Indian pharmaceutical

industry
 Introduction
 Pharmaceutical Industry in India is one of the largest and most advanced among the

developing countries.

 It is ranked 4th in volume terms and 11th in value terms globally.

The Indian pharmaceutical industry traditionally relied on “reverse engineering”

There are over 60,000 formulations manufactured in India in more than 60 therapeutic

segments.

The Pharmaceutical industry in India is fragmented with over 3,000 small/medium sized

generic pharmaceutical manufacturers.

It has over 20,000 units out of which 300 units are in the organized sector; while others exist

in the small scale/unorganised sector.

The leading 250 pharmaceutical companies control 70% of the market with market leader

holding nearly 7% of the market share.

Major Indian Pharma Companies include names such as Glenmark, Cipla, Dr. Reddy Labs,

Biocon, Ranbaxy etc.

 Trends in Indian Pharma Industry and its
contribution to Indian Economy
 Growth of Indian bulk drug industry in the last five decades has been impressive and highest among
developing countries.

 Today 70 percent of the countrys demand is met by the Indian Companies as compared to 20 percent in 1980s

 Bulk drugs exports grew robustly by 28% CAGR between 2001-02 and 2009-10 to reach an estimated USD 6.0
billion.

 The portion of DMF(Drug Master Fillings) by Indian players has jumped from around 14% in 2000 to 46% of
total filings in 2008( Nov-Dec).

 Between 2004 and 2009 the domestic formulation industry grew at a CAGR of 11.9% from around USD 4.3
billion in 2002 to USD 9 billion in 2009.

 OTC market USD 1 billion (Dec,2009)with growth rate of 18-20%

 Per capita drug expenditure Rs. 500 per annum

 Pharma Sector contributes nearly one percent today in the GDP and expected to reach 2.5 percent in 2014.
Statistical Highlights
Drugs Exports
Growth in billion dollars
Dr. Reddy’s Lab
Introduction
 Established in 1984, Dr. Reddy’s Laboratories (‘Dr. Reddy’s’ or ‘the
Company’) is an integrated global pharmaceutical company committed
to providing affordable and innovative medicines through its three core
businesses:
 Global Generics, which includes branded and unbranded
prescription and over-the-counter (OTC) drug products.
 Pharmaceutical Services and Active Ingredients (PSAI),
comprising Active Pharmaceutical Ingredients and Custom
Pharmaceutical Services.
 Proprietary Products, comprising Generic Biopharmaceuticals, New
Chemical Entities (NCEs), Differentiated Formulations and a
dermatology focused specialty company – Promius TM Pharma.
The Company has a strong presence — in highly
regulated markets such as the United States, the
United Kingdom, Germany, as well as in emerging
markets including India, Russia, Venezuela, Romania
and certain CIS countries.
In the US market, 2009 saw Dr. Reddy’s enter the list
of the Top 10 generic companies. The Company has
broken into the Top 10 league by improving its market
share from 2.1% to 2.7%. This is a significant
milestone, and corroborates Dr. Reddy’s longer term
target of becoming a leading generics player in the US.
Business Highlights
In the US market, 2009 saw Dr. Reddy’s enter the
list of the Top 10 generic companies.
India & Russia, both key emerging markets for
the Company, registered impressive performance.
Successful audits of the Company’s formulations
and chemical plants.
Product pipeline continues to show impressive
growth potential.
Dr. Reddy’s Consolidated Revenue and
Share of Markets
 Liquidity Ratios
Ratio Year 2008- Year 2009-10 Industry Average
09

Current Ratio 1.44 1.84 1.313

Quick Ratio 0.78 0.84 0.81

 Profitability Ratios
Ratio Year 2008-09 Year 2009-10 Industry Average

Gross Profit Margin Ratio 0.91 0.82 0.62

(Gross Profit / Net Sales)

Dr. Reddy’s gross profit remains almost flat at Rs. 36,340

million. Gross profit as a percentage of revenue was 52% in
2009-10, versus 53% in 2008-09. The minor decrease in gross
margin was primarily due to a fall in revenues from
sumatriptan, which contributed a significantly higher margin
in 2008-09.
 Ownership Ratios
Ratio Year 2008-09 Year 2009-10

Earning Ratios

Earnings Per Share (EPS) 33.32 (Basic par value `5/Sh.) 50.15 (Basic par value
`5/Sh)

33.11 (Diluted par value `5/Sh) 49.18 (Diluted par value

`5/Sh)

Price Earning Ratio 25.01 26.71

(Market Price / EPS)
 Ownership Ratios
Ratio Year 2008-09 Year 2009-10

Dividend Ratio

Dividend Pay-Out Ratio 0.18 0.22

(DPS/EPS)

Dividend Yield 0.05 0.04

(DPS/Market Price)
 Ownership Ratios
Ratio Year Year 2009-10 Industry Average
2008-09
Leverage Ratios
Capital Structure Ratios
Debt - Equity Ratio 0.46 0.34 0.64

Debt - Asset Ratio 0.50 0.35 0.31

 Ownership Ratios
Ratio Year 2008-09 Year 2009-10

Leverage Ratios
Coverage Ratios

Interest Coverage Ratio 40.43 98.73

(EBIT/Interest Expenses)

Debt Service Coverage Ratio 40.44 97.53

(PAT+Dep.+Other non cash
charges+Interest on long term
loan/Interest + Principle Amt)
 Turnover Ratios
Ratio Year 2008-09 Year 2009-10 Industry Average

Average Payable Period 107 110 102

Average Collection Period 115 87 86

Inventory Turnover Ratio 135 143 152

(Days)

Net WC Cycle 127 120 131

 Cash Flow statement (Dr. REDDY)
Rs. In Million
For the year ended 31st March 2010 2010 2009

Net profit before tax 10,848 7,295

Unrealized Foreign exchange (gain)/loss 960 (201)

Inventory Write-down 1086 486

Net cash from operating activities (after tax) 12532 4813

Net cash used in investing activities (loans & (11,111) (7,436)

advances to subsidiaries reduced by 2256)

Net cash from financing activities ( repayment of (1522) 1056

loans increased by 3083)

Net increase/(decrease) in cash and cash equivalents (101) (1567)

 Introduction
 Founded by Khwaja Abdul Hamied as The Chemical, Industrial &
Pharmaceutical Laboratories in 1935.
 On August 17, 1935, Cipla was registered as a public limited company
with an authorised capital of Rs 6 lakhs.
 On October 31, 1939, the books showed an alltime high loss of Rs
67,935. That was the last time the company ever recorded a deficit.
 Best-known outside its home country for manufacturing low-cost
anti-AIDS drugs for HIV-positive patients in developing countries.
 Its products are distributed in more than 180 countries worldwide.
 Current Chairman - Y.K.Hamied.
 Revenue - H.5,624.91 crore (US$ 1.22 billion) (2010)
 Cipla is the world's largest manufacturer of antiretroviral
drugs(ARVs) to fight HIV/AIDS, as measured by units produced and
distributed.
 PROFITABILITY RATIOS
2006 2007 2008 2009 2010
Operating profit 23.27 23.07 20.27 23.78 24.63
margin (%)
Gross profit 23.86 24.27 17.16 20.88 21.32
margin
Net profit margin 20.12 18.41 16.43 14.58 18.97
Return on capital 26.67 23.40 18.17 22.39 22.16
employed
Return on net 30.78 20.70 18.72 17.89 18.31
worth
 LIQUIDITY AND SOLVENCY
RATIOS
2006 2007 2008 2009 2010

Current ratio 2.07 2.65 2.62 1.81 2.17

Quick ratio 1.33 1.76 1.88 1.93 1.57

Debt equity ratio 0.24 0.04 0.15 0.22 --

 MANAGEMENT EFFICIENCY
RATIOS
2006 2007 2008 2009 2010

Inventory Turnover 3.16 3.71 3.83 3.79 3.74

Ratio
Debtors Turnover 4.07 3.74 3.47 3.24 3.31
Ratio
Asset Turnover Ratio 2.18 1.98 1.91 1.94 1.94

Net WC 935.66 1788.03 1766.82 2072.4 2197.8

Net WC cycle 195 235 198 217 200
 2006 2007 2008 2009 2010

Dividend Payout Ratio 29.17 27.22 25.92 23.41 17.31

Earnings Per Share 20.26 8.59 9.02 9.99 13.47

 2009 2010
Avg payable 88 100

Avg collection 111 108

 CASH FLOW STATEMENT
H. in crocre
2009 2010
Net Profit Before Tax 901.31 1324.99
Net Cash From Operating Activities 373.27 1041.68
(Sale of brand and other related rights 95.00)
Net Cash (used in)/from Investing Activities (580.79) (562.23)

Net Cash (used in)/from Financing Activities 178.92 (471.61)

Net (decrease)/increase In Cash and Cash (26.28) 7.84

Equivalents

Repayment of long term loan of H. 1397.44 in 2010 as

against H. 532.47 in 2009.
Ranbaxy was incorporated in 1961 and went public in 1973.
Ranbaxy has a presence in 23 of the top 25 pharmaceutical markets
of the world.
 serves customers in over 125 countries.
In June 2008, Ranbaxy entered into an alliance with one of the
largest Japanese innovator companies, Daiichi Sankyo Company Ltd.,
to create an innovator and generic pharmaceutical powerhouse. The
combined entity now ranks among the top 20 pharmaceutical
companies, globally.
For the year 2009, the Company recorded Global Sales of US $ 1519
mn.
Ranbaxy has world-class manufacturing facilities in 7 countries
namely Ireland, India, Malaysia, Nigeria, Romania, South
Africa and USA. Its overseas facilities are designed to cater to the
requirements of the local regulatory bodies of that country while the
Indian facilities meet the requirements of all International
Regulatory Agencies.
Ratios
Ratio

2004 2005 2006 2007 2008 2009

Current Ratio

1.49 1.12 1.10 0.92 0.931.35

Quick Ratio

0.99
0.70 0.59 0.56 0.40 0.58
Debt-Equity
Ratio

0.05 0.43 1.35 1.38 1.10 1.30

Ratio

2004 2005 2006 2007 2008 2009

Interest Coverage
Ratio

55.80 7.04 8.36 8.30 -10.65 27.90

Return on Assets

0.55
1.00 0.76 0.62 0.58 -0.42
Asset Turnover
Ratio

2.83
3.97 2.36 2.13 2.06 2.13
Ratios

2004 2005 2006 2007 2008 2009

Average Payment
Period (Days)

90.93 83.70 85.30 90.02 336.13 95

Average Collection
Period (Days)
94.12
62.92 90.97 93.67 96.56 90.73
Gross WC Cycle

328
243.24 364.54 339.20 328.84 344.97
Net WC Cycle

238
152.30 280.84 253.90 238.82 8.84
 2007-08 2008-09

Earnings Per -27.29 (Basic par value Rs 5/Sh.) 13.61 (Basic par value Rs
Share (EPS) 5/Sh.)

-27.29 (Diluted par value `5/Sh) 10.74 (Diluted par value

`5/Sh)
(share application money pending
allotment)

P/E -10.81 35.52

 Cash Flow statement (Ranbaxy)
Rs. In crores
For the year ended 31st March 2010 2009 2008

Net profit before tax 10,619.17 (16,190.81)

Adjustments: (11497.02) 14421.81

Working capital changes (increase in debtors (3402.85) (1391.69)

4621.74)
Net cash from operating activities (after tax) (6654.34) (3896.80)

Net cash used in investing activities( increase in FD) 861.21 (17,104.26)

Net cash from financing activities (issued in capital (2141.42) 27,906.26

in 2009 of 34,389.19)
Cash and bank balance at the end of the year ( inc in 7541.24 19349.39
current a/c and deposit a/c)
Conclusion
 Ranbaxy: Q1 Net Profit 960 Cr (60% jump)
- 1 bn $ revenue in first half year.
- Revenue increased by 22% but profit decreased by
48%
- Launched 30 new products
 Cipla: net profit rose by 6.5% and sales went up by
7.58%
 Dr. Reddy’s: Sales of 1.6 bn$ and profit of 2.05 bn
 Wockhardt: Loss of 116 Cr in 2009
Road Ahead…
 Growing incomes.
Growing attention for health.
Saturation point of market is far away.
Globalization
Thank you
Aahna Khatri
Amit Bhansali
Ankit Jain
Kunal Prasher