MANAGEMENT DISCUSSION AND ANALYSIS
P.I. Drugs & Pharmaceuticals Ltd is leading manufacturers of API - Animal Health
and formulations having presence In Indian and Global Markets. The company's revenue are
mainly from manufacture and sale of Veterinary APIs and Veterinary Finished Dosage Forms.
The Company exports to all major markets like Europe, South America, Australia, Asia
and Africa. It has a specialized and dedicated WHO - GMP accredited manufacturing plant
for the manufacture of API's.
The product cost primarily comprise raw and packing materials, purchase of finished
goods, staff cost, selling and marketing expenses, manufacturing overheads, R&D
expenses, and general overheads.
Highlights of Company's financial performance for the year 2008-49:
• The total income on a stand alone basis stood at Rs 10785 lacs compared to Rs
7519 lacs recorded last year.
• The operating margin stood at 13% as against 11 % previous year.
• Net profit after tax for the year stood at Rs 352 compared to Rs 252 lacs
registering a growth of 40%.
• The consolidated global income stood at Rs 15053 lacs as against Rs 7519 lacs.
• The domestic sales grew by 19% and stood at Rs 43 50 lacs.
• Export grew by 119% and stood at Rs 6255 lacs.
• Finished dosage forms business stood at Rs 1057 lacs.
• The API-Anthelmentic business contributes 90%.
• The formulation business contributes 10%.
• Top ten customers contribute for 50% of sales.
The Company has been consistently investing to upgrade its manufacturing facilities to
meet regulatory standards. Plans are on the unveil to double the capacity at its plant at
Mahad to cater to new customers and markets.
European markets have significant opportunities for its API Veterinary products and
formulations especially for those with low cost development and manufacturing
capabilities. The company therefore continues to focus on these markets for its business.
On the domestic front, the company plans to consolidate by tapping new markets as well
introduce new products and broad base its product base to lessen its dependency on fewer
Highlights of the year 2008-09
• Received certificate of suitability from European Directorate for Quality of
Medicines and Health Care for out of its API plant.
• The company received excellence award In SME sector from a leading nationalised
bank for its performance in 2008.
• The Mahad Plant was Inspected by leading MNC for supply of API for its Lymphatic
• DMF filings in Hungary, Rumania for its Anthelmentlc products.
Global Veterinary Pharmaceutical Market
The world animal health care market is valued at $16 billion annually and the animal
health products include veterinary medicines, feed additives, vaccines and other
Animal health industry is poised to grow at a CAGR of six to seven percent in the next
five years Animal health products market is growing at an annual rate of eight to ten
percent with a major chunk of growth coming from small and medium sized companies.
'The market estimation values are based on Animal Pharm Scrip reports (2006-07) which
project that the total Indian animal health market is approximately Rs 1157 crore, which
includes verticals like livestock cattle, poultry companion animals, equine and small
In the export market, the focus is on food and companion animal categories.
The fact that Indian market is only one percent of the world market, demonstrates the
potential available in the world. While growth comes from emerging markets like India and
Africa, size comes from being present in US, EU and Latin America."
Major growth drivers for the animal healthcare market are emergence of new diseases,
changes in animal production practices, new product introductions and ongoing food safety
concerns. Future trends include product development for certain segments like
parasiticides for companion animals.
While veterinary market looks promising the challenges ahead are meeting regulatory
standards which are at par with human health products, competition from China, volatility
of the currency.
Risk of Competition, price pressure
Generic Market across the world are characterised by number of players competing with
each other to grab market share putting continuous pressure on the prices of the product.
The company's business in developed generic markets of Europe and emerging markets of
India, Brazil, South Africa and other markets face stiff competition from Indian and other
players. Apart from this any action by Government in these countries towards controlling
prices of pharmaceutical products to keep check on health care costs can also impact our
pricing power adversely.
Risk of Litigation related to Quality of products, IP and other Litigations
Any deviation from the prescribed regulations or any variation in quality from
standards laid down by the regulatory authorities can lead to actions from these
authorities or litigation from customers. The company also faces the risk of litigation
from competitors and multinational pharmaceutical companies holding patents for products
and processes, in case the company's products or processes are claimed to be infringing
their intellectual property rights.
Foreign Exchange Risk
The company's operation are funded through foreign currency exposes it to the risk
associated with fluctuation in currencies of these countries vis a vis the Indian Rupee.
Any depreciation of Indian Rupee can lead to higher export realisation, but will also lead
to higher outgo on repayment of debt and import payments. The situation can be reverse in
case of any appreciation in Indian Rupee.
Internal Control System
The company has in place a well defined internal audit system where by an internal
audit is performed across locations of the company and the results of the audit findings
are reviewed by the audit committee. The company also has a reasonable system of internal
control comprising authority levels and powers and supervision, checks, and balances and
procedures. The system is reviewed and updated on an on- going basis. The company
continuously upgrades its internal control systems by measures such as strengthening of IT
infrastructure and use external management assurance services.