The leading 75 pharmaceutical companies in India, with net sales above Rs.50 crore during the first nine months ended December 2010, have posted impressive bottom line growth of 44.2 per cent. Their net profit increased to Rs.7,919 crore from Rs.5,490 crore in the corresponding nine months of previous year. The net sales also improved by 16.7 per cent to Rs.61,220 crore from Rs.52,437 crore. The 75 companies overcome several odds like stiff competition, firmness in exchange rates and higher interest cost.

The major companies like Dr Reddy's Laboratories (DRL) and Orchid Chemicals turned the corner and back in black during the first nine months of 2010-11. DRL posted a net profit of Rs.770 crore as against a net loss of Rs.59.71 crore in the same period of last year and Orchid earned a net profit of Rs.98.20 crore as compared to net loss of Rs.59.82 crore. Wockhardt managed to reduce its net loss significantly to Rs.71.31 crore from Rs.425.30 crore as it divested its animal healthcare business.

As per the Pharmabiz sample of 75 companies, Panacea Biotec, Glenmark Pharmaceutical, Ind-Swift Laboratories, Sharon Bio-Medicine, Parenteral Drugs, TTK Healthcare, Parabolic Drugs, Alembic, Twilght Litaka  Pharma, Vivimed Laboratories, and Ajanta Pharma achieved net profit growth of over 50 per cent during the first nine months of 2010-11. Sun Pharmaceuticals, Arvind Remedies, Surya Pharma, JB Chemicals, Lupin, Cadila Healthcare and  Bilcare also pushed their net profit by over 35 per cent.

However, few major companies like Ankur Drugs and Pharma, Jubilant Life Sciences,  Dishman Pharma,  Granules India, Lincoln Pharma, Fresenius Kabi Oncology, Medicamen Biotech, IOL Chemicals and Pharma received setback and there net profit declined between 25 to 80 per cent during the period under review. Further, the net loss of Marksans Pharma and Shasun Pharma increased to Rs.  79.54 core and Rs.11.80 crore during the nine months ended December 2010. Wanbury, Morepen Labs, Vimta incurred a net loss as compared to profit in the same period of last year.

The companies like  GlaxoSmithKline, Aventis Pharma, Pfizer, Abbott India, Solvay India, Merck, Fulford (India), Stride Arcolabs, AstraZeneca Pharma, Claris Lifesciences and Sterling Biotech not included in the study as their accounting year is closing in December. The study has not covered working of Piramal Healthcare in the study as the company sold its domestic formulation business to Abbott Healthcare Pvt Ltd and Piramal Diagnostic Services Pvt Ltd to Super Religare Ltd, and generated huge profits which are not comparable with previous period.

DRL maintained its leadership position for the nine months ended December 2010, though its net sales increased only by 1.2 per cent to Rs.5,452 crore from Rs.5,385 crore in the corresponding period of last year. Cipla's remained at second spot with net sales of Rs.4,509 crore as compared to Rs.4,041 crore, a growth of 11.6 per cent. The sales of Sun Pharmaceutical went up sharply by 46 per cent to Rs.4,371 crore from Rs.3,456 crore. Lupin and Cadila Healthcare posted net sales growth of 21.1 per cent and Rs.19.5 per cent to Rs.4,184 crore and Rs.3,296 crore respectively.

The slow down in orders for outsourcing impacted the top line of few companies during the first nine months of current year. Dishman Pharmaceuticals sales declined by 3.1 per cent to Rs.646.44 crore from Rs.667.44 crore. Similarly, the sales of Ankur Drugs and Pharma also declined by 12.8 per cent to Rs.702.76 crore from Rs.806.10 crore. Jubilant Life Sciences (formerly known as Jubilant Organosys) has demerged its its Agri and Performance Polymer business into Jubilant Industries Ltd from April 1, 2010 and amalgamated Speciality Molecules Ltd and Pace Marketing Specialities Ltd. Due to this restructuring, its consolidated net sales declined by 9.2 per cent to Rs.2,543 crore from Rs.2,799 crore. The net sales of Marksans Pharma, Hikal, Wanbury, SMS Pharmaceutical and India Gelatine also declined during the period under review.

The net sales for the full year ended March 2010 of these 75 companies touched to Rs.71,943 crore and they earned net profit of Rs.7,784 crore. Based on performance for nine months of current year, the overall top line growth is expected to be in the range of 13 to 15 per cent and net profit growth of over 30 per cent in the current year. The foreign exchange gains will have significant positive impact on profitability. However, redemption of FCCBs and rise in interest rates during last few months will put additional burden on profits.  The sales growth is likely to be restricted on account of lower CRAMS orders from US and Europe. However, clinical trials, in-licensing income and marketing tie-ups may play crucial roll in top line growth during current year.

Nine Month End Table Link