Despite reduction in prices of several medicines by NPPA, quality problems with US FDA, competition and slowdown in approvals, 50 top Indian pharmaceutical companies registered satisfactory growth in net sales and earnings before depreciation, interest, tax and adjustments (EBDITA). The net sales of Pharmabiz sample of 50 major pharmaceutical companies went up by 13.7 per cent to Rs.75,377 crore from Rs.66,314 crore in the corresponding period of last year. However, their other operating income declined by 13 per cent to Rs.2,244 crore from Rs.2,579 crore.
EBDITA saw a growth of 15.5 per cent in first half of 2014-15 to Rs.18,787 crore as against Rs.16,263 crore and EBDITA margins improved to 24.9 per cent from 24.5 per cent in the last period. The profit before tax & adjustments improved by 19.5 per cent to Rs.14,125 crore from Rs.11,821 crore basically due to lower interest cost of Rs.1,692 crore as compared to Rs.2,041 crore. Interest cost declined by 17.1 per cent. The provision for taxation increased by 39.2 per cent to Rs.3,364 crore from Rs.2,417 crore which put pressure on profit after tax but before adjustments and improved by 14.4 per cent to Rs.10,761 crore from Rs.9,403 crore in the similar half of last year.
The Pharmabiz sample of 50 companies registered a significant growth in bottom line during the first half of 2014-15 to Rs.13,020 crore as against Rs.4,963 crore basically due to lower foreign exchange loss and higher income from adjustments. The forex loss declined to Rs.154 crore from Rs 1,140 crore in the last period. The forex loss of Aurobindo Pharma declined to Rs.41 crore from Rs.241 crore and that of Ranbaxy Laboratories to Rs.50 crore from Rs.727 crore. The forex loss of Piramal Enterprises declined to Rs.27 crore from Rs.201 crore.
The other adjustments impacted favourable and worked out a gain of Rs.2,413 crore as compared to loss of Rs.3,301 crore in the similar half of last year. Piramal Enterprises showed a total gain from exceptional items of Rs.2,729 crore during first half which includes major items like sale of investment in Vodafone India Ltd (Rs.3,036 crore) and scaling down the R&D activities of new chemical entity (NCE) division aggregating to Rs.374 crore. Sun Pharma has provided Rs.2,517 crore towards the generic Protonix litigation in the US in the similar half of last year. Strides Arcolab received dividend income from non-current investment in wholly-owned subsidiaries of Rs.397 crore. Cipla's adjustment in respect of share of profit of associates and minority interest amounted to Rs.40 crore in the first half of 2014-15 as compared to Rs.4 crore in the last period.
Sun Pharmaceutical remained on top with net sales of Rs.8,677 crore during the first half ended September 2014, a growth of 13.1 per cent. This was followed by Dr Reddy's Laboratories (Rs.7,105 crore), Lupin (Rs.6,401 crore), Aurobind Pharma (Rs.5,757 crore) and Ranbaxy Laboratories (Rs.5,590 crore). Cipla and Cadila Healthcare registered net sales of Rs.5,277 crore and Rs.4,084 crore respectively. Aurobindo's net sales went up sharply by 60 per cent. Similarly, Divi's Labs, Abbott India, Granules India, Ajanta Pharma, Arvind Remedies, Marksans Pharma and Panacea Biotec grab net sales growth of above 25 per cent.
Out of Pharmabiz sample of 50 companies, 17 companies notched up net sales above Rs.1,000 crore during the first half ended September 2014. The sample did not include major companies like GlaxoSmithKline Pharma, Sanofi India, Orchid Chemicals, Sharon Bio-Medicines and Sterling Biotech due to different set of year ending. The net sales of 10 companies declined during the period which includes major companies like Wockhardt, Plethico Pharma, Claris Lifesciences, Strides Arcolab, Ind- Swift Laboratories, Ind-Swift, Venus Remedies, AstraZeneca Pharma, Sequent Scientific and Parabolic Drugs.
The net sales of Ranbaxy Laboratories, Cipla, Jubilant Life Sciences, Ipca Laboratories, Biocon, Vivimed Labs, Unichem Laboratories, Pfizer, Novartis India, Suven Life Sciences and Neuland Laboratories improved only by single digit during the first half of 2014-15.
EBDITA of major companies like Cipla, Jubilant Life Sciences, Piramal Enterprises, Wockhardt, Ipca Laboratories, Dishman Pharma, Shasun Pharmaceuticals, Unichem Laboratories, Plethico Pharma, Pfizer, Claris Lifesciences, Hikal, Strides Arcolab, Ind Swift Labs, Suven Life and AstraZeneca, Sequent Scientific, Neuland Pharma declined during the period under review.
However, Ranbaxy, Lupin, Aurobindo Pharma, Cadila Healthcare, Torrent Pharma, Abbott India, Granules India, Ajanta Pharma, Indoco Remedies, Marksans Pharma, Wyeth and SMS Pharma registered strong growth over 40 per cent. Torrent Pharma's EBDITA moved up by 82.5 per cent to Rs.739 crore from Rs.405 crore and that of Ranabxy increased by 122 per cent to Rs.1,148 crore from Rs.518 crore.
Considering the above performance during first half of 2014-15, Indian pharmaceutical companies are well set to achieve 15 per cent growth in net sales and profit before adjustments in 2014-15. However, key problems like price cuts, quality problems, ANDA approvals, launch of new products and stiff competition may put pressure on growth. With better performance, the market capitalization of these 50 companies improved during last two months and the BSE Heathcare index of 17 companies touched to yearly highest level at 15182.79 on November 13, 2014.
Half year ended performance of 50 Cos