The industry attributes the rise to the refusal of stockists to pick up stocks during the quarter in anticipation of the introduction of the value-added tax from April 1.
As a result, the sales growth rate of the pharmaceutical sector went down by 5.37 per cent during the same period.
Nicholas Piramal piled up stock in trade worth Rs 77.62 crore (Rs 776.2 million) during the period against a reduction of Rs 14.84 crore (Rs 148.4 million) worth of stock in the corresponding quarter ending March 2004.
Ranbaxy Laboratories increased its finished goods inventory by Rs 70.88 crore (Rs 708.8 million).
Major pile-up of inventory was also seen in Orchid Chemicals and Pharmaceuticals (Rs 54.75 crore), Cipla (Rs 51.72 crore), Aventis Pharmaceuticals (Rs 33.80 crore) and GlaxoSmithkline Pharmaceuticals (Rs 26.30 crore).
The decline in sales affected the profitability of pharmaceutical companies with the net profit of 47 companies declining by 38.6 per cent.
Companies like Nicholas Piramal, Novartis, Orchid Chemicals, Cadila Healthcare and GlaxoSmithkline Pharmaceuticals posted over 10 per cent decline in sales turnover.
Wyeth Ltd, Dr Reddy's Laboratories, Novartis and Torrent Pharmaceutical slipped into the red in the last quarter while Ranbaxy Laboratories and Cadila Healthcare posted about 50 per cent decline in net profit.
PR Joshi, president, Cadila Healthcare, told Business Standard, "During the last two quarters, sales were affected. However, things are under control now with our internal planning process in place. In April and May, sales have picked up well."
"The third and fourth quarters in the last year were really bad for all the companies and Torrent was no exception. The stocks have started moving," said a Torrent spokesperson.