syncom healthcare ltd Management discussions

Industry Structure and Developments

Global economy

Global economic growth slowed in 2018 to 3.6% from 3.8% in 2017 (Source: International Monetary Funds World Economic Outlook). A slowdown in the Eurozone, trade tensions in China and macro-economic stress in developing economies such as Argentina and Turkey led to this slowdown. Escalating trade tensions between the US and China coupled with uncertainty on Brexit added to the volatility in financial markets and delayed investment decisions, putting further brakes on economic activity. Eurozones economic growth dipped to 1.8% in 2018 from 2.4% in 2017 due to weak export performance and low domestic demand. Chinas growth rate also fell to 6.6% from 6.9% in 2017 as tight monetary policy reduced demand in the domestic market. The US economy, however managed to buck the trend and register a 2.9% growth in 2018. Good employment rates, favorable business conditions and marginal inflation helped the worlds largest economy grow at its strongest pace in nearly a decade.

Indian Pharmaceutical market

The Indian economy too slowed down to 6.8% in 2018-19, after growing at 7.5% in the first half of the fiscal year, due to weak industrial output on the back of a contraction in manufacturing, capital goods and consumer durables, along with subdued urban and rural demand. The IMF expects Indias GDP growth to recover to levels above 7% as the Reserve Bank of India (RBI) shifts its policy stance from neutral to accommodative aided by the governments push for structural reforms.

India is the largest manufacturer of generic drugs globally. Indian companies received 290 Abbreviated New Drug Application (ANDA) approvals from the US Food and Drug Administration (USFDA) in 2018 (source: pharmaknowladgecentre.com). Competitive advantages such as a large pool of scientists and engineers, reasonable cost of production and strong R&D spending by Indian companies have made the country an export hub for the pharmaceutical industry with total pharma exports for FY 2017-18 touching US$17.27 billion and US$ 15.52 billion in FY19 (up to January 2020). (Source: IBEF pharmaceuticals) Indias domestic spending on medicines stood at US$20.4 billion and is expected to grow by 8-11% to US$28-32 billion by 2023. (Source: IQVIA 2020 Global health Care Outlook)

In order to promote healthcare in India, the government has taken several initiatives including:

Bank Dues:

As the company got admitted under CIRP, Banks and other financial institutions have submitted their claim to the ‘Resolution Professional. As laid by the law, this matter too will now be addressed under Resolution Process as per IBC 2016. Information with regard to various actions & steps taken under CIRP, details of claims received and admitted etc. have been uploaded to the companys website. http://www.bartronics.com/CIRP.html

Key Developments

As mentioned above, during the year your company was admitted under CIRP. However, during the end of financial year, entire country was experiencing the effects of pandemic caused by Coronavirus. Owing to this, regulatory authorities allowed all companies to conduct Annual General Meeting for Financial Year 2019-20 by December 31, 2020.

Human Capital

Your company believes that the value of any enterprise is only as good as its Human Capital. The Resolution Professional is also putting valiant efforts to ensure that the employees do not face any adverse situation due to the ongoing Resolution Process faced by the Company. There were no cases of sexual harassment of woman at work place. Also, there are no instances of Child Labour/ Forced Labour/ involuntary labour and discretionary employment during the year.

Single-Window Facility:

The Drug Controller General of India plans to start a single-window facility to provide consents, approvals and other information. The move is aimed at giving a push to the ‘Make in India initiative.

Electronic Platform:

The government plans to set up an electronic platform to regulate online pharmacies and halt any misuse of

Drug Price Control Order:

The government introduced mechanisms to deal with the issue of affordability and availability of medicines.

One of the key developments of this year was the introduction of the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (PMJAY). Ayushman Bharat is one of the worlds largest funded healthcare programme targeting more than 500 million beneficiaries and should significantly enhance access to medical care across the country.

Pricing and Access

The growing demand for healthcare due to demographic change is further constraining healthcare providers with push for universal healthcare coverage. As difficult economic conditions are burdening patients with out-of-pocket expenses relating to medicines, Government and payer budgets remain subject to increasing reviews. The pricing of biopharmaceutical products continues to draw significant attention from Governments and the public, with calls for better transparency on how prices are set and a greater emphasis on health outcome-based pricing. Specialty drugs are increasingly being used for treatment of complex, chronic or rare conditions, and pricing for these products reflects the higher value they bring to patients and payers, as well as the smaller patient numbers as a result of targeted treatment options.

Despite this, medicines that are clearly differentiated in areas of unmet medical need will continue to attract strong coverage and funding globally. To expand access to drugs, cell and gene therapies, life science companies may need to align their commercial models with changing market dynamics in advanced markets such as the United States and Europe. Biopharmaceutical companies may need to demonstrate not just the clinical benefits but also the economic and humanistic value that their products bring to all stakeholders.

Opportunities & Threat

The slowdown caused by the outbreak of pandemic due to coronavirus is more transient than structural. Economy is expected to revive gradually as necessary vaccines for the pandemic expected by early 2021. Any revival in the economy will be an opportunity for the company to grow. However, Companys inability to protect its operations owing to several headwinds will increase threat from its competitors.

Risks & Concerns

Company getting admitted under CIRP is one of the most critical risks for the business to remain as a Going Concern. A lot will now depend on resolution process which the Company is going through.