Marksans Pharma (MARKSANS) Q4 06/07 earnings summary

Executive summary

• FY06-07 was an investment year focused on R&D, capacity and regulated-market readiness; API price erosion and Chinese competition drove a sharp earnings decline.

• Revenue fell 17% to ₹2,503.9m, while net profit after tax declined to ₹69.3m from ₹228.9m.

Financial highlights

• Standalone sales were ₹2,398.9m vs ₹2,974.1m; other income rose to ₹105.0m from ₹47.1m.

• Standalone PBT was ₹95.6m vs ₹314.1m; net profit after tax was ₹69.3m vs ₹228.9m.

• Consolidated sales were ₹2,419.9m vs ₹2,974.1m; consolidated net profit after tax was ₹66.9m.

• Cost of sales rose to 81.57% of revenue from 77.05%, reflecting weaker bulk-drug realizations and domestic competition.

Outlook and guidance

• US revenues from initiated CRAMS work were expected to begin in FY08-09; an agreement with Pharmgen covered 11 ANDA filings for products with stated cumulative US annual sales of US$17bn.

• Plans included four to five domestic product launches per quarter and one to two in-licensed biotech launches annually.

• Priorities included regulated-market entry, broader API and formulation pipelines, CRAMS services, and development of niche products, NDDS and NCEs.