The pharmaceutical industry is expected to continue with its good performance in the first quarter of 2008-09 with over 25 per cent growth in revenues and about 45 per cent rise in net profit riding on better sales in the domestic and export markets. The industry will gain from the the depreciation of rupee as well.
Sales of drug makers are likely to rise as companies have been to able to add specialty high value drugs, including generic cancer, heart disease drugs and other lifestyle medicines to their existing portfolio.
Profits will also be bolstered by consolidation of the acquisitions made in the previous year, contract manufacturing, growing exports to regulated markets, such as US and Europe, and a 14 per cent growth in domestic business.
The rupee fluctuation is another factor that is expected to boost bottom lines. A one per cent rupee depreciation results in 1.3 per cent upgrade in operating income, assuming exports comprise 50 per cent of total revenue, notes research firm Religare.
"During the quarter, the rupee depreciated about 7 per cent and this will help Indian generic companies to gain from overseas markets. The domestic business of Indian companies are expected to post 14 per cent growth," said Ranjit Kapadia, head (PCG research), Prabhudas Lilladher.
Dr Reddy's and Lupin are expected to gain from the launch of generic ramipril, indicated for the treatment of hypertension.
King Pharmaceutical's branded ramipril product, Altace, had sales of $920 million in 2007. Ranbaxy Laboratories, Glenmark, Zydus Cadila and Aurobindo are also expected to post higher sales with the launch of the generic version of topiramate (brand name Topamax), an anticonvulsant drug produced by Ortho-McNeil Neurologics, a division of Johnson & Johnson.
"Among the Indian large caps, barring Dr Reddy's Laboratories, the companies in the space are likely to post a double-digit sales growth, notable among them being Sun Pharmaceuticals, with upsides from launch of Pantaprazole in the US markets," Sarabjit Kaur Nagra, vice-president (research), Angel Broking, said.
The generic version of Wyeth's Protonix, the pantoprazole tablets that had sales of $2.3 billion in the US in 2007. Sun Pharma, which launched the product in the US this year, shares a 180-day marketing exclusivity with Teva for the drug.
Sun's revenues are expected to jump by 120 per cent with a 56 per cent growth in net profit during the quarter, Nagra said.
Religare estimates that acquisitions made by Indian companies in global markets during the last year will help post better results. The firm projects 31.4 per cent growth in sales for the major Indian pharmaceutical companies.