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| Glaxo Pharma: High on launches | |
| Shobhana Subramanian / Mumbai August 4, 2009, 0:41 IST | |
Glaxo Pharma’s net sales were up 10 per cent in the June 2009 quarter to Rs 457 crore with recent launches such as Arixtra, Tykerb and Rotarix doing well.
 However, it was somewhat disappointing that gross sales increased by just 6.6 per cent given that the growth in the market was closer to 10 per cent. Besides, an increase in expenses on marketing and employees resulted in the operating profit margin (OPM) coming off by about 60 basis points year-on-year to 36.7 per cent, leaving earnings before interest tax and depreciation (EBITDA) higher by just 8 per cent to Rs 167.4 crore. If the profit after tax grew by a higher 15 per cent, it was because depreciation stayed flat while other income rose sharply, cushioning the higher tax rate.
Glaxo has been rolling out a slew of products — it is hoping to launch the Cervarix vaccine this year — and so promotion spends are unlikely to ease in the near term. With sales momentum unlikely to pick up sharply, operating margins are likely to remain at current levels. With close to Rs 1,600 crore in cash, Glaxo’s profits in calendar year 2009 are expected to grow about 20 per cent over the 448.4 crore posted in 2008.
Industry watchers believe the MNC should gain from a strong IPR regime in the longer term. The stock has rallied smartly over the past couple of months and at Rs1,385 trades closer to 22 times estimated calendar 2009 earnings, with near-term upsides priced in.
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