Cipla found itself at the receiving end, slipping 2.5% to Rs 755, as institutions, both Indian and foreign, were pressing sales on the counter.

As a result, the scrip was trading near the day's low of Rs 754. The scrip has witnessed a sustained fall on the bourses in recent months. From a recent high of Rs 943.10 on 9 January 2003, the scrip has lost 20% in less than two months to the current Rs 755. The stock has plunged to its lowest level in more than two years.

As per market talk, foreign brokerage Credit Lyonnais Securities is pressing sales on the counter. Though, it has not been discovered who the brokerage is selling on behalf. Leading local institutional investors like UTI are also pressing sales in Cipla it is believed.

For Cipla, the Union Budget has been none-too-forthcoming, even though the healthcare segment was given a big push by way of reduction in customs duty on specified life saving drugs and health insurance measures initiated for the poor. Also, with a view to encourage private hospitals to either establish new facilities or to expand existing medical facilities, the benefit of section 10 (23 G) of the Income Tax Act has been extended to such financial institutions to provide long-term capital to private hospitals with 100 beds or more. But these do not hold direct advantages for drug makers like Cipla.

Cipla's stock trades at a PE multiple of 16.9 based on its nine month (April-December 2002) annualised EPS of Rs 44.60.

Cipla was hurt by a US court ruling, last year, as its American alliance partner Andrx Pharmaceutical's version of blockbuster ulcer drug, Prilosec, was deemed patent infringing. Andrx has a tie-up with Cipla for supplying Omeprazole.

Exports of its anti-asthma inhaler, then, were seen as a key trigger for the stock. However, exports of the inhaler have already been much delayed. Italy's Chiesi Farmaceutici seems to have stolen a march on the company, as it recently received an approval for selling budesonide-based inhalers that use ozone-friendly HFA propellants, in Germany. Budesonide is an anti-asthma drug.

In December 2002, the Drug Controller General of India directed the state drug authority of Silvassa to suspend the licence for the manufacture of Montair Plus. Montair Plus is a fixed dose combination of montelukast and bambutarol, which was manufactured by Okassa Pharma and marketed by Cipla. The suspension was necessitated as Okassa Pharma had not taken necessary approvals from the Drug Controller General of India for manufacturing and marketing the product. The DCGI has also advised Cipla to withdraw all the stock of the product from the market.

For Q3 ended 31 December 2002, Cipla posted disappointing results. It recorded a mere 6% rise in net profit to Rs 66.46 crore compared to Rs 62.65 crore in the corresponding period of the previous year. Net sales increased by 5% to Rs 387 crore (Rs 3.87 billion) from Rs 366.91 crore (Rs 3.66 billion).

Earlier, Cipla entered into a strategic alliance with California-based Watson Pharmaceuticals Inc., to develop, manufacture and market 10 generic pharmaceutical products, many of which are currently under development. Under the agreement, Watson will have exclusive US marketing rights to all the developed products and will also own the regulatory filings. On approval of the products, Cipla will manufacture and supply products to Watson.

BSE code: 500087

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