Pharma companies splitting R&D units to reduce costs
Amriteshwar Mathur Mumbai | Total Operational income | | | Mar 08
quarter | Mar 07
quarter | Mar 08
quarter | Mar 07
quarter |
| Ranbaxy | 92.0 | 81.1 | 1698.6 | 1582.1 |
| Wockhardt | 14.3 | 16.0 | 785.7 | 522.8 |
| Dr Reddy's | 102.3 | 85.2 | 1325.2 | 1557.3 |
| Lupin | 48.2 | 40.5 | 619.5 | 518.0 |
| Sun Pharma | 78.5 | 71.5 | 1257.1 | 548.4 |
| Nicholas Piramal | 40.4 | 35.9 | 767.8 | 645.2 |
| Total | 375.7 | 330.2 | 6453.9 | 5373.8 |
| (Rs Crore) |
The shares of Ranbaxy hit a 52-week high of Rs 535.7, but closed at Rs 529.95, Sun Pharma ended at Rs 1441.05, below its 52-week high of Rs 1,481 on May 2. Lupin ended at Rs 698.45 and has now gained 8.6 per cent since the beginning of 2008.
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| Companies were able to absorb the costs, led by buoyant growth in emerging markets such as Eastern Europe and strong domestic sales that varied between 12 and 18 per cent y-o-y in the three months ended March. |
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| In the December 2007 quarter, these six generic players saw their R&D costs as a proportion of total operational income declining by 50 basis points y-o-y to 7.3 per cent. To keep a tight check on R&D costs, the Ranbaxy's board approved a plan, in February 2008, to demerge its new drug discovery research activity into a subsidiary, Ranbaxy Life Science Research (RLSRL). |
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| Analysts expect RLSLR to list on the bourses once it receives the regulatory nods. Sun Pharma had earlier approved a scheme to demerge its innovative R&D business (covering new chemical entities and NDDS programmes) into a new company called Sun Pharma Advanced Research Company. |
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| This new entity Sun Pharma Advanced Research Company was listed on the bourses in mid-July 2007. |
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