The Hindu Business Line : Dabur Pharma net rises 23% but sales dip

New Delhi, Oct. 26 Oncology specialist Dabur Pharma has reported a 23 per cent jump in standalone net profits of Rs 8.5 crore for the second quarter, despite a nearly 31 per cent drop in sales.

The company claims this is a result of a better product mix and cost control, including a 45% reduction in R&D expenditure this quarter compared to the corresponding quarter last year. “This is also due to a better management of material costs, since we sold off our non-oncology business early this year,” said Mr Vij Ajay, CEO, Dabur Pharma.

The Rs 159-crore sell-off of its non-oncology business to Alembic in February was one of the largest ever in the domestic pharma business. The transaction, which turned Dabur Pharma into a specialised company, is also reflected in a 31 per cent drop in the net sales figure which for this quarter stood at Rs 62 crore.

Rupee hit

Mr Vij said sales, 70 per cent of which is accounted for by international sales, had taken about a 10 per cent hit due to the rupee appreciation. During the first half of the year the company has had sales in Europe and the US to the tune of about Rs 16 crore. However, this is not reflected in the standalone earnings reported on Friday.

Dabur Pharma continues to look for an acquisition target in Europe, Japan and China but has yet to find a sales and distribution company, preferably a specialist in oncology.

Generic market

The global oncology market currently estimated at $20-25 billion is expected to reach $50-60 billion in the next 7-10 years. However, it is the generic opportunity of $8-12 billion arising from patents expiring over the next 5-7 years that has Dabur Pharma excited.