De-stocking by distributors led to 14 per cent drop in sales and 64 per cent decline in net profit for Glaxo SmithKline Pharmaceuticals in first quarter of FY18.
The drug maker saw its revenue decline to Rs 607 crore as against Rs 705 crore in same period last year as distributors cut down inventory in June ahead of GST implementation. Net profit for the quarter was Rs 26 crore as against Rs 72 crore in same period last year.
On an industry wide basis stockists were carrying 17 days inventory in June end which was 23 days lower than May end stock.
"Our company's revenue and profit before tax performance have been temporarily adversely impacted by the introduction of GST. The pharmaceutical trade channels de-stocked impacting the overall performance of the industry," said A. Vaidheesh, managing director, GlaxoSmithKline Pharmaceuticals.
Vaidheesh said the company's primary sales reduced by around Rs 130 crore or equivalent to two weeks of sales.
"We expect the trade channels to normalise in future months. Our prescription uptake in the market remains strong where we maintained patient supply for the GST transition. The IMS TSA data for the six month period to June 2017 highlights GSK's fundamentals in prescription fulfilment remain intact growing at 7 per cent in value terms ahead of a market growing at 6 per cent," he added.