The Hindu Business Line : ‘Raw material shortage key risk for pharma cos’

Mumbai, July 24 Shortage of raw materials and rising price of input material from China are the key risk factors facing the pharma industry, said Mr Ajay Piramal, Chairman of Piramal Healthcare.

The industry has asked the Centre to be allowed to raise prices, given the rising input costs, but to no avail, he added. Drug companies will now look to alternate sourcing destinations, like the local market, he said, speaking to Business Line after his company’s board meet on Thursday.

Q1 results

A 20 per cent growth in the domestic business and a doubling of the custom manufacturing business that accounts for about 45 per cent of the company’s revenues buoyed the company’s financial performance for the three months ended June, 2008, Mr Piramal said. In the domestic segment, revenues came in from the sale of cardiac, diabetes and respiratory medicines. The customs manufacturing business, where Piramal Healthcare makes products for overseas clients, grew by 14.2 per cent to Rs 230 crore in the period under review.

The company’s consolidated net profit was after providing for Rs 21 crore towards mark-to-market unrealised loss on outstanding foreign currency borrowing, and realised forex loss of Rs 2 crore, the company said. This was unlikely to recur, he added.

The company was still looking for business in the UK for its assets there, he said, though growth is slack in the market. Some of the production is being moved out of the plants there to India, he said. Piramal Healthcare, or the erstwhile Nicholas Piramal, had acquired Pfizer’s Morepeth facilty in the UK in Morpeth drug unit in 2006 and Avecia’s unit in 2005.

Piramal Healthcare shares were marginally up at Rs 297.65 on the BSE.

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