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Several pharma cos with sharp drop in sales & profits in 5 years dampen investor's mood
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Sanjay Pingle, Mumbai
July 20 , 2015
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Investments in shares of pharmaceutical companies is considered to be
relatively safe as compared to other industry segments in the country,
but in recent years that scenario has changed dramatically. Scrips of
quite a few pharma companies are seriously impacting investor's
confidence with below par share prices and uncertain future.
During
last five years several leading pharma companies went through a
difficult phase due to forex losses, interest burden, government pricing
policies, quality problems, R&D investments and low returns,
stringent approvals system in regulated markets and competition.
Investors lost heavily in few companies like Surya Pharmaceutical, Ankur
Drugs and Pharmaceuticals, Sharon Bio-Medicine, Venus Remedies,
Twilight Litaka Pharma, Sterling Biotech, Plethico Pharma, Parabolic
Drugs, etc. on account of poor financial performance.
The new
S&P BSE Sensex improved by 10.4 per cent during last one year to
28,198.29 on July 16, 2015 from 25,549.72 points year ago. The new
S&P BSE Healthcare outperformed Sensex and improved by over 50 per
cent to 17,739.03 points on July 16, 2015 from 11,781.51 points year
ago. Despite strong growth in healthcare index, a good number of pharma
shares failed to show any improvement dampening the investor's mood.
The
growth in sales and profits of Pharmabiz leading 100 listed
pharmaceutical companies in India was in single digit during 2014-15 on
account of poor financial performance by few pharma entities. The stock
authorities have suspended some pharma companies from trading as they
failed to fulfill norms prescribed by SEBI and stock exchanges or
financial hurdles. Heavy losses and lower sales impacted share price
movements as well as market capitalisation of pharma companies.
Surya Pharmaceutical with net sales of Rs.1,599
crore in the year ended March 2011 has been suspended from trading on
BSE due to Penal reasons. The company's sales dropped to Rs.12.64
crore in March 2014 and thereafter the company did not declare
financial results. Currently, the share price of Re. 1 per share is
quoted around Rs.0.18. Ankur Drugs and Pharmaceuticals scrip was suspended from trading with last price of Rs.3.93 for a face value of Rs.10 share each. Ankur's sales for the nine months period ended December 2012 declined to Rs.90 crore from Rs.824
crore in the full year ended March 2011 and incurred heavy loss. Now
the company management received permission to wind up the operations.
Maharashtra based Sharon Bio-Medicine with a sales of Rs.1,325 crore during June 2014, has received similar setback and its sales declined to Rs.692 crore for the nine months ended March 2015 and it incurred a net loss of Rs.134 crore. The company's Rs.2 share is quoted at Rs.17-18 on the BSE. Twilight Litaka Pharma with a Rs.2 per share suspended from BSE, is quoted at Rs.2.88. The company's net sales declined to Rs.31.50 crore from Rs.657 crore in 2010-11. As against the equity capital of Rs.12.39 crore its market capitalisation worked out to Rs.7.14 crore. Sterling Biotech also lost heavily during last five years and its sales declined to Rs.667 crore in 2014-15 from Rs.1,616 crore in the 2010-11.
There
are several companies like above in pharma segment and investors have
lost hard earned savings. Plethico Pharmaceutical's net sales for the
year ended March 2014 reached at Rs.2,000
crore. However, the company has not declared so far its financial
results for the year ended March 2015 and its sales for nine months
ended December 2014 declined sharply to Rs.644 crore with net loss of Rs.12 crore. Its poor financial performance adversely impacted share price movement on BSE which declined to Rs.29.50.
Similarly,
Ind-Swift Ltd, Ind-Swift Laboratories, Panacea Biotec, Markson Pharma,
Lyka Laboratories, Smruthi Organics, Parenteral Drugs (India), Avon
Organics, Kilitch Drugs, Jupiter Bioscience, Wanbury, Venus
Laboratories, Parabolic Drug, Syncom Healthcare, Syncom Formulations,
etc also lost heavily on sales and profit front during last five years.
These shares failed to offer better returns to investors dampening the
overall mood.
Large pharmaceutical companies having net sales above Rs.1,000
crore, like Wockhardt, Jubilant Life Sciences, Ipca Laboratories, Elder
Pharmaceuticals and Orchid Chemical and Pharmaceuticals suffered heavy
setbacks and put significant pressure on overall working of Indian
pharma segment.
Wockhardt a Rs.4,400
crore Mumbai based pharma giant, has shaken by the US FDA's actions and
its net profit declined sharply by 51.8 per cent to Rs.405 crore in 2014-15. Jubilant Life Sciences went into loss of Rs.58 crore as compared to a net profit of Rs.109 crore and that of Ipca Laboratories' net profit declined sharply by 47 per cent to Rs.254 crore from Rs.478 crore. Elder Pharmaceuticals' net profit declined almost by 97 per cent to Rs.3 crore from Rs.82 crore. Orchid Chemical suffered heavy setback though it managed to reduce its net loss to Rs.198 crore from Rs.558 crore. Thus, the poor working put pressure on share price movement of these scrips.
Change in net sales : 2014-15 & 2010-11
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