elder project ltd Management discussions

Management Discussion and Analysis Report

Indian Pharmaceutical Industry

India is now among the top five pharmaceutical emerging markets globally and is a front runner in a wide range of specialties involving complex drugs manufacture, development, and technology. The Indian pharmaceutical industry is a highly knowledge based industry which is growing steadily and plays a major role in the Indian economy. As a highly organised sector, a number of pharmaceutical companies are increasing their operations in India. The industry is expected to touch US$ 35.9 billion by 2016. As per the IMS dataset, the pharmaceutical market in India for the period MAT June, 2013 was Rs. 75500 crores with a growth of 10%. Abbott remained on top position followed by Cipla, Sun Pharmaceutical, GlaxoSmithKline and Zydus Cadila respectively.

The major factors responsible for growth are increasing sales of generic medicines, continued growth in chronic therapies and a greater penetration in rural markets. The cumulative drugs and pharmaceuticals sector has attracted foreign direct investments (FDI) worth US$ 11,304.91 million during April 2000 to April 2013, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).

The Indian pharmaceutical industry would continue to experience strong growth as structural growth drivers continue to remain impervious. The industry is expected to register a growth of 10-12 percent in 2013-14, according to a study by ICRA. It is also expected that in-organic investments will gain momentum in the medium-term as companies plan to create stronger presence in emerging markets and build expertise in select therapy areas.

According to a research paper published by Mckinsey, even in the most pessimistic scenario, India will be a top 3 pharmaceutical markets by incremental growth by 2020 and in absolute size the country will become the 6th largest market globally by 2020. Only USA, China, Japan, Germany and Russia will be ahead of India in the global phama sweepstakes.

The McKinsey report is of the view that Indias pharmaceutical market growth will be fairly fragmented, thereby creating opportunities for a large number of players. Nearly two-thirds of the market will be in top cities and tier 1 towns and hence targeting middle class consumer segment will be a key determining factor for success.

Company Overview

Elder Pharmaceuticals Ltd has been one of the leading domestic manufacturing & marketing company with a pan-India geographical presence by virtue of its extensive field force. Over the past so many years, the Company has built leadership position in womens healthcare, wound care & nutraceutical segments and has also made major inroads into the lifestyle disease management segment as well as anti-infective segment. In addition to the formulation business, the Company offers medical equipments including Oxygen concentrators & nebulisers. Also, the Company provides industrial equipment for instrumentation & weighing based automation applications. Apart from the marketing strength, the Company manufactures formulations in 6 manufacturing plants across the country & all of them conform to the GMP norms. The dosage forms that are being manufactured in these plants include tablets, capsules, syrups, injectables, skin creams & ointments. The Company also manufactures few APIs some of which are used for captive consumption. Additionally, the company has two step down subsidiaries, Elder Biomeda (Bulgaria) & NeutraHealth PLC (UK), which facilitate its presence in these markets.

Financials

Standalone revenues for the financial year ended June,2013 stood at Rs. 124,203.57 lacs as against Rs. 99,249.38 lacs for the year ended March 2012. When we compare similar periods, the revenues generated during the current financial year are higher than the earlier financial year by 0.11%. The profit for the period under review stood at Rs. 9373.90 lacs as compared to Rs. 8407.33 lacs for the year ended March 2012. When we compare similar periods, the profits generated during the current financial year are lower than the earlier financial year by 10.8%. The Consolidated revenues for the financial year ended June,2013 stood at Rs. 165,064.02 lacs as against Rs. 134,258.92 lacs for the year ended March 2012. When we compare similar periods, the revenues generated during the current financial year are lower than the earlier financial year by 1.65%. The profit for the period under review stood at Rs. 8215.00 lacs as compared to Rs. 7225.81 lacs for the year ended March 2012. When we compare similar periods, the profits generated during the current financial year are lower than the earlier financial year by 9.05%.