Mid-cap drug firms beat bigger peers in first quarter

Good show by smaller companies helps market post double-digit growth during the period.

Small and mid-sized domestic pharmaceutical companies came up with better financial results than large-cap players in the first quarter (April-June) of the current financial year, even as multinationals operating in the country reported declining sales.

The good show put up by smaller companies helped the market post double-digit growth during the period.

A number of small firms, which include Torrent Pharma, Glenmark, Aurobindo, Orchid Pharma, Unichem Laboratories, Matrix, Dishman, FDC, Elder Pharma, Divis Lab, Strides Arcolab, Shasun Chemicals and Plethico, achieved 15-20 per cent rise in sales, on an average.

On the other hand, the big guns such as Ranbaxy, Nicholas Piramal, Cadila Healthcare, Wockhardt and Aventis Pharma reported only marginal growth in sales.

However, some big names like Cipla, Sun Pharma, Dr Reddy's and Lupin posted impressive growth in income and profits, albeit with exports as the main growth driver in many cases.

MNCs such as GlaxoSmithKline (GSK), Novartis, Merck, Aventis, Wyeth and AstraZeneca posted negative growth in sales. GSK, Novartis, Wyeth and Merck and domestic majors like Nicholas Piramal and Wockhardt, among others, registered a decline in profits as well.

Industry analysts attribute the pharma MNCs' negative growth in the country to fewer product launches during the quarter.

Small and mid-size firms could post growth in sales because of their ability to penetrate more into the expanded domestic market.

Suresh Kare, chairman and managing director, Indoco Remedies, said many of the medium-sized pharma companies, in a bid to grow in the domestic market, focus on building capacity and widen the products range, apart from leveraging their capabilities of increasing business from CRAMS (contract research and manufacturing) and also in the generic space.

Ranbaxy, the largest pharma company in the country by sales, posted 7.76 per cent y-o-y growth in achieving sales worth Rs 1,083.78 during the June 2006 quarter. On the other hand, Indoco's domestic sales grew 25 per cent, Orchid's 19 per cent and Elder Pharma's 20 per cent.

However, Lupin and Cipla, whose portfolios are dominated by country-specific therapeutic segments, registered high sales growth of 31 and 33 per cent, respectively.