The latest Investment Credit Rating Agency (ICRA) analysis on the performance of pharmaceutical companies has found export revenues as the major driver that led to a healthy growth in the net sales during the second quarter. The November analysis revealed that the companies managed to keep their sales figures intact despite the pricing pressures in some developed markets and monsoon destructions at the domestic front.

The analysis said that most of the Indian companies reported a healthy growth in net sales during Q2 of 2005-06 led by exports to markets other than North America even as most players continued to witness pricing pressures in the generics market of developed countries such as the US. Even in the domestic market, formulation sales of select companies were affected by the rains in western India that damaged the stocks. Despite volatility in the sales growth for prominent companies in the past few quarters, the players continued their initiatives to expand the product portfolio and strengthen their presence in export destinations besides efforts to widen their geographic presence. These initiatives may enable the players further diversify their revenue streams, ICRA predicts.

According to the ICRA study, during Q2 2005-2006, most pharmaceutical companies in the ICRA sample showed a healthy to strong growth in net sales with the exception of three companies (Ranbaxy Laboratories Limited or RLL, Nicholas Piramal India Limited and Novartis India Limited). Healthy to strong growth in net sales for most companies was led by growth in exports as the domestic sales of some of the companies were affected on account of heavy rains in Mumbai which damaged the stock.

For the aggregate, the net sales marked a growth of 14.6% in Q2 2005-2006 over the corresponding previous. Despite higher sales, PBDIT/ Net sales of the ICRA sample declined from 21.4% in Q2 2004-2005 to 19.2% in Q2 2005-06. This further translated into lower PAT/Net Sales during Q2 2005-06, it said.