APIs, mainly due to the cost effectiveness and quality assurance offered by Chinese companies. China exported about 67 major pharmaceutical material and ingredients worth $2,400, million in the year 2005
India has become the second largest market for pharmaceutical products and ingredient exports from China, next to the USA, registering a big leap of 172.44 per cent growth during the year 2005, in comparison to the previous year.
Various pharmaceutical products and ingredient exports to India from China touched over $ 300 million worth products at $ 303.88 million in 2005, a substantial increase from about $ 120 million in 2004, sources with China Pharmaceutical Industry Association (CPIA)
The global economy is expected to grow at 4.9% in 2006. It is expected that India's GDP would grow more than 8% during 2006-07. With regard to the pharmaceutical industry in India, it is expected to maintain a similar growth rate for the coming quarter with more new product launches; increase in exports and increase in investments both in manufacturing and research domain. In the coming quarter, Indian pharma companies will continue acquiring pharma companies in the European market and investment management organizations are expected to increase their stake in the Indian pharma companies
High performance pharmaceutical companies require superior visibility and control of complex, mission critical processes like clinical trials and sample allocation planning in order to stay competitive in this fast paced industry. The Indian pharmaceutical industry is expecting double digit growth in the next quarter and this will be accounted through acquisition, new product launches and also increases in exports of pharmaceuticals to the regulated market
(By Cygnus Business Consulting & Research , Hyderabad - www.cygnusindia.com)