Despite worldwide economic slowdown, uncertainty in Eurozone debt crisis, stiff competition and cost cutting measures adopted by several highly regulated nations, the leading 100 Indian pharmaceutical companies, including 11 multinationals, registered strong operational performance during the quarter ended June 2012. Higher investments in R&D, improved product filings, approvals and sales exclusivity helped to boost operational performance. However, higher interest burden, employees cost and foreign exchange loss put pressure on net profit level.

The EBDITA (earnings before depreciation, interest, taxation and adjustments) of Pharmabiz sample of 100 companies increased by 30.1 per cent to Rs.7,674 crore during the quarter ended June 2012 from Rs.5,898 crore in the corresponding period of last year. Out of 100 companies 61 players registered growth in EBDITA. The EBDITA margins improved slightly to 23 per cent from 22 per cent in the previous period. Continuous hike in interest rates by Reserve Bank of India during last couple of quarters has put additional burden on net profit. The interest cost increased by 53.6 per cent to Rs.1,167 crore from Rs.760 crore. Further employees cost went up by 22.1 per cent to Rs.5,441 crore from Rs.4,458 crore.

These companies incurred a foreign exchange loss of Rs.1,396 crore during the quarter under review as against a gain of Rs.156 crore in the same quarter of last year. Ranbaxy's forex loss went up to Rs.850 crore as against a gain of Rs.134 crore in the last period. Similarly, few majors like Aurobindo registered forex loss of Rs.206 crore, Jubilant Rs.104 crore, Ipca Laboratories Rs.59 crore, Strides Arcolab Rs.49 crore during the quarter ended June 2012, which adversely impacted the bottom line.

With significant higher interest burden, employees cost and forex loss, the net profit of 100 companies declined by 15 per cent to Rs.2,970 crore from Rs.3,495 crore. The net profit of 51 companies improved during the quarter. Net profit margins declined to 8.8 per cent from 13 per cent in the last period. Ranbaxy incurred a net loss of Rs.586 crore as against a net profit of Rs.243 crore. Similarly Jubilant Life Sciences' net profit declined by 94 per cent to Rs.5 crore from Rs.77 crore and Glenmark's net by 62.5 per cent to Rs.78 crore from Rs.209 crore. Orchid Chemicals, Sterling Biotech Surya Pharmaceutical, Ind-Swift Laboratories, Panacea Biotec also incurred net loss during the quarter under review compared to net profit in the similar period of last year.

Wockhardt generated impressive performance during the quarter and pushed its net profit by 97 per cent to Rs.383 crore with higher sales in regulated markets. Similarly, Sun Pharma's consolidated net profit jumped by 58.8 per cent to Rs.796 crore which includes performance of recently acquired Taro Pharmaceuticals. Cipla's net profit grew by 48.2 per cent to Rs.401 crore from Rs.253 crore and that of Divi's Labs net went up by 63.2 per cent to Rs.167 crore. Vivimed Labs net touched to Rs.26 core from Rs.12 crore.

The net sales of 100 companies for the quarter ended June 2012 jumped by 24 per cent to Rs.33,661 crore from Rs.27,157 crore in the similar period of last year. Ten companies viz., Ranbaxy Laboratories, Sun Pharmaceuticals, Piramal Enterprises (formerly known as Piramal Healthcare), Nectar Lifesciences, Vivimed Labs, Granules India, Parabolic Drugs, Aanjaneya Lifecare, Suven Life Sciences and Themis Medicare registered strong net sales growth of over 50 per cent. Further, 24 companies net sales grew between 25 and 49 per cent, 18 companies between 15 to 24 per cent and the sales growth of 28 companies remained below 15 per cent. The net sales of 20 companies declined during the quarter under review.

Ranbaxy maintained its leadership position with consolidated net sales of Rs.3,174 crore during the quarter ended June 2012 from Rs.2,054 crore in the similar period of last year, representing a strong growth of 54.6 per cent. This growth is marked by robust sales in USA with strong base business and exclusivity sales. This was followed by Dr Reddy's Laboratories (Rs.2,542 crore), Sun Pharmaceuticals (Rs.2,658 crore), Lupin (Rs.2,219 crore) and Cipla (Rs.1,917 crore).

The net sales of few major players like Sterling Biotech, Surya Pharmaceutical, Panacea Biotec, AstraZeneca Pharma and Anu's Laboratories declined sharply impacting the overall net sales of 100 companies. The net sales of Surya Pharmaceutical declined by 92.3 per cent to Rs.31.24 crore from Rs.405.55 crore and that of Panacea Biotec by 62.4 per cent to Rs.83.10 crore from Rs.220.99 crore. The net sales of Sterling Biotech moved down by 49.4 per cent to Rs.225.68 crore from Rs.446.05 crore. The net sales of Strides Arcolab, Orchid Chemicals, Plethico Pharma and Twilight Litaka Pharma also nosedived by 12.6 per cent, 11.7 per cent, 17.7 per cent and 12.6 per cent respectively during the quarter ended June 2012.

Among the Pharmabiz sample of 100 companies, there were 11 multinational companies (MNCs), viz., Ranbaxy, GlaxoSmithKline Pharma, Abbott India, Sanofi Aventis (formerly know as Aventis Pharma Ltd), Pfizer, Novartis India, Wyeth, Merck, AstraZeneca Pharma, Fresenius Kabi Oncology and Fulford. Most of these MNCs are closing their accounting year in December. The overall performance of MNCs was impacted by heavy loss of Ranbaxy. The net sales of 11 MNCs increased by 30.9 per cent to Rs.5,650 crore from Rs.4,316 crore in the similar quarter of last year. There EBDITA surged by 42 per cent to Rs.1,085 crore from Rs.764 crore. However, the huge provision for forex loss by Ranbaxy pulled down there net profit by almost 90 per cent to Rs.63 crore from Rs.627 crore in the same quarter of last year.

Based on the performance during the June quarter, the revenue and EBDITA of Indian pharmaceutical companies may improve in the range of 12-15 per cent during 2012-13. With lower provision for foreign exchange loss, launching of new products with exclusivity, stable foreign exchange rates and improvement in US and European economy may give further push to top line as well as bottom line.

Performance highlights for 100 cos in June Quarter

Performance of 100 companies in quarter ended June 2012 and 2011