Stock Review: Pfizer India

 

Pfizer India, the Indian arm of the US drug major Pfizer, has posted muted performance for the quarter ended June 2011. Due to the company changing its accounting year from December-November to April-March, the results of the quarter ended June 2011 are not exactly comparable to those reported for the quarter ended May 2010. Pfizer India has logged 19% growth in net profit – aided by an exceptionally higher other operating income. It posted net sales growth of 14% in line with that of logged by the domestic pharma industry.

On a sequential basis, the company's performance has visibly decelerated. Net revenues have dropped by 17%, while net profit is down 35% when compared quarter-on quarter.

The first quarter of the fiscal is typically a strong quarter for pharma companies. However, the market growth for the 12 months ended May 2011 has slowed down to around 14% compared to over 25% during the same period last year. It has been especially slow in case of the anti-infective segment. The growth in demand for anti-infectives from hospitals has been quite weak at 2-3%.
Pfizer India has a mature product portfolio comprising strong brands like Corex and Becosule. It is now struggling with the systemic challenge of slowdown in demand. In the preceding March quarter, Pfizer had outperformed the domestic market growth. However, in the quarter ended June, the company has barely managed to grow in line with the market. With growth rates in the anti-infective segment slowing down to very low single-digit numbers, the company faces a critical challenge of growing more than the market in the coming quarters. Pfizer had launched four products in the June quarter. The company is focusing on consolidating its launches in order to register growth that is higher than the market.

While the company does not provide any growth guidance for the fiscal, it expects to grow higher than the industry in the coming quarters. This may be difficult in case the current situation of slowdown in demand does not improve. Pfizer's stock price has appreciated nearly 25% in the past four months. The muted performance is likely to cause a short-term dent in the rallying stock price.