Pricing pressure, high costs dent pharma firms' margins

Domestic companies are investing heavily to build a pipeline of specialty and complex drugs

A slump in domestic and US business coupled with increased investment in research and development (R&D) has put a squeeze on pharmaceutical companies’ profit margins. These firms have also guided for muted growth in the current financial year due to continued headwinds in key markets.

Sun Pharma’s earnings before interest, taxes, depreciation and amortisation (Ebitda) margins nearly halved on a year-on-year basis to 17.1 per cent in the first quarter of FY18, while Lupin’s margin came down by 1,100 basis points to 21 per cent in the same period. Aurobindo Pharma and Dr Reddy’s Laboratories, too, have seen a decline