Top ten pharma companies of the country have shown enviable net profit growth of 53.7 per cent in October-December quarter of 05-06 but most of it was on account of sales of assets, insurance claims, interest incomes, etc. and not from pharmaceutical operations. The net profit of these companies accounted for Rs 672 crore in the quarter December 2005.

The companies are Ranbaxy Laboratories, Cipla, Dr Reddy's Laboratories, Sun Pharmaceuticals, Lupin, Aurobindo Pharma, Nicholas Piramal India, Orchid Chemicals, Matrix Laboratories and Glenmark Pharmaceuticals. All the companies have net sales of Rs 175 crore or above for the quarter ended December 2005.

Although net profit of these ten companies moved up to Rs 672.08 crore in the quarter ended December 2005 from Rs 437.40 crore in the corresponding period of last year, the component of their other income went up by 150 per cent to Rs 304.51 crore from Rs 121.81 which significantly helped to push the bottomline.

Ranbaxy has shown net profit of Rs 97.99 crore during the quarter ended December 2005 as against Rs 72.26 crore in the same period of last year but its profit before tax and exceptional items declined sharply by 32.1 per cent to Rs 77 crore from Rs 113.44 crore. The company added Rs 49.10 crore as profit on sale of undertaking, which pushed its net profit to Rs 97.99 crore.

Matrix Laboratories inflated its other income sharply by Rs 63.37 crore accounting for certain exceptional and earlier period items. With these additions, Matrix reported a huge jump in net profit of 275 per cent to Rs 95.84 crore during the quarter ended December 2005. If the exceptional items have not been included, the company would have experienced a net profit growth of only 27 per cent at Rs 32.47 crore.

Sun Pharma received interest income of Rs 17.34 crore during the quarter as against nil in the same period of last year. This pushed its net profit by 39.4 per cent to Rs 108.31 crore. Further, its share of income from partnership firms went up sharply to Rs 101.94 crore during December quarter from Rs 59.90 crore in the last period. Thus interest income and share of income from firm assisted its net profit to take quantum jump.

Cipla received an amount of Rs 72.72 crore as insurance claims for damage of finished goods at its Bhiwandi godown caused by the floods in July 2005. This pushed its other income to Rs 74.45 crore and also moved up its net profit to Rs 175.31 crore from Rs 125.67 crore.

Dr Reddy's Laboratories added Rs 38.81 crore to its other income by selling its formulations manufacturing facility situated at Goa. This pushed its net profit to Rs 54.25 crore in the quarter ended December 2005 from Rs 4.34 crore in the similar period of last year.

The net sales of the sample of ten companies improved by 19.8 per cent to Rs 4351 crore during the quarter ended December 2005 from Rs 3633 crore in the corresponding period of last year. The cost of raw material increased by 27.5 per cent to Rs 2157 crore and the staff cost went up by 10.2 per cent to Rs 323 crore. With expansion projects going on, the interest cost moved up 39 per cent to Rs 68.85 crore during the quarter from Rs 49.52 crore. The depreciation provision of ten companies for the quarter increased by 25.8 per cent to Rs 156.70 crore from Rs 124.53 crore.

Thus, the expenditure on raw material, staff, interest and depreciation is increasing significantly. Other expenditure, including selling and marketing, also gone up to Rs 1350 crore from Rs 1215 crore. Taxation provision of the ten companies increased to Rs 114 crore from Rs 75 crore in the corresponding quarter of last year. However, the hefty rise in other income of the companies absorbed higher expenditure and pushed their aggregate bottom line.

However, export performance of these companies was quite satisfactory during the quarter ended December 2005 despite stiff competition in the US and Europe. Except Ranbaxy Laboratories, the export performance of all other companies improved during the quarter. Ranbaxy's exports declined to Rs 590 crore from Rs 679 crore due to stiff competition in its US market. Dr Reddy clocked exports of Rs 385 crore during the quarter ended December 2005 as compared to Rs 321 crore and Cipla's exports moved up to Rs 386 crore from Rs 285 crore. Lupin and Aurobindo achieved significant growth of over 50 per cent in exports during the December quarter.

Click here to veiw Quarter ended Dec. 2005 & 2004