Indian pharmas gain on N America boost: Q4 earnings review

The performance of big participants in the Indian healthcare business has been as varied as the drugs they manufacture. But CNBC-TV18's Archana Shukla reports that the pharma sector's fortunes in the January-March quarter were dictated by the US market.

North America is the largest pharmaceutical market for the drug firms of the world. And the importance of this market has been highlighted by the quarterly numbers posted by Indian pharmaceutical giants.
For Lupin, revenues from the US market grew a staggering 33 percent  which pushed overall net sales up 35 percent, and led to profits more-than-doubling to Rs 408 crore. And though its Indian business grew 24 percent in FY13, the big boost over the year still came from the US where a 47-percent growth in revenue was driven by the launch of 10 new products.
The stock surged to a 52-week high of over Rs 735 per share especially after the company said the performance was sustainable. Kamal Sharma, MD, Lupin says, "Cumulatively, costs came down by about 3 percent. I hope we will be able to maintain this level and improve further. In this particular quarter and year, our EBITDA margin, which was around 21 percent last year, is over 24 percent this year. The 6-percent improvement on our base of Rs 9,600-crore has resulted in a substantial boost in performance." Glenmark has a similar tale to tell.  A 39-percent surge in sales in the US helped. It reported a 25-percent growth in FY13 sales and a 33.5 -percent jump in net profits.
Leading the charge for Glenmark are its oral contraceptives and dermatology products which found a firm footing in the US markets. And with at least four new launches on the anvil for FY14, the company is confident it will maintain a 20-percent revenue growth. That's counting a sluggish Indian market and a longer approval process in the US.
Glenn Saldanha, MD and CEO, Glenmark Pharma adds, "The slump in the Indian pharmaceutical market which has made it difficult to post growth over 20 percent. We are not sure about the kind of filings and approvals in the current year in the US because there is a huge slowdown in FDA approval process."
But it's this very same US market that has spelt trouble for Ranbaxy. Sales fell 15 percent in the region as it no longer had the cushion of an exclusivity period associated with some of its blockbuster drugs like cholesterol-lowering Atorvastatin.
And so the quarterly performance was disappointing with consolidated net profit down 90 percent and net sales down 34 percent. Arun Sawhney CEO and MD, Ranbaxy, says, "Developed market sales were impacted by the absence of exlusivities as compared to the corresponding quarter last year. Primary sales in India grew 11 percent during the quarter. US-based business sales excluding first-to-file grew over 40 percent."
But Ranbaxy is not losing hope. It is betting on a slew of recently launched drugs like dermatology-drug Absorica and anti-depressant Pristiq to keep its US business growing. Ranbaxy also says it may get to fall back on the 180-day exclusivity on hypertension drug Diovan, for which FDA approval is pending.