Looking to increase exports for price advantage: Cipla

Pharmaceutical major Cipla has reported a net profit of Rs 309 crore in the second quarter of FY12, a growth of 17.5% as compared to Rs 263 crore in the corresponding quarter of last fiscal. Out of this, the company earns 52% from exports and 48% from domestic sales.

Speaking to CNBC-TV18, chairman and managing director YK Hamied says that they intend to increase this ratio so as to avail the benefit of higher international prices. Below is an edited transcript of his interview with Elan Dutta. Also watch the accompanying video. Q: Growth seems to have been driven by formulations, so could you give us the breakup between the export and the domestic formulations? A: Domestic has increased by 12% over the previous year, the total revenues have increased by about 10% and the export turnover by 10%. So the overall picture has been pretty good. The total export is roughly balanced, about 52% is the export and 48% is domestic. Q: What is the contribution from antiretroviral drug (ARV) sales? A: The ARV is about 15-20% of the turnover and that is mainly to Africa. Q: You said export is looking good but what about domestic formulations? Last quarter they had been under pressure and did not really meet with industry average. Has that sort of stabilized this time, what's your guidance going forward on that one? A: Going forward, we would prefer that the ratio of exports increases to domestic. The export pricing is much higher than domestic. Domestic is very low, export is much higher particularly in the regulated markets of the US and Europe. Q: What is the contribution from technology income this quarter? A: Technology income is essentially like paying for R&D. It gets translated into a commercial business after the technology transfer is done. Cipla then manufactures products for international companies. So if the technology know-how comes down, the export of formulations and APIs goes up. So technology and know-how fees and the export formulations hand in hand. Q: How is the Indore SEZ scaled up because you had earlier said that it would add around 10% to sales in FY12? What are the realizations from that front? A: This quarter has been exceptionally good. We did a total of about Rs 150 crore in the quarter that has just ended, the second quarter of the year which has been exceptional and now slowly the accumulated losses of the past have been sort of written off. We can now look forward to Indore playing a much more positive role in Cipla