Reddys Boosts Pharma Sector

The pharmaceutical industry has outperformed the corporate sector during the quarter ended December 2001.

The industry posted a 29.4 per cent rise in sales and a hefty 54.6 per cent growth in net profits. This is against the corporate sector's 0.4 per cent decline in sales and 12.97 per cent drop in net profit.

Though the sales growth has been the highest in the last three quarters, the net profits increased by 86.28 per cent in July-September quarter.

Dr Reddy's Laboratories (DRL) with is first blockbuster, fluoxetine, provided the much-needed boost to the pharma industry. Dr Reddy's grew by over 100 per cent during the last three quarters, with a profit growth of over 277 per cent in the first nine months. Excluding the company from the sample, it becomes clear that the sector's growth rate in sales and profits declined to 23.02 per cent and 13.65 per cent respectively for the October-December 2001 quarter.

Dr Reddy's also outperformed big pharmaceutical players having yearly sales turnover of Rs 500 crore. The pharma majors have done well with sales and profits growth of 33.28 per cent and 59.58 per cent respectively, during the October-December quarter. Excluding DRL, it may be seen that their sales growth rate went down to 25.5 per cent and the rate of growth in net profits declined to 12.2 per cent.

The small pharma companies with quarterly sales turnover of less than Rs 25 crore managed to improve their performance compared with July-September 2001. Their sales were up 14.75 per cent in third quarter compared with a growth of 5.90 in the second quarter. The net profits of these companies rose by 21.99 per cent compared with 15.18 per cent in the second quarter.

The pharma stocks underperformed the markets between September 31, 2001, and January 29, 2002, with an appreciation of 11.4 per cent compared with the BSE Sensex, which moved up by 17.84 per cent.

However, Dr Reddy's moved up marginally by 6.4 per cent, while Glaxo (up 48.7 per cent), Glenmark (up 105.5 per cent) and Torrent Pharmaceuticals (up 52.5 per cent) to outperform the Sensex as well as the pharma sector.