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POOR SHOW BY PHARMA COS

P A Francis
Thursday, August 31, 2017, 08:00 Hrs  [IST]

A Pharmabiz study of the performances of 100 top pharmaceutical companies in the country shows a disappointing picture in terms of sales and profitability during 2016-17. The combined net sales growth of these 100 companies was just 8 per cent in 2016-17 at Rs.2,06,899 crore as against Rs 1,91,602 crore in the previous year. Of the 100 companies, 27 reported a decline in their sales during 2016-17 whereas 36 companies registered a single digit sales growth, 19 companies achieved a growth of above 20 per cent and 18 posted growth between 10-20 per cent. Equally disappointing was the profit growth during the year. Earnings before interest, depreciation, taxation and adjustments (EBIDTA) improved only by 7.4 per cent to Rs 50,410 crore in 2016-17 from Rs 46,919 crore and net profit improved by a mere 5.9 per cent to Rs 26,893 crore from Rs 25,397 crore. Among the 100 companies, 5 companies namely Sun Pharma, Lupin, Aurobindo Pharmaceuticals, Cipla and Dr Reddy's Labs reported sales above Rs 14,000 crore each during 2016-17. And as many as 34 companies crossed the Rs 1,000 crore mark in sales with three companies such as Laurus Lab, Indoco Remedies and FDC crossing Rs.1,000 crore mark for the first time. The net sales of these 34 companies worked out to almost 90 per cent of net sales of Pharmabiz sample of 100 companies. Sun Pharma maintained its lead position among the companies with net sales of Rs 30,264 crore in 2016-17 as compared to Rs 27,888 crore in the previous year. Lupin emerged as the second top company displacing Dr Reddy’s Lab achieving a strong sales growth of 24.4 per cent at Rs 17,120 crore. Aurobindo and Cipla registered sales growth of 8.3 per cent and 5.8 per cent to Rs 14,845 crore and Rs 14,280 crore respectively. Among the 34 major companies of the 100, Natco Pharma reported highest sales growth of 91.2 per cent to Rs 2,065 crore from Rs 1,080 crore during the year under review. Lupin, Glenmark Pharma, Piramal Enterprises and Strides Shasun reported over 20 per cent growth.
 
Among the major companies, EBIDTA declined by 31.9 per cent in the case of DRL, Cadila Healthcare by 16.9 per cent, Torrent Pharma 45.9 per cent, Wockhardt 75.6 per cent, Alembic Pharma 39.1 per cent, GlaxoSmithKline Pharma (GSK) 17.9 per cent, Pfizer 13.2 per cent and Indoco Remedies 6.7 per cent during 2016-17. Increasing interest and employee costs have affected the performances of the pharmaceutical companies to some extend during the year. But, the main reason for the poor performances of the pharma companies is the lower growth in the export front. Pharma companies have been under tremendous pressure for some years now on account of restrictions on export to the US and European markets. Repeated inspections of manufacturing facilities of Indian companies by the US FDA and European regulatory agency and their follow up actions have badly hit the overall sales and profitability. Indian pharma companies have to realize that they need to maintain and modify standards of manufacturing facilities on a regular basis if they have to remain in business. Increasing pressure on prices of generic drugs in these key markets has been another factor that brought down the profitability of these companies. Patient groups have been active for some time now putting pressure on the US government to bring down the generic prices as they realized about the huge profiteering by some companies. Therefore, the Indian pharma companies need to rework their strategy of pricing of generic drugs in the context of growing competition and pressure from the regulatory agencies of the US and Europe.

 

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Amit Kumar Tiwari Sep 6, 2017 9:48 AM
The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value, as per a report by Equity Master. India’s pharmaceutical exports stood at US$ 16.4 billion in 2016-17 and are expected to grow by 30 per cent over the next three years to reach US$ 20 billion by 2020, according to the Pharmaceuticals Export Promotion Council of India. I indeed agreed with the Mr. Pradeep Awasthi on his views on the latest scenario related to Indian pharmaceutical market. The introduction of GST, stringent regulations, price fixation, export restriction are few factors which affects significantly the performance of Indian pharmaceutical Industry. Some of the Government Initiatives such as 'Pharma Vision 2020', Drug Price Control Orders, New Industry establishments, procedural ease related thereof and Make in India are welcoming steps and will take Indian pharmaceutical Industry to another superior level.
Pradeep Awasthi Sep 1, 2017 8:20 AM
The financial year of 2016/17,was indeed the most challanging year in the history of Indian pharmaceutical landscape.There are two major factors which influenced majority of Indian pharma companies in terms of their net sales growth and profitability are inclusion of GST from july month and increase in out let of generic drugs by government.The sales scenario of majority pharma companies had been skewed in last three months because of this two major changes brought by indian goverment.

Though pricing fixation of generic drugs by U.S is also one of the factor affecting profitability and growth,but the major factor affecting net sales of big indian pharma companies is their export which is now restricted by USFDA and European union on account of their manfacturing facilities,which are under deep threat and being inspected regularly for maintaing standards as per their recommendation.

Indian companies need to be more stringent in terms of their quality
 
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