Merck India outsources 70 per cent of its pharmaceutical products with only about 30 per cent manufactured on an in-house basis. Even in future the company is intending to use outsourcing route and will be shrinking its in-house manufacturing base. "Outsourcing is the master key for cost cutting. As and when the management decides, we will increase the scope for outsourcing," said R.L. Shenoy, director, Merck India.

In its cost cutting drive the company recently shut down its plant at Taloja, Maharashtra after offering VRS to the existing employees. Products manufactured in the plant like tablets, injectables, and nasal drops were outsourced to contract manufacturers. Tablet manufacturing contracts were given to Aurangabad-based Hetraphen and Nasik-based Sigma. "We have given contract to these companies for the manufacture of 900-1,000 million tablets," said Shenoy. The contract for the nasal drops has been given to Palghar-based Korten. The injectibles manufacturing was transferred to the company's plant in Goa. The company's Goa plant also manufacture capsules and Vitamin E.

Bulk drugs, injections, reagents, syrups, powders, tablets and capsules form the bulk of produce of Merck India. Most of these products are Vitamin-based.

Continuing the drive, the company offered VRS to about 35 of its employees in Goa. The Goa plant currently has about 250 employees with it. "We incurred Rs. 2 crore as VRS expenses," he said.

Merck Ltd has posted a net profit of Rs 13.37 crore for the quarter ended June 30, 2003 as compared to Rs 8.80 crore for the quarter ended June 30, 2002. Total income has increased from Rs 97.31 crore in the JQ-02 to Rs 98.98 crore in the quarter ended June 30, 2003.

In an effort to consolidate its product portfolio, Merck India is planning to acquire suitable brands and companies. "We are eyeing some of the lucrative brands in the diabetic and nutraceuticals segments," said Shenoy.

Besides, the company is contemplating new introductions in its chemicals and pharmaceuticals divisions. The company is also planning to enhance exports especially to other units of its overseas parent.

Strengthening its product portfolio is being seen as efforts by the company to achieve its double-digit growth target in the future. Sales have been sluggish of late, growing only around one per cent during the first five months of 2003. The company is also hoping for a better showing on the export front. The company's exports for the first five months of 2003 stood at Rs 6 crore as against Rs 13.12 crore in 2002.