The leading 100 Indian pharmaceutical companies registered satisfactory financial performance during fiscal year 2015-16 despite quality problems, Drug Price Control Order (DPCO), volatile foreign exchange rates and stiff competition. The net sales of 100 companies increased by 10.3 per cent to Rs. 190,627 crore during 2015-16 from Rs. 172,842 crore in the previous year and the compounded annual growth rate (CAGR) of sales for the last six years worked out to 13.3 per cent. The growth is propelled by increasing affordability, improving medical infrastructure and rising insurance penetration in domestic market. Further, new product launches through investment in R&D, entry into new therapies and markets played crucial role.
Among the Pharmabiz sample of 100 listed companies, Sun Pharmaceutical Industries maintained its top position with net sales of Rs. 27,744 crore in 2015-16 as against Rs. 27,245 crore after merger of Ranbaxy Laboratories in previous year. Similarly, Dr Reddy's Laboratories (DRL) keeps its No 2 position with net sales of Rs. 15,471 crore and Lupin at third spot with net sales at Rs. 13,702 crore. The sales of these three companies improved only single digit at 1.8 per cent, 4.4 per cent and 8.7 per cent respectively. Aurobindo Pharma registered sales growth of 13.3 per cent at Rs. 13,650 crore and hold on its fourth rank. Cipla, the fifth largest pharma major, notched up strong sales growth of 22.9 per cent to Rs. 13,372 crore.
Among 100 companies, 30 companies recorded net sales over Rs. 1,000 crore during 2015-16 and contributed around 88 per cent to aggregate net sales of 100 companies. Alkem Laboratories and Syngene International entered the list with net sales of Rs. 4,877 crore and Rs. 1,086 crore. Both the companies successfully entered capital market during 2015-16 with public issue. Orchid Pharma failed to maintain its position in these 30 companies as its net sales declined sharply to Rs. 860 crore from Rs. 1,714 crore. Strides Shasun, formerly known as Strides Arcolab, has moved up strongly after merger of Shasun Pharmaceutical and its net sales moved up to Rs. 3,014 crore from Rs. 1,131 crore in the previous year.
The net sales of first 30 companies increased by 11.9 per cent to Rs. 167,152 crore during 2015-16 from Rs. 149,430 crore in the previous year. Out of these 30 top companies, sales of Jubilant Life Sciences, Ipca Laboratories, GlaxoSmithKline Pharma (GSK) and Vivimed Labs declined by 1.3 per cent, 8.7 per cent, 16.2 per cent and 2.5 per cent respectively. Cipla, Piramal Enterprises, Torrent Pharmaceuticals, Alkem Laboratories, Divi's Laboratories, Alembic Pharmaceuticals, Strides Shasun and Syngene International posted net sales growth of over 20 per cent.
Besides, the net sales of 21 companies from Pharmabiz sample of 100 companies declined during 2015-16. Among the major, Orchid Pharma's net sales declined by 49.9 per cent to Rs. 859 crore from Rs. 1,714 crore. Parabolic Drugs to Rs. 75 crore from Rs. 229 crore, Vinati Organic by 23.8 per cent to Rs. 578 crore, Ind-Swift Ltd by 27 per cent to Rs. 304 crore, Lyka Labs by 20 per cent to Rs. 125 crore, Parnax Lab by 30.7 per cent to Rs. 71 crore Sterling Biotec and Sharon Bio-Medicine posted results for nine months during 2015-16. Further, the net sales of Novartis, Ind-Swift Laboratories, Panacea Biotec, Suven Life Sciences, Venus Remedies, etc also declined.
The operating profitability of 100 companies improved during 2015-16 with relatively stable input costs and EBDITA margin improved to 24.7 per cent as 22.8 per cent in the last year. The raw material cost including stock adjustments and purchases increased only by 3.7 per cent to Rs. 67,688 crore from Rs. 65,252 crore and staff cost moved up by 14.6 per cent to Rs. 32,792 crore. Other expenditure increased by 10.6 per cent to Rs. 49,788 crore. Thus, the total expenditure increased only by 8.2 per cent during 2015-16 to Rs. 1,50,268 crore from Rs. 1,38,884 crore and assisted well to push profitability.
EBDITA (earnings before depreciation, interest, tax and adjustments) increased by 19.2 per cent to Rs. 47,037 crore from Rs. 39,462 crore. EBDITA of Alembic Pharmaceuticals has taken a jump of 150 per cent to Rs. 1,011 crore from Rs. 405 crore. Torrent Pharma's EBDITA went up by 125 per cent to Rs. 2,936 crore from Rs. 1,306 crore and that of Strides Shasun moved up by 140 per cent to Rs. 643 crore from Rs. 267 crore. EBDITA of Sequent Scientific and IOL Chemicals also improved by 141 per cent and 318 per cent respectively.
Among the 100 companies EBDITA of major companies like, Wockhardt, Ipca Laboratories, GSK, Nectar Lifesciences, Hikal, Marksans Pharma, Orchid Pharma, Suven Life Sciences, etc., declined during 2015-16. Further, Ind-Swift, Sun Pharma Advance Research Co., Sharon Bio-Medicine and Parabolic Drugs increased there operating loss during 2015-16. Total 39 companies improved EBDITA by over 20 per cent.
The depreciation provision of 100 companies increased only by 4.2 per cent to Rs. 8,023 crore from Rs. 7,701 crore and Interest cost moved up by 14.2 per cent to Rs. 5,283 crore from Rs. 4,626 crore. The tax provision went up by 26.4 per cent to Rs. 8,236 crore from Rs. 6,517 crore. Thus, the profit before adjustments has shown better growth of 23.7 per cent during 2015-16 to Rs. 25,595 crore from Rs. 20,618 crore. Total adjustments, including forex loss or gain worked out to expenditure of Rs. 1,466 crore as against income of Rs. 1,797 crore. Piramal Enterprises, Strides Shasun and Orchid shown adjusted income of Rs. 2,855 crore, 850 crore and Rs. 114 crore during 2014-15 which inflated adjustment figure. These adjustments put pressure on growth of final net profit in 2015-16 which increased only by 7.2 per cent to Rs. 24,029 crore from Rs. 22,415 crore.
The net profit of few majors like Torrent Pharma, Pfizer, Novartis, Morepen Laboratories, Albert David, Mangalam Drugs and Themis Medicare increased by over 100 per cent. However, the net profit of few important company's like Dr Reddy's Laboratories, Lupin, Piramal Enterprise, Wockhardt, Strides Shasun, Ipca Laboratories, GSK, Nectar Lifesciences, Aarti Drugs Marksans Pharma Ind-Swift Laboratories, Panacea Biotec, Venus Remedies was under pressure and declined during 2015-16. Sun Pharma's net profit increased only by 3.9 per cent to Rs. 4,716 crore and that of DRL net profit declined by 9.8 per cent. Lupin's net profit was under pressure and declined by 5.5 per cent to Rs. 2,270 crore. Aurobindo Pharma, Cipla Cadila Healthcare, Biocon, Alkem Laboratories, Dishman Pharma J B Chemicals and Glenmark Pharma posted strong growth of over 20 per cent in net profit.
Currently there are 7 listed multinational (MNCs) pharmaceutical companies viz., GlaxoSmithKline Pharma, Abbott India, Sanofi India, Pfizer, Novartis India, Merck and AstraZeneca India. The net sales of 7 MNCs increased only by 1.8 per cent to Rs. 11,569 crore during 2015-16 from Rs. 11,360 crore in the previous year. EBDITA improved only by 2.6 per cent to Rs. 2,282 crore from Rs. 2,224 crore and their net profit before adjustments declined by 2.7 per cent to Rs. 1,209 crore from Rs. 1,242 crore. However, after adjustments the net profit moved up by 26 per cent to Rs. 1437 crore.
The equity capital of 7 MNCs stood at Rs. 419 crore and their market capitalisation worked out to Rs. 64,863 crore. Their reserves and surplus increased by 6.9 per cent to Rs. 8,243 crore from Rs. 7,713 crore.
Equity capital of Pharmabiz 100 companies increased to Rs. 4,677 crore from Rs. 4,250 crore and there Reserves & surplus went up by 18.7 per cent to Rs. 150,519 crore from Rs. 126,765 crore in 2014-15. The market capitalisation of top ten companies worked out to Rs. 498,923 crore as against there equity capital of Rs. 901 crore. Sun Pharma has build up strong reserves position and its reserves went up by 22.8 per cent to Rs. 31,164 crore from Rs. 25,377 crore. Its EPS for Re1 face value share worked out to Rs. 19.60 as against Rs. 18.90 in the previous year. With lower profits, DRL's EPS of Rs. 5 each equity share declined by 9.9 per cent to Rs. 117.34 from Rs. 130.22 and that of Lupin declined to Rs. 50.45 from Rs. 53.54 in the last year. Similarly, EPS of few majors like Piramal Enterprises, Wockhardt, Strides Shasun, Ipca Laboratories, GSK, Nectar Lifesciences, etc declined during 2015-16.
The pharmaceutical segment is offering handsome returns to their investors in the form of dividend. Few majors like Piramal Healthcare, Torrent Pharma, Divi's Laboratories, Alkem Laboratories and GSK declared handsome equity dividend of over 500 per cent during 2015-16. Further, DRL, Lupin, Cadila Healthcare, Glenmark Pharma, Jubilant Lifesciences, Alembic Pharma, Abbott India, Sanofi India, Pfizer, Ajanta Pharma, J B Chemicals, FDC, Unichem Laboratories and Novartis declared equity dividend of over 200 per cent.
Thus, the overall performance posted by leading 100 was satisfactory with higher returns during 2015-16 despite several odds. Investment in R&D, product launch and entry into new markets may give significant support in the coming yeaRs. However, the ban on the manufacture and sale of several fixed dose combination during March 2016 may put pressure on working in the current year. Further, DPCO, competition, recessionary conditions in several countries, government intervention. unfavourable exchange rates and limited final outcome from R&D investments may impact bottomline in 2016-17.
Highlights of 100 Cos