Indian pharma net profits “to soar 50%+ this year”
The jump in the firms’ net income will be due to lower foreign exchange losses and other adjustments, reports India’s Pharmabiz newspaper, which also expects the firms’ earnings before interest, depreciation, taxation and adjustments (EBIDTA) to rise 13%-15% during fiscal 2009-10. This “better financial position will allow managements to declare higher returns to their investors in the form of dividends,” says Pharmabiz.
The newspaper bases its forecasts on results for the nine month-period ending last December for 25 of the country’s leading drugmakers, which together saw net sales grow just under 12% during the period. While majors such as Dr Reddy’s Laboratories and Cipla reported only modest growth, at 8.7% and 8.1% respectively, Biocon’s net sales rose 49.8% and Surya Pharmaceutical’s were up 47.9%. Also doing well were Ind-Swift (+33.4%), Cadila Healthcare (+27.7%), Nectar Lifesciences (+26.9%), Lupin (+26.5%) and Ipca Labs (+24.4%).
After adjustments for foreign exchange losses or gains, net profits for the 25 increased 30.8% overall during the nine months, with particularly fast growth reported for Aurobindo, Biocon, Ipca Labs, Alembic, Cipla, Cadila and Piramal, the analysis finds. However, net profits at a number of majors – including Dr Reddy’s, Sun, Glenmark, Divi’s Laboratories and Elder Pharma - declined sharply in the period.
Profits after interest and depreciation but before taxation and adjustments increased 12.8% overall for the 25 firms, adds Pharmabiz, which notes that, because of different reporting dates, the analysis does not assess the prospects of a number of drug majors including Ranbaxy, Wockhardt, GlaxoSmithKline, Aventis, Pfizer, Abbott India, Stride Arcolab and Sterling Biotech.
Meantime, Fitch Ratings has this week described the outlook for the Indian pharmaceutical sector this year as “stable.” The nation’s export-focused drugmakers will benefit from growing global acceptance of generic medicines, coupled with outsourcing of manufacturing by multinationals to low-cost locations, while domestic-focused firms will continue to benefit from steady demand growth, it says.
In a new Special Report, the ratings agency says that this year it expects Indian drug exporters to experience shorter cash cycles for their working capital than has recently been the case, plus improved cash flows in the near-term period.
Moreover, the Economic Times of India reports that drugmakers in India are expecting to award their employees salary increases of 10%-20% this year and most are planning to hire staff, given that domestic pharmaceutical sales are expected to continue rising around the 17.6% level seen last year.
This April, employees at GlaxoSmithKline India will see their salaries rise 12.5% on average, and potentially as high as 17% plus the possibility of a further 5% increase in October, while Dr Reddy’s is looking at 10%-12% increases and Mannkind Pharma plans to repeat the 15% average hike it awarded its staff last year, the newspaper reports.
By Lynne Taylor
PharmaTimes
http://www.pharmatimes.com/WorldNews/article.aspx?id=17378
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