Rising depreciation cost pulls down profit
To enter oncology market this yearTo adopt new strategy to sustain growth
BANGALORE: Rising depreciation costs and a drop in revenues from the enzymes business have pulled down the full year net profit of Biocon Limited to Rs 174 crore in 2005-06, a decline of 12 per cent from a year earlier.
However, Biocon said its total revenues jumped by 9 per cent to Rs. 793 crore as income from biopharmaceuticals and enzymes grew by 6 per cent to Rs. 688 crore from Rs. 647 crore in the previous year. The company's revenues from research services grew by 52 per cent to Rs. 100 crore from Rs. 66 crore.
The board of Biocon has recommended a dividend of Rs. 2.50 per share.
Though, the operating profit for the year dipped marginally by 2 per cent to Rs. 234 crore, the Chairman and Managing Director, Kiran Mazumdar-Shaw, said the company had posted a healthy operating margin of 30 per cent despite a fiercely competitive environment. "This enables us to continue to invest in our discovery-led research programmes,'' she told reporters here on Thursday, while announcing the annual results.
During the year, Biocon's depreciation costs rose by 31.8 per cent to Rs. 29 crore, while revenues from the enzyme business declined by five per cent to Rs. 85 crore.
The net profit for the fourth quarter (January-March) climbed up by 13 per cent to Rs. 48 crore from Rs. 42 crore a year earlier as revenues jumped by 20 per cent to Rs. 215 crore from Rs. 178 crore.
Ms. Shaw said the year ahead would continue to be challenging due to uncertainties in market conditions and the impact of depreciation at the firm's new facilities at the Biocon Park. "However, we expect insulin to gain market share both in India and overseas markets including regulated ones such as the U.S., Europe and Japan.
Biocon is expected to enter the oncology market this year with its antibody product BIOMAB-EGFR for the treatment of head and neck cancers.
"The recent acquisition of the NOBEX portfolio has significantly enhanced our IP assets both in terms of patents and proprietary technologies, which will play a key role in our innovation strategy for the future. Our balanced portfolio of products and services will deliver superior shareholder value over the medium to long term,'' she said.
Biocon is in the process of transformation from a generics Active Pharmaceutical Ingredients (API) or drug substance maker into an innovator company that is developing a pipeline of new molecules.
"This strategy will deliver strong and sustainable growth in the future,'' she said.