Top pharma companies in trouble_Pharmabiz update
That the Indian
pharmaceutical industry is going through a difficult period is an undisputed
fact, thanks mainly to the unprecedented quality issues being raised by the US
FDA. For the last couple of years, the Indian pharmaceutical companies,
especially those which have exposure to regulated markets like US and Europe,
have been staring at a scenario where their profits have been eroding from
quarter to quarter.
The gravity of
the situation can be gauged from a Pharmabiz
study of 30 major Indian pharmaceutical companies. The
study has revealed that the net profit of 30 Indian pharma giants has declined
by a whopping 38% in the first nine months ended December, 2017. As per the
study, 30 major pharmaceutical companies in India have posted dismal financial
performance during the first nine months ended December 2017 and their net
profit declined sharply by 37.9 per cent to Rs. 12,313 crore from Rs. 19,833
crore in the corresponding period of last year due to US FDA actions against
leading companies, challenging US generic pricing environment, price cuts and
stiff competition from competitors. Among the 30 companies, the net profit of
17 companies declined during the nine months, mainly due to US FDA actions in
respect of cGMP and price erosion in the US market. Sun Pharma,
Lupin, Dr Reddy's, Glenmark, Alkem, Torrent, Biocon, Strides Shasun and Vivimed
Labs suffered heavy setback and their net profit declined sharply by over 25
per cent. Further, Divi's Laboratories and J B Chemicals registered de-growth
in profit by 23.4 per cent and 19 per cent respectively. Ajanta Pharma, Pfizer,
Granules, Aarti Drugs and FDC also failed to improve profits. Wockhardt's net
loss went up to Rs. 454 crore from Rs. 21 crore in the corresponding period of
last year. Among the remaining 13 companies, Cipla, Jubilant Life
Sciences, Ipca, GSK and Hikal posted double digit growth in net profits. Other
companies like Aurobindo, Cadila Healthare, Alembic, Laurus Labs, Nectar
Lifesciences, Dishman Carbogen and Syngene posted small growth of single digit
during the first nine months.
However, the net sales of these 30 companies remained almost stagnant at Rs 1,27,484 crore as against Rs 1,28,475 crore and EBIDTA of 30 companies declined by 16.5 per cent to Rs. 28,397 crore from Rs. 34,026 crore in the same period of last year. The net sales of 13 major companies declined during the first nine months ended December 2017 which included Sun Pharma, Lupin, Torrent Pharma, Biocon, Wockhardt, Divi's, Ipca, Alembic, GSK, Pfizer, Natco, Aarti Drugs and Vivimed. Five companies Cadila Healthcare, Jubilant Life, Granules, Syngene and Hikal registered double digit growth in sales. Aurobindo Pharma, Cipla, Dr Reddy's, Glenmark Pharma, Alkem Laboratories, Strides Shasun, Ajanta Pharma, Laurus Labs, Nectar Life, Dishman Carbogen, J B Chemicals and FDC posted only single digit growth in net sales during this period. What is more worrisome is a possible scenario that, based on the first nine months financial performance of these leading 30 companies, there is no hope for any growth in net sales and net profit for the full financial year 2017-18. The industry now should do some serious soul-searching exercise to reverse the trend in the next financial year. It is time to sit back and take stock.
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