20000330

Knoll Pharma declares 200pc dividend, bonus each for 1999

RECORDER REPORT

KARACHI: Knoll Pharmaceuticals Limited declared a cash dividend of 200 percent and bonus of 200 percent for the year ended December 31, 1999.

According to the information released by the company, the sales were at Rs 719.5 million for the period under review which have grown by 16 percent over previous year. Since there is no increase in pharmaceutical product price for more than three years, the entire growth in sales reflects volume increase.

The operating profit was Rs 79 million for 1999, which has declined by 6 percent inspite of healthy sales growth. The cost of production continues to increase due to inflation, rupee devaluation and sales tax on packaging material, whereas prices of the products remained unchanged.

The profit before tax has increased by Rs 14 million over last year reflecting mainly higher income on account of exchange gain on foreign currency deposits.

The present government would have to take immediate remedial actions to encourage further investments in the pharmaceutical industry through deregulation in product pricing/registration, as well as consistent and transparent policies. The law relating to price adjustment has not been implemented since November 1997, whereas the overall cost escalation for the pharmaceutical industry in Pakistan has been approximately 45 percent since the last adjustment in 1996.

The shareholders of the pharmaceuticals companies in Pakistan, both local and foreign, are sensitive towards returns on their investments and might look for better opportunities in Pakistan or other countries.

The company pointed out several acute problems which are responsible in the decline in profits and sales in the overall industry. These are inconsistent government policies for the industry which do not permit to plan properly reducing drastically the investment spending, law not implemented since 1997 for annual price adjustments (SRO 1038) by the government. The price adjustment was in November 1996, this means more than three years ago, custom duty, sales tax and other punitive levies were imposed on this industry without any price correction/adjustment (the cost increase since 1996 was overall 45 percent), no clear cut government policy for the pharma industry, in order to attract more investment and long registration time and inadequate price fixation formula for new hi-tech and research based products.