Indian pharmaceutical industry reported a satisfactory performance during 2010-11 with only marginal growth in sales and operating profits. This is despite stiff competition, challenging economic conditions, cost cutting measures in the US and Europe and government intervention in highly regulated markets. The earnings before depreciation, interest, tax and adjustments (EBDITA) of Pharmabiz sample of 100 listed pharma entities increased by 21.9 per cent to Rs.23,317 crore from Rs.19,133 crore in the previous year. The EBDITA margins improved to 22.5 per cent from 20.9 per cent. These companies recommended handsome dividend to shareholders and created healthy reserve position during 2010-11.
The net sales increased by 13.1 per cent to Rs.1,03,500 crore (US$ 22.8 billion) during 2010-11 from Rs.91,518 crore ($ 20.3 billion) in 2009-10. The net sales growth of almost similar set of companies was only 11.6 per cent in 2009-10 over the previous year. Out of 100 companies, 26 companies recorded net sales of over Rs.1,000 crore during 2010-11. Ranbaxy Laboratories remained on top with consolidated net sales of Rs.8,535 crore followed by Dr Reddy's Laboratories at Rs.7,469 crore and Cipla at Rs.6,123 crore. With acquisition of Taro Pharmaceutical Industries, Sun Pharmaceutical has climbed to fourth place from sixth in the previous year with net sales of Rs.5,721 crore and it has overtaken Lupin and Wockhardt in ranking. Lupin went to fifth position from fourth with net sales of Rs.5,707 crore and Wockhardt went down to eight spot from fifth in the preceding year.
The sales of 26 companies, with sales volume of over Rs.1000 core, improved by 14 per cent to Rs.78,580 crore from Rs.68,939 crore in the 2009-10. This worked out to almost 76 per cent of net sales of 100 companies as against 75.3 per cent in the previous year. The EBDITA of these 26 companies moved up by 25.8 per cent to Rs.18,896 crore from Rs.15,018 crore. EBDITA of 26 companies worked out to 81 per cent and 78.1 per cent of aggregate EBDITA of 100 companies. Pfizer's sales crossed Rs.1000 crore mainly due to 16 months period in 2010-11.
There were several adjustments done by Pharmabiz in respect of restructuring of operations including selling of part of business, demerger of business operations, mergers & acquisitions, change in financial period, foreign exchange gains/losses and one time adjustment regarding income/cost. We have arrived at aggregate profit figures by taking these adjustment after profit after tax to get true picture of financial working. We have taken consolidated figures where ever available which includes working of subsidiaries and joint ventures. While taking aggregate figures we have not annualised figures for change in accounting period.
The net profit after tax but before adjustments (NPBA) of 25 companies with sales above Rs.1,000 crore, excluding Piramal Healthcare, jumped by 51.3 per cent to Rs.11,762 crore from Rs.7,772 crore in the previous year. Ranbaxy earned NPBA of Rs.1,100 crore as against a loss before adjustment of Rs.213 crore. Similarly, Orchid Chemical's NPBA worked out to Rs.154 crore as against a loss of Rs.554 crore. The NPBA of Cipla and Aventis was under pressure during 2010-11 and declined by 2 per cent and 1.5 per cent respectively. The NPBA of Jubilant Life Sciences declined due to demerger of its agri and polymer product division and that of Piramal Healthcare due to hefty tax provision. The NPBA of Strides Arcolab, Panacea Biotec, Ind-Swift Laboratories, Wockhardt, and Arch Pharmalabs moved up by over 50 per cent during 2010-11.
The NPBA of Dishman Pharma, Abbott India, Unichem Laboratories, Hikal, Aarti Drugs, Parenteral Drugs, Anu's Laboratories, Themis Medicare, Bliss GVS Pharma, Fulford (India) and Jagsonpal Pharmaceuticals, etc., was under pressure during 2010-11 and declined. The net loss before adjustment of Wanbury, and Morepen Laboratories increased and a few companies like Ankur Drugs, Alembic, Marksans Pharma and Vimta Labs incurred losses as against profit in the previous year.
The Indian companies are entering aggressively into the highly regulated market with investments in research and development. Further, investments in expansion and up-gradation of facilities as per international standards helped them to generate higher revenues from CRAMS, clinical trials, in-licensing and product launches. The relatively small and medium size companies are focusing more on emerging markets.
The Pharmabiz study shows that the profit before tax provisions and adjustments relating to foreign exchange gains/loss, profit on sale of assets and mergers & acquisitions worked out to Rs.16,939 crore during 2010-11 as compared to Rs.13,183 crore, a strong growth of 28.5 per cent. However, the net profit after tax but before adjustments remained flat with small growth of 0.2 per cent to Rs.10,136 crore from Rs.10,120 crore as the aggregate tax provision jumped by over 120 per cent to Rs.6,803 crore from Rs.3,063 crore in the previous year.
The higher tax provision is mainly due to significant higher amount of tax paid by Piramal Healthcare on selling of its domestic formulation business to Abbott Healthcare Pvt Ltd and diagnostic business to Super Religare Ltd. Piriamal shown an exceptional income of Rs.16,221 crore in 2010-11 and provided Rs.3,680 crore for taxation as against Rs.18.03 crore in the previous year. Excluding Piramal's tax provision the net profit before adjustments shown a stronger growth of 36.3 per cent to Rs.13,816 crore from Rs.10,138 crore.
The cost of raw materials, including increase/decrease in stocks and purchases, went up by 10.4 per cent to Rs.45,525 crore from Rs.41,255 crore and staff cost by 14.8 per cent to Rs.14,522 crore from Rs.12,647 crore. The other expenditure including other administrative expenses and research & development, increased by 12.1 per cent to Rs.23,616 crore from Rs.21,069 crore. Thus the Indian companies managed to keep manufacturing cost at reasonable level and performance at operating level has shown satisfactory growth.
The depreciation provision of 100 companies moved up by 14 per cent to Rs.3,889 crore from Rs.3,412 crore. However, with low interest rate regime in 2010-11, the interest cost of these companies declined by 1.9 per cent to Rs.2,489 crore from Rs.2,538 crore in the previous year. Due to lower interest burden, the profit before tax and adjustments has taken a quantum jump of 28.5 per cent and reached at Rs.16,939 crore from Rs.13,183 crore in the previous year.
At present there are 12 listed multinational companies in India viz Ranbaxy Laboratories, GlaxoSmithKline Pharma, Aventis Pharma, Pfizer, Novartis India, Abbott India, AstraZeneca Pharma, Merck, Fresenius Kabi Oncology, Solvay Pharma, Fulford (India) and Wyeth, and these companies achieved net sales growth of over 20 per cent to Rs.17,362 crore during 2010-11 from Rs.14,419 crore. EBDITA of these MNCs went up smartly by 66.7 per cent to Rs.4,525 crore from Rs.2,715 crore in the previous year. Pfizer, Wyeth and AstraZeneca Pharma changed their financial year during 2010-11 and announced results for 16 months or 15 months. Solvay Pharma is now merging with Abbott India with a swap ratio for the merger of 2:3. Matrix Laboratories, now a wholly owned subsidiary of of Mylan Inc., was delisted from BSE and NSE.
With overall better growth in profit before tax and adjustments, several companies rewarded their shareholders and announced higher dividend for the year 2010-11. Merck declared equity dividend of 950 per cent followed by Piramal Healthcare (600 per cent), Aventis (550), Divi's Laboratories (500), AstraZeneca (500), GSK (400) and Torrent Pharma (400). Sun Pharmaceutical announced equity dividend of 350 per cent, Solvay Pharma 255 per cent and Dr Reddy's Laboratories 225 per cent.
The net sales increased by 13.1 per cent to Rs.1,03,500 crore (US$ 22.8 billion) during 2010-11 from Rs.91,518 crore ($ 20.3 billion) in 2009-10. The net sales growth of almost similar set of companies was only 11.6 per cent in 2009-10 over the previous year. Out of 100 companies, 26 companies recorded net sales of over Rs.1,000 crore during 2010-11. Ranbaxy Laboratories remained on top with consolidated net sales of Rs.8,535 crore followed by Dr Reddy's Laboratories at Rs.7,469 crore and Cipla at Rs.6,123 crore. With acquisition of Taro Pharmaceutical Industries, Sun Pharmaceutical has climbed to fourth place from sixth in the previous year with net sales of Rs.5,721 crore and it has overtaken Lupin and Wockhardt in ranking. Lupin went to fifth position from fourth with net sales of Rs.5,707 crore and Wockhardt went down to eight spot from fifth in the preceding year.
The sales of 26 companies, with sales volume of over Rs.1000 core, improved by 14 per cent to Rs.78,580 crore from Rs.68,939 crore in the 2009-10. This worked out to almost 76 per cent of net sales of 100 companies as against 75.3 per cent in the previous year. The EBDITA of these 26 companies moved up by 25.8 per cent to Rs.18,896 crore from Rs.15,018 crore. EBDITA of 26 companies worked out to 81 per cent and 78.1 per cent of aggregate EBDITA of 100 companies. Pfizer's sales crossed Rs.1000 crore mainly due to 16 months period in 2010-11.
There were several adjustments done by Pharmabiz in respect of restructuring of operations including selling of part of business, demerger of business operations, mergers & acquisitions, change in financial period, foreign exchange gains/losses and one time adjustment regarding income/cost. We have arrived at aggregate profit figures by taking these adjustment after profit after tax to get true picture of financial working. We have taken consolidated figures where ever available which includes working of subsidiaries and joint ventures. While taking aggregate figures we have not annualised figures for change in accounting period.
The net profit after tax but before adjustments (NPBA) of 25 companies with sales above Rs.1,000 crore, excluding Piramal Healthcare, jumped by 51.3 per cent to Rs.11,762 crore from Rs.7,772 crore in the previous year. Ranbaxy earned NPBA of Rs.1,100 crore as against a loss before adjustment of Rs.213 crore. Similarly, Orchid Chemical's NPBA worked out to Rs.154 crore as against a loss of Rs.554 crore. The NPBA of Cipla and Aventis was under pressure during 2010-11 and declined by 2 per cent and 1.5 per cent respectively. The NPBA of Jubilant Life Sciences declined due to demerger of its agri and polymer product division and that of Piramal Healthcare due to hefty tax provision. The NPBA of Strides Arcolab, Panacea Biotec, Ind-Swift Laboratories, Wockhardt, and Arch Pharmalabs moved up by over 50 per cent during 2010-11.
The NPBA of Dishman Pharma, Abbott India, Unichem Laboratories, Hikal, Aarti Drugs, Parenteral Drugs, Anu's Laboratories, Themis Medicare, Bliss GVS Pharma, Fulford (India) and Jagsonpal Pharmaceuticals, etc., was under pressure during 2010-11 and declined. The net loss before adjustment of Wanbury, and Morepen Laboratories increased and a few companies like Ankur Drugs, Alembic, Marksans Pharma and Vimta Labs incurred losses as against profit in the previous year.
The Indian companies are entering aggressively into the highly regulated market with investments in research and development. Further, investments in expansion and up-gradation of facilities as per international standards helped them to generate higher revenues from CRAMS, clinical trials, in-licensing and product launches. The relatively small and medium size companies are focusing more on emerging markets.
The Pharmabiz study shows that the profit before tax provisions and adjustments relating to foreign exchange gains/loss, profit on sale of assets and mergers & acquisitions worked out to Rs.16,939 crore during 2010-11 as compared to Rs.13,183 crore, a strong growth of 28.5 per cent. However, the net profit after tax but before adjustments remained flat with small growth of 0.2 per cent to Rs.10,136 crore from Rs.10,120 crore as the aggregate tax provision jumped by over 120 per cent to Rs.6,803 crore from Rs.3,063 crore in the previous year.
The higher tax provision is mainly due to significant higher amount of tax paid by Piramal Healthcare on selling of its domestic formulation business to Abbott Healthcare Pvt Ltd and diagnostic business to Super Religare Ltd. Piriamal shown an exceptional income of Rs.16,221 crore in 2010-11 and provided Rs.3,680 crore for taxation as against Rs.18.03 crore in the previous year. Excluding Piramal's tax provision the net profit before adjustments shown a stronger growth of 36.3 per cent to Rs.13,816 crore from Rs.10,138 crore.
The cost of raw materials, including increase/decrease in stocks and purchases, went up by 10.4 per cent to Rs.45,525 crore from Rs.41,255 crore and staff cost by 14.8 per cent to Rs.14,522 crore from Rs.12,647 crore. The other expenditure including other administrative expenses and research & development, increased by 12.1 per cent to Rs.23,616 crore from Rs.21,069 crore. Thus the Indian companies managed to keep manufacturing cost at reasonable level and performance at operating level has shown satisfactory growth.
The depreciation provision of 100 companies moved up by 14 per cent to Rs.3,889 crore from Rs.3,412 crore. However, with low interest rate regime in 2010-11, the interest cost of these companies declined by 1.9 per cent to Rs.2,489 crore from Rs.2,538 crore in the previous year. Due to lower interest burden, the profit before tax and adjustments has taken a quantum jump of 28.5 per cent and reached at Rs.16,939 crore from Rs.13,183 crore in the previous year.
At present there are 12 listed multinational companies in India viz Ranbaxy Laboratories, GlaxoSmithKline Pharma, Aventis Pharma, Pfizer, Novartis India, Abbott India, AstraZeneca Pharma, Merck, Fresenius Kabi Oncology, Solvay Pharma, Fulford (India) and Wyeth, and these companies achieved net sales growth of over 20 per cent to Rs.17,362 crore during 2010-11 from Rs.14,419 crore. EBDITA of these MNCs went up smartly by 66.7 per cent to Rs.4,525 crore from Rs.2,715 crore in the previous year. Pfizer, Wyeth and AstraZeneca Pharma changed their financial year during 2010-11 and announced results for 16 months or 15 months. Solvay Pharma is now merging with Abbott India with a swap ratio for the merger of 2:3. Matrix Laboratories, now a wholly owned subsidiary of of Mylan Inc., was delisted from BSE and NSE.
With overall better growth in profit before tax and adjustments, several companies rewarded their shareholders and announced higher dividend for the year 2010-11. Merck declared equity dividend of 950 per cent followed by Piramal Healthcare (600 per cent), Aventis (550), Divi's Laboratories (500), AstraZeneca (500), GSK (400) and Torrent Pharma (400). Sun Pharmaceutical announced equity dividend of 350 per cent, Solvay Pharma 255 per cent and Dr Reddy's Laboratories 225 per cent.
