Cipla Medpro lifts earnings by a quarter

CIPLA Medpro reported a rise in profit for the year to December, with Its headline earnings also climbIng 25.7 percent to R160.9 million.

This translated into an increase of 25.8 percent to 36.6c at the headline earnings a share level, the company announced yesterday.

"Cipla Medpro retained its standing as the fastest-growing pharmaceutical company in South Africa and the fourthlargest by value," it said.

The listed pharmaceutical company added that its relationship with Cipla India continued to deliver research and development on newer generics, the launch of first-to-market patent-expired molecules and over-the-counter medicines.

"Dossiers regularly flow from Cipla India, helping to bolster our already significant pipeline of products for the future," said Cipla Medpro.

A significant collaboration agreement had been concluded with Biomab-Desano of China, which would open the doors to their extensive range of biosimilars, biotechnology and monoclonal antibodies.

According to the group, the top 10 Cipla Medpro products by value, some as old as 10 years, continued to grow in units, which was "very rewarding given our strategy of building brands".

Last year saw a number of new product launches.

Cipla Medpro said it would add an oncology division to its medicines portfolio in 2010/11.

"Commencing with 20 molecules targeting a host of cancers, including breast, colon and lung, three of the leading causes of cancer-related deaths globally, as well as ovarIan and pancreatic cancers, It Is likely that Cipla Medpro will boast the most comprehensive and affordable portfolio locally," the company added.

Commenting on the resu?ts, consultancy firm Frost & Sullivan said the local pharmaceutical market was highly competitive and the trend continued to be towards generic substitution, which favoured Cipla.

"The Influx of new entrants and ever-increasing price sensitivity makes this a tough environment, yet there are signs that government is looking to support local production," health care programme manager Peter Breltenbach said.

However, he cautioned that the single exit pricing (SEP) position for medicines for 2010 had yet to be announced and that there were significant capacity Issues in the pricing committee that might prolong this process.

"The lack of certainty re gardlng the SEP announcements is a major Issue in the sector."

Breitenbach said it was to Cipla's advantage that the government In its recently minted industrial policy action plan favoured local pharmaceutical manufacturers, particularly those of generic drugs.

"Government will also allow local manufacturers an opportunity to match the prices of the preferred bidder."

He pointed out that the government was investigating the feasibility of establishing a greenflelds antiretroviral active pharmaceutical ingredients facility. "In all likelihood It will look for local partners for both imvestment and expertise."

Although dwarfed by Aspen and Adcock's local manufacturing bases, this might present Cipla with a significant opportunity to gain a greater foothold in the segment, Breitenbach said. "The proposed national health insurance (NHI) will favour high quality generic products and the expected Increase in patient volumes will significantly increase demand, although price pressures will continue."

Frost & Sullivan's analysis on the likely ramifications of the NHI suggested that generic pharmaceutical vendors could expect to benefit from higher volumes, he added.

Cipla shares rose 0.6 percent to close at R5.45 yesterday.

Business Report (National), Sapa