The
Maharashtra- based pharmaceutical companies which have established a
strong presence in the domestic as well as international markets ,
with a focus on research and development (R&D), investments in
expansion, filing of products in highly regulated profitable markets,
partnering with major international giants, contract research and
manufacturing alliances, play a dominant role in the Indian
pharmaceutical scenario.
Despite
several challenges, these companies have soldiered on the global
stage giving a tough competition to multinationals. The
infrastructure facilities in the state, easy availability of talent
pool and government support , have created an ideal ecosystem for
growth. These companies have consolidated operations to meet the
rapidly changing market dynamics.
However
these companies are now facing headwinds on account of implementation
of GST, drug price control, competition, exchange rates,
demonetization and quality related problems with US FDA. The current
year will be a difficult one as several major companies suffered
heavy setback in the first quarter ended June 2017.
Implementation
of GST and demonetisation have also put pressure on working capital
in the first quarter ended June 2017. The slow growth in profits and
lower exports impacted the share price movements and market
capitalization. Share prices of several companies have moved
southward and are now headed for yearly low levels. This has shaken
the confidence of investors and many have moved to other sectors of
economy. Despite all these black swan events, the managements of
pharma companies have rewarded their stake holders with higher
dividends.
The
revenue of Maharashtra- based listed 50 pharma companies, with net
sales above Rs 25 crore, are contributing to almost 45 per cent to
the Pharmabiz sample of top 100 companies. The net sales of 50
companies increased by 14.7 per cent to Rs 86,705 crore during
2016-17 as against Rs 75,595 crore in the previous year. Their EBIDTA
increased by 22.9 per cent to Rs 20,298 crore from Rs 16,509 crore .
The net profit increased only by six per cent to Rs 9,327 crore from
Rs 8,798 crore. As against the equity capital of Rs 1,342 crore,
their reserves and surplus moved up by 10.6 per cent to Rs 78,283
crore from Rs 70,796 crore in the previous year.
Despite
lower profits, several companies declared handsome dividend during
2016-17. Lupin paid equity dividend of 375 per cent, Alkem
Laboratories 750 per cent, Sanof India 680 per cent, Ajanta Pharma
650 per cent and Abbott India 400 per cent. Cipla, Glenmark, GSK,
Pfizer, Unichem, Merck, Novartis declared equity dividend above 100
per cent.
Among
the Pharmabiz sample 50 Maharashtra- based companies, Lupin
maintained its leadership position with consolidated net sales of Rs
17,120 crore during 2016-17 and followed by Cipla Rs 14,281 crore and
Glenmark Pharma Rs 8,970 crore. Piramal Enterprises total
consolidated net sales worked out to Rs 8,504 crore and its pharma
sales contributed 46 per cent only at Rs 3,973 crore. Alkem
Laboratories net sales reached at Rs 5,853 crore. There were 18
companies with net sales above Rs 1,000 crore mark. Two companies
viz, Indoco Remedies and FDC clocked sales of above Rs 1,000 crore
for the first time. The net sales of 10 companies declined during
2016-17.
A
few majors from the sample of 50 companies have shown significant
growth in top line during 2016-17. Lupin's net sales increased by
24.4 per cent to Rs 17,120 crore. Glenmark Pharma, Piramal
Enterprises, Strides Shasun, Sequent Scientific, Bliss GVS Pharma,
Aarey drugs, Gufic Biosciences, Parnax Lab, Fredun Pharma and Kiltch
Drugs posted better sales growth of over 20 per cent. However, net
sales of Wockhardt, Marksans Pharma, Sterling Biotech, Parenteral
Drugs, Anuh Pharma and Sanjivani Paranteral declined by over 10 per
cent.
Out
of seven listed multinational companies in India, except AstraZeneca
Pharma, six other companies have set up their registered office in
Maharashtra. The financial performance of six MNCs viz.,
GlaxoSmithKline Pharma (GSK), Abbott India, Sanofi India, Pfizer,
Memrck and Novartis India was not upto the mark during 2016-17. Only
Abbott India registered double digit growth of 11 per cent in sales
during 2016-17 to Rs 2,921 crore. GSK's net sales increased by 6.1
per cent to Rs 2,920 crore and that of Sanofi India's increased by
7.7 per cent to Rs 2,206 crore. Merck's sales moved up by 6.6 per
cent to Rs 968 crore. However, net sales of Novartis India declined
by 4.9 per cent to Rs 656 crore.
During
the first half ended June 2017, Indian pharmaceutical companies
secured 138 ANDA approvals from US FDA and 32 tentative approvals.
Out of this,10 Maharashtra -based pharma companies received final
approval for 37 ANDAs and 12 tentative approvals from US FDA during
the first half with higher R&D investments. Lupin grabbed nine
ANDA approvals followed by Alkem Laboratories and Glenmark Pharma
which received approval for six ANDAs each. Strides received four
approvals. Cipla and Wockhardt got three approvals each.
Indian
pharmaceutical companies are facing quality problems and are passing
through a difficult patch. During the year 2016, a few companies like
Lupin,Cipla, Alkem Laboratories and Indoco Remedies received US FDA
warning letters regarding lapses in quality of products. During the
first half ended June 2017, Wockhardt, Alkem Labs, Marksans Pharma,
Lupin and Strides received warning letters form US FDA. This put
pressure on overall working of these companies as their sales in US
declined sharply.
The
pharma majors like Lupin, Cipla, Glenmark, Indoco Remedies, Strides
Shasun, Wockhardt, Piramal Enterprises are investing more in R&D
activities to be more competitive, make healthy product pipeline and
grab patent expiration opportunities. Lupin is planning to
consolidate on its generics portfolio while focusing on complex
generics and speciality products. Its R&D expenditure has
increased to Rs 2,310 crore (13.5 per cent of its revenues) during
2016-17 from Rs 1,604 crore in the previous year and has helped it to
become a leader in differentiated product introductions. Currently,
1,700 scientists and technologists are employed by Lupin. The company
has set up a biotechnology R&D centre at Pune to produce products
for approval in both regulated and semi-regulated markets.
Lupin
has filed 37 ANDAs in the US market during the year ended March 2017.
Its cumulative ANDA filings stood at 368 as of June 30, 2017 with the
company having received 217 approvals to date. It now has 45
first-to-files filings (FTF) including 23 exclusive FTF
opportunities. Its cumulative DMF filings stands at 187. It received
approval for 3 MAA from the European authority during the June 2017
quarter. Cumulative filings with European authorities now stand at 61
with the company having received 57 approvals. Its US revenue
increased to US$ 1.1 billion in 2016-17 with launch of 18 new
products in the US market. The sales in US contributed to about 48
per cent share to its total revenue. It is well set to maintain its
leadership in new product introductions in the coming years.
Cipla,
a Rs 14,000 crore pharma giant, has spent about 7.6 per cent of its
revenue on R&D activities during 2016-17.
The
company has successfully integrated two recent acquisitions, InvaGen
and Exelan into its global mainstream operations. It filed 32 ANDAs
in the US. Its focus remained on a global access programme in several
critical therapeutic and neglected areas that include HIV/AIDS,
malaria, hepatitis, cancer and reproductive health. The company is
planning to file over 20 ANDAs in the US in the current year. During
the June quarter Cipla's R&D investment reached Rs 212 crore. The
company launched four new products in the US and filed three new
ANDAs during the quarter. It is planning to file 25 more products in
the full year. Its sales declined by 3.5 per cent to Rs 3,432 crore.
However, its net profit moved up strongly by 21 per cent to Rs 409
crore.
Wockhardt's
Drug Discovery programme has won QIDP status by US FDA for five NCEs,
three for gram positive organisms and two for gram negative
organisms. It increased number of patent filed in antibacterial drugs
by 315 per cent. The company has embarked on abridged Phase III
clinical trial for WK 5222 which will be a life-saving destination
therapy for serious hospital-acquired infections such as pneumonia,
ventilator associated pneumonia, blood stream infections etc. Its R&D
expenditure increased to Rs 571 crore and worked out 14 per of total
sales. It filed 311 patents and won 80 patents, taking cumulative
patents filed to 2,904 and patents won to 553.
GSK
is investing Rs 1,000 core to set up a new facility at Vemgal,
Karnataka, which will offer cost effective products from 2018. The
new facility will initially supply a range of solid dose form
products. The company is set to focus on untapped rural market,
vaccines and new products. Its sales during the first quarter ended
June 2017 declined by 14 per cent to Rs 587 crore and net profit
nosedived by 63 per cent to Rs26.42 crore from Rs 72.27 crore..
The
ongoing US FDA regulatory issues have adversely impacted the Ipca
Laboratories business. The company’s generic formulations business
in the European market also suffered due to Brexit and resultant
significant currency fluctuations. The company has developed and
submitted 62 generic formulation dossiers for registration in Europe
out of which 61 dossiers are registered. It has also obtained
certificate of suitability (COS) of 48 APIs from European Directorate
for Quality Medicines. Its R&D expenditure was Rs 125.67 crore
(4.06 per cent of the turnover) as against Rs 137.67 crore (4.91 per
cent of the turnover) in the previous year. The sales of API
increased to Rs 710.26 crore as against Rs 658.13 crore in the
previous financial year, a growth of eight per cent.