Sanofi India tumbles on price control announcement

Sanofi India fell 9.38% to Rs 2,927 at 14:52 IST on BSE as the Indian drug pricing authority capped the price at which the company can sell its key cardiac and anti-diabetes drugs.

Meanwhile, the BSE Sensex was down 13.54 points, or 0.05%, to 25,010.81.

On BSE, so far 2,281 shares were traded in the counter, compared with an average volume of 2,812 shares in the past one quarter.

The stock hit a high of Rs 3,141 and a low of Rs 2,910 so far during the day. The stock hit a record high of Rs 3,540 on 3 June 2014. The stock hit a 52-week low of Rs 2,280 on 5 September 2013.

The stock had outperformed the market over the past one month till 11 July 2014, rising 1.59% compared with 1.76% fall in the Sensex. The scrip had, however, underperformed the market in past one quarter, rising 8.32% as against Sensex's 10.59% rise.

The mid-cap company has an equity capital of Rs 23.03 crore. Face value per share is Rs 10.

The notice by the National Pharmaceutical Pricing Authority (NPPA), published on its website on Friday, 11 July 2014, has sought to control the prices of 50 drug formulations which are used to treat diabetes and cardiac disorders. The list includes key anti-diabetes molecules such as metformin Hcl, gliclazide, glimepiride, pioglitazone and sitagliptin.

Drugs such as amlodipine, valsartan and temisartan used to treat hypertension and associated cardiac problems have also been brought under the ambit of price control.

Media reports suggest that in the listed space, multinational drug maker Sanofi India is likely to be the worst hit by this move. The company's key brands such as Amaryl, Cetapin V and Clexane, which are priced at a substantial premium to others, have now been brought under price control.

A sharp fall in the prices of these drugs will hurt the company's profitability substantially. These brands account for over 30% of the company's domestic revenues, reports added.

Net profit of Sanofi India rose 16.44% to Rs 51.70 crore on 15.71% rise in net sales to Rs 419.90 crore in Q1 March 2014 over Q1 March 2013.

Sanofi, an integrated global healthcare leader, discovers, develops and distributes therapeutic solutions focused on patients' needs. Sanofi has core strengths in the field of healthcare with seven growth platforms: diabetes solutions, human vaccines, innovative drugs, consumer healthcare, emerging markets, animal health and the new Genzyme.

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