Leading 50 Indian pharmaceutical companies have registered strong growth in profits during the first half ended September 2018 on account of new product launch, satisfactory ANDAs approvals from highly regulated bodies, resolving of few quality issues with US FDA, depreciation of rupee in terms of US dollar and investments in R&D activities. Based on the first half ended September 2018 performance, these companies will be able to register full year net sales growth of around 10-12 per cent though the net profit growth will be under pressure.
The net sales of Pharmabiz sample of top 50 pharmaceutical companies increased by 13.5 per cent to Rs.1,08,213 crore during the first half ended September 30, 2018 from Rs.95,348 crore in the corresponding period of last year. Their other operating income moved up by 17.1 per cent to Rs.1,547 crore from Rs.1,321 crore and other income increased by 53.5 per cent to Rs.2,957 crore from Rs.1,926 crore. Thus, total income increased by 14.3 per cent to Rs.1,12,717 crore from Rs.98,595 crore.
These 50 companies achieved net sales of Rs.1,98,965 crore during full year ended March 2018 and their contribution to Pharmabiz study of 100 companies worked out to 96 per cent. Similarly these 50 companies posted net profit of Rs.23,464 crore in the full year ended March 2018.
The raw material cost, including purchases and stock adjustments, increased by 14 per cent to Rs.38,428 crore from Rs.33,704 crore in the similar half of last year. Employees cost increased by 13.6 per cent to Rs.20,044 from Rs.17,643 crore. Other expenditure including R&D expenditure, selling and marketing, etc. increased by 10 per cent to Rs.27,606 crore from Rs.25,094 crore. Thus total expenditure increased by 12.6 per cent to Rs.86,078 crore from Rs.76,441 crore.
The earning before interest, tax, depreciation and adjustments (EBITDA) of Pharmabiz sample of 50 companies increased strongly by 20.2 per cent to Rs.26,639 crore from Rs.22,154 crore in the same half of last year. Interest cost went up by 26.3 per cent to Rs.3,894 crore from Rs.3,082 crore and depreciation provision increased by 12.6 per cent to Rs.5,607 crore from Rs.4,980 crore. Tax provision increased by 20.7 per cent to Rs.4,275 crore from Rs.3,541 crore. The net profit before adjustments and forex gain/loss increased by 21.9 per cent to Rs.12,863 crore from Rs.10,551 crore. After adjustments and forex gain/loss, net profit of 50 companies increased by 21.7 per cent to Rs.11,558 crore from Rs.9,499 crore in the similar half of last year. Equity capital of 50 companies stood at Rs.2,252 crore as at the end of September 2018 as against Rs.2,237 crore.
Among the top 10 companies in respect of sales viz., Sun Pharmaceuticals Industries, Aurobindo Pharma, Lupin, Cipla, Dr Reddy’s Laboratories, Cadila Healthcare, Piramal Enterprises, Glenmark Pharmaceuticals, Jubilant Life Sciences and Alkem Laboratories contributed 65 per cent to the aggregate sales of 50 companies. Out of ten top players only four companies registered double digit growth in sales during the first half. The net sales of Aurobindo Pharma increased by 11 per cent to Rs.8,849 crore in the first half, Piramal Enterprises (diversified into pharma (36 per cent) and financial and other activities 64 per cent) by 26.5 per cent to Rs.6,047 crore, Jubilant Life by 35.8 per cent to Rs.4,292 crore and Alkem Labs by 12.9 per cent to Rs.3,578 crore. Piramal Enterprises pharma sales increased only by 2.4 per cent to Rs.2,153 crore in the first half.
Sun Pharma clocked sales growth of 9.6 per cent to Rs.13,985 crore and Dr Reddy’s Labs of 8.9 per cent to Rs.7,337 crore. The net sales of Lupin declined slightly to Rs.7,666 crore and that of Glenmark increased only by 2.6 per cent to Rs.4,669 crore. Cipla and Cadila registered net sales growth of 5 per cent and 6.9 per cent to Rs.7,794 crore and Rs.5,613 crore respectively.
Few other major players like Torrent Pharma, Biocon, Divi’s Laboratories, Alembic Pharmaceuticals, Natco Pharma, Nectar Lifesciences, Granules India, Syngene International, Hikal, IOL Chemicals & Pharma, Vinati Organics and Unichem Laboratories registered strong sales growth of over 25 per cent during the first half ended September 2018. IOL Chemicals clocked sales growth of 81.2 per cent to Rs.785 crore, Nectar Lifesciences 67.1 per cent to Rs.1,255 crore, Vinati Organics 50 per cent to Rs.518 crore and Unichem Laboratories 47.1 per cent to Rs.447 crore.
The net sales of Strides Pharma Sciences, Indoco Remedies, Bliss GVS Pharma, Ind-Swift Laboratories, Shilpa Medicare, Panacea Biotec and Novartis India declined during the first half ended September 2018. Further, net sales of Ajanta Pharma, Pfizer, FDC and Marksans Pharma increased in the range of 2-5 per cent only.
EBITDA of Wockhardt, IOL Chemicals and TTK Healthcare went up by over 100 per cent during the first half ended September 2018. Wockhardt’s EBITDA went up by 356 per cent to Rs.94 crore from Rs.21 crore in the corresponding period of last year and that of IOL Chemicals’ EBITDA moved up by 115 per cent to Rs.124 crore from Rs.58 crore. TTK’s EBITDA went up by over 200 per cent to Rs.33.02 crore. Unichem reported EBITDA of Rs.15.06 crore as against loss of Rs.44.42 crore. The EBITDA of Aurobindo Pharma, Lupin, Alkem Labs, Strides Pharma, Laurus Labs, Vivimed Labs, FDC, Indoco Remedies, Bliss GVS Pharma, Suven Life, Morepen Laboratories, AstraZeneca Pharma and Novartis India remained under pressure during first half. Panacea incurred loss before interest, depreciation and tax to Rs.21.99 crore as against profit of Rs.32.69 crore.
The net profit of Aurobindo Pharma, Lupin, Piramal Enterprises, Torrent Pharma, Laurus Labs, Nectar Lifesiences, Eris Lifesciences, Suven Life, Morepen Laboratories, AstraZeneca Pharma and Novartis declined during the first half ended September 2018. Lupin’s net profit declined by 42.3 per cent to Rs.468.74 crore and that of Aurobindo Pharma declined by 17.9 per cent to Rs.1,067 crore. Cipla’s net profit declined by 5.5 per cent to Rs.813 crore. Wockhardt reduced its net loss to Rs.109 crore from Rs.413 crore. However, Strides Pharma incurred a net loss of Rs.9.49 crore as against a net profit of Rs.30.27 crore. Ind-Swift turned the corner and earned a net profit of Rs.29 crore as against a net loss of Rs.30 crore.
The net profit of Dr Reddy’s Laboratories, Biocon, Ipca Laboratories, Natco Pharma, Sequent Scientific and Vinati Organics went up sharply by over 100 per cent during the first half ended September 2018. Similarly, the net profit of Jubilant Life Sciences, Divi’s Laboratories, Alembic Pharma and Marksans Pharma has taken quantum jump of over 50 per cent.
Sun Pharma’s net profit increased by 47.6 per cent to Rs.1,002 crore from Rs.679 crore in the corresponding period of last year despite provision of Rs.1,214 crore towards settlement of antitrust litigation in respect of product Modafinil during the first half. Similarly, Piramal Enterprises has provided a loss of Rs.452.25 crore towards sale of its entire ownership interest in its wholly owned subsidiary Piramal Imaging SA. Further, Biocon has shown gain of Rs.188.8 crore towards investments in associates and joint ventures which pushed its net profit significantly during the first half. Glenmark Pharma has shown exceptional gain of Rs.167.18 crore from sale of its orthopaedic and pain management India business as well as de-prioritization of certain intangibles. These exceptional provisions impacted their final net profit during the first half.
Indian pharma companies have established strong presence in international market with the help of R&D investments during the last few years. During the first nine months ended September 2018, Indian pharma companies received total final approvals for 193 ANDAs from US FDA out of total 575 ANDAs approvals and 43 tentative ANDA approvals. For the full year ended December 2017, Indian companies grab 304 final ANDA approvals and 61 tentative approvals.
During the first half ended September 2018, Sun Pharma’s R&D expenditure was at Rs.952 crore and this worked out to 6.8 per cent of sales. It has a comprehensive product offering in the US market consisting of approved ANDAs for 432 products while filings for 134 ANDAs await US FDA approval. Lupin’s R&D expenditure declined by 22.9 per cent to Rs.751 crore from Rs.974 crore in the corresponding half of last year. Its cumulative ANDA filings stood at 405 as of September 2018, with the company having received 247 approvals.
Torrent Pharma’s R&D spending increased to Rs.263 crore from Rs.208 crore and that of Wockhardt reached at Rs.143 crore. DRL’s R&D expenditure stood at Rs.826 crore for the first half and that of Cipla’s worked out to Rs.594 crore. Jubilant Life Sciences R&D spending reached at Rs.113 crore during the first half of 2018 and it received 10 ANDA approvals. Several other companies, like Alembic, Ajanta Pharma, Biocon, Alkem Laboratories, Glenmark Pharma, Indoco Remedies, etc also investing substantial amount on R&D activities.