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Drug companies post robust net; Jubilant disappoints

Drug companies post robust net; Jubilant disappoints
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First Published: Tue, Jul 27 2010. 07 45 PM IST
Updated: Tue, Jul 27 2010. 07 45 PM IST
Mumbai: Indian mid-cap drug firms Glenmark Pharmaceuticals, Cadila Healthcare and Strides Arcolab on Tuesday reported robust profits in April-June, beating street estimates on a rally in formulations and active pharmaceutical ingredients (APIs).
However, Jubilant Organosys posted dismal results, primarily due to margin pressures in the contract research and manufacturing services (CRAMS) segment and forex transactions.
“The results are in line with expectations, and especially, Cadila Healthcare has shown a robust performance due to growth momentum in the US market,” Sushant Dalmia, analyst with Angel Broking, told Reuters over the telephone.
Earlier in the day, Cadila reported a 67% jump in quarterly net profit to Rs2 billion against Rs1.2 billion last year.
A Reuters poll of 14 brokerages had forecast a consolidated net profit of Rs1.65 billion for Cadila on net sales of Rs10.4 billion.
Triggered by three key drug launches during the quarter, the US sales rose by 51% during April-June, the company said in a statement.
Rising sales in the speciality formulations segment helped Mumbai-based Glenmark record a 191% jump in consolidated Apri-June net profit to Rs1.56 billion.
This was largely in line with the Reuters forecast of consolidated net profit of Rs1.43 billion on net sales of Rs7.43 billion.
“The out-licensing deal with Sanofi-Aventis for ‘GRC 15300´ and a number of new US FDA approvals in the quarter will aid growth for the company in this financial year,” Glenn Saldanha, chief executive and managing director, Glenmark, said in a statement.
The company expects an improved performance from central and eastern Europe for the remainder of the year, he added.
“Glenmark and Cadila have shown strong numbers, as expected, following rising formulations and API businesses... and they will continue this trend for the year,” another analyst with a Mumbai-based brokerage said.
Bulk drugmaker Strides Arcolab reported a 10% growth in consolidated net profit to Rs457.6 million for the April-June period against Rs417.7 million reported in the previous year.
“Strides has struck few good licensing deals and as a result, it will continue to post excellent numbers... primarily driven by huge volumes,” another analyst said.
Jubilant down on rising costs
Contract research player Jubilant Organosys reported a consolidated net profit of Rs627.3 million in April-June, a drop of 50% on year, and far below the Reuters poll estimate of Rs1.09 billion.
“The pressure on margins is due to lag effect of passing on the increase in input material cost, which is expected to get corrected in the subsequent quarters,” Shyam Bhartia, chairman and managing director, Jubilant Organosys, said in a statement.
However, the company expects robust revenue and profitability on expected global buoyancy in outsourcing in FY11, he added.
The growth is expected on account of revenue led by the strong order book position, growth initiatives and expected signing of new contracts with drugmakers, Bhartia said.
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First Published: Tue, Jul 27 2010. 07 45 PM IST