Secondary sales growing above industry average: Unichem

December quarter net profit for the drugmaker stood at Rs 32 crore versus Rs 36.21 crore in the September quarter and Rs 30.3 crore in the year-ago quarter. Quarterly revenues stood at Rs 265 crore, versus Rs 266.19 crore in the previous quarter and Rs 231 crore year-on-year.

The company's net profit was boosted by an exceptional income from sale of SEZ land to Myland,  Parikh said.

Talking about the impact of the new drug pricing policy, under which the government has put selected drugs under a fixed price regime, he said it could shave 2.5 percent off the firm's revenues. "The impact is expected to be resolved over the next few quarters."

He said new launches would add to the company's growth in the coming quarters.

Below is the transcript of the interview.

Q: It has been a bit of a subdued quarter this time but can you just take us through how the geographies did for Unichem Laboratories? Your total sales were up 14 percent for the quarter.

A: In fact, after the first two quarters, the growth rates have jumped up and what the people were expecting that we have been able to come to a double digit growth not only at the company level at 14 percent, which was driven by almost India formulation growth of 9 percent.

While on India formulation, I would like to say that even the secondary sales report for December has been out and it is auguring well for the industry, which had a couple of months of negative growth and it has come into positive but more important for Unichem.

What we have seen is that again the quarterly growth of the industry of less than 5 percent around 4.9 percent Unichem has been able to clock 12.4 percent on the secondary sales. So whatever action we have taken on the past has been helping.

On the active pharmaceutical ingredients (API) front, the growth has been phenomenal if you compare year-on-year, but even on a year-to-date level it has been more than 8 percent not withstanding our capacity constraints and the captive requirements.

In the international formulation though the contractual business has been subdued in the first six months, there has been a slight traction but the US and the other markets have shown a very good growth and without any new launches if you see - US in dollar terms for the nine months now is well above 35 percent growth.

The UK subsidiary niche also has shown a good growth in Great Britain Pound (GBP) term of about 17 percent now for the nine months because of good quarter in three months.

The other thing is there was an exceptional item, whatever we had earlier been talking about the sell of their SEZ unit at Mylan was completed during the quarter and the profits of that has been reflected as an exceptional item.

The position because of that has significantly shown a good growth with all the three businesses showing a good growth.

Q: Do you think this 14 percent sales growth and this 12.4 percent secondary sales growth that can continue or would you see that number coming down a bit as you move forward?

A: As we have been seeing over the past few quarters, the traction has been on the positive on the upward sign and the hope over the next few quarters is it should continue.

Quarter-on-quarter (Q-o-Q) things can go up and down but overall we feel there is a good sign and including the subsidiaries whereas I told you, the US we have not been able to launch any new product with no new approvals having come through but amongst the past approvals, I am able to launch couple of products. So that should continue for the next year giving a higher growth.

The India formulation also based on whatever initiative we have taken with the productivity improvement and the market improving, there is a good chance that we can end up this kind of a performance, we can repeat at least for a year or two coming in the future.

Q: The domestic formulation business, what was the impact of the new pricing policy, do you think that is over? Also, what has driven the US business and what is the guidance on the same?

A: As far as the India formulation is concerned, the impact is roughly coming to around less than 2.5 percent around 2.2-2.3 percent and that has continued in the quarter. This was further slightly subdued because of the issues with the industries having with the trade, which was not fully sorted out in the quarter.

There has been some leeway, which has come there and the issue has been reasonably resolved though I would not say fully resolved but it is expected to get resolved over the next one-two quarters when we start seeing the benefits.

By the time one year period also of the policy implementation would have gone through having been coming from June or July, so that would further add, we hope based on the wholesale price index (WPI) that increased in prices which has automatically supposed to be taken which the government will allow and that could further help us get some traction out of it.

As far as your second question was concerned about the US, there has been a good sales growth organically for the existing products, which we had launched and there is a good buoyancy about the product which we have.

This growth, though the base effect will start catching up we have another two-three products, which we have not launched out of the abbreviated new drug application (ANDA) approvals and which are in the process of being launched. So coming quarter as well as the quarter after that these products are expected to be launched and they will help us to see and continue this growth.

In the meantime, we expect more approvals to come through because out of the 28 ANDAs filed, we are having only 16 approvals and we hope another couple of approvals will start coming through. So we will be in a position to launch those products too.