Mumbai: Mid-cap drug companies are seen reporting a substantial rise in net profit for the September quarter backed by acquisitions and presence in geographically diverse markets, analysts said.
The rupee’s 12.5% rise against the dollar so far this year, including a 2% gain in July-September alone, will not hurt a majority of these firms as their exports is not all concentrated to the United States.
“They are not so highly dependent on US as the large cap companies. They are well diversified in several semi-regulated markets,” Sarabjit Kour Nangra, vice president-research for pharmaceuticals at Angel Broking said.
A Reuters poll forecast a 29% net profit growth for Jubilant Organosys as it consolidates its Hollister-Stier acquisition, and driven by a robust growth in its contract research and manufacturing business (CRAMS).
However, net profit growth for bigger CRAMS rival, Nicholas Piramal India Ltd, is seen at 8.3%, hurt by higher costs at its Morpeth, UK unit and the rising rupee.
Wockhardt Ltd too is expected to turn in a paltry 7.2% rise in net profit due to higher costs, despite a 111% leap in revenue after integrating its Pinewood, Dumex and Negma acquisitions.
“Indian Pharma companies, which have already adopted inorganic growth opportunities, will continue to remain actively involved in the global consolidation wave,” Religare institutional equity research said in a note.
Divis Laboratories Ltd is expected to show a 105% leap in net profit, the highest amongst the mid-cap firms polled by Reuters, to Rs641 million, aided by tax benefits from its new special economic zone.
A low base in the year-ago quarter is seen helping Glenmark Pharmaceuticals Ltd post a 95% surge in quarterly net profit.
Net profit for the Indian arm of multinational companies -- Aventis Pharma Ltd and Pfizer Ltd -- are expected to record a fall of 2.2% and 1.2% respectively.