Stock Watch

By Lakshmi P Myiris.com

Indian drug companies are either entering into strategic alliances with large generic companies in the world of off-patent molecules or entering into contract manufacturing agreements with innovator companies for supplying under-patent molecules. With contract research and manufacturing services (CRAMS) opening its doors, Indian pharma companies are betting big on the growth opportunity in this segment. Mid-cap pharma stocks in the CRAMS segment has witnessed sharp peformance recently. Indian companies are proving to be better at developing APIs than their competitors from target markets. Companies like Dishman Pharma, Divis Labs and Matrix Labs are undertaking contract jobs for MNCs in the US and Europe.

A closer look at Matrix

Matrix Laboratories is engaged in the manufacture of APIs and Solid Oral Dosage Forms. Matrix is one of the fastest growing API manufacturers in India and focuses on regulated markets of US and EU.

Moving to the financials, sales went up by 88.92 percent at Rs 291.58 crore for the second quarter on consolidated basis over standalone Q1. The profit was up by 72.74 percent at Rs 43.69 crore for the second quarter on consolidated basis over standalone Q1. For the half-year ended September 30, 2005, Matrix Laboratories reported a PAT of Rs 55.94 crore on net sales of Rs 328.70 crore on standalone basis. The annualised earnings per share (EPS) on the consolidated basis for the quarter works out to be Rs 11.68 on a paid-up equity capital of Rs 29.94 core. The company has also stepped up the R&D expenditure significantly. It has filed four DMFs with USFDA, taking the total number of US DMFs to 54 as of September 30, 2005. On the innovation front, total number of patents reached to 45. The company has been successful in derisking from price erosion of Citalopram.

The increase in the sales of anti-retrovirals, generic APIs and CRAM business segment has more than compensated the drop in Citalopram sales value.

After acquiring controlling stake in Docpharma, Belgium, for a front-end presence in Southern Europe, the company has announced that it would be buying 55 percent controlling stake in Concord Biotech, an Ahmedabad-based biotechnology company. It has signed an MoU with a US generic major for development and manufacturing of 18 products. It has also received another project from a big pharma company in the contract manufacturing space.

The shares of Matrix went up by five percent in a week to close at Rs 229.55, while in a month it has gone up by 19 percent and rose by 14 percent in the last one year.

Wockhardt’s Biovac A

Wockhardt is planning to introduce six new vaccines by December 2006. The company is working on a strategy of licensing with the global vaccine companies for introduction of Biovac A vaccine in India.

The company recently introduced Biovac A (a new generation Hepatitis A vaccine) through a collaboration with Zhejiang Pukang Biotechnology Company of China, the originators of the vaccine. Shares of Wockhardt went up by 19 percent to close at Rs 443.15. The stock price stood at Rs 371.35 on Dec 16, 2004.

The BSE Healthcare index which includes pharmaceutical stocks went up by 27.54 points or 0.89 percent, closing at 3095.18 for the week ending December 16.