Pfizer in News

Strong demand helps Pfizer India offset rising costs
Business Standard / Niraj Bhatt
October 04,2006.

Pfizer India: Right dose

Pfizer India’s quarter ended August 2006 reinforces the continued strength in the demand for medications, which has helped it offset rising costs.

Pfizer India has seen its operating profit (including service income) improve by 18.2 per cent y-o-y to Rs 47.79 crore for the quarter ended August 2006 compared with 9.5 per cent growth in operating income to Rs 185.6 crore.

The company’s operating profit margin also grew by 190 basis points y-o-y to 25.7 per cent in the August quarter. Even in the May quarter, its operating profit margin had grown by 236 basis points.

In the key pharmaceuticals division, segment revenues grew by 9.8 per cent y-o-y to Rs 163.45 crore in the August 2006 quarter.

Analysts point out that sales growth in this segment has been provided by Gelusil (antacid), thanks to its sales showing signs of stabilising.

Also, its recent products launches such as Viagra and Lyrica (medication for management of neuropathic pain) saw improved offtake, add analysts.

However, input costs also went up in the last quarter. The purchase of finished goods rose a staggering 61.4 per cent to Rs 32.6 crore in the August 2006 quarter.

Analysts highlight that this was largely owing to increased sourcing of finished products purchased from its parents’ global operations.

The company was able to offset the rise in costs in the last quarter via higher income. In the May 2006 quarter too, the company had seen its purchase of finished goods rise 29.9 per cent y-o-y to Rs 26.34 crore.

The US parent had earlier announced that it had sold its worldwide consumer healthcare business to Johnson & Johnson, and Pfizer India too will exit from this business shortly.

For the Indian arm, this business—which has products such as Benadryl, Listerine and Gelusil-—it was estimated to provide Rs 140 crore or about 23 per cent of the company’s total revenues for the year ended November 2005, highlight analysts.

The stock trades at about 25 times estimated November 2006 earnings (excluding the impact of hiving off the consumer healthcare business), it leaves not much room for further upside.