A notable feature of the Pharmabiz study of 50 companies in the first half of the current year is the remarkable performance of medium and small companies. Performance of these 31 medium and small companies out of the 50 in terms of sales and net profit were far better than the top ten pharma companies. As per the figures available in the study, their net sales went up by 24.8 per cent in the quarter ended September 2004 as compared to the sales achieved in the same quarter of the previous year. Panacea Biotech, Arch Pharmalabs, Wanbury, Ankur Drugs and Glenmark are some of these players which reported a more than 50 per cent increase in sales during the second quarter of the current financial. The 31 companies also reported a 55 per cent increase in net profit during the second quarter. In the case of top ten pharma companies, overall financial performance was disappointing during the first six months of the current year. The sales figures reported by these companies show that there was only a marginal 1.9 per cent increase in sales during the second quarter ended September as compared to the figures in the same quarter of the previous year. While Ranbaxy, Dr Reddy's Aurobindo, Lupin and Orchid reported a negative growth in sales during the second quarter, Cipla, Cadila and Sun Pharma reported a double digit growth. Cipla stands out amongst the top ten as the company which recorded perhaps the highest growth rate in sales at 28.4 per cent. Lower sales have reflected on profits of the companies quite badly. Profit before tax of these companies has declined quite sharply at 22 per cent during the quarter ended September 2004 as compared to the same period of the previous year. Dr Reddy's, the second largest spender on research reported a 66.7 per cent drop in PBT. A totally different picture emerges from the performances of MNCs in India during the current year. The study shows that the net sales of nine MNCs increased on an average by 8.5 per cent during the second quarter over the same period of the previous year. Three of them namely Aventis, GSK and Solvey India, however, registered a sales growth of over 15 per cent. The other six reported either no increase in sales or negative growth rate during the period under review. Despite these modest sales figures, profitability of MNCs is quite impressive at 49.8 per cent. The higher profit of MNCs is mainly on account of the sharp rise in the other income coming from sale of plants and other properties. MNCs will continue to shut down and sell most of their remaining manufacturing plants in the country as that will substantially bring down the operating costs and push up their bottomlines. In the ongoing structural change that is taking place in Indian pharmaceutical industry today, the victim appears to be the research based large Indian companies. On the one hand, their R&D expenditure is shooting up with no major discoveries in the horizon and on other hand sales are not growing due to tough competition from medium and small players. This position is not likely to change in the near future and the research based Indian companies will have to hold on for some time if they have to survive in the new patent regime.