Sales income in the year ended December 2000 was down by 10 per cent to Rs 162.6 crore (Rs 180.9 crore). It is true that the company succeeded in slashing material costs. But staff cost and other expenses increased sharply and that brought down the operating profit by 30 per cent to Rs 34 crore.

Subsequently, operating profit margins fell from 24 per cent to 18.3 per cent. Net profit dipped by 35 per cent to Rs 19.15 crore against the highest profit of Rs 29.34 crore for the year ended December 1999.

Most of the company's topline brands are very old. Largest selling top brands Septran, Calpol, Neosprin and Actified were introduced in the market in 1975, 1967, 1985 and 1984 respectively. In the past one and half decades, no new molecule made any appearance nor impact. The product mix has not been changed to reflect changing preferences for growth-oriented drugs.

Therefore, most of the segments are either shrinking or growing at a very slow rate. The company faces competition from increasing number of low cost generics turned out by domestic and multinational companies. Low R&D spending is another area of concern. Burroughs Wellcome spends only 0.3 per cent of sales on R&D, against 4 per cent to 5 per cent by most companies.

Export in the year ended December 2000 fell to Rs 3.7 crore, while imports rose to Rs 21 crore.

The company has been trying hard to fight odds by revamping its marketing force through integration with the marketing staff of Glaxo Wellcome.

Therefore, the advantage of skill and penetration in the market of Glaxo would be available to Burroughs Wellcome. This strategy may, perhaps, help the company in increasing sales in the future.

Dhruv Rathi