The Hindu Business Line : `We're tiding over pricing pressure'

THE CMD of Biocon, Ms Kiran Mazumdar-Shaw believes that the company's performance in Q3 has been very good. She admits to facing pricing pressure, but says that the product mix is getting better.

Ms Mazumdar Shaw is also expecting premium pricing for a statin's launch in the US. Excerpts from CNBC-TV18's exclusive interview with Ms Mazumdar-Shaw:

Profits are under pressure. How long do you expect the pricing pressure on statins to continue?

I think the worst is over in terms of pricing pressure on statin because whatever had to happen has already impacted previous quarters. I would just like to comment on this quarter's results in comparison to last quarter's results, which really do not quite reflect the strength of this year's performance because Q3 last fiscal actually had a component of Rs 6.5 crore. If you take that out of the equation, I think we had a very good quarter.

From Q3 to Q2, your operating margins are still down about 300 basis points. Where is that pressure coming from?

There is pricing pressure but we have fairly sustained the kind of performance that we had last quarter with this quarter. The product mix is getting better. Our dependence on statins is lesser than what it was at the start of this quarter. And as we go forward, you will start seeing that we are going to get other growth drivers contributing to the topline and bottomline.

Can we expect margins to improve this quarter or is it going to take a couple of more quarters for that to happen?

I think margins will be sustained. We would see dramatically improved margins in the next few quarters. In the years ahead, I would certainly see these margins improving purely from the kind of opportunities we have in the bio-initiatives for the biosimilars.

Our research services and business are doing extremely well and they will continue to drive growth and margins in a very positive sense. I also believe that some of our forays into oncology and diabetes franchises that we have got into will also start delivering results over the next few years. We just started our oncology franchise. This is going to be a very important aspect for us.

What about your statins program in the US? What is the timetable?

The statins market in the US is going to open up for us this calendar year and I would see some good premium pricing at least for a short time and that's something that will show up in a few quarters down the way. But I must caution you that we are familiar with the generic sale.

We have faced competition in Europe and having withstood it very well. We are very committed to the statin space.