The domestic pharmaceutical industry has reported weak numbers for the October-December quarter.
Analysts attribute this to the global slowdown, foreign exchange losses and the US authorities not giving permission to sell drugs. Only a few beat analysts’ expectations, with most reporting losses and lower profits.
Ranbaxy Laboratories, Sun Pharmaceutical Industries (India), Glenmark Pharma, Orchid Chemicals, Piramal Healthcare were some of the big players reporting disappointing numbers. Cipla, Dr Reddy’s Laboratories, Torrent Pharmaceuticals and Cadila Healthcare were among the few to beat forecasts.
Ranbaxy, the country’s No. 1 pharmaceutical company, suffered a loss of Rs 679.8 crore for the fourth quarter ended December 31, 2008, against a net profit of Rs 187.7 crore in the corresponding period a year ago.
This was on account of a foreign exchange loss of Rs 192 crore on loans and a one-time charge of Rs 784 crore for adopting a new accounting system.
Sun Pharma failed to meet street expectations despite an improvement in its bottom line. According to an analyst at Sharekhan, the company’s revenues grew only 14 per cent because of the lower sales of pantoprazole used in the treatment of oesophagus ailments.
Moreover, sales came under pressure after the US Food and Drug Administration withheld the pending drug applications of Caraco, a subsidiary.In its report on the industry, Sharekhan said the revenue growth of drug companies slowed down to 13 per cent year-on-year during the third quarter, sharply lower than growth rates of more than 20 per cent in the previous quarters.
According to the brokerage house, the industry is facing numerous hurdles. In addition to the slowdown in approvals from the US, firms are being forced to sell unsold stocks at lower prices and are plagued by delayed payments in the emerging markets.
Revenues have also declined in contract research, because of funding constraints, and for third-party manufacturers.
A senior official from a leading drug company, who did not wish to be identified, said the huge number of drugs applications was impeding clearance in the US.“Even in the domestic markets, figures show that there is some slowdown in the sale of prescription drugs. We remain cautious,” he said.
Experts now forecast that the industry will grow in single digits this year, lower than the 12 per cent average growth rate it has been clocking in the past few years.