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US FDA actions, DPCO hit sales & profits of top 30 cos in first half of 2016-17
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Sanjay Pingle, Mumbai
November 23 , 2016
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Repeated US FDA actions against leading Indian pharmaceutical companies,
price control and adverse foreign exchange rates have started hitting
their overall sales and bottom lines. The Pharmabiz study of 30 top
Indian pharma companies in the first half of the current year clearly
reflects adverse trend. The sales of these 30 companies account for
almost 75 per cent of sales of Pharmabiz study of 100 companies during
2015-16.The growth in top line as well as bottom line of several
companies remained single digit or negative during first half of
2016-17.
The outlook for the whole year 2016-17 appears to be
tough for the Indian pharma majors on account of dismal performance
during first half. However, recent firming up of currencies against
Indian rupee, R&D investments and new product launches may boost
export performances to some extend..
The net sales of 30 Indian pharma companies increased only by 9.4 per cent to Rs.87,197 crore during the first half ended September 2016 from Rs.79,684
crore in the corresponding period of last year and earnings before
interest, depreciation, tax and adjustments (EBIDTA) improved marginally
by 8.2 per cent to Rs.23,394 crore from Rs.21,628 crore. The other operating income of these companies moved up sharply by 32 per cent to Rs.2,097 crore from Rs.1,590 crore, which aided to push EBIDTA growth.
Though
the raw material cost, employees cost and other expenditure remained
under control, interest cost went up sharply, which put pressure on
profits. The profit before tax and adjustments improved only by 3.7 per
cent to Rs.17,480 crore from Rs.16,864 crore. Interest burden increased by 21.6 per cent to Rs.2,051 crore from Rs.1,687 crore. Their net profit, after tax but before adjustments, increased only by 4.4 per cent to Rs.13,987 crore from Rs.13,398 crore as the tax provision remained almost same at Rs.3,493 crore as against Rs.3,467 crore in the similar half of last year.
Adjustments
in respect of foreign exchange gains or losses and others assisted well
and net profit of 30 companies registered a growth of 12.5 per cent to Rs.14,152 crore from Rs.12,581 crore. The foreign exchange gains amounted to Rs.14 crore as against a loss of Rs.105 crore in the last period. Further income form other adjustments was at Rs.104 crore as against a loss of Rs.751 crore. The equity capital stood at Rs.1,870 crore.
Though
Sun Pharma, Lupin, Aurobindo Pharma, Piramal Enterprises, Strides
Shasun, Ipca Laboratories, Biocon, Ajanta Pharma, Syngene International,
achieved satisfactory growth rates, the working of few majors like Dr
Reddy's Laboratories, Torrent Pharma, Jubilant Life Sciences, Wockhardt,
Vivimed Labs and Marksans Pharma put pressure on top line as well as
bottom line during first half ended September 2016.
Among the
30 companies, the net sales of Dr Reddy's Laboratories (DRL), Torrent
Pharma, Jubilant Life Sciences, Wockhardt, Vivimed Labs and Marksans
Pharma declined during the first half ended September 2016. DRL's net
sales declined by 12.1 per cent to Rs.6,714 crore from Rs.7,642
crore due to quality problem with US FDA. If things continue in the
next half, DRL may loos its 'second highest' pharma tag in 2016-17 and
Lupin may grab the second position. The net sales of Torrent Pharma also
declined by 17.7 per cent to Rs.2,919 crore and that of Wockhardt dropped by 10.1 per cent to Rs.2,129 crore.
Further
the net sales of other majors like Cipla, Cadila Healthcare, Alembic
Pharma, Pfizer, Granules India, Aarti Drugs and FDC improved marginally
during the first half. Cipla's net sales remained almost stagnant at Rs.7,228 crore as against Rs.7,171 crore and that of Cadila's remained at Rs.4,553 crore as compared to Rs.4,534 crore with marginal growth of 0.8 per cent and 0.4 per cent respectively.
EBIDTA
of Cipla, DRL, Cadila Healthcare, Torrent Pharma, Wockhardt, Divi's
Laboratories, Alembic Pharma, GlaxoSmithKline Pharma, Pfizer, Vivimed
Labs, Indoco Remedies, Sequent Scientific and Marksans Pharma declined
during the first half. The EBIDTA of DRL declined by over 50 per cent to
Rs.1,128 crore from Rs.2,267 crore and that of Torrent Pharma moved down by 52.9 per cent to Rs.836 crore from Rs.1,775 crore in the corresponding half of last year. The EBIDTA of Marksans Pharma dropped by 86 per cent to Rs.15 crore from Rs.104 crore. Wockhardt's EBDITA declined by over 39 per cent to Rs.220 crore and that of Alembic Pharma declined by 30.1 per cent to Rs.336
crore. The poor performance by these companies put pressure on
aggregate working of Pharmabiz sample of 30 companies. We have not
included Sanofi as its year ending is December. Further, Nectar Life
Sciences and Abbott India did not declared their results for first half.
The
net profit after tax and adjustment of Sun Pharma, Strides Shasun
(after merger of Shasun), Ipca Laboratories and Biocon increased by over
100 per cent during the first half ended September 2016. Even Lupin,
Dishman Pharma, Syngene International, Aurobindo Pharma, Piramal
Enterprises, Pfizer, Ajanta Pharma Granules India and Aarti Drugs
reported healthy growth of over 25 per cent in bottom line. However,
DRL, Cipla, Cadila Healthcare, Torrent Pharma, Wockhardt, Alembic and
Marksans Pharma put pressure and reported de-growth in net profit.
Leading 30 pharma companies
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