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TOP COS IN TROUBLE

Ramesh Shankar
Wednesday, February 28, 2018, 08:00 Hrs  [IST]

That the Indian pharmaceutical industry is going through a difficult period is an undisputed fact, thanks mainly to the unprecedented quality issues being raised by the US FDA. For the last couple of years, the Indian pharmaceutical companies, especially those which have exposure to regulated markets like US and Europe, have been staring at a scenario where their profits have been eroding from quarter to quarter. The gravity of the situation can be gauged from a Pharmabiz study of 30 major Indian pharmaceutical companies. The study has revealed that the net profit of 30 Indian pharma giants has declined by a whopping 38% in the first nine months ended December, 2017. As per the study, 30 major pharmaceutical companies in India have posted dismal financial performance during the first nine months ended December 2017 and their net profit declined sharply by 37.9 per cent to Rs. 12,313 crore from Rs. 19,833 crore in the corresponding period of last year due to US FDA actions against leading companies, challenging US generic pricing environment, price cuts and stiff competition from competitors. Among the 30 companies, the net profit of 17 companies declined during the nine months, mainly due to US FDA actions in respect of cGMP and price erosion in the US market. Sun Pharma, Lupin, Dr Reddy's, Glenmark, Alkem, Torrent, Biocon, Strides Shasun and Vivimed Labs suffered heavy setback and their net profit declined sharply by over 25 per cent. Further, Divi's Laboratories and J B Chemicals registered de-growth in profit by 23.4 per cent and 19 per cent respectively. Ajanta Pharma, Pfizer, Granules, Aarti Drugs and FDC also failed to improve profits. Wockhardt's net loss went up to Rs. 454 crore from Rs. 21 crore in the corresponding period of last year. Among the remaining 13 companies, Cipla, Jubilant Life Sciences, Ipca, GSK and Hikal posted double digit growth in net profits. Other companies like Aurobindo, Cadila Healthare, Alembic, Laurus Labs, Nectar Lifesciences, Dishman Carbogen and Syngene posted small growth of single digit during the first nine months.


However, the net sales of these 30 companies remained almost stagnant at Rs 1,27,484 crore as against Rs 1,28,475 crore and EBIDTA of 30 companies declined by 16.5 per cent to Rs. 28,397 crore from Rs. 34,026 crore in the same period of last year. The net sales of 13 major companies declined during the first nine months ended December 2017 which included Sun Pharma, Lupin, Torrent Pharma, Biocon, Wockhardt, Divi's, Ipca, Alembic, GSK, Pfizer, Natco, Aarti Drugs and Vivimed. Five companies Cadila Healthcare, Jubilant Life, Granules, Syngene and Hikal registered double digit growth in sales. Aurobindo Pharma, Cipla, Dr Reddy's, Glenmark Pharma, Alkem Laboratories, Strides Shasun, Ajanta Pharma, Laurus Labs, Nectar Life, Dishman Carbogen, J B Chemicals and FDC posted only single digit growth in net sales during this period. What is more worrisome is a possible scenario that, based on the first nine months financial performance of these leading 30 companies, there is no hope for any growth in net sales and net profit for the full financial year 2017-18. The industry now should do some serious soul-searching exercise to reverse the trend in the next financial year. It is time to sit back and take stock.

 

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Praeep Awasthi Mar 4, 2018 6:43 PM
Its nothing surprise to share,flop show of Top Indian pharma companies in last couple of years,in terms of netsales and their annual profit.There are two important factors which had severely impacted to Top companies,is the quality issues raised by USFDA and price fixing of generics in U.S countries,where this Top companies were leveraging higher prices on exported generic to post large exports and profitability,which is being restricted by U.S new law suit introduced by U.S countries for generic drugs.

This massive decline of Top big 30 companies in terms of net sales is resulting of this stringent policies of U.S.Its certainly a wake up call for Indian companies to formulate their new strategies to counteract with this loss and get prepared for incoming challenges.
 
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