Biotech major Biocon is facing higher salary costs because of an increase in poaching of its employees from IT companies.

It expects this trend to escalate further this year as well.

“We cannot be immune to this kind of market dynamics. So, we certainly expect to see increased salary costs for rest of the year and while I hope that we can start seeing some containment, going forward, we certainly do not see any of that right now,” Ms Kiran Mazumdar-Shaw, Chairman and Managing Director, said.

Sharing her concern with analysts at a recent conference, she is learnt to have indicated that her employees are not only being poached by other companies but also by the IT industry.

In the previous financial year (2010-11), the standalone staff costs were up 46 per cent and the consolidated number went up 27 per cent.

“I think that is the way the trend is. Further, this is also about adding people. So, when you start growing your businesses and start trying to scale up some of your businesses, you are going to add a large number of people, so, certainly this is the ballpark you should look at,” Ms Mazumdar-Shaw pointed out.

R&D spend

The biotech major, which is planning to roll out large portfolio of drugs both in domestic and international market, is likely to increase its R&D spend.

While the R&D spend for the first quarter is about Rs 20 crore, for the entire fiscal it will be between 8 per cent and 10 per cent of revenues while the capex spend will be around Rs 150 crore.

The development costs for insulins and various other partnered programmes will be a part of this cost.

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