MANAGEMENTS DISCUSSION & ANALYSIS REPORT
Global economy
In FY23, the resurgence of COVID in China and the geopolitical
conflicts continued to affect the global economy. Russias invasion of Ukraine
causing supply chain disruptions worldwide, exacted a heavy toll on the economy. This
resulted in an upward pressure in commodity prices increasing an already elevated
inflation in advanced as well as emerging countries. These major headwinds contributed to
the world facing a broad-based inflation and sharper-than-anticipated economic slowdown.
The rising costs of living, inflated food and energy prices, tightening liquidity
conditions and the lingering effects of the pandemic are all adversely impacting the
global economic growth.
Supply chain constraints and market volatility have dented consumer
sentiment, affected global economic prospects and lowered capital outflows. Several
nations are dealing with persistent demand-supply imbalances and decadal-high inflation
rates. According to World Bank, Global headline CPI inflation stood at 7.6% in CY 2022. To
tame inflation and achieve price stability, central banks around the world have responded
with synchronised rate hikes and tightened monetary policy.
7.6%
Inflation rate of FY2023
Growth of the advanced economies will decline from 2.5% in CY 2022 to
0.5% in CY 2023, as forecasted by the World Bank in its Global Economic Prospects for
January 2023, indicating a potential worldwide recession. The per-capita income of
emerging and developing countries is anticipated to rise by an average of 2.8% during the
next two years.
Outlook
Despite support from a persistent rebound in the services sector, it is
projected that both global trade and growth would decline sharply. From a rate of 4% in
2022, global trade growth is predicted to decrease to 1.6% in 2023, in part because of a
decline in worldwide demand. Although there are more global supply chain restrictions than
there were before the pandemic, these have been easing since mid-2022, as seen by lower
transit costs and a return to normal inventory levels.
According to recent IMF forecasts, global growth will drop down further
from an expected 3.4% in CY 2022 to 2.9% in CY 2023. CPI inflation is expected to stay
high at 5.2% in CY 2023 before falling to a projected 3.2% in CY 2024. The challenges
posed by the cost-of-living crisis are expected to ease out in the future on the back of a
supportive fiscal policy. It is also anticipated that the monetary policy will maintain
its current trajectory to restore price stability. Structural improvements can make the
fight against inflation easier by bolstering productivity and removing supply chain
constraints.
Indian economy
The Indian economy demonstrated resilient growth despite the
geopolitical and high inflation-induced global economic headwinds. India ranked as the
fifth-largest economy in the world in terms of US dollars and as one of the countries with
the fastest economic growth in FY 2023.
The Indian economy is estimated to have recorded a growth of 7% in
FY23, according to the first advance projections provided by the National Statistical
Office (NSO) on January 6, 2023.
7%
Indias growth in FY 2023
Despite the RBI hiking the repo rate to 6.5% and placing medium- to
short-term liquidity pressure on the Indian economy, the backdrop of strong credit growth,
stable financial markets and the governments ongoing emphasis on infrastructure and
capital spending are favourable for pitching in substantial investments.
Outlook
It is anticipated that a drop in international demand will adversely
impact exports. Real GDP growth for 2023 to 2024 is projected to be 6.4%. Taking into
account all of these factors and keeping the risks in check, Q1 growth will be 7.8%, Q2
growth will be 6.2%, Q3 growth will be 6.0% and Q4 growth will be 6.0%. The risks are
evenly distributed, with the CPI inflation prediction for FY2023–2024 at 5.3%, the
first quarter at 5%, the second at 5.4%, the third at 5.6% and the fourth quarter at
5.6%.1
Although the outlook for the global economy appears grim, the fact that
the Government of India and RBI have been able to safeguard the Indian economy from an
impending global recession is reflective of Indias strong economic fundamentals.
India shows signs of recovery, and pent-up credit demand over the last two years offers
hope for new growth opportunities in the domestic market.
Industry overview
Global pharmaceutical industry
Following a considerable recovery in 2021 as markets recovered from the
pandemic, the global consumption of medicines topped out in 2022. The total sales volume
is anticipated to increase at a CAGR of 1.6% in days of therapy, with Asia-Pacific, India,
Latin America, Africa and the Middle East and China predicted to outpace the global volume
growth by 2027. Through 2027, developed nations in Western Europe, North America, Japan
and Eastern Europe are anticipated to witness growth at a slower pace of 0.1% to 0.4%, in
part because of their existing higher per capita use. Disruptions caused by the ongoing
conflict in Ukraine are also impeding Eastern Europes volume growth.
Global market growth is anticipated to return to pre-pandemic levels by
2024. From 2020 to 2027, it is likely that global spending on medications will total USD
497 billion more than it did prior to the pandemic. This is because of increased
investment on COVID-19 vaccines and novel treatments as well as other therapeutic sectors.
Spending and growth by regions
The global pharmaceutical market is anticipated to expand at a 3-6%
CAGR, with a total market value of roughly USD 1.9 trillion by 2027. Spending and volume
growth will follow differing trajectories by area. With larger established markets
expanding more slowly, markets in Eastern Europe, Asia and Latin America are growing in
both volume and spending.
On a net price basis, the U.S. market is anticipated to expand between
-1% and 2% CAGR over the following five years, down from 4% CAGR over the previous five
years. Spending in Europe is anticipated to rise by USD 59 billion, with a focus on
generics and biosimilars by 2027.
The pandemic has a wide range of consequences for the Asia-Pacific
region, but stable growth is expected in the years ahead, beginning in 2021.
In the next five years, Japans spending on medicines is expected to
increase by -1% to 2%, as strong brand growth is countered by a change in the yearly price
reduction and continuous shifts to generics. 2
Trends and innovations 3
The world is undergoing a rapid technological transformation and it is
crucial for every industry to incorporate the most recent improvements through systematic
research and development. Adopting cutting-edge technology enhances the efficacy and
profitability of the overall business in terms of its operations, cost-effectiveness, data
collection and security.
The industry is exposed to many advanced research and development
procedures. They are mentioned below:
Artificial intelligence- The process of sourcing and developing new
drugs requires the identification of patients, particularly when performing clinical
trials. Artificial intelligence streamlines the procedure for determining eligibility
requirements and patient inclusion. It also makes group identification quicker and less
expensive.
Big data and analytics- To analyse the massive amount of data created
during the drug discovery and development process, the pharmaceutical industry needs
high-performance technology.
Flexible production- Due to shifting market dynamics, the
pharmaceutical sector is investigating novel manufacturing techniques, such as small
batches for precision medicine. Single-use bioreactors are also becoming more popular
since they amplify output and lower downtime. Apart from having low energy requirements,
continuous manufacturing reduces waste and generates high productivity.
Precision medicine- Treating each patient as a unique individual is
essential for ensuring proper treatment. Drug exposure models determine the ideal dosage
for a specific medication based on variables including age, sex, comorbidities and other
clinical criteria.
Blockchain technology- Blockchain technology is also being incorporated
to combat the use of fake medications and poor-quality pharmaceuticals, which enter the
pharmaceutical supply chain and cause thousands of deaths each year.
Addictive manufacturing- The development of advanced 3D printers that
can produce tissues or cells is the subject of extensive research. Drug discovery, organ
engineering and regenerative medicine all benefit greatly from 3D printing of human
tissues. This makes it possible to create precise medication as well as medical
formulations that are based on physiology or age.
Extended reality- Pharmaceutical research and manufacturing extensively
use virtual reality and augmented reality.
Real-world data- Due to the emphasis on research, the pharmaceutical
sector must ensure that the data it uses is trustworthy and relevant. The pharma sector is
changing rapidly owing to the availability of real-world data made available by the
Internet of Things (IoT), sensors and wearables.
Digital therapeutics- Software- and evidence-based therapy
interventions are delivered through digital therapeutics to prevent, manage or treat
behavioural, mental and physical health concerns.
Curative therapies- There is a paradigm shift happening in the field of
medicine, from managing ailments to healing them entirely. By mandating the need for
prolonged treatments, curative therapies like cell and gene therapies are altering the way
in which chronic diseases or difficult-to-treat ailments are handled.
Indias pharmaceutical industry
Indias pharmaceutical sector is prominent in the global pharmaceutical
market. India is the third-largest producer of pharmaceutical goods across the world by
volume and the fourteenth-largest producer by value.
Indias pharma sector manufactures the largest number of vaccines
in the world, with a market share of 60% and is the largest provider of generic drugs
globally, accounting for 20% of the total supply by volume. The domestic pharmaceutical
market in India is projected to reach USD 65 billion in 2024 and USD 130 billion by 2030.
Pharma exports have performed well, maintaining positive growth despite
the slowdown in global trade and the decline in demand for COVID-related medicines.
Exports of drugs and pharmaceuticals increased by 22% between April and October 2022
compared to the same pre-pandemic period in FY 2020. In September 2022, cumulative FDI in
the pharmaceutical industry exceeded USD 20 billion. In addition, FDI inflows have surged
four-fold over the course of five years, reaching USD 699 million, owing to attractive
regulations and the sectors promising future outlook.
Government initiatives
• The Government has taken a number of actions to upgrade the
pharmaceutical sectors infrastructure. The Strengthening the Pharmaceutical Industry
(SPI) initiative, a five-year project with a USD 500 million budget (from FY2022 to
FY2026), was unveiled on March 11, 2022. It first aims to strengthen the already-existing
infrastructure facilities before providing financial support to pharma clusters to create
shared facilities.
• By offering interest subsidies or capital subsidies on their
capital loans, MSMEs production facilities are modified and upgraded to comply with
local, national and global regulatory standards.
• The Government also encourages awareness and understanding of
the pharmaceutical and medical device industries by conducting studies, developing
databases and convening experts from the business world and academia, as well as
policymakers, to share their expertise. 4
Trends and innovations 5
According to the EY FICCI analysis, Indias pharmaceutical market
is expected to be worth USD 130 billion by the end of 2030. The pharmaceutical industry in
India has a better chance of expanding in 2023 due to a strong focus on high-quality
production, affordable medicines and prompt application of innovation and technology.
However, higher adaptability and resilience are needed to mitigate certain concerns, such
as low R&D spending, a lack of skilled personnel, intellectual property (IP)
restrictions and rights and potential export contraction.
Proactive quality management system- To manage pharmaceutical supply
chains more efficiently, the pharmaceutical industry has to implement better track and
trace systems.
Digital technologies- Pharmaceutical industries are gradually investing
in ramping up their manufacturing capabilities to match regulatory requirements and meet
international standards as the countrys footprint expands.
Emerging market penetration- Emerging markets are becoming a prominent
source of growth and income for the pharmaceutical industry. In order to remain
competitive, pharmaceutical companies will concentrate more on developing their worldwide
competencies while implementing local market-specific strategies.
African pharmaceutical industry
The growth drivers of the African pharmaceutical market are the
continents rapid urbanisation, enhanced healthcare capacity and favourable business
climate. The market is expected to be worth between USD 56 billion and USD 70 billion by
2030, according to estimates. As Western markets approach a recession, it is advantageous
for global corporations and pharmaceutical firms seeking new growth opportunities.
Patients will also have access to medications that were previously inaccessible in the
continent.
Growth opportunities
Global malaria overview
Plasmodium parasites, which individuals contract through the bites of
infected female Anopheles mosquitoes, are the primary sources of the acute fever known as
malaria. The two most dangerous parasite species, P. falciparum and P. vivax, are among
the five, that cause malaria in humans. The most common and fatal malaria parasite on the
continent of Africa is P. falciparum. The most common malaria parasite outside of
sub-Saharan Africa is P. vivax.
Almost half of the worlds population was susceptible to malaria in
2021. Infants, young children, pregnant women, persons with HIV/ AIDS and people with low
immunity who travel to places where malaria transmission rates are high, such as migrant
workers, mobile populations and travellers, are at a higher risk of acquiring malaria and
developing severe symptoms.6
Globally, 247 million malaria cases were reported in CY 2021 among 84
malaria-endemic countries, marking an increase of 2 million cases compared to CY 2020.
Over the last five years, the WHO African Region has reported the maximum number of cases.
During the pandemic, crucial malaria services were disrupted, resulting in 63,000 deaths
between 2019 and 2021. Thus, the mortality rate rose to around 15.1 deaths per 100,000
at-risk individuals in 2020 before dipping slightly to 14.8 in 2021.
In 2021, there were nine malaria-endemic nations in the WHO SouthEast
Asia Region, which together accounted for 5.4 million cases or 2% of all malaria cases
worldwide. About 79% of all malaria cases in 2021 were in India.
Opportunities
Increasing aged population
With the global rise in life expectancy, there is an escalation in the
requirement for medications and therapies pertaining to age-related health ailments.
Conditions such as arthritis, heart disease, diabetes, Alzheimers, and various forms
of cancer are increasingly prevalent among the elderly population, leading to an amplified
necessity for remedies targeting these specific ailments.
Personalised Medicine
The progressions in genomics and personalised medicine have facilitated
the customisation of treatments to suit the individual patients distinct genetic
composition. This paradigm shift is especially noteworthy in the realm of cancer
treatment, where tailored approaches have gained prominence. Consequently, this
development presents pharmaceutical companies with a notable prospect to create and market
highly specialised treatments that often come at a higher cost.
Advancement in Technology
The enormous potential of AI, Machine Learning, and Big Data in
enhancing the processes of drug discovery and development is widely recognised. These
technologies offer the capability to conduct more efficient data analysis, predictive
modelling, and patient monitoring, thereby resulting in cost savings and increased
efficiencies within the pharmaceutical industry. Furthermore, the integration of the
Internet of Things (IoT) has the potential to contribute to medication adherence and
real-time monitoring of patients, further augmenting these advancements.
Telemedicine
As the landscape of healthcare delivery undergoes transformation,
telemedicine is assuming a larger role in the provision of patient care. Consequently,
this shift opens up novel avenues for pharmaceutical companies, particularly in areas such
as direct-to-patient marketing, medication adherence programs, and collaborations with
telehealth providers. These emerging opportunities enable pharmaceutical companies to
enhance their engagement with patients and capitalise on the potential benefits offered by
telemedicine platforms.
Increasing Health Awareness
As the availability of information expands, individuals are
progressively developing a heightened awareness of their health. This growing trend has
the potential to elevate the demand for preventive medications and health supplements,
thereby creating an additional opportunity for the pharmaceutical industry.
Challenges
Regulatory Changes
Pharmaceutical companies are confronted with intricate regulatory
frameworks that vary across different countries. These regulations undergo rapid changes,
and a failure to adapt can result in severe repercussions. Regulatory authorities
consistently revise guidelines to enhance drug safety, efficacy, and quality control,
necessitating pharmaceutical companies to maintain constant vigilance and compliance.
Innovation and R&D
Research and development (R&D) hold paramount importance in the
pharmaceutical sector; however, they are frequently accompanied by substantial expenses
and time constraints. Additionally, the success rate of new drugs remains dismally low.
Pharmaceutical companies are persistently engaged in a competitive race to develop
ground-breaking drugs and therapies, including personalised medicine and advanced
biologics. Nevertheless, the increasing innovation gap, denoting the expanding disparity
between research investments and the approval of new substances, presents a significant
challenge in this field.
Pricing and Accessibility
Pharmaceutical sector faces substantial pressure in relation to drug
pricing, originating from governments, insurance entities, and consumers who seek
cost-effective and affordable treatment options. The companies often encounter criticism
for their high pricing structures, and they must navigate the delicate balance between
addressing these concerns and fulfilling their imperative to invest in research and
development (R&D) endeavors. Furthermore, ensuring equitable access to essential
medications in low- and middle-income countries remains an enduring challenge that
necessitates concerted efforts.
Ethical and Sustainability Concerns
The demand for transparency in clinical trials, ethical sourcing, and
sustainable business practices is on the rise among consumers and stakeholders.
Pharmaceutical companies are facing mounting expectations to adhere to Environmental,
Social, and Governance (ESG) criteria, encompassing a range of responsible and sustainable
business practices. Compliance with these criteria has become an integral aspect of
meeting the evolving demands and expectations of various stakeholders in the industry.
Company overview
Bliss GVS Pharma Ltd. (BGPL), founded in 1984 with the objective of
ensuring healthcare access worldwide, is one of the pharmaceutical industries
fastest-growing businesses. The Company has a robust portfolio of more than 250 products
and is a global leader in the dosage forms for suppositories and pessaries. It has a
strong foothold in Sub-Saharan Africa and intends to grow there as well as in Europe,
North America, Southeast Asia and Latin America. The business operates five cutting-edge
production facilities that adhere to WHO-GMP, EU-GMP, ISO 14001 and OHSAS 45001 standards
1984
Bliss GVS Ltd. started its journey
250+
Product Portfolio
60+nations
Global presence
The Company has grown substantially in terms of its production,
marketing and R&D capacities throughout the years, reaching more than 64 nations. In
Sub-Saharan Africa, the Company is a market leader in antimalarial, antifungal,
dermatological and anti-inflammatory drugs.
Human resource management
The Company treasures its people as its most valuable asset and
endeavours to create a productive and competitive work environment for them. It conducts a
number of skill-development and engagement programmes to inspire its personnel. The
Companys goal is to identify people with the right skill sets and provide them with
the best training available so that they become experts in their respective fields.
With a comprehensive EHS policy in place, Bliss GVS Pharma Limited is
committed to creating a safe working environment for all its people. To safeguard the
workers health, industrial hygiene protocols are also followed.
During FY 2023, 179 people have been recruited making a total employee
strength of 763. Female employees make up 19% of the total employee strength.
Research and development
The Company makes regular R&D investments to strengthen its
capacity for innovation and to meet both present and future customer needs. Along with
providing technical assistance to the manufacturing facilities, R&D also prioritises
the development of distinct products and operational excellence. The R&D team members
leverage their knowledge and expertise to significantly contribute to the Companys
ability to innovate and its sustained global growth.
The Government of Indias Department of Scientific and Industrial
Research (DSIR) has given the R&D Centre in Mumbai permission to adhere to good
laboratory practices. A particle size analyser, gas chromatography, high-performance
liquid chromatography, dissolution tester, stability chambers and lab-scale manufacturing
equipment for various oral solid dosage forms, suppositories and pessaries are just a few
of the cutting-edge technologies available at the R&D facility.
| Particle size analyser |
Gas chromatography |
| Liquid chromatography |
Dissolution tester |
| Stability chamber |
Lab scale manufacturing equipments |
Risk management
The Company has established procedures to inform the Board about the
risk assessment and minimisation procedures in accordance with the provisions of the
Companies Act, 2013 and good corporate governance. The Board shall be in charge of
developing, implementing and overseeing the Companys risk management plans. The objective
is to develop a proactive strategy for reporting, assessing and addressing
business-related risks while ensuring stable and sustainable corporate growth. The
Companys Audit Committee has frequently assessed the numerous risks connected to its
operations. This review includes the identification, assessment, and mitigation of risks.
Financial statement
|
Standalone |
|
|
|
Consolidated |
|
( H in Lakhs) |
| Particulars |
FY2023 |
FY2022 |
YOY% |
Particulars |
FY2023 |
FY2022 |
YOY% |
| Revenue |
59,833.95 |
63,635.67 |
(5.97%) |
Revenue |
75,158.75 |
74,745.41 |
0.55% |
| EBITDA |
9,015.52 |
10,919.90 |
(17.44)% |
EBITDA |
11,732.25 |
11,834.08 |
(0.86)% |
| PAT |
8,547.86 |
9,266.40 |
(7.75)% |
PAT |
7,673.48 |
2,312.65 |
231.80% |
Details of key ratios and significant changes (i.e., changes of 25% or
more as compared to the immediately previous fiscal year) in key financial ratios, along
with detailed explanations, are given below:
Ratios |
For the year ended March
31, 2023 |
For the year ended March
31, 2022 |
% Variance |
Reason for Variance for
more than 25% |
| Current Ratio |
4.76 |
4.10 |
16% |
- |
| Debt-Equity Ratio |
0.08 |
0.10 |
-20% |
- |
Interest Coverage Ratio |
12.94 |
17.95 |
-28% |
Decrease on account of
decrease in profitabiity |
Debt Service Coverage Ratio |
6.79 |
4.50 |
51% |
Improvement in ratio due to
profits impacting equity and reduction in debt |
| Return on Equity Ratio |
0.10 |
0.12 |
-10% |
- |
| Inventory Turnover Ratio |
11.26 |
10.08 |
12% |
- |
| Trade Receivables turnover Ratio |
1.47 |
1.68 |
-11% |
- |
| Trade Payable turnover Ratio |
3.73 |
4.61 |
-19% |
- |
| Net Working Capital turnover Ratio |
1.21 |
1.40 |
-14% |
- |
| Operating Profit % |
53% |
54% |
-2% |
- |
| Net Profit % |
13% |
14% |
-5% |
- |
Internal control systems and their adequacy
To ensure accurate recording of financial and operational information
and compliance with various internal controls, statutory compliances and other regulatory
compliances, the Company has a strong internal financial control system in place that is
proportionate to the size, scale and complexity of its operations.
No significant or important observation regarding the effectiveness or
appropriateness of such controls was made by the Companys internal auditors throughout
the assessment period. The finance department closely monitors and assesses the
effectiveness and sufficiency of the Companys internal control system, as well as its
compliance with operational systems, accounting procedures and internal regulations at all
of the Companys locations.
The effectiveness of the internal financial control system in the
Company has been assessed and monitored by M/s. Kalyaniwalla & Mistry LLP, Chartered
Accountants and Statutory Auditors of the Company. It complies with the Companys
operating system, accounting practices and standards at all of its sites.
Corrective measures are performed in the relevant areas and controls
are improved following the results of the Internal Audit functions report. The Audit
Committee of the Board is given a presentation outlining any major audit observations,
recommendations and recommended corrective action. In order to correctly manage the books
of account and publish financial statements, the Company complies with all applicable
Indian Accounting Standards.
Outlook
Bliss GVS Pharma Limited is certain that its robust R&D and
manufacturing infrastructure will allow it to witness sustained growth in the future.
Commercialisation of Vevoor plant will enhance the operational efficiency. In the years
ahead, the organisation intends to increase its market share in economies other than
Africa. The Companys position in the market is further solidified by its relentless
focus on innovation and strong R&D skills. Also, it consistently invests in upgrading
its manufacturing and R&D capabilities to seize potential opportunities. In order to
stay ahead of the curve, the Company is gearing up to work with several domestic and
international market players.
Cautionary statement
There may be forward-looking statements in the MDA section about
potential future developments. These statements involve known and unknown risks and
uncertainties that might materially affect final results. In addition to the
aforementioned macro-environmental changes, a worldwide pandemic could present
unanticipated, unprecedented, unknown, and continuously changing risk(s), among others, to
the Company and the setting in which it operates. The reports facts and figures were
derived from the outcomes of these assumptions, which were based on available internal and
external data.
The estimations on which these assumptions are based are therefore
susceptible to change because the underlying variables are dynamic. Any forward-looking
statement published here only speaks as of the date it was made and only reflects the
Companys current intentions, beliefs or assumptions. The Company disclaims any need to
update or modify any forward-looking statements, whether as a result of new data,
unexpected developments or other factors.
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