arvind remedies ltd Management discussions

Global trend

The Global Pharma market is estimated to be US $ 1 trillion and is growing at an average rate of 4 to 5% per annum. Increased penetration of specialized drugs and continued rise of emerging markets are key trends that will shape the global pharma markets in the coming years

The research based pharma industry is entering an exciting new era in medicine development. The research methods are evolving and the innovative pharma industry aims to turn fundamental research into innovative treatments that are widely available and accessible to patients, with less side effects directly addressing the site of action.

Outlook

India is ranked 3rd in volume by value and ranks 13th. Branded generics constitute 70% OF Indian pharma market. Indian exports have increased to US$ 10 billion in 2014. Indian pharma industry is estimated to grow at nearly 20% over next 5 years. There are around 500 indian pharma manufacturing facilities registered with USFDA . Govt. of India has unveiled pharma vision 2020 aiming at making india a global leader in drug manufacturing

Indian companies are focusing on global generic and API business. R&D activities and contract research and manufacturing alliances, is also fast emerging as preferred location. Several large selling drugs going off patent over next few years and reduced health care cost will provide attractive growth opportunities and is poised for accelerated growth in the coming years.

During the year under report, there was no change in the nature of companys business.

Domestic market

The Indian pharma industry during 2014-15 grew by mere 6.1% and reached size of approx Rs.823 bn. However it has been globally ranked third in terms of volume and tenth in terms of value. The market is expected to grow at a compounded Annual Growth Rate of 12% over the next five years.

The key factors influence growth of healthcare sector are growth in population, increasing incidence of diseases, increasing affordability, rise in insurance and government schemes.

Future scope

Increasing investment by MNCs reflect at their renewed interest in the Indian market, with the implementation of the product patent regime and strong growth prospects. Series of major acquisitions, steady growth in new product introductions especially in the branded segment and expansion in field force clearly indicates their renewed interest in the Indian market.

Indian generics to benefit from the ongoing wave of patent expiries. Most of the leading players have significantly expanded their ANDA filings in line with the patent expiration cycle. Hence US generics market has become significant contributor to the revenues of most leading Indian companies.

Keeping the above in mind, ARL can play vital role by going for registration of off patented products for exports and developing the outsourcing market. Key strategy will be to focus on the new and latest molecules approved by the authorities and share with top companies who can market these products, focus on additional dosages - injectible and softjel apart from tablets capsules liquid and ointments. ARL is focusing chronic diseases segments in ayurveda, diabetics, anti arthiritis and obesity segments. This will help to identify the new formulations without side effect. Also these alternate therapies can very well prevent the recurrence by addressing the root cause of the ailment so that the disease is totally eradicated rather than symptomatic elimination.

SWOT ANALYSIS

Strength

The industry has seen growth at CAGR about 15% in the last five years and it is expected that same trend will continue. Investment on R&D has increased. The Asian countries will emerge as fastest growing hub due to low cost and favourable regulatory environment. Sales is expected to grow at faster rate in India, China, and South Korea due to rising disposable income, health insurance scheme, availability of manpower and lower cost competencies. ARL can have its production planning to utilize the above opportunities in the domestic & global markets

Opportunities

Indian pharma has the potential to transform itself over the next decade. If spending in new drug discovery has increased to desired level, domestic firms could corner major share of global generics market in coming years. With highly talented manpower and cost advantage India generic manufacturers are well positioned to seize opportunities arising out of patent. Indian pharma companies are already in the process to get registered for US FDA approval as the size of US drug market is around 45% of global market. Companies who obtain US FDA approval for new drug application will save lot of money and time spent if go for off patented products on development of new drugs.

Threats & weakness

Greatest challenge and threat is too many players focused on similar bio equivalent products in the same market and thereby competition, Government Regulations and price controls, and increasing R&D costs result in providing low margins. There is also risk related to economic and political conditions in the world which in turn limits financial benefit of growth. Another threat is risk related to exposure to the Rupee US$ exchange rate.

Internal control system and their adequacy

The company has adequate system of internal controls, based on well-defined individual roles and responsibilities with their limit of authority at various levels as well as effective feedback flow. The Board of Directors of your Company has constituted a qualified and independent Audit Committee that reviews the adequacy of internal control at regular intervals.

The Company has appointed Cost Auditor as per the requirements of the provisions of Section 233(1B) of the Companies Act, 1956 and for the year 2012-13 the requirements have been complied with.

Human Resources

Human resource, as always, has been the major strength in the consistent development of the Organization. The HR department takes care to understand the work place phenomenon and relationships through comprehensive research. This helps the company to explain the role of work force in the organizational success in minute detail.

ARL has a programme of periodical review of its key employees performance along with their output. This enables them to realize their strengths and further enhances them with their awareness.

This is what enables ARL work together as an interdependent team for enhancing companys productivity and profits.

ARL continues to lay strong emphasis on Sales Training for its field force both at the induction level and through refresher programs to enable front-line medical representatives and managers for availing their field efforts products.

		For and on behalf of the Board
Place : Chennai
	Dr. B. ARVIND SHAH RAVINDRAN	Dr. CHANDRA
Date : 11/03.2016	Managing Director	Whole time
Director