Gujarat pharma firms post poor growth in FY '07

Inconsistent, if not dismal, could be the term that can be used for performance of some of the leading listed pharmaceutical companies of Gujarat this year. Fiscal 2006-07 witnessed a dip in the average growth rate of net sales and net profit of these companies. However, financial results of only two of the six pharma companies were satisfactory.

The average net sales of Dishman Pharma, Torrent Pharma, Sun Pharma, Alembic Ltd, Cadila Healthcare Ltd and JB Chemicals & Pharmaceuticals Ltd dropped to 10 per cent in FY 06-07 as compared to 29.5 per cent in the previous year. While the average net profit dipped from 36.5 per cent to 25.6 per cent in FY 06-07.

Of the six, the two pharma companies able to achieve a better growth were Dishman Pharmaceuticals and Torrent Pharmaceuticals. Dishman Pharma was able to secure a bottomline growth of 33 per cent, while its net sales grew 29 per cent. Salvaging the shareholders' interests, the company's earning per share (EPS) increased from Rs 6.66 to Rs 8.73. According to market sources, the rise in its sales and net profit can be attributed to its recent acquisition of Carbogen Amcis, Switzerland (CA) that gave it access to new customers in Europe as well.

The other factors that came into play were the company's strong relationships with multinational pharmaceuticals and increased pharma outsourcing.

On the other hand, Torrent Pharma's bottomline grew by 71 per cent and topline by 28 per cent. The company's EPS nearly doubled from last year when it rose from Rs 7.78 to Rs 13.35. Market experts are of the view that sales across all divisions are upbeat and the domestic formulations continue to show a robust growth. Meanwhile, Torrent Pharma could have managed to post such a growth rate through its improved performance of Heumann Pharma (Heumann) and Brazilian operations.

As for Sun Pharma, which recently demerged its R&D activity, the company witnessed a drop in the growth rate of net profit from 40 per cent in last year to 36 per cent in FY 06-07, even when in absolute terms the net profit surged from Rs 461.29 crore in FY 05-06 to Rs 628.92 crore in FY 06-07.

The net sales dipped from Rs 1709.38 crore in FY05-06 to Rs 1662.56 crore in FY06-07, thus registering a drop of 3 per cent. However, the company's reserves went up by 71 per cent from Rs 1370.67 crore to Rs 2351.42 crore, while its EPS improved from Rs 24.9 to Rs 33.5.

All through fiscal 2006-07 Cadila Healthcare was greeted by a somewhat stagnant net profit growth, as it marginally grew from 24 per cent from last year to 25 per cent. Even on the net sales front the company was not able to register any growth as it dropped by 4 per cent compared to last year when it registered a growth of 17 per cent.

While other two companies, Alembic and JB Chemicals & Pharmaceuticals, were not able to achieve an impressive growth as well, as Alembic's net profit dipped by 10 per cent while JB Chemicals registered a growth in net profit of 0.13 per cent only over last year.

Similar was the case of these companies' net sales which halved as compared to last year.