Top India drugs firms' net up 23 pct in 1998/99
By Rosemary Arackaparambil
BOMBAY, June 6 (Reuters) - Earnings of 11 leading Indian pharmaceuticals companies grew some 23 percent the financial year just ended, and their performance in 1999/2000 hinges on domestic sales and the government's pharmaceuticals pricing policy.
Net sales in 1998/99 (April-March) grew an average of 13.20 percent.
Average profit growth was heavily influenced by Rhone Poulenc (India) Ltd's earnings, which grew 134.7 percent, and Novartis India Ltd's , which rose 95 percent.
The profits of Rhone Poulenc, which is 40 percent-owned by Rhone Poulenc Rorer Inc (NYSE:RP - news), were boosted by depreciation write-backs following a change in the method of calculation. The Novartis AG unit was helped by a low employee severance provision.
Companies which had exposures to the Russian market were squeezed by its economic debacle.
''Hoechst Marion Roussel was badly hurt because it had 20 percent of the Russian market,'' said Shahina Mukadam, analyst with Birla Marlin Securities.
The Hoechst AG (quote from Yahoo! UK & Ireland: HOEG.F) subsidiary's 1998/99 net profit fell to 204 million rupees ($4.7 million) from 321 million in the previous year.
''Dr. Reddy's also would have done much better if it were not for the provisioning for the Russian problem,'' she said.
Dr. Reddy's Laboratories' net profit in 1998/99 was 677.16 million rupees against 488.44 million in 1997/98.
Ranbaxy Laboratories also suffered a drop in net profit and sales during the first quarter of calendar 1999.
Mukadam said firms like Glaxo India Ltd and SmithKline Beecham Pharma , units of British parents, were affected by price cuts in some of their major products.
Glaxo posted five percent sales growth in first quarter 1999 but expects a 15 percent rise for the full year.
Overall performance will pick up in April-September with the onset of the monsoons which typically boost sales, and companies are also expected to tap new markets.
Domestic sales in the January-March period of 1999 were slow for several companies.
''Many firms faced the problem of increasing offtake of generic formulations made by small scale industry as opposed to branded formulations,'' said an analyst who asked not to be identified.
Profitability this year would be influenced by any liberalisation in government pharmaceuticals pricing policy. A freer pricing regime will allow companies to produce newer drugs and boost their earnings.
''We are looking forward to the deliberations of a government committee...and expect the number of drugs under price control to be reduced significantly from the present 74,'' said Nishid Shah, head of research at Inquire Indian Equity Research.
Benefits of business restructuring and early retirement schemes would also influence profit growth. |
