The north- based pharmaceutical companies have successfully overcome all odds and are now moving ahead smoothly pumping in more funds in expansion, research & development and focusing on highly regulated markets. These companies are also catering to higher demands from the emerging markets. To strengthen operations and presence in the international markets, these companies have entered into new partnerships and set up new subsidiaries. The US FDA and European approvals for facilities have worked out positively and has given the necessary push for the CRAMS business. However, stiff competition, stringent approval system, cost -cutting measures adopted by several governments, volatile exchange rates and recent interest rate hike may put pressure on margins in the coming years.
The leading 10 pharmaceutical companies from North India, with consolidated net sales above Rs 300 crore during 2009-10, viz., Ranbaxy Laboratories (a subsidiary of Daiichi Sankyo Co, Japan), Jubilant Life Sciences (a demerged entity of Jubilant Organosys), Surya Pharmaceuticals, Panacea Biotec, Nectar Lifesciences, Ind-Swift Laboratories, Ind-Swift Ltd, Parabolic Drugs, Fresenius Kabi Oncology and Venus Remedies notched up better growth rates in respect of top line and bottom line. Out of 10 companies, three companies i.e. Ranbaxy, Jubilant Life and Surya Pharma recorded net sales of above Rs 1,000 crore during 2009-10.
The aggregate net sales of these 10 companies during financial year 2009-10 increased by 10.8 per cent to Rs 16,748 crore from Rs 15,121 crore in the previous year. With significant improvements in profits by Ranbaxy and Panacea Biotec, these companies recorded a net profit of Rs 1,096 crore as against a net loss of Rs 624 crore in the last year. Fresenius Kabi also reduced its net loss to Rs 33 crore from Rs 146 crore. These companies recorded higher exports, stepped up R&D investments, received higher approvals and undertook strategic restructuring in business model during 2009-10 and the first half of the current year.
The financial performance during the first half ended September 2010 was not so encouraging due to unfavourable exchange rates and significant rise in cost of production. Excluding Ranbaxy, (as the year ending is December), the net profit of 10 companies declined by 4.1 per cent to Rs 407 crore basically due to huge net loss of Rs 21 crore by Morepen Laboratories. Their net sales increased 16 per cent to Rs 5,179 crore from Rs 4,466 crore in the corresponding period of last year.
To overcome stiff competition and launch of cost -effective products in international markets, the R&D expenditure of Ranbaxy increased by almost five per cent to Rs 494.38 crore during the year 2009-10. The same was at Rs 358.84 crore during the first nine months ended September 2010 as compared to Rs 334.04 crore in the corresponding nine months of last year. During the third quarter ended September 2010, it made 37 filings and received 47 approvals for dosage forms. The company transferred certain assets pertaining to its new drug discovery research centre to Daiichi Sankyo India Pharma Pvt Ltd along with a non-compete and non-solicitation agreement for a period of two years for a consideration of Rs 147 crore.
Jubilant Life Science, an integrated pharmaceutical industry player and the largest CRAMS company in India, has achieved a consolidated net sales of Rs 1,969 crore during the first half of the current year from Rs 1,829 crore, representing a growth of eight per cent The international business contributed 61 per cent to the top line. Its pharmaceutical sales reached 1,663 crore and contributed 84 per cent to the total revenues. The company signed a long - term contract in CRAMS business worth US$51 million with a leading US life sciences company during second quarter of current year. Further it also singed a long- term contract in CRAMS worth US$33 million in US.
Surya Pharma, the third largest pharma company from North India, has notched up strong performance during the first half of 2010-11 and its net profit zoomed by 51.5 per cent to Rs 49.09 crore. Similarly, its net sales moved up by 57 per cent to Rs 754.41 crore from Rs 480.83 crore in the corresponding half of last year. The company has commissioned its second unit at the greenfield project in Jammu. During the second quarter ended September 2010, Surya has completed its maiden GDRs issue of US $ 25 million. Its subsidiary has set up 75 retail stores under brand name “VIVA”.
Panacea Biotec, the second largest vaccine producer in India, has posted an impressive growth of 48 per cent in turnover during the first half ended September 2010 to Rs 506 crore from Rs 343 crore in the similar period of last year. Its formulation turnover went up by 37 per cent to Rs 161 crore and its exports of vaccine grew by 57 per cent. Its vaccine sales reached at 345 crore as compared to Rs 225 crore. Its profit after tax jumped by 226 per cent to Rs 49.4 crore in the first half of current year. Panacea has collaborations and tie-ups with leading national and international research organizations and corporations. It has five dedicated research and development centres and 24 product patents, valid in more than 60 countries worldwide.
Ind-Swift Laboratories has also improved its performance and is now focusing on the regulated markets of the US, Australia and Japan in a big way for which it has already filed over 310 DMFs. It also filed over 129 patents in various countries. Ind-Swift is set to move faster with 19 US FDA compliant plants and a robust product basket of 40 molecules and 20 more are in the pipeline. The company is positioning itself as a primary supplier of APIs to generic players in regulated markets.
Parabolic Drugs, a Rs 550 crore pharma giant which entered capital market in June 2010, is setting up another manufacturing facility at Chachrauli, Derabassi, to manufacture the non-antibiotic range of APIs, which is expected to commence commercial operations in fiscal 2012. Its product portfolio presently comprises 44 APIs and seven API intermediates. It is exporting its products to 45 countries, including regulated markets. Parabolic has filed 17 dossiers with the regulatory authorities, including US FDA and EDQM. For the first half ended September 2010, Parabolic Drugs' net profit went up to Rs 24.82 crore from Rs 13.15 crore, a strong growth of 88.8 per cent and its net sales touched Rs 274 crore from Rs 232 crore.
Few other important pharma companies from North India viz.Nectar Lifesciences, Fresenius Kabi Oncology, Ind-Swift Ltd, Medicamen Biotech and IOL Chemicals and Pharmaceuticals Ltd are also contributing to the growth story of pharma segment. Morepen Laboratories is still passing through a difficult phase and its net loss during the first half went up to Rs 21.38 crore. The net profit of Medicamen Biotech also declined to Rs 0.81 crore during the first half ended September 2010 from Rs 1.91 crore and its top line increased marginally to Rs 46.39 crore from Rs 44.35 crore. IOL Chemicals also received a setback during first half of 2009-10 and its net profit declined to Rs 1.97 crore from Rs 2.80 crore.