MUMBAI, July 24 (Reuters) - India’s Piramal Healthcare Ltd (PIRA.BO) on Thursday said quarterly net profit rose by more than half aided by growth in its India-based contract drug making business and a rise in its domestic formulations business.
Consolidated net profit for April-June rose 57 percent to 681 million rupees, after providing for 208.2 million rupees in notional mark-to-market loss on outstanding foreign currency borrowings and 21.4 million rupees in realised forex losses.
Piramal, which provides custom drug manufacturing services to global drug firms from its units in India and the United Kingdom, saw its India-based business more than double during the quarter to 588.9 million rupees, the company said in a statement.
The company is in the process of transferring some of its manufacturing contracts from its UK units to India to help improve margins, as it is more cost effective to manufacture at its Indian units.
Piramal’s UK operations comprise the drug making unit it acquired from Pfizer (PFE.N) in 2006 and another it bought from Avecia in 2005.
Domestic formulation sales rose more than 20 percent to 3.5 billion rupees, compared to a year ago, when sales were affected by a shortage of codeine, a narcotic substance and a key input in one of Piramal’s top drugs, Phensedyl, used as a cough treatment.
The rise in formulations business and custom manufacturing in India resulted in its operating margins improving to 16.9 percent from 13.8 percent in the year-ago quarter, Chairman Ajay Piramal said at a press conference.
Piramal is aggressively focusing on contract research and manufacturing services as large global drug firms, reeling under rising drug development and manufacturing costs, are outsourcing a large part of these activities to low-cost manufacturers.
The company’s shares ended 0.7 percent lower at 294.55 rupees in a weak Mumbai market. (Reporting by Bharghavi Nagaraju; editing by Sunil Nair)