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GSK Pharma’s profit plunges 63.4% to Rs26.42 crore, plans to introduce more vaccines

LiveMint logoLiveMint 25-07-2017 Isha Trivedi

Mumbai: GlaxoSmithKline Pharmaceuticals Ltd plans to introduce more vaccines and respiratory products in India over the next few years, managing director A. Vaidheesh said on Tuesday.

The company currently sells 10 vaccines in India and has a 34% share in the Rs1,700 crore privately-sold vaccines market. Vaccines contribute 18% to GSK’s total revenue, however, the respiratory segment currently accounts for just 1% of sales.

In the June quarter, GSK’s net profit plunged 63.4% from a year ago to Rs26.42 crore owing to de-stocking by distributors ahead of implementation of the goods and services tax (GST). The company’s sales fell 14.4% on year to Rs586.79 crore.

On Tuesday, shares of GSK Pharma ended down 1.8% at Rs2,510 on the BSE, while benchmark Sensex index closed almost flat at 32,228.27 points.

The firm has been struggling to increase profits over the last couple of years owing to government price controls on drugs and supply constraints. About 30% of its product portfolio is under price control. Moreover, only 5% of the company’s portfolio is chronic therapy drugs which provide sustained returns.

GSK will increase its presence in the chronic drugs space by “getting products from parent’s innovation pipeline and partly by local and international deals,” said Andrew Aristidou, its chief financial officer. The company is also looking at in-licensing opportunities.

In its annual general meeting of shareholders on Tuesday, chairman Deepak Parekh also said that the company’s upcoming facility at Vemgal in Karnataka is expected to start commercial production in the fourth quarter of 2018. The total investment in the Vemgal facility is estimated at Rs1,000 crore.

Parekh also said the company is likely to close a deal to sell its 60-acre land parcel in Thane by the end of this year. GSK Pharma has been trying to sell this land since 2014 but has been unable to do so owing to lower-than-expected price bids and legal issues associated with the land.

“We understand there are large number of charges which Maharashtra government levies. We have made an appeal to the government to consolidate some of these charges because 50% of the value of land goes in the charges paid. We have got offers and hope we can culminate the Thane land sale by December,” Parekh said.

The value of Thane land deal could be Rs500-600 crore, Parekh added.

The company is also trying to sell its 80-acre land parcel in Bengaluru but there are certain government-related issues and hence it will take about two years for the company to be able to sell that land if the government permits, he said.

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