• New corporate R&D Center at Bollaram inaugurated


• US DMFs increased to 50, number of product innovation patents increased to 74


• Acquisition of 22 per cent controlling stake in Docpharma, Belgium, completed; draft prospects for the open offer filed with BFIC


• FDF facility to initiate ANDA batches in August


• Medikon Galenicals, the JV company, commenced Dossier filing in Europe

Matrix Laboratories Limited has reported a profit after tax (PAT) of Rs. 25.29 crore on a sales of Rs. 154.33 crore for the first quarter ended 30th June 2005.

The profit before R&D, interest and depreciation for the quarter stood at Rs. 40.13 crore. The R&D expenditure (revenue and capex) for the quarter has grown by 132 per cent at Rs. 16.65 crore, as against Rs. 7.16 crore in the same quarter of last financial year.

The net sales for the quarter increased marginally despite the loss of production at one of the units (Unit-I) for about two months due to the fire accident that took place in March 2005, whereas the profit after tax has declined. This was mainly due to increase in the material cost on account of change in the product mix and increase in the crude oil prices in the international markets, and a significant increase in the R&D expenditure.

The annualized earnings per share (EPS) on the post-Bonus paid-up capital of Rs. 29.94 crore with a face value of Rs. 2 per share stood at Rs. 6.76.

The company's Corporate R&D Center involving an investment of about Rs. 20 crore at Bollaram on the outskirts of Hyderabad was inaugurated during the quarter. The new R&D center with the state-of-the-art equipment for chemical, analytical and biological research will accommodate about 150 scientists. The company's R&D strength is expected to go up to 350 from the present level of 250 over a period of time to cover generic API, analytical and NCE research. The company plans to invest over 6 per cent of its sales on R&D during the current financial year from that of 4.3 per cent in 2004-05.

With the filing of four Drug Master Files (DMFs) with the US FDA during the quarter, the total number of US DMFs increased to 50. Similarly, the total number of patents filed in various countries for 41 innovations covering 27 products increased to 74 at the end of the quarter.

The upgradation of the company's Finished Dosage Forms (FDFs) facility at Nashik to meet US FDA norms is nearing completion and the company expects to commence manufacturing of ANDA batches (Exhibit batches) in August through site transfer of ANDAs from its US customers. The 25-member formulation R&D team is in place and is currently working on the development of six products.

Medikon Galenicals Limited, a joint venture formed by Matrix in association with two German partners, has inaugurated its formulation development laboratory and pilot plant during the quarter. Of the eight products that are under development under the joint venture company, one dossier has already been filed in the European markets, while others are at an advanced stage of filing.

A special purpose vehicle (SPV) was formed in the name and style of Matrix Laboratories NV, Belgium, for the acquisition of Docpharma NV, Belgium. Subsequent to the acquisition of 22 per cent controlling stake in Docpharma NV, Belgium, the Matrix Laboratories NV has filed draft prospectus with the Banking Finance and Insurance Commission (BFIC), Belgium, for its approval. Post approval of the prospectus by the BFIC, an open offer shall be made for the remaining shares of Docpharma. The company has obtained an irrevocable and unconditional guarantee from the ABN AMRO Bank for an amount of Euro 165 million to fund the open offer.

"A cross functional team has been formed involving the members of Matrix and Docpharma for effective integration of the operations of both the companies. Besides this, various initiatives undertaken by the company to pursue global business opportunities are expected to yield significant results in the coming quarters", said Mr. N. Prasad, the Executive Chairman of Matrix Laboratories.

"In continuation of the business derisking strategy, dependence on Citaloparm and other generic APIs has been reduced, while further strengthening the leadership position in the Anti-retrovirals (ARVs) segment", Mr. Prasad added.

The Board of Directors at the meeting today approved the appointment of Mr. Rajiv Malik as the Chief Executive Officer (CEO) and also as an Additional Director on the Board. The Board has also approved the appointment of Dr. C. Satyanarayana as a Technical Advisor into the Corporate Advisory Board (CAB) on his relinquishing the executive position in the company.