The two pharmaceutical majors Orchid Chemicals & Pharmaceuticals Ltd and Shasun Chemicals and Drugs Ltd from Tamil Nadu have established a strong brand image in the international market putting Tamil Nadu on the World Pharma map. Both the companies have taken several strategic initiatives during last few years to cover some of the most advanced healthcare market, focusing more and more on research and development and new drug discovery.
Orchid has completed successfully its first decade of operations during 2003-04 and set to move fast with new product launches and tie-ups with international players. It is focusing more on advanced markets, with a particular focus on generics.
The company spent nearly Rs 40 crore (almost 6% of its total turnover) for R&D during the financial year ended in 31st March 2004. The specific areas in R&D include process research, pharma research, new drug discovery and new drug delivery systems.
Orchid filed seventh ANDA in August 2004 which covers various finished dosage forms of 3 cephalosporin antibiotic products. Its ANDAs are filed from its sterile cephalosporin formulation facilities near Chennai. The company entered into exclusive marketing arrangements with Apotex and Par Pharmaceutials to market is sterile and oral cephalosporin formulations respectively in the US. It has identified 15 key antibiotic products. The company is planning to raise $ 100 million via GDR, which will be listed in Luxumburg exchange and issue 25 lakh warrants to the promoters. To accommodate new shares it is raising its authorized capital to Rs 55 crore.
Shasun Chemicals was incorporated in 1976 with headquarter in Chennai and now selling its products to more than 40 countries. The company's two API manufacturing facilities at Pondicherry and Cuddalore in South India have been successfully inspected by the USFDA, UK MHRA, EDQM, TGA and other regulatory bodies. The company is now setting up a formulations plant to service the evolving needs of its customers. Further it has research, manufacturing and marketing collaborations with several North American pharma companies.
Shasun is focusing more on its anti-inflammatory drug ibuprofen. Currently the company is holding 15 per cent market share in US in respect of ibuprofen. It has a tie-up with the GSK for the supply of ranitidine. The company is increasing involvement with foreign majors like Eli Lilly and GSK. Shasun has tie-up for 22 products with Alpharma in segment such as cardio-vascular and central nervous system. These products will be launched within next three years. It has invested Rs 44 crore for setting up new facility which is partly operational. Further, it is investing Rs 33 crore for setting up R&D centre. The new facility will cater to contract manufacturing activity in a big way.
With the difficult market conditions on account of stiff competition, the financial performance of Orchid suffered a temporary setback during the year 2004-05. Orchid's consolidated gross sales improved marginally by 5.1 per cent to Rs 734.75 crore from Rs 699.32 crore in the previous year. However, its net profit declined by 8.2 per cent to Rs 25.02 crore mainly due to higher interest and depreciation cost. Its sales from bulk drugs improved to Rs 646.38 crore from Rs 527.87 crore, but that of formulations declined to Rs 96.20 crore from Rs 104.41 crore.
Despite several odds like problem of excise on MRP, VAT implementation and large scale competition in the generic field, Shasun managed to generate better performance during the year ended March 2005. Its consolidated net sales increased 20.4 per cent to Rs 340.11 crore from Rs 282.44 crore in the previous year. Its net profit has taken a quantum jump of 22 per cent and touched to Rs 31.11 crore from Rs 25.49 crore.
Both the companies are taking better care of their investors and paid handsome equity dividend and are enjoying investors confidence. Orchid maintained equity dividend at 40 per cent and Shasun stepped up it dividend to 75 per cent for the year 2004-05 from 60 per cent in the last year. Currently Orchid scrip is quoted at Rs 329 and Shasun is hovering around Rs 420 on the Bombay Stock Exchange. As against the equity capital of Rs 34.13 crore of Orchid, the market capitalization worked out to Rs 1123 crore. Similarly, Shasun's equity capital stood at Rs 9.15 crore and its market capitalization reached at Rs 386 crore. Orchid and Shasun scrips reached at 52-weeks peak level at Rs 370 and Rs 518 respectively.