Domestic pharma cos net 48% profit over MNCs’ 11% during Apr-Sept

Sanjay Sardana

New Delhi, Dec 2: Domestic pharmaceutical companies have yet again outperformed their multinational (MNC) counterparts during the six months ended September.

While the net profit of around 50 domestic pharma companies grew by a healthy 48 per cent from Rs 616.38 crore during April-September 2000 to Rs 913.7 crore in 2001, 10 multinational companies recorded an average growth of just 11 per cent to Rs 175.95 crore, up from Rs 157.47 crore reported in the corresponding period last year.

In terms of revenue, these MNCs showed a meagre growth of 4.7 per cent to Rs 1,531.56 crore, while revenue of domestic companies was up 27.34 per cent to Rs 6,545.5 crore over the corresponding period of last year.

Higher export revenues, aggressive new product launches and product positioning in fast growing-high margin therapeutic segments have been responsible for excellent performance of most of the domestic pharma companies. For others, it’s been restructuring for cost cutting, which has led to margin improvement.

MNCs on the other hand, which primarily have presence in the anti-infective and vitamins segment have not been very aggressive in launching new products, thus resulting in lower growth.

The surge in net profit in case of domestic companies was led by pharma majors — Dr Reddy’s Laboratories, Ranbaxy, Nicholas Piramal, Sun Pharma and Wockhardt. While Shasun chemicals, Orchid, Kopran and Ajanta Pharma have been a few exceptions in domestic pharma companies, which have reported a slide in earnings.

For MNCs, majors including Glaxo Smithkline, Novartis and Duphar Pharma showed healthy growth during the six months ended September. However, Knoll Pharma, Burroughs Wellcome and Abott Laboratories reported a negative growth or a fall in net profit during the same period.

On the back of a stupendous growth of over 300 per cent growth in net profit, Dr Reddy’s announced a special interim dividend of 100 per cent. The exceptional growth in sales and net profit was due to the 180-day marketing exclusivity obtained by the company in the US market for Fluoxetine, which runs between August 2001 and February 2002.

Ranbaxy’s continuing emphasis on financial performance parameters has yielded positive results and has managed to improve its profit margins and better return on capital employed. The company’s growth was led by its global sales, which stood at $416 million during the nine months ended September, up 16 per cent compared over corresponding period last year.