The year ended with March 2017 is not passed in favor of the pharma companies as manufacturers face a lot of burden during that year. Pharma companies encounter a number of problems like quality issues with US FDA, price cuts by governments in domestic and international markets, adverse exchange rates and competition that leads to having single digit sales and profit growth in their yearly profits.
Many companies invested good amounts in research and development but get limited success and market changes added burden on them. According to the reports, India’s top 100 pharma manufacturers improved their growth graph only by 8 per cent to Rs. 2,06,899 crore during 2016-17 from Rs. 1,91,602 crore last year.
Pharma share market investors faced loss due to poor financial performance, the BSE Healthcare index of 67 leading pharma companies has underperformed as compared to BSE Sensex. Companies like Ankur Drugs, Elder Pharma, Arvind Remedies, Amar Remedies, Jupiter Bio, Surya Pharma, Twilight Litaka, etc. are suspended from trading from stock exchanges from the last couple of years.
To maintain the present share price levels, a few new launches into the market with better dividend payouts. Investors’ sentiments got highly affected with the share market conditions.
Several Pharma manufacturers achieved good sales result like Sun Pharmaceutical Industries, at leading position with net sales of Rs. 30,264 crore as compared to Rs. 27,888 crore in the previous year. Lupin, Aurobindo Pharmaceuticals, Cipla and Dr. Reddy’s Laboratories (DRL) have also reported sales above Rs. 14,000 crores during 2016-17. Total 34 companies crossed Rs. 1,000 crore mark in sales and improved by 8.3 per cent to Rs. 1,85,754 crore during 2016-17 as compared to Rs. 1,71,568 crore in the previous year.
Many other factors like raw material cost including purchases and stock adjustments, increased by 7.3 per cent to Rs. 73,297 crore from Rs. 68,309 crore. Employees cost went up by 12.2 per cent and the other operating income increased by 9.6 per cent. Thus, the total expenditure of these companies increased by 8.2 percent.
The first quarter and second quarter will be completely impacted by the GST implementation and price cuts announced in the 2016-17.