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The leading 50 Indian pharmaceutical companies have shown satisfactory financial performance during the first nine months period ended December 2018 and based on these results these companies are well set to achieve sales growth of over 12 per cent in the financial year 2018-19 as against just 3 per cent growth by 100 companies in 2017-18. However, drug price control by government, price erosion in international markets, competition, exchange rates fluctuations, quality problems with highly regulated authorities, demonitisation, GST implementation and litigation related costs are likely to impact bottom line in FY19 and net profit may decline marginally by over two percent. The investments in R&D activities and higher ANDA approvals for Indian pharma companies in US may push sales as well as profits in the current quarter.
The Pharmabiz sample of 50 top companies, including major players based on sales ranking in 2017-18, has shown net sales growth of 13.8 per cent during the first nine months period ended December 2018 to Rs.1,67,685 crore from Rs.1,47,293 crore in the corresponding period of last year. Sun Pharmaceutical Industries remained on top with net sales of Rs.21,642 crore during the first nine months ended December 2018, a growth of 11.8 per cent. Followed by Aurobindo Pharma Rs.14,025 crore, Lupin Rs.12,043 crore, Cipla Rs.11,700 crore and Dr Reddy's Laboratories Rs.11,369 crore. There may not be any change in ranking of first five companies in FY19.
Out of 50 leading companies, 10 companies registered handsome gain in sales of over 30 per cent during the first nine months ended December 2018. IOL Chemicals and Pharmaceuticals has notched up highest net sales growth of 77 per cent to Rs.1,263 crore from Rs.713 crore in the last period. Its nine months sales crossed its full year sales of Rs.1,001 crore during 2017-18 and now well set to move upward in sales ranking in the current year. Similarly, Nectar Lifesciences registered strong growth of 52.1 per cent in sales to Rs.1,986 crore from Rs.1,306 crore in the last period. Vinati Organic, Unichem Laboratories, Biocon and Granules India also clocked hefty rise in sales by 49.4 per cent, 49 per cent, 48.2 per cent and 40.2 per cent respectively.
Torrent Pharma posted net sales growth of 35.6 per cent to Rs.5,640 crore during the first nine months ended December 2018 and was followed by Neuland Laboratories 33.9 per cent, Alembic Pharmaceuticals 32.1 per cent and Divi's Laboratories 31.8 per cent. Piramal Enterprises, engaged in pharmaceutical and financial services, Jubilant Life Sciences, Syngene International, Hikal, Sequent Scientific, Eris Lifesciences, Morepen Laboratories and AstraZeneca Pharma registered net sales growth of over 20 per cent.
The sales of Ajanta Pharma, Indoco Remedies, Suven Life Sciences, Panacea Biotec, Novartis India and SMS Pharma remained under pressure during first nine months ended December 2018 and declined. Sanofi India and Merck are not included as their year ending is in December. Panacea's net sales declined by 20.6 per cent to Rs.328 crore Ajanta Pharma's net sales declined by 3.8 per cent to Rs.1,540 crore and Indoco Remedies sales declined by 8.2 per cent to Rs.696 crore. Few pharma majors like Lupin, Cipla, DRL, Cadila Helathcare, Glenmark Pharmaceuticals and Wockhardt registered only single digit sales growth. The sales of Strides Pharma, FDC and Bliss GVS Pharma remained almost stagnant.
Earnings before interest, tax, depreciation and adjustments (EBITDA) of 50 companies improved by 20 per cent to Rs.41,499 crore from Rs.34,586 crore during the similar nine months period of last year mainly due to significant growth in EBITDA of Sun Pharma, DRL, Piramal Enterprises, Biocon, Divi's Labs, Ipca Laboratories, Alembic Pharma, Natco Pharma, Granules India, Hikal, J B Chemicals, IOL Chemical, Marksans Pharma, Sequent Scientific, Eris Lifesciences, Vinati Organics, TTK Healthcare and AstraZeneca Pharma. The EBITDA of IOL Chemicals went up by 188 per cent to Rs.261 crore. Vinati Organics and Granules India registered a strong growth of over 108 per cent to Rs.324 crore and Rs.492 crore respectively. Sun Pharm's EBITDA moved up by 35.3 per cent to Rs.6,035 crore and that of DRL's went up by 37.7 per cent to Rs.2,614 crore. Biocon posts strong EBITDA growth of 50 per cent to Rs.1,107 crore and Divi's Laboratories of 55.2 per cent to Rs.559 crore.
Among the major pharma players, EBITDA of Aurobind Pharma, Lupin, Cipla and Alkem Laboratories was under pressure and declined by single digit. Further, Indoco Remedies, Strides Pharma, Ajanta Pharma, Laurus Labs, Vivimed Labs, Bliss GVS Pharma, Suven Life Sciences, Morepen Laboratories and Novartis India registered lower EBITDA during first nine months. Unichem Laboratories posts EBITDA of Rs.23 crore as against loss of Rs.93 crore. Panacea's earnings was negative at Rs.0.56 crore as against profit of Rs.65 crore.
The net profit of 50 companies went up by 27 per cent to Rs.18,160 crore during the first nine months of 2018-19 from Rs.14,300 crore in the similar period of last year basically due to significant growth of over 100 per cent recorded by Sun Pharma, DRL, Biocon, Strides Pharma, Vinati Organics, IOL Chemicals and Neuland Laboratories. Further, Divi's Laboratories, Ipca Laboratories, Granules India, Marksans Pharma, TTK Pharma and AstraZeneca Pharma also posted growth of over 50 per cent.
The net profit of Sun Pharma went up due to provision of Rs.513 crore as exceptional item in the last period for re-measurement of the group's deferred tax assets as against in the latest period. Its profit before adjustments and tax improved by 41.8 per cent to Rs.4,330 crore. Aurobindo's net declined due to provision regarding acquisition related costs as well as forex loss of Rs.57 crore. Lupin's net declined due to provision of Rs.342 crore towards the Perindopril litigation in Europe.
Piramal's net profit went down due to loss of Rs.452 crore for selling of stake in another subsidiary and Wockhardt's net loss declined to Rs.180 crore from Rs.454 crore due to provision of Rs.358 crore for settlement of litigation with Teva's associated company in respect of a supply contract in the last period. Strides net jumps by 167 per cent due to gain on disposal of assets of Rs.270 crore. Its net profit before this adjustment of discontinued operations declined by over 74% to Rs.15.12 crore from Rs.77.66 crore. Ind-Swift Laboratories' posted net profit of Rs.71 crore due to settlement income of Rs.76 crore of insurance claim as against a net loss of Rs.30.28 crore in the last period.
Among the losers on net profit front, Aurobindo Pharma, Lupin, Cipla, Piramal Enterprises, Wockhardt, Ajanta Pharma, Laurus Labs, Nectar Lifesciences, Vivimed Labs, Eris Lifesciences, Suven Life, Morepen Labs and Novartis India suffered setback and their net profit declined during the first nine months ended December 2018. Indoco Remedies incurred a net loss of Rs.14.47 crore as against a net profit of Rs.20.69 crore, Healthcare Global Enterprises' net loss stood at Rs.20 crore as against a net profit of Rs.17 crore and that of Panacea Biotec net loss increased to Rs.157 crore from Rs.63 crore due to provision of Rs.26.84 crore under CDR scheme. Similarly, Unichem's net profit was at Rs.3 crore as compared to net loss of Rs.124 crore on account of higher other income.
Few major pharma companies like Alkem Laboratories, Aurobindo Pharma, Suven Life Sciences, Hikal, Torrent Pharma and Granules India declared interim dividends during the third quarter ended December 2018. Alkem declared interim dividend of 400 per cent and Aurobindo announced second interim of 125 per cent. Granules India recommended third interim dividend of 25 per cent and Torrent paid interim dividend of 260 per cent. Hikal and Suven announced interim dividend of 30 per cent and 150 per cent respectively. Ajanta Pharma announced buy-back of shares at a price of Rs.1300.
The R&D investments of Sun Pharma reached at Rs.1,417 crore and worked out to 6.5 per cent of sales. Its total ANDA filings reached at 441 products and 123 ANDA await US FDA approval. Additionally, the pipeline includes 49 approved NDAs, while 6 ANDAs await for approval. Aurobindo's R&D expenditure increased to Rs.255 crore and worked out to 4.8 per cent of revenues. It filed 10 ANDAs with US FDA and received final approval for 14 ANDAs. Cumulative basis, it filed 519 ANDAs and received 397 approvals. Lupin's revenue expenditure on R&D spending declined to Rs.427 crore from Rs.476 crore in the third quarter of FY19. It filed 8 ANDA and received one approval. Cumulative ANDA filings stood at 412 as of December 31, 2018 with it has received 258 approvals. Jubilant Life's R&D spending increased to Rs.177 crore and worked out to 4.5 per cent of its pharm sales. Dr Reddy's Labs' R&D spending declined to Rs.1,195 crore during nine months from Rs.1,392 crore mainly on account of timing variation in development related activities coupled with productivity improvement measures.
Thus the overall performance in R&D front is better and these companies are well set to receive higher approvals in the next quarters.
Highlights 9 Months ended December 2018
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