MUMBAI, Aug 20: Royalty payments by Pfizer Ltd to its American parent, a contentious issue with company shareholders, have been on the decline in the last couple of years with the payment amounting to Rs 5.55 crore for the year to March 1997.

This figure represented a 4.64 per cent decline over the previous year's Rs 5.82 crore and is substantially lower than the royalty and technical know-how fees of Rs 6.81 crore paid in 1994-95.

Industry sources said the royalty figure in 1994-95 included a one time payment of about Rs 2 crore made to Pfizer Inc and hence has not been reflected in the subsequent years. Pfizer pays a royalty on its entire pharmaceutical range but this excludes its animal health range and its protein supplement brand Protinex.

Shareholders had questioned the Pfizer management's decision to make a royalty payment of Rs 6.81 crore in 1994-95, (previous year Rs 39 lakh) to Pfizer Inc claiming that their interests had been ignored. They were particularly peeved then as the jump in royalty payment accompanied a dividend cut to Rs 1.50 a share from Rs 3 a share earlier despite reasonably good profits.

Analysts said if the payments are for transfer of new product technology, it will be beneficial to the company in the long run. Sales of the company for the year ended March 1997 rose to Rs 262.89 crore from Rs 252.60 crore last year.

Meanwhile, during 1996-97, Pfizer's clinical research division entered into an alliance with Pfizer Inc to carry out clinical trials and studies in India "in respect of pharmaceutical and consumer healthcare products developed or proposed to be developed by Pfizer Inc and/or its affiliates".

The unit will also provide data management and analysis services to Pfizer Inc for which the Indian arm is receiving reimbursement of expenses and adequate compensation from the American parent. Sources also said that Pfizer has initiated legal action against Jayant Vitamins following non-payment of advances made to the company. Advances made to Jayant, a supplier of raw material to Pfizer, became fully receivable due to the discontinuance of purchases from them.The outstanding amount as on March 31, 1997 was Rs 1.18 crore.

Arm owes Rs 11 cr

MUMBAI, Aug 20: Loans and advances due to Pfizer from its wholly-owned subsidiary Duchem Laboratories as on March 31, 1997 were Rs 10.69 crore, a 116.85 per cent jump compared with Rs 4.93 crore in the previous year.Pfizer, however, considers the outstandings as good and fully recoverable despite the negative net worth of Duchem. While Duchem's turnover rose to Rs 55 crore from Rs 33 crore, the company registered a loss of Rs 52 lakh as against a profit of Rs 24 lakh in the previous year.Sources said that the widespread copying of key anti-fungal product, Fumycin, had forced the company to withdraw the product. The loss is essentially due to write off of date expired goods and low margins on drugs. But this kind of write off is non-recurring in nature and the current year's operations are expected to reflect further growth in sales and improvement in profitability.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.