In line with the rapid changes taking place in the global healthcare segment, the Gujarat- based pharmaceutical entities have adopted changes and is now focusing on cGMP compliance, investment in R&D, mergers and acquisitions, CRAMS and in-licensing opportunities. These companies which are moving ahead into new markets are all set to cash in on the emerging opportunities from patent expiration. With the help of investment in R&D activities, these pharma players are well set to launch complex generics, new active pharmaceutical ingredients and niche products. On the marketing front, these companies are focusing on sales as well as talent pool.
Product differentiation is crucial to overcome stiff competition with innovative pipeline and cost competitive products. The business of these companies will be benefited through ageing population, increase life expectancy, rising income, accessibility and affordability and growing chronic diseases like cardiovascular, anti-diabetes, anti-depressants and anti-cancers.
However, few odds like the regulatory ban by the Indian government from the month of March 2016 of a large number of fixed dose combinations, DPCO, unfavourable exchange rate fluctuations, warning letters from US FDA, stringent regulations and quality standards have adversely impacted their fortunes in 2015-16.
Moving ahead, the development of the business in new markets is a critical factor for future growth. The development of new products and commercialization processes is taking a longer time and needs higher investment. The final outcome of research activities and high rate of failure and long gestation period of a discovery project coupled with significant upfront costs put additional burden.
The leading 10 listed pharmaceutical companies with registered offices in Gujarat have put up good show during 2015-16 and is now moving ahead in international as well as domestic markets. The market capitalization of these companies viz., Sun Pharmaceutical Industries, Cadila Healthcare, Torrent Pharmaceuticals, Alembic Pharmaceuticals, Dishman Chemical & Pharmaceuticals, Claris Lifesciences, Lincoln Pharmaceuticals, Themis Medicare, Sun Pharma Advance Research Company and Lyka Labs worked out to Rs 2,75,700 crore plus on Bombay Stock Exchange as against their equity capital of Rs 625 crore. Sun Pharma's market capitalization worked out to Rs 1,85,616 crore followed by Cadila of Rs 37,643 crore. These companies have taken due care of investors and rewarded them handsomely by way of dividend distribution.
For the first quarter ended June 2016, the total net sales of these companies increased by 10 per cent to Rs 13,217 crore from Rs 12,065 crore in the corresponding similar period last year. Their net profit moved up by 56.4 per cent to Rs 2,831 crore from Rs 1,811 crore. The earnings before interest, depreciation, tax and adjustments (EBDITA) increased by 15.2 per cent to Rs 4,405 crore from Rs 3,823 crore.
The Pharmabiz leading 10 companies exhibited satisfactory financial performance during the year ended March 2016 despite several odds like quality problems, DOCO, foreign exchange rates, slower approval rate and competition. Torrent Pharma, Alembic Pharma, Cadila Healthcare, Themis Medicare, Lincoln Pharma registered strong all-round growth .
The aggregate net sales of these companies increased by 10.4 per cent to Rs 50,094 crore during 2015-16 from Rs 45,366 crore in the previous year. Sun Pharma remained on the top with net sales of Rs 27,744 crore and was followed by Cadila Healthcare (Rs 9,469 crore), Torrrent Pharma (Rs 6,529 crore), Alembic Pharma (Rs 3,145 crore) and Dishman Pharma (Rs 1,561 crore). The overall performance of Sun Pharma was under pressure due to merger of Ranbaxy Laboratories and warning letters from US FDA.
Though the sales of Sun Pharma increased only by 1.8 per cent due to US FDA warning letter, the sales of Torrent Pharma increased by 42.4 per cent to Rs 6,529 crore and that of Alembic Pharmaceuticals increased by 53.2 per cent to Rs 3,145 crore.A relatively small company viz., Lincoln Pharma has registered net sales growth of 46.2 per cent to Rs 389 crore.
The EBDITA of these companies increased by 27.3 per cent to Rs 16,041 crore during 2015-16 from Rs 12,601 crore mainly due to significant growth registered by Torrent Pharma and Alembic Pharma. The net profit also increased by 26.1 per cent to Rs 8,770 crore from Rs 6,957 crore. The equity capital of these companies worked out to Rs 561 crore and their reserves & surplus amounted to Rs 43,569 crore as against Rs 34,782 crore.
These companies have rewarded their investors by offering hefty dividend during 2015-16. Torrent Pharma declared an equity dividend of 700 per cent and Cadila Healthcare paid a dividend of 320 per cent. Alembic rewarded a dividend of 200 per cent and Sun Pharma paid a dividend of 100 per cent. Claris Lifescience declared an equity dividend of 20 per cent and Lincoln Pharma paid 10 per cent. Themis Medicare, Sun Pharma Advance Research Co (SPARC) and Lyka Labs did not declare any dividend for 2015-16.
The consolidated R&D expenditure of Sun Pharma increased by 17.3 per cent to Rs 2,207 crore during 2015-16 from Rs 1,881 crore in the previous year. A large part of the spending was for complex products, ANDA filings for the US, and API technologies. Its cumulative filing of ANDAs reached 572 and it received approval for 413 ANDAs across various therapies. Total 159 ANDAs were pending with the US FDA. Further, it filed 422 DMFs and received approval for 298 DMFz. The company is manufacturing over 300 APIs across 14 locations. Every year it is adding 20 APIs to its portfolio. The company has submitted total 1,013 patent applications and it granted 762 patents.
Cadila Healthcare's R&D expenditure reached at Rs 681 crore during 2015-16 and it filed 30 ANDAs , taking the cumulative number of ANDA filings to 269. Its received 10 ANDA approvals, taking the cumulative number of ANDA approvals to 103. Its vaccine technology centre is developing vaccines for the basic vaccine programmes such as diphtheria, pertussis, tetanus, haemophilus influenzae type B, hepatitis B, measles etc.
It has built one of the largest biosimilars pipelines in India and is currently marketing eight biosimilars products in India and have 20 biosimilars in various stages of development. Despite these R&D activities, the company was under pressure due to the US warning letter on its formulations facility in Moraiya. The R&D expenditure of Torrent Pharmaceuticals was at Rs 266 crore as at the end of March 2016 and worked out to five per cent of its turnover. Its R&D centre is engaged in the discovery of New Chemical Entities (NCEs) and development of new processes for known APIs and for value-added & differentiated formulations by leveraging its proprietary technologies for which patents have been filed. It received approvals for seven ANDAs during 2015-16 and its cumulative filing reached 77 ANDas and 27 DMFs in the US.
It also submitted 28 DMFs in the EU. Similarly, it filed 857 patents for NDDS technology and drug discovery projects and received approval for 353 patents. The company has initiated investment in the areas of oncology, dermatology, opthalmic, biosimilars and respiratory. It is planning to invest 6-8 per cent of sales in R&D activities.
Alembic Pharma's R&D expenditure increased by 152 per cent to Rs 307 crore from Rs 122 crore in the previous year. The R&D investment worked out to 10.9 per cent of sales. The company has fully operationalised its R&D centre at Alexandria Knowledge Park, Hyderabad and has increased internal R&D team strength from 400 to 500. It has received approval for total 76 ANDAs and its cumulative DMF filing has reached 81. The number of research projects under various stages of development quadrupled to 240 in 2015-16.
These companies have also invested in mergers and acquisition during the last couple of years and also setup new subsidiaries and joint ventures to spread their business in international markets. Further,a few companies have entered into tie-ups with major international players to tap the US and European markets. The enhanced presence in international market with the the help of R&D activities will enhance the growth of these pharma entities.