Staff costs of Indian pharma cos go up by 33% in first half of 07-08

Indian pharmaceutical companies are facing a steep rise in staff costs in recent years on account of frequent expansion programmes, rising investments in R&D and mergers and acquisitions. Increasing focus on skilled manpower and spending higher amounts to retain them are also substantially adding to the employee costs.

A Pharmabiz study of 25 leading Indian companies show that the employee costs had gone up by 33 per cent to Rs 1,575 crore during the first half of 2007-08 from Rs 1,185 crore in the same period of last year. Barring three companies, the employee costs moved up between 10 to 250 per cent during the first half. The cost of employees of Dishman Pharma, Dr Reddy's Laboratories (DRL), Biocon and Jubilant Organosys saw a growth of over 40 per cent. Similarly, leading companies like Cadila, Lupin, Aurobindo, Glenmark and Panacea Biotec also incurred significant higher employees cost during the first half.

Multinational companies in India, however, have been cutting costs through implementing VRS. However, Novartis reported a rise of 11 per cent in staff cost, but Wyeth has reduced it by 3.4 per cent. The Indian companies have started expanding aggressively in the international market and they need to invest in manpower for marketing there products as well as for manufacturing purpose. Further, contract manufacturing activity is gaining ground with requirement of more skilled people.

The Pharmabiz study has not included some leading companies like Ranbaxy Labs, Wockhardt, Stride Acrolab, Sterling Biotec and MNC like GSK, Aventis, Pfizer, Abbott, Merck, and AstraZeneca, as their financial year endings are in November- December. The staff cost of these companies have gone up by 14.6 per cent to Rs 791.46 crore for the nine month ended September 2007 as against Rs 690.37 crore in the corresponding period of last year. Stride Arcolab's staff cost increased by 41.1 per cent to Rs 39.08 crore from Rs 27.70 crore in the same period of last year. MNCs like Pfizer has successfully reduced its staff cost by 4.7 per cent during the first nine months of 2007. GSK and Merck pushed there staff cost marginally by 3.4 per cent and 2.2 per cent. Ranbaxy's staff cost increased by 17 per cent to Rs 289crore from Rs 247 crore in the corresponding period of last year.