BackDifferent product mix helped cut material costs
Different product mix helped cut material costs
PremiumBullish: Cipla chairman and managing director Y.K. Hamied. Santosh Verma / Bloomberg
Mumbai: Drug maker Cipla Ltd said net profit in the three months ended 30 September rose 82.78% to Rs276 crore, compared with Rs151 crore in the year-ago period. Chairman and managing director Y.K. Hamied said in an interview that the higher profits resulted from lower material costs due to a change in the product mix. Edited excerpts:
What has been the export growth for Cipla in this quarter?
The total export growth in the quarter has been about 4%.
What was the domestic growth?
It is about 7% in the quarter.
A lot of the growth has been in the anti-AIDS drugs. These are sold internationally by tenders. And if you don’t win a tender, you don’t get the sales. Therefore, we have lost out a lot on the tender business—both internally and consciously—because those prices have been very low. And because of that, you will see a major factor (has been) that our material consumption has gone down considerably. So, material costs have gone down because the product mix has changed, and because the product mix has changed, the profitability is higher.
What about exports to emerging markets such as Russia?
We are targeting this whole year (to 31 March) for an export exceeding Rs3,000 crore. For the six months figure, we have already reached Rs1,440 crore. This is something which is already 8% (growth). At the beginning of the year, we had mentioned that the (export) growth would be in the region of about 10% for the year.
Also Read Cipla sales growth slows, but net profit close to expectations
Any problems on domestic growth?
Again, it all depends on product mix. And again, we are not supplying to the big government tenders on anti-AIDS drugs, we are not winning the tenders. And because of that, the anti-AIDS drugs sales in the private market have fallen considerably because the government is giving anti-AIDS drugs free to the public within India. So, we had a very large private market for anti-AIDS drugs and that has gone down considerably because of the government’s free distribution of anti-AIDS drugs.
Will you not participate in the tenders if there is a price correction?
We will not participate at a loss. We are not a 100% charitable organization.
Has there been any foreign exchange gain in this quarter?
I can’t tell you offhand the forex gain in the quarter. There are no losses.
You had earlier said that there would be a biotech joint venture in China. What is the status of that?
By the end of 2011, our first biotech anti-cancer drugs should be in the market, in India and perhaps abroad as well. And these are some of the leading biotech drugs that are available internationally— Avastin and Herceptin. These are not covered under intellectual property. So we are free to manufacture and market them.
cnbctv18@livemint.com
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
