Pharmas curb R&D costs in Dec quarter

Leading Indian pharmaceutical companies, which are largely focused on the global generics and the domestic pharma market, have succeeded in keeping a tight check on their key research and development (R&D) costs in the December 2007 quarter.

The cost control in R&D came at a time when the Indian generic players are grappling with an 11-12 per cent year-or-year (y-o-y) surge in the rupee against the US dollar and sluggish sales in the US market.

Meanwhile, the R&D expenditure of the six leading pharma companies "" Ranbaxy, Nicholas Piramal, Dr Reddy's, Sun Pharma, Lupin and Matrix Lab "" as a percentage of total operational income was 8.3 per cent in December quarter compared with 8.31 per cent in the corresponding period of the previous year.

In the September quarter, these companies saw their R&D costs as a proportion of total operational income rising 170 basis points y-o-y to 7.5 per cent.

Analysts said that the companies had taken the steps to bring down R&D costs in advance.

For instance, Sun Pharma had earlier approved a scheme to demerge its innovative R&D business (covering new chemical entities and NDDS programs) into a new company called Sun Pharma Advanced Research Company.

In a similar move, Wockhardt's board has recently decided to demerge its R&D business into a separate entity.

Earlier, in a bid to bring down operational costs, Dr Reddy's Laboratories had entered into an agreement with ICICI Venture, in which the latter agreed to fund the development.