Matrix Laboratories received major blow with falling prices of Citalopram. The company's standalone net profit during the second quarter ended September 2005 declined by 26.9 per cent to Rs 30.65 crore from Rs 41.95 crore in the corresponding period of last year. The net sales increased to Rs 174.37 crore from Rs 162.47 crore. The corresponding quarter of last year has an exceptionally high profit due to supply of launch quantities of Citalopram to the US market.

The company has been successful in de-risking from price erosion of Citalopram. The increase in the sales of Anti-Retrovirals, Generic active pharmaceutical ingredients (API) and CRAM business segment has more than compensated the drop in Citalopram sales value.

During the quarter, the company has stepped up the R&D expenditure significantly. The company has filed four DMFs with the US FDA, taking the total number of US DMFs to 54 as at the end of September 2005. On innovation front, the total number of patents reached to 45.

"Various strategic steps and consolidation measures initiated by the company in the recent past are taking shape as envisaged. The benefits emanating out of these initiatives are expected to yield good results in the near future," said N Prasad, the executive chairman of Matrix.

For the half-year ended September 2005, Matrix reported a PAT of Rs 55.94 crore on a net sales of Rs 328.70 crore on standalone basis. During this period, the company had spent Rs 34.20 crore on R&D (both capital and revenue expenditure), as compared to Rs 10.20 crore in the corresponding period of last year.

Having completed the upgradation of the Finished Dosage Forms (FDFs) manufacturing facility at Nashik during the quarter as per US FDA standards, the company has initiated manufacture of Exhibit batches meant for US market. The company has signed a Letter of Intent (LoI) with a US generic major for development/manufacturing of 18 products. Last year, the company had entered into similar understanding with another US-based generic player.

Similarly, the company as part of its CRAM (Contract Research and Manufacturing) activity has dispatched the first commercial consignment of a key intermediate used in a blockbuster product of a big Pharma company. The company has entered into long-term supply agreement for this intermediate and this would be a significant growth driver in the CRAM segment.

Sales of Docpharma for the quarter (July-Sep 05) was EUR 23.8 million (Rs 1270.6 million), representing a growth of 10 per cent compared to corresponding quarter of last year. Sales from Belgium accounted for 77 per cent of the total revenues. Typically, this quarter always contributes lower revenues to the annual turnover and is the weakest quarter in the European pharmaceutical market.

The pharmaceutical business unit accounted for 59 per cent of total revenues and Hospital business unit accounted for the remaining 41 per cent and both the business units grew at similar levels of 10 per cent over the corresponding quarter of the previous year. During this quarter, Docpharma launched two products namely, Mirtazapine and Cefuroxime tablets in Belgium.