GlaxoSmithKline Pharma Q4 Net Up 18%

Sales of the Pharma products grew by 18 per cent on YOY basis. Company has various therapeutic products of which its vaccine segment did well in the quarter. On the other hand company witnessed slower growth in its anti infective segment. Company had launched new products earlier this year which helped to record growth of 18 per cent during the quarter. Its specialty segment witnessed growth momentum due to the healthy product pipeline. During in the quarter company launched a vaccine against invasive pneumococcal disease Synflorix. In this year company has also increased its presence in oncology segment by launching 2 products in the segment. 

Its EBITDA margins would have been higher however its total material costs increased by 27 per cent compared to sales growth of 16 per cent. Employee cost grew by 8 per cent while it’s other expenditure decreased by 6 per cent which helped to expand the margins by 11 basis points. 

Company has total debt of Rs 4.91 crore and has investments of Rs 112.19 crore. Its cash position is also increased from Rs 200 crore in the last year to Rs 204 crore in this year. As a result of this its interest income rose by 36 per cent to Rs 41 crore. Its reserve position of Rs 1935 crore makes its debt to equity ratio almost nil.  Company paid a tax of Rs 70 crore compared to Rs 59 crore in the same quarter last year. Its net profit before exceptional items remained higher by 20 per cent to Rs 147 crore. After the adjustment of exceptional items net profit is up by 18 per cent to Rs 135 crore. 

For the year ended December 31, 2011 company reported moderate growth of 11 per cent in the top line. EBITDA margins were dragged down by 295 basis points due to 42 per cent rise in traded goods. Interest income was good at Rs 145 crore. Effective tax rate remained at 33 per cent compared to 25 per cent in the previous year which kept its net profit growth at 9 per cent to Rs 629 crore (before exceptional items). With the adjustment for the exceptional items its bottom line shrunk by 24 per cent to Rs 428 crore. 

In this year, company expects to launch new products in branded generics, anti-infective, cardiovascular and metabolic drugs segments. Company also has said that it will not add any more sales force in 2012 and would bet on the 700 people that it added in 2011. 

Going ahead company expects to grow by 13-14 per cent where its main growth drivers would be vaccine business which currently adds 11 per cent in the top line. Company expects this segment to add 17-18 per cent in next 3-4 years. With this projected growth rate we expect 12 per cent price appreciation in this year which will be lower than broader market. Company also would not see any benefit of interest rate reversal as it has nearly negligible debt. Investors who wish to play safe in the market may look forward to invest in the stock.