INDUSTRY STRUCTURE AND DEVELOPMENT
The Pharmaceutical Industry in India is the world's third-largest in terms of volume.According to India Brand Equity Foundation, the Indian pharmaceutical market is likely togrow at a Compound Annual Growth Rate (CAGR) of 14-17 percent in between 2012-2016. Indiais now among the top five pharmaceutical emerging markets of the world. According to PriceWaterhouse Coopers (PWC) in 2010, India joined among the league of top 10 globalpharmaceutical market in terms of sales by 2020 with value reaching US$50 billion.
TRENDS AND OVERVIEW OF THE INDIAN PHARMA INDUSTRY
Indian pharma companies are constantly innovating and adopting international standardsto stay relevant in the competitive global market. In fact, Indian pharma companies areknown for their strict regulatory compliance with international market norms. Indianpharma companies are making high investments to ensure absorption of modern procedures andpractices for operational efficiency. The two trends, viz, a growing focus on research anddevelopment coupled with fast paced growth in health information technology are emergingas critical drivers of the Indian pharmaceutical industry.
ROLE OF PHARMACEUTICAL INDUSTRY IN INDIA-GDP FACTS
The Central Statistics Office had estimated India's real GDP to have grown by4.6 percent during April-December 2013. It had projected the GDP growth for the entirefiscal year 2013-2014 at 4.9 percent, thus implicitly estimating the growth for the lastquarter at 5.5 percent.
The estimated worth of the Indian Pharmaceutical Industry is US$ 6 billion.
The growth rate of the industry is 13 percent per year.
Almost most 70 percent of the domestic demand for bulk drugs is catered by theIndian Pharma Industry.
The Indian Pharma Industry produces around 20 percent to 24 percent of theglobal generic drugs.
The Indian Pharmaceutical Industry is one of the biggest producers of the ActivePharmaceutical Ingredients (API) in the international arena.
The Indian Pharma sector leads the science-based industries in the country.
The pharmaceutical sector has the capacity and technology pertaining to complexdrug manufacturing.
Around 40 percent of the total pharmaceutical produce is exported.
55 percent of the total exports constitute of formulations and the other 45percent comprises of bulk drugs.
PHARMACEUTICAL INDUSTRY IN INDIA- GROWTH
As per the present growth rate, the Indian Pharma Industry is expected to be a US$ 20billion industry by the year 2015. The national Pharma market would experience the rise inthe sales of the patent drugs. The sales of the Indian Pharma Industry would worth US$ 43billion within the next decade. With the increase in the medical infrastructure, thehealth services would be transformed and it would help the growth of the Pharma industryfurther.
OPPORTUNITIES AND THREATS
The migration into a product patent based regime is likely to transform industryfortunes in the long term. The new product patent regime will bring with it new innovativedrugs. Large number of drugs going off-patent in Europe and in the US offers a bigopportunity for the Indian companies to capture this market. Since generic drugs arecommodities by nature, Indian producers have the competitive advantage, as they are thelowest cost producers of drugs in the world. Being the lowest cost producer combined withFDA approved plants; Indian companies can become a global outsourcing hub forpharmaceutical products.
The customer expectations are rising and they want new low cost therapies that areclinically and economically better than the existing alternatives. Towards providingbetter and new healthcare solutions to the customers, the company is planning to lauch thefollowing products during the year:
SEGMENT OR PRODUCT-WISE PERFORMANCE
The company is dealing in only one segment i.e. pharmaceutical. During the year underreview, the company has produced the demanded products with full capacity.
In a world that is striving to achieve lower drug costs at every level, productioncosts will continue to remain a key measure. The company has a good foundation of reliablesourcing and cost effective manufacturing systems and is exploring further ways ofreducing costs and strengthening competitiveness. This trend, as in the past, is expectedto continue with several new launches as well as improving the existing business. TheCompany has an enviable product basket with a large portfolio of regulatory approvals. Thefocus will be to continue to step up the volumes of high value products, improve the reachin the market while taking care to reduce overall costs. The Company will capitalize onits inherent strengths, some of which are given below:
Cost effective vertically integrated manufacturing systems;
Current Good Manufacturing Practices;
Best-in-class, best-in-cost, large manufacturing capacity;
Highly skilled professionals with regulatory expertise and competent to deliveron development, product processes and regulatory standards;
Access to new technologies.
RISKS AND CONCERNS
Drug Price Control:
At present 348 bulk drugs and 654 formulations are covered under National List ofEssential Medicines (NLEM). It is likely that the government may bring more such drugs andformulations under price control or change the mechanism of calculating the ceiling priceof the Drugs which are under the ambit of the revised policy, which in turn will affectthe net margins of the Company.
New Product Approvals:
The success of any Company is dependent on the continuous launch of the new products inthe market. In highly regulated business, the requirements to obtain regulatory approvalbased on product's safety, efficacy and quality before it can be marketed for anindication in a particular country, as well as to maintain and comply with licenses andother regulations relating to its manufacture and marketing, are particularly important.
Manufacturing & Supplying Risk:
Although a major portion of our finished formulations are being manufactured atin-house facilities, we also depend on third party suppliers for sourcing in some of themarkets. Any significant disruption at any of such in-house facilities or third partymanufacturing locations due to internal, third party lapses even on the short term basisdue to economic, political & social unrest or by any event which is Force Majeure,which may lead to impair our ability to produce, procure and ship products to the marketon a timely basis .
Product Liability Risk:
The business is exposed to potential claims for product liability. These risks aresought to be managed by appropriate laboratory and clinical studies for each new product,compliance with Good Manufacturing Practices and independent quality assurance system. TheCompany also has an insurance cover for product liability.
New Product Risk:
New product development and launch involves substantial expenditure, which may not berecovered due to several factors including development uncertainties, increasedcompetition, regulatory delays, delay in market launch and marketing failure. The Companymanages the risk through careful market research for selection of new products, detailedproject planning and monitoring.
The Company faces the risk of high costs of litigation. This risk is sought to bemanaged by careful analysis prior to development and launch of the products.
INTERNAL CONTROLS AND ADEQUACY
PDIL has well established internal control system for operations of the Company and itssubsidiaries. It is designed to ensure operational efficiency, protection and conservationof resources, accuracy and promptness in financial reporting and compliance with laws andregulations, which is supported by an internal audit process for reviewing the adequacyand efficacy of the Company's internal controls, including its systems and processes andcompliance with regulations and procedures. Internal Audit Reports are discussed with theManagement and are reviewed by the Audit Committee of the Board which also reviews theadequacy and effectiveness of the internal controls in the Company. The Company is wellstaffed with experienced and qualified personnel who play an important role inimplementing and monitoring the internal control environment and compliance with statutoryrequirements.
REVIEW OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
During the financial year 2013-2014, the Company met its fund requirements through acombination of short term debt and long term debt. As on 31st March, 2014, the Companyearned Rs.18650.53 Lacs as revenue from operations, profit before depreciation interestand tax of Rs.1691.24 Lacs and recorded loss after tax of Rs. 5870.12 Lacs. The Company iscontinuing its focus for enhancing production capacities, optimizing output, improvingmargins through innovative product development, better product mix and emphasis on brandedproducts and control on cost. Significant measures have been taken for simplification ofprocesses and structures which will result in improvement in productivity and efficiencyacross the organization.
PDIL's focus continued to be on further strengthening its processes and internalreviewing and monitoring systems. PDIL recognizes that nurturing and recruiting the besttalent is vital to the long term success of the enterprise. Employees are provided withcontinuous opportunities for active learning and development which are viewed as keydrivers of their personal growth and the success of PDIL.
The total staff strength of the Company as on 31st March, 2014 stood at 1019.
Your Company firmly believes that quality has to be present in every area of operationof the company. Various continuous quality improvement programs are built into the annualbusiness and operating plans to sustain inherent efficiency and competitiveness in valuedelivery to the stake holders and to the society at large. Benchmarking the GoodManufacturing Practices with best in class is continuously pursued in all endeavors toimprove efficacy in use of the resources and accomplish the deliverables: Safety, Healthand Environment.
Your Company continues to look for new opportunities to enhance health and safetytraining and awareness for employees and contractors.
Statements in the "Management Discussion & Analysis Report" describingcompany's strategy, business and financial analysis are in the nature of judgments andforward looking statements. Actual results may differ materially from those expressed inthe statement. Important factors that could influence the Company's operations includechange in Government regulations, tax laws, economic & political developments withinand outside the country and such other factors.
Manoharlal Gupta , Chairman
Vinod Kumar Gupta , Managing Director
Govind Das Garg , Whole-time Director
Dharam Pal Khanna , Director
Company Head Office / Quarters:
340 Laxmi Plaza Laxmi Indl Est,
New Link Road Andheri (West),
Phone : Maharashtra- / Maharashtra-
Fax : Maharashtra- / Maharashtra-
E-mail : email@example.com
Web : http://www.pdindia.com