Key products

Aventis Pharma: Aggressive strategy for future growth

Aventis Pharma (formerly Hoechst Marion Roussel) posted a measly rise of 2.1 per cent in sales income to Rs 132.7 crore in the second quarter to June 2001. But total expenditure declined 4.2 per cent to Rs 108.4 crore. Therefore, operating profit increased 36.9 per cent to Rs 25.6 crore and margin to 19.1 per cent ( 14.2 per cent).
Debt repayment from its accumulated profit saved interest. Net profit surged 58.4 per cent to Rs 12.2 crore.

The company also benefited from restructuring that resulted in higher margins. Hiving off brands and selling property helped improve profit.

Changes in product mix did not help sales growth but did improve margins. The sale of strategic brands, despite their small base and recent introduction, increased -‘Cardace’ 69 per cent, ‘Allegra’ 26 per cent and ‘Amaryl’ 58 per cent.

The company has 12 topline brands that account for around 50 per cent of turnover. The company has strong presence in many segments like anti-inflammatory, anti-diabetic, vaccines, anti-allergic, skin preparations and analgesics, most of them being old age products.

However, in the coming years, the parent company, Aventis Pharma GmbH, Germany, that holds 50.1 per cent equity, is expected to give many new brands for manufacturing and marketing in India.

Hopefully, new brands should spruce up Aventis Pharma’s show. The company can also hope to benefit substantially when the DPCO control is dispensed with in the near future. Almost 60 per cent of its products are price-controlled. Besides, most segments in which the company has strong brands are growing at a steady clip.

In the words of its managing director Ramesh Subrahmanian, ‘Our clear focus on profitable growth driven by growth in strategic products is paying off. Despite sluggish market conditions, strong performance of key brands has offset the impact of intense generic competition in some of our product segments. We will continue to focus on establishing and consolidating our leadership position in key products.” The task is likely to be tough particularly in the post-patent era.

-- Dhruv Rathi