However, the company claims that its pharma business grew by 3.6 per cent in the same quarter. The lower growth is attributed to lower export. The closure of the Ciba Vision lens division seems to have affected sales income.Total expenses have increased from 81.6 per cent of sales to 88.1 per cent.

The increase in cost put downward pressure on operating profit margin (OPM) from 18.3 per cent to 11.8 per cent. OPM during 1999-2000 was 17 per cent.

Consequently net profit margin also slid from 13.8 per cent to 10.7 per cent. During the third quarter, the in-house raw material consumption was less than Rs 1 crore but trading purchases exceeded Rs 57 crore, while staff cost was Rs 8.3 crore. In 1999-2000, the company's imports at Rs 135 crore were substantially higher than exports valued at Rs 58 crore. Novartis demerged its major agro-business at the beginning of the current fiscal. The drug business accounted for 44 per cent of total turnover of Rs 824 crore in 1999-2000. Ciba Vision contributed only 1 per cent of total business, while the rest came from agro-business. The company hived off agro-business which accounted for 55 per cent of total turnover.

The decline in profit margins need not deter Novartis from shoring up its performance in the future. It has a strong and diversified product profile, besides it being a leader in many therapeutic segments. For example, its `Voveran' brand is the fourth largest selling brand among top 300 drugs. It has been growing at a 20 plus per cent clip in sales. Another best selling brand is `Tegritol' at 25 per cent plus, ranked 45th among ORG's top 300 brands.

Dhruv Rathi