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Margin Hit
Research and development expenditure rose significantly from Rs 130 crore last year to Rs 198 crore this year, which is close to 13% of revenues, and it impacted the margin, he said.
According to him, though the R&D expenses tend to be “lumpy”, it will lead to growth as products progress in the market.
Rising input costs, increments given to employees and currency value fluctuation are other factors that have impacted the margin, Mittal said.
If there is a need to meet orders even on low margins, Biocon may do so while ensuring sustainable performance and cut input costs, he said. Along with maintaining a profitable business, “we cannot have our patients run out of medicine”, Mittal said.
He gave the example of ‘statins’, which is a large segment of the generics business and is heavily dependent on solvents. Some of the statins “have seen negative margins but we nevertheless continue to service those customers”, said Mittal.
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