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Pricing pressure in Europe drags Biocon's net profit

Special Correspondent

Insulin and branded formulations are building bio-pharma business of the company

BANGALORE: Pricing pressure in the European markets has pulled down the net profit of Biocon to Rs. 39 crore in the April-June quarter of this fiscal, a decline of 7 per cent from the previous quarter and 20 per cent from the first quarter of last year.

The average price of its mainstay Statins fell by about 35-40 per cent in the Eurpoean markets.

The company clocked consolidated sales of Rs. 174 crore in the first quarter that matched the revenues of the previous quarter and the first quarter of the previous year. Higher price realisation also helped the company maintains the 30 per cent margin of the previous quarter and 33 per cent margin of the first quarter of 2005.

Despite a `flatish' growth in the first quarter, Biocon CMD Kiram Mazumdar Shaw said the overall financial performance was in line with the company's plan.

"The pricing pressure in the European markets have affected our percentage margins this quarter. The decline in net profit is due to a higher tax charge in the current quarter and a significant portion of export sales being routed through the domestic channels. However, the outlook for the year ahead remains positive,'' Ms Shaw told reporters here.

Insulin, immuno-suppressants and branded formulations are building the bio-pharmaceuticals business of the company in a more robust manner and reducing the dependence on Statins. New capacities that would come on stream in the latter half of this fiscal will also contribute to the overall growth, she said.

According to Ms Shaw, the progress made in discovery-led research programmes in diabetes and oncology is expected to develop into large global opportunities in the next 2-3 years. Contract research services from Biocon subsidiaries Syngene and Clinigene recorded a 35 per cent growth over the first quarter of 2005. Clinigene's strategic tie-up with U.S.-based SCIREX would generate additional business this fiscal, she added.

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