Indian Generics Makers Hit By Taxes, US Expenses

Leading Indian drugmakers Ranbaxy, Cipla, Sun Pharma, Wockhardt and Nicholas Piramal have blamed worsening first-quarter sales on local taxes, marketing expenses in the US and the country's new patent law. Combined profits at the five companies were 36.3% lower year-on-year, at roughly INR2.94bn (US$67.45mn), on a 13.5% fall in sales to INR19.9bn (US$459.18mn).

Generics maker Nicholas Piramal attributed part of its sales decline to confusion over changes to India's value-added tax, which led wholesalers to postpone large orders. Ranbaxy, meanwhile, noted that its results had been affected by the withdrawal of stocks of quinapril, following a US legal challenge by Pfizer on a patent for its antihypertensive Accupril. In the period, only Cipla reported a profit rise.

The investment costs borne by Indian drugmakers on R&D has continued to affect results; the accounting item that includes R&D expenditure rose 16% for the five drugmakers in the first quarter. In the wake of the country's new patent law, it can be estimated that higher drug development costs and a greater drive to win overseas registrations — especially in the US — will continue to affect financial performance.