The top 100 pharmaceutical companies in the country reported a poor profit growth of just 1.8 per cent during the year ended March 2015. They failed to show good profit growth mainly on account of quality problems with US FDA, new price control order, higher input costs, significant higher provision for depreciation and stiff global competition.
After making necessary adjustments of merger of Ranbaxy and Wyeth with Sun Pharmaceutical and Pfizer respectively, the net sales of these 100 companies increased only by 7.2 per cent at Rs.171,201 crore from Rs.159,747 crore which is lowest growth in last five years. The net profit of these companies during the year stood at Rs.19,703 crore as against Rs.19,355 crore in the previous year. Despite lower profit growth, pharma companies rewarded their investors handsomely in the form of equity dividend, bonus issues and stock split during 2014-15.
Among the Pharmabiz sample of 100 companies, five of them crossed milestone of Rs.10,000 crore and 27 companies registered net sales of above Rs.1,000 crore during 2014-15. The net sales of top 32 pharma companies, with net sales above Rs.1,000 crore, worked out to 88 per cent of the total net sales of 100 companies in 2014-15 as compared to 87 per cent in the 2013-14. Their total income increased by 7.1 per cent to Rs.176,423 crore from Rs.164,783 crore.
Due to merger of Ranabxy Laboratories with Sun Pharmaceutical and Wyeth with Pfizer during 2014-15, Pharmabiz has added all related figures of 2013-14 of Ranbaxy and Wyeth with Sun Pharmaceutical and Pfizer respectively in this study. Further, Plethico Pharmaceuticals and Arvind Remedies have not announced financial performance for 2014-15 and not included in the study.
Sun Pharmaceutical remained on top with net sales of Rs.27,287 crore in 2014-15, after the merger of Ranbaxy, as against Rs.29,045 crore in the previous year. We have added Ranbaxy's net sales of 2013-14 with Sun Pharma's net sales in 2013-14 for better comparison. After making adjustments, Sun's net sales declined by 6.1 per cent. Dr Reddy's Laboratories maintained its second position with net sales of Rs.14,819 crore as compared to Rs.13,217 crore, a growth of 12.1 per cent and that of Lupin at third spot with net sales of Rs.12,600 crore. Aurobindo Pharma climbed to fourth rank with net sales of Rs.12,043 crore, registering a strong growth of almost 50 per cent. Cipla went down to fifth spot from fourth in last year with net sales of Rs.10,882 crore as against Rs.9,825 crore.
Among the leading 32 companies with net sales of above Rs.1,000 crore, the net sales of Wockhardt, Ipca Laboratories, Orchid Chemicals and Pharmaceuticals and Elder Pharmaceutical, declined during 2014-15. Wockhardt sales declined by 8.9 per cent to Rs.4,400 crore due to quality problem with US FDA. Similarly, Ipca Labs net sales declined by 4 per cent to Rs.3,117 crore and that of Orchid Chemicals annualised net sales declined sharply by 39.6 per cent to Rs.1,143 crore (annualised) from Rs.1,893 crore. Strides Arcolab's annualised sales also declined by 28 per cent to Rs.906 crore from Rs.1,258 crore. Out of 100 companies, the net sales of 31 companies declined during 2014-15 and 27 companies registered only single digit sales growth.
There were total eight listed multinational pharma companies viz., GlaxoSmithKline Pharma, Abbott India, Sanofi India, Pfizer, Novartis India, Merck, AstraZeneca Pharma and Fulford (India) in 2014-15 as against 11 in the last year. Ranbaxy, a subsidiary of Daiichi Sankyo of Japan merged with Sun Pharma and Wyeth merged with Pfizer in 2014-15. Earlier, Fresenius Kabi Oncology was de-listed and Solvay Pharma was merged with Abbott India. The net sales of 8 MNCs increased by 10 per cent to Rs.11,679 crore during 2014-15 from Rs.10,609 crore in the previous year. However, there EBDITA improved only by 3.3 per cent to Rs.2,229 crore. Four MNCs achieved net sales of over Rs.1,000 crore.
Aurobindo Pharma clocked strong net sales growth of 50 per cent to Rs.12,043 crore during 2014-15 as compared to Rs.8,038 crore in the previous year. Cadila Healthcare also registered net sales growth of 20.4 per cent to Rs.8,497 crore as against Rs.7,060 crore. Piramal Enterprises and Torrent Pharma notched up net sales growth of 13.8 per cent and 13.6 per cent respectively. Relatively small companies like Panacea Biotec, Lincoln Pharmaceuticals, Mangalam Drugs, Caplin Points Labs, Parnax Lab and Godavari Drugs achieved smart growth in net sales.
The total cost of raw materials of 100 companies increased by 6.1 per cent to Rs.65,163 crore from Rs.61,408 crore. Employees cost went up by 10.9 per cent to Rs.28,199 crore from Rs.25,418 crore and other expenditure, including selling & marketing, research & development expenditure, by 7.7 per cent to Rs.43,993 crore from Rs.40,841 crore in the previous year. Thus, the total expenditure increased by 7.6 per cent to Rs.137,355 crore from Rs.127,667 crore. The depreciation provision jumped up by 28 per cent to Rs.8,043 crore from Rs.6,284 crore. These 100 companies reduced interest burden by 10.8 per cent to Rs.4,885 crore as compared to Rs.5,477 crore. Tax provision amounted to Rs.6,437 crore as against Rs.6,000 crore, a growth of 7.3 per cent.
Earnings before interest, depreciation, tax and adjustments (EBDITA) of 100 companies improved only by 5.3 per cent to Rs.39,068 crore from Rs.37,116 crore in the previous year and profit after tax but before adjustments moved up slightly by 1.8 per cent to Rs.19,703 crore from Rs.19,355 crore. After adjustment of Ranbaxy, Sun Pharma's EBDITA declined by 3.2 per cent to Rs.8,516 crore from Rs.8,793 crore and that of Dr Reddy's improved only by 7.3 per cent to Rs.3,502 crore from Rs.3,263 crore. Lupin and Aurobindo clocked EBDITA growth of 23.7 per cent and 22.6 per cent respectively. Similarly, Cadila Healthcare, Piramal Healthcare, Torrent Pharma, Ajanta Pharma, Granules India, Sharon Bio-Medicine, Indoco Remedies, registered significant growth in EBDITA. However, out of 100 companies EBDITA of 40 companies declined during 2014-15.
The total adjusted income of 100 companies amounted to Rs.1,928 crore as against adjusted expenditure of Rs.4,395 crore in the previous year. The foreign exchange loss increased to Rs.428 crore from Rs.367 crore. Piramal Enterprises has reported adjusted income of Rs.2,856 crore on account of sell of Vodaphone investments and scaling down the R&D activities. Similarly, Orchid Chemicals and Elder Pharmaceuticals' adjusted income amounted to Rs.270 crore and Rs.371 crore respectively during 2014-15. However, Sun Pharma's adjusted expenditure amounted to Rs.1,187 crore as against Rs.4,131 crore which includes Ranbaxy's exceptional loss of Rs.865 crore in the last year. Similarly, Glenmark's adjusted expenditure at Rs.187 crore and that of Pfizer was at Rs.111 crore.
With these adjustments in income and expenditure, the net profit of 100 Pharmabiz companies increased by 45.3 per cent to Rs.21,203 crore from Rs.14,593 crore. Sun Pharma's net profit went up sharply by 121 per cent to Rs.4,541 crore, after adjustment of Ranbaxy figures, from Rs.2,056 crore in the previous year. DRL's net profit increased marginally by 3.1 per cent to Rs.2,218 crore from Rs.2,151 crore. Lupin, Aurobindo Pharma, Cadila Healthcare, Ajanta Pharma, J B Chemicals, Indoco Remedies Natco Pharma Vinati Organics, SMS Pharmaceutical, Bliss GVS Pharma, Poly Medicure, etc registered strong growth in net profit during 2014-15.
Among the 100 companies, the net profit of 45 companies improved and that of 27 companies declined during 2014-15. Nine companies managed to reduced their net loss and six companies reported net profit as against loss in the last year. The net profit of major companies like Cipla, Glenmark Pharmaceuticals, Wockhardt, Ipca Laboratories, Pfizer, Shasun Pharmaceuticals, Unichem Laboratories, Elder Pharmaceuticals, Hikal, Novartis and Merck declined during 2014-15. Wockhardt's net profit declined by 51.8 per cent to Rs.405 crore from Rs.841 crore and that of Ipca Laboratories' net profit declined by 46.9 per cent to Rs.244 crore from Rs.479 crore in the previous year. Pfizer's net declined by 77.4 per cent and that of Unichem Laboratories by 55.5 per cent. Elder Pharmaceuticals received major setback and its net profit went down by almost 97 per cent to Rs.2.72 crore from Rs.82 crore. Orchid Chemicals managed to reduce its net loss to Rs.198 crore from Rs.558 crore and Piramal reported net profit of Rs.2849 crore as against a net loss of Rs.501 crore due to adjustments.
The equity capital of 100 companies reached at Rs.2,804 crore during 2014-15 and their reserves and surplus amounted to Rs.124,067 crore (few companies have not furnished figures for Reserves). These companies stepped up dividend rate in 2014-15 and several companies like Dr Reddy's Labs, Lupin, Aurobindo, Piramal Enterprises, Wockhardt, GlaxoSmithKline, Divi's Laboratories, Abbott India, Sanofi India, Ajanta Pharma, Strides Arcolab and J B Chemicals declared equity dividend of over 300 per cent.
Highlights of 100 pharma companies