GSK results lift sagging morale of drug firms

GSK results lift sagging morale of drug firms
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First Published: Sat, Feb 17 2007. 12 04 AM IST
Updated: Sat, Feb 17 2007. 12 04 AM IST
Mumbai/New Delhi: The financial results of GlaxoSmithKline Pharmaceuticals India, the country’s largest foreign-owned producer of medicines, in 2006 have managed to bring some cheer to the beleaguered Indian arms of drug multinationals—all of whom have reported tough quarters.
These companies, which control a fifth of the Rs30,000 crore worth domestic pharmaceuticals sales, have seen falling net profits on account of fewer product launches and cost cutting in the domestic market in 2006.
GSK India’s net profit grew by a third to Rs68.16 crore during the quarter ended 31 December 2006, most of which was boosted by other income of nearly Rs20 crore. Its sales, net of excise duties, declined marginally by almost 1% to Rs320.27 crore. The company, which reports its results January to December, showed 18% higher profit at Rs361.72 crore in 2006. Net sales grew 4.55% to Rs1,552.92 crore.
Other multinational drug makers, a majority of whom end their financial year on 31 March, had no respite in the last quarter of 2006. Pfizer India and Merck Ltd, local arms of eponymous international drug makers, saw net profits drop. The Mumbai-based arms of US drug makers saw profits dip by 2.13% and 49%, respectively.
Abbott India suffered no reverses but had almost flat results in the just gone by quarter compared with the year-ago period. Net profits of Novartis India, the second-largest foreign-owned drugs company in India, dropped nearly a tenth to Rs21.07 crore in the quarter to December after sales of its profitable brands shrank. Its net sales grew 7.57% to Rs148.72 crore. Novartis said sales were partly affected because Tegrital, a key anti-epileptic drug, was brought under price ­controls.
Pfizer saw net profits flat at Rs17 crore on account of a higher tax provision and boycott of its products by drug traders. “There were trade-related issues because of which our Maharashtra sales got affected,” Pfizer managing director Kewal Handa told Mint, adding there would be no product launches soon.
Merck, in its press release, had attributed a decline of a net profit of Rs11.59 crore for the quarter from Rs22.66 crore last year—to the sale of its life science and analytic business division earlier in the year.
An analyst tracking the industry said aggressive marketing tactics by local drug makers ate into the market of foreign rivals. “The Indian firms have seen their revenues surge because of product launches, ramping up of the fieldforce and signing of licensing deals,” said Sion Mukherjee, Mumbai-based Brics Securities’ analyst.
Amongst the companies that have shown strong revenue growth, Ranbaxy Laboratories increased its marketing and distribution fieldforce from 2,000 to 3,000 people, Dr Reddy’s expanded the number to 1,400 from 1,000 while Lupin has a field strength of 2000, up from 800 a couple of years ago. c.unnikrishnan@livemint.com
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First Published: Sat, Feb 17 2007. 12 04 AM IST