X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Pfizer: Bright future ahead? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jun 10, 2005

    Pfizer: Bright future ahead?

    With the product patent regime now in force in India from the start of 2005, MNC pharma companies stand to gain as new product launches will spur growth for these companies in the coming years. MNC pharma major Pfizer is one of these companies. In this article, we take a look at the past performance of the company and future prospects.

    (Rs m) Nov-02 Nov-03 Change Nov-04 YoY Change 1QNov-05 YoY change
    Net sales 5,424 4,746 -12.5% 5,578 17.5% 1,329 -2.9%
    Expenditure 4,788 4,409 -7.9% 4,919 11.6% 1,101 -8.2%
    Operating profit (EBIDTA) 636 337 -47.0% 659 95.5% 228 34.4%
    Operating profit margin (%) 11.7% 7.1% -39.4% 11.8%   17.2%  
    Other income 538 368 -31.6% 392 6.5% 87 5.8%
    Interest (net) (50) (32) -36.0% 8   2 -37.5%
    Depreciation 106 108 1.9% 103 -4.6% 29 52.3%
    Profit before tax 1,118 629 -43.7% 940 49.4% 284 23.4%
    Exceptional items 148 1(167)   (192) 15.0% (58) 12.5%
    Tax 505 188 -62.8% 293 55.9% 92 20.9%
    Profit after tax 761 274 -64.0% 455 66.1% 134 30.8%
    Net profit margin (%) 14.0% 5.8%   8.2%   10.1%  
    No. of shares (m) 28.8 28.8   28.8   29.8  
    Diluted earnings per share (Rs)* 26.4 9.5   15.8   18.0  
    P/E ratio (x)           41.0  
    (* annualised)              

    About the company
    Pfizer India is a 40% subsidiary of the world's largest pharmaceuticals company - Pfizer Inc. It has some strong brands in its portfolio like Corex (a cough syrup) and Becosules (a B-complex supplement), both being more than Rs 1 bn brands each. The company has merged Parke Davis and Pharmacia with itself. Pfizer derives most of its revenues from the pharmaceuticals division (86%). The company also has presence in the animal health (10%) and clinical development operations (4%) segments. In the pharma segment, merger with Parke-Davis and strong brands like Benadryl, Corex and Gelusil are the key drivers. In the animal health segment, Pfizer plans to capitalize on its parent's global leader status and become a major player. The company is also evaluating the inorganic growth strategy in this segment. Pfizer also carries out clinical trials on behalf of its parent.

    Performance over the years
    2002:  The amalgamation of the erstwhile Parke Davis with the company took place this year. During the year, the pharmaceuticals division was under pressure due to the phased discontinuation of the vaccine business, non-realisation of the budgeted price increases for some of the company's key brands as there was a delay in announcement of the new DPCO. Also, there were re-structuring exercises undertaken due to the merger of the Pfizer field force and the erstwhile Parke Davis field force. Despite this, its key brands like Corex and Benadryl managed to post 15% YoY and 26% YoY growth rates respectively. As far as the animal health business id concerned, the poultry business continued to contribute significantly to the total animal health business. During the year, the company incurred VRS to the tune of Rs 135 m.

    2003:  This year was full of disappointments for the company. Revenues registered a 13% YoY decline, which was largely led by the dip in pharmaceutical business (down 16% YoY), while animal health care business reported a decline of 8%. The slowdown of the market in general and lower growth rates in the therapeutic segments in which the company operates, contributed to the fall in the topline. Operating margins dipped from 12% to 7% aided by pressure on realisations as prices of its key products fell.

    Consequently, bottomline fell 64% YoY. The company had received extraordinary income to the tune of Rs 331 m during 2002 for the sale of certain trademark licenses, which deflated the bottomline picture in 2003. Also, it incurred VRS expenditure to the tune of Rs 167 m. It must be noted that during the year, the domestic pharma industry was hampered by price cuts and Pfizer was one of the major losers on this front. The company's product portfolio is old and the management did not make any significant product launches citing India's patent laws.

    2004:  During the year, the company merged with Pharmacia Healthcare. Topline clocked an 18% YoY growth aided by the 8% YoY growth in the clinical services development business and 17% YoY growth in the pharmaceutical business. Animal health care business registered a decent 9% YoY growth. The operating margins improved from 7% to 12% on the back of operational efficiency led by lower staff cost and lower proportion of traded goods in the company's sales. Good topline growth and benefits for the company at the operational level was reflected in the bottomline which surged 66% YoY. It must be mentioned that the performance of the company was pretty decent considering the fact that most of its products are old and competition is higher.

    What to expect?
    At 738, the stock is trading at a P/E of 41 times its annualised 1QFY05 earnings. The company's portfolio comprises of old products, which have been facing intense competition and price cuts. Also, in the past the company was not keen on introducing new products due to India's patent laws, which recognised process patents and not product patents. However, post 2005, the scenario has changed with India accepting the WTO norms. Therefore, Pfizer is in a position to capitalise on this opportunity as it can now introduce new products in the Indian market from its parent's product stable. Also, the merger with Pharmacia is expected to bring in operational synergies, which will continue to reflect in margin expansion going forward.

    More Views on News

    Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

    Aug 14, 2017

    A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

    Lupin: Bigger Challenges or Bigger Margin of Safety? (Quarterly Results Update - Detailed)

    Aug 14, 2017

    GST impact coupled with price erosion in US leads to lower profits for the quarter.

    Dr Reddy's: US Pressure Continues to Haunt (Quarterly Results Update - Detailed)

    Aug 8, 2017

    Profits plunge due to higher raw material costs.

    Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter (Quarterly Results Update - Detailed)

    Jun 23, 2017

    Net Profit lower due to exceptional items in the previous year.

    Sun Pharma: Price Erosion in US Impacts Growth (Quarterly Results Update - Detailed)

    May 30, 2017

    US markets decline while other geographies grow in the quarter.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    PFIZER SHARE PRICE


    Aug 22, 2017 (Close)

    TRACK PFIZER

    PFIZER 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE PFIZER WITH

    MARKET STATS