cadila healthcare ltd share price Management discussions


Novel coronavirus disease (COVID-19), first case of which was reported in the later part of 2019 and which spread across the globe at a lightening pace in 2020 triggered a global crisis like no other. A global health crisis, in addition to an enormous human toll led to the deepest global recession since the second world war. The pandemic is unlikely to impact the fundamental determinants of long-term growth prospects and the global economy showed early signs of growth following a 3.5% contraction caused by the pandemic during the year 2020. However, the short term growth outlook remains well below pre-pandemic projections. Moreover, the recovery is uneven, passing over many poorer countries, and there is some uncertainty about its durability. The pandemic continues to shape the path for global economic activity, with severe outbreaks continuing to weigh on growth in many countries. The most recent wave of COVID-19 is now centred in some emerging markets and developing economies (EMDEs), where more transmissible and virulent strains are spreading and where vaccine access remains limited. Vaccination remains especially feeble in low-income countries (LICs). In contrast, advanced economies have generally seen substantial vaccination progress, which has helped limit the spread of COVID-19. Amid the continued vaccination, economic activity is firming across major advanced economies most notably in the United States, where the recovery is being driven by substantial fiscal support. Growth in China remains solid but has moderated as the focus has been shifted to reduce financial stability risks. Many other countries, primarily EMDEs, are experiencing subdued pickups alongside surges of COVID-19 cases while the recoveries in fragile and conflict-affected LICs are particularly weak, as the pandemic has exacerbated underlying challenges (Source: Global Economic Prospects Reports).


The global pharmaceutical market is expected to have slowed down marginally during the year 2020 and valued at around US$ 1.21 trillion. The year was impacted due to the lockdown and social distancing norms imposed by various countries and economic slowdown across countries owing to the COVID-19 outbreak and the measures to contain it. The market is expectedtogrowataCAGRof8.5%from2021 through 2023 and reach a size of US$ 1.74 trillion. Technological advances, changes in lifestyles, new methods for drug discovery, large pool of undiagnosed population, and an increase in pharmaceutical drug usage due to the COVID-19 pandemic is expected to drive the growth of the market (Source: Industry Estimates).

US remained the largest pharmaceutical market during the year accounting for over 40% share of the global pharmaceutical sales. The US is expected to retain its leading position in the global pharmaceuticals market with a market share in excess of 40% in 2023. Growth of the US pharmaceutical market will be fuelled by the growing and ageing population in U.S. Apart from ageing and rising population, the improvements in purchasing power will drive the growth of the US pharma market. Another aspect which is leading this growth is rising focus of pharmaceuticals companies to tap the rare and speciality diseases (Source: Industry Estimates).


Like the global economy, the year gone by turned out to be an exceptional one for the Indian economy as the spread of COVID-19 pandemic and the measures taken by the Government to contain the spread of the virus adversely impacted the economic activities in the country. Indian economy began to regain the momentum with clear signs of uptick in consumption and investment towards the end of 2019. However, the progress was halted on account of the pandemic which made the Government enforce the country-wide lockdown in the later part of March, 2020.

The country began the year on a quiet note as the month of April, 2020 witnessed stringent lockdown leading to a standstill in manufacturing and service activity though agriculture and allied activities showed continued resilience. In line with the global trend, the country witnessed a significant contraction of output during the first quarter of fiscal 21.

On the back of gradual scaling back of the lockdowns, the economy demonstrated a strong V-shaped recovery during the second quarter on a sequential basis which reflected a resilience and robustness of the Indian economy. The economic activities gained further momentum during the second half of the fiscal on the back of a steady uptick in consumer sentiment. In fact, the economy showed positive growth for the first time during the third quarter post the onset of the pandemic.

While the economy strongly bounced back during the second half of the fiscal, the momentum was moderated by the ravaging second wave of COVID-19 which emerged from the mid of March, 2021.

Unlike the first wave, the effect of the second wave was asynchronous in its onset across states and wider in its spread as the second wave also entered the rural interland. From the second half of May, 2021 there has been a substantial reduction in no. of new cases being registered daily. After declining during the second wave, high frequency indicators such as power consumption, E-way bills and foreign portfolio investment (FPI) flows witnessed uptick in the second half of May 2021 while agriculture sector continues to offer comfortable prospects (Source: Monthly Economic Reports, Department of Economic Affairs, Government of India).



Like other sectors, Indian Pharmaceuticals Market (IPM) was also impacted during the year on account of the pandemic and the measures taken by the Government to contain the spread as the market slowed down during the year, registering a growth of 2.1% viz-a-viz 9.7% registered during the previous financial year.

Overall, the market added Rs. 2,966 crores during the year against the addition of Rs. 12,719 crores last year.

The market declined by 5.9% during the first quarter of the fiscal. However, the market started to recover from the second quarter of the fiscal with various unlocking measures implemented by the government which in turn led to the increase in patient footfall and the doctors re-starting their practice resulting in increase in number of prescriptions.

The market in-fact grew by 5.9% during the second half of the FY21 after de-growing by 2.3% during the first half.

In terms of therapeutic performance, Cardiac was the largest therapeutic area during the year followed by Anti-infective and Gastro Intestinal therapeutic areas. Cardiac was also the fastest growing therapeutic area during the year with a growth of 11.2% (Source: AWACS MAT Mar21).

Going forward, digital technology is going to play an increasingly important role in reaching out to the doctors, patients and connecting all the stakeholders.


Cadila Healthcare Ltd. is one of the leading innovation driven pharmaceutical companies in India with presence across the pharmaceutical value chain of innovating (research & development),manufacturing,marketingandsellingoffinished dosage human formulations (generics, branded generics and specialty formulations, including biosimilars and vaccines), active pharmaceutical ingredients (“APIs”), animal healthcare products and consumer wellness products. Innovation is the backbone of the Company as it ensures business sustainability through continuous availability of new products for various businesses. The Companys initiatives in the areas of research and development span across the pharmaceuticals value chain, including New Chemical Entities (“NCE”), biologics, vaccines, specialty and complex generic formulations, API process development and consumer wellness products. The Company has a global presence and sells its products in the United States, India, Europe and emerging markets including countries in Latin America, Asia Pacific region and Africa. The Company has a pool of modern, cost efficient and regulatory compliant manufacturing facilities which ensures continuous supply of high quality products at the most competitive prices to its customers across the globe.


The year gone by was an unprecedented one for the entire humanity across the globe as the world continued to battle against an unprecedented healthcare crisis in the form of novel coronavirus disease which emerged from the beginning of the calendar year 2020, spread rapidly across the globe and wreaked havoc forcing many countries to go into the lockdown. The Company began the year on a quiet note as the country was under lockdown at the start of the year which in turn impacted the business in India and the emerging markets during the initial days of the lockdown.

To counter the challenges posed by the pandemic, the Company implemented a business continuity plan in the light of events unfolding in the external environment to ensure that the operations continue right through the pandemic situation with minimal interruption. The manufacturing facilities of the Company were running at reasonable capacities even during the lock-down since pharmaceutical products are classified as essential commodities. The Company implemented several preventive and corrective measures across all workplaces in the form of enhanced safety requirements, physical distancing at work places, mandated use of protective gears and remote working across the locations to ensure the safety of the employees. The Company could fulfill the demand of customers across the globe with the collaborative efforts of various functions despite the logistical challenges.

In a bid to ensure access to the affordable treatment options to the people across the globe in a fight against the pandemic, the Company took several initiatives across the spectrum from prevention to treatment of COVID-19 using a diverse set of capabilities in small molecule therapeutics, biologicals and vaccines, even using the range of wellness products for sanitization and overall immunity enhancement.

As a part of this endeavor, the Company launched several products like Remdesivir injection, Hydroxychloroquine, Dexamethasone injections etc. at the most affordable prices. The Company is also exploring the innovative ways to fight COVID-19 which are discussed at length in the COVID-19 research update section.

Further, the Companys efforts to strengthen the balance sheet have resulted into a net debt reduction of Rs. 32 bn. during the year and the net debt stands at Rs. 35 bn. as of 31st March, 2021 against Rs. 67 bn. as of 31st March, 2020. Net debt of Rs. 35 bn. and net debt to EBIDTA of 1.05x as on 31st March, 2021 are the lowest in last 5 years.


The Company is exploring various innovative ways apart from the initiatives in the therapeutics and wellness space. This includes development of two vaccines to combat the spread of the virus, exploring the biological route including re-purposing the existing drugs to offer alternate treatment options to the patients and evaluating a few small molecules to treat the COVID-19 related complications.

On the vaccine research front, the Company initiated an accelerated research programme in February 2020, even before the novel coronavirus, 2019-nCoV (COVID-19) had entered India, to develop a Plasmid DNA vaccine targeted at the major viral membrane protein responsible for the cell entry of the novel coronavirus.

During the year, the vaccine candidate ZyCov-D successfully completed Adaptive Phase I/II clinical trials and is currently in the advanced stage of Phase III clinical trials. Adaptive Phase I/ II study was conducted in over 1000 healthy adult volunteers as part of the dose escalation, multi-centric, randomized, double-blind placebo controlled study. The vaccine was found to be safe and elicited a strong immunogenic response. Phase III trials are being conducted in over 28000 subjects across 60 sites to evaluate the e_icacy of the vaccine. Population selected for the trials include people in the age group of over 60 years, those between the age group of 18 to 60 years with and without co-morbidities and those in the age group of 12 to 18 years. Necessary data has been submitted to publish the results of Phase I clinical trials. The results will be published in a peer reviewed journal soon.

The Company has put up a plant for the production of Zycov-D vaccine. The plant is expected to be ready for commercial production by June, 2021. The Company has also developed another vaccine candidate to fight COVID-19 which is a recombinant measles vectored vaccine viz. ZyCoV-MV. During the year, the Company received an approval from the Review Committee on Genetic Manipulation (RCGM) to carry out preclinical and/or safety toxicity studies. During the year, NCE molecule Desidustat successfully completed Phase II(b) studies in COVID-19 patients in Mexico as the molecule showed the e_icacy and safety in treating Hypoxia in hospitalized COVID-19 patients. Patients infected with COVID-19 have been reported to display signs of ‘Hypoxia leading to organ failure and death despite the use of antivirals, anti-inflammatory drugs or ventilators. The lung cells have been reported to develop extremely intense poisoning and inflammation, which causes shortness of breath and this can lead to Acute Respiratory Distress Syndrome (ARDS). Patients with ARDS may require mechanical ventilator support to help circulate oxygen in the body. Phase II(b) trial data shows the potential of Desidustat in helping prevent ARDS. None of the hospitalised patients required mechanical ventilator in the Desidustat arm, while 25% patients on the standard of care arm required mechanical ventilator. In order to provide the treatment option for the treatment of novel coronavirus, the Company started exploring the biological route with long-acting Interferon alpha-2b since the beginning of the financial year after the research conducted in the US and China showed that Interferon alpha significantly reduced novel Coronavirus titers in vitro and shortened duration of viral shedding in patients. During the year, the Company successfully completed Phase III clinical trials in India of Pegylated Interferon alpha-2b (the product commercially launched under brand name ‘Virafin) and recently, in the month of April, 2021, DCGI granted the Restricted Emergency Use Approval for the use of Pegylated Interferon alpha-2b (‘Virafin) in treating moderate COVID-19 infection in adults. A single dose of the molecule administered subcutaneously early on shows significant clinical and virological improvement in moderate COVID-19 adult patients. 91.15% of the patients treated with Pegylated Interferon alpha-2b were RT PCR negative by day 7. The treatment significantly reduces the hours of supplemental oxygen in the patients. The molecule is a very potent anti-viral and post its launch, the initial results are encouraging as there is an increased demand from many hospitals. The product is a part of Karnataka State Treatment Protocol and four other states are considering it to include the same in their treatment protocol. In order to facilitate the treatment of COVID-19 globally, the Company will seek the permission from the regulatory authorities of other countries to file for registration of Pegylated interferon alfa 2b.

Adding to the treatment profile for COVID-19, the company has developed a novel biotherapeutic cocktail of monoclonal antibodies which is directed against spike protein of the virus that causes COVID-19. The Company has completed pre-clinical toxicity studies and sought the permission from DCGI to initiate clinical trials in patients with mild to moderate symptoms. The molecule can emerge as one of the main treatments for mild COVID-19 cases as it has been designed to have a long half-life providing protection for a long period of time, has reduced immune-e_ector functions to minimize potential tissue damaging side effects of virus neutralizing monoclonal antibodies and are better equipped to deal with variants than single monoclonal antibody based products.

Continuous innovation is one of the most defining characteristics of the pharmaceutical industry as it needs to continuously introduce the new medicines to fulfil the unmet needs of the patients quickly and in a cost e_icient manner. While the innovation has a dramatic impact on the health and wellness of millions of people, the health of pharmaceutical players depends upon the flow of new drugs as the new products and new therapies help them to bridge the revenue gap which will arise on account of the loss of patent protection of their existing products. Over the past two decades, spending on R&D and the introduction of new drugs have gone up significantly across the globe. In fact, there is a clear correlation between the innovation and growth as the most innovative players have demonstrated the higher growth viz-a-viz the least innovative ones. The amount of money which is devoted to R&D by the companies is determined by the amount of revenue they expect to earn from a new drug, the expected cost of developing that drug, and policies that influence the supply of and demand for drugs. Di_erent companies invest their resources for different kind of products, for different therapeutic areas and for different geographies so as to build sustainable future cash flows and diversify the risks.

From NCEs to v_ccines, biosimil_rs, niche technologies find to generic product development, the group is exploring different ide_s, concepts find continuously innovfiting with _n _im to fulfil the unmet pfitient needs find to fulfil the demfind of its customers _cross the globe.


New chemical entities (NCEs) also known as New molecular entities (NMEs) are compounds that emerge from the process of drug discovery. While drug discovery can be described as the process of identifying chemical entities that have the potential to become therapeutic agents, drug development is the process of bringing a new drug molecule into clinical practice. Drug development is a riskier and long gestation exercise and it requires substantial investments in terms of capital, human resources, research skill and technological expertise.

The Zydus Research Centre (ZRC) which is a state-of-the-art facility, is the dedicated arm of the Company to carry out NCE research. With a team of over 400 research professionals, ZRC spearheads the groups quest of creating healthier and happier communities globally.

The Center is working on cutting edge technologies in different scientific disciplines to discover novel therapeutic agents. It has the capabilities to conduct drug discovery and development from concept to Investigational New Drug (IND) enabling pre-clinical and clinical studies.

Focused areas of NCE research include cardio-metabolic disorders, inflammation, pain, oncology and infectious diseases.

During the year, the Company received an approval from the Drug Controller General of India (DCGI) for its New Drug Application (NDA) for Saroglitazar Magnesium for the treatment of Non-Alcoholic Fatty Liver Disease (NAFLD) in India. The molecule becomes the first medicine for the treatment of NAFLD in India. Non-Alcoholic Fatty Liver Disease (NAFLD) is a spectrum ranging from Non-Alcoholic Fatty Liver (NAFL) to Non-alcoholic Steatohepatitis (NASH), which has the propensity to progress to liver cirrhosis and Hepatocellular Carcinoma (HCC), a leading cause of liver transplant.

Nearly 25-30% of the population in India is estimated to be suffering from NAFLD. The molecule is now approved by DCGI for five indications in India viz. Diabetic Dyslipidaemia, Hypertriglyceridemia, NASH, NAFLD and Type II Diabetes.

During the year, Zydus Discovery DMCC (ZDD), a subsidiary of the Company successfully completed Phase II clinical trials of Saroglitazar Magnesium for Primary Biliary Cholangitis (PBC) indication. USFDA granted the Orphan Drug Designation (ODD) and Fast Track Designation to Saroglitazar Magnesium in the treatment of patients with Primary Biliary Cholangitis (PBC). Recently, in the month of April, 2021, the protocol was submitted to the USFDA to get an approval for initiating Phase II(b)/ III clinical trials of Saroglitazar Magnesium for PBC indication. The trials are expected to commence from the month of August, 2021 after securing the necessary approvals. The trials will be conducted on 192 patients across 100 sites globally.

Recently, in the month of May, 2021, the Company received an approval from the USFDA to initiate Phase II(b) clinical trials of Saroglitazar Magnesium for NASH and F2/F3 Fibrosis in the US. The trials are expected to commence from the month of June, 2021. Clinical trials data and pre-clinical PSC data of Saroglitazar Magnesium in the treatment of PBC and NASH indication were presented at American Association for the Study of Liver Diseases (AASLD) The Liver Meeting Digital Experience™ 2020.

Enrolment of patients is currently going on across several clinical sites in the US for EVIDENCES (Evaluation In NAFLD / NASH of Saroglitazar Magnesium) VII Phase II clinical trials for assessing the effect of Saroglitazar Magnesium in the treatment of NAFLD in women with Polycystic Ovary Syndrome (PCOS). The enrolment is expected to be over by the 3rd quarter of FY22.

During the year, the Company completed the recruitment of patients for Phase III clinical trials in India for another Investigational New Drug (IND), Desidustat (ZYAN1), an oral hypoxia-inducible Factor-prolyl hydroxylase inhibitor (HIF-PHI) targeted at treating anaemia both in dialysis and non-dialysis dependent CKD patients.

Despite the challenges posed by COVID-19 pandemic, 392 patients were recruited who were suff? ering from anaemia and were on dialysis for Phase III trials also known as DREAM-D (Desidustat Oral Evaluation in Anemia Management - Dialysis) trials and 588 patients were recruited who were su_ering from anaemia and were not on dialysis for Phase III trials also known as DREAM-ND (Desidustat Oral Evaluation in Anemia Management – Non Dialysis) trials. Follow-up is currently going on which is likely to be completed and the results are likely to be submitted by the third quarter of FY22.

During the year, the Company achieved an important milestone in pursuit of developing a single-dose radical cure for malaria as it completed Phase I clinical trials of its anti-malarial drug candidate. Phase I study in healthy volunteers demonstrated long-half life and potential for a single-dose cure for malaria. Potent antimalarial activity was demonstrated in malaria challenge trial following single-dose oral administration of the molecule. The molecule is a fast-acting and effective drug against both P. falciparum and P. vivax strains of malarial parasites.

The Company also received an approval from the DCGI to initiate Phase I clinical trials of ZYIL1, a novel oral small molecule targeted at selectively supressing inflammation caused by NLRP3 inflammasome. Phase I clinical trials are currently going on in India which will study the safety, tolerability, pharmacokinetics and pharmacodynamics of ZYIL1 in healthy human volunteers. The molecule has demonstrated promising e_icacy in a number of validated pre-clinical models of Inflammatory Bowel Disease (IBD), Multiple Sclerosis (MS), Sepsis and acute lung injury models of Acute Respiratory Distress Syndrome (ARDS). The studies have demonstrated that ZYIL1 can selectively supress inflammation caused by the NLRP3 inflammasome.

On the biosimilars front, the Company successfully completed Phase III clinical trials for Rituximab during the year and will submit an application to DCGI for Marketing Authorization approval. In a bid to further strengthen its biosimilars portfolio, the Company completed pre-clinical toxicity studies for 2 more products during the year.

On the emerging markets front, the Company launched its first biosimilar viz. Pegfilgrastim in Russia which is a significant market for biosimilars among emerging market countries. This was also the first biosimilar launch of Pegfilgrastim by any company in Russia. The product was launched with filling activity being carried out by the local player which will enable the Company to participate in the procurement activity by the Government. Further, approval in Russia opens the door for the Company in CIS region and will enable the Company to get the approvals on a fast track basis in other CIS countries. The Company also filed the dossier of one more product with the

Russian regulatory authority during the year. The Company holds the registration of its key biosimilar products in some of the key emerging market countries such as Indonesia, Sri Lanka, Thailand etc. The Company has set its footprint in the LATAM region and currently the dossiers of 4 key biosimilar products are under different stages of review cycles with the regulatory authorities of Columbia and Mexico. Overall, the Company has commercialised products in 9 countries of emerging markets during the year.

As a part of global biosimilar program, the Company has selected two candidates for global market development. These products are selected with an aim to have a robust presence in the oncology biosimilar space of the regulated markets of US and EU as the approval in these markets will make the Company eligible for approval in many other countries as well. The Company is evaluating various possible partnership options with a focus on co-development partnership model.

During the year, the Company received marketing authorization in India for Hepatitis B Vaccine (rDNA) I.P. and Pentavalent Vaccine. For Tetanus Diphtheria (Td) vaccine, the Company successfully completed Phase II/III clinical trials in adults and adolescents and submitted the marketing authorization application to DCGI. With respect to the candidates in the early stages of development, the Company received regulatory permission to conduct pre-clinical toxicity studies for one more candidate.

From a business perspective, vaccines business is going to be an important growth driver with a diverse portfolio of vaccines in the development pipeline. For a couple of vaccine candidates in the portfolio, the Company is also in process of applying for pre-qualification to WHO so as to expand and establish its presence for supply of these vaccines to procurement agencies like The Global Alliance for Vaccines and Immunization (GAVI) and PAN American Health Organisation (PAHO).

The Companys specialty portfolio is focused on providing value-added treatments addressing unmet needs and enhancing the ease of patients and physicians with a viable commercial opportunity. The Company is actively looking into repositioning and repurposing existing drugs to support its specialty portfolio. So far, the Company has developed a portfolio of 9 products including 2 in orphan diseases space with a focus on Pain Management, Neurology, Liver Diseases and other opportunistic areas. Besides this, the Company is developing a portfolio of life-cycle management opportunities for existing products. The Company is also actively evaluating potential licensing and acquisition opportunities complementing focused therapy areas of interest in specialty space.

During the year, the Company filed 1 New Drug Application (NDA), 1 pre New Drug Application (pNDA) and 5 pre Investigational New Drug (pIND) requests with the USFDA and received an acceptance from the USFDA for the NDA filed in the area of metabolic disorder with Prescription Drug User Fee Act (PDUFA) date in September, 2021.

The Company plans to file 1 more NDA in the pain management area in FY22.

As mentioned earlier, orphan and rare diseases space is a focussed area in the specialty portfolio build-up and as a part of that strategy, Sentynl Therapeutics Inc., a wholly owned subsidiary of the Company acquired rights to Copper Histidinate product candidate CUTX-101 from Cyprium Therapeutics Inc. CUTX-101 has been granted orphan drug and fast track designation by USFDA for Menkes disease which is a rare and fatal paediatric disease caused by mutations in copper transporter gene due to which a new born is unable to absorb copper. If untreated, it may cause premature death within fist three years. The product is under rolling submission and all modules are expected to be filed with the USFDA by December, 2021. Being a fast track designated product, approval may be granted in the first quarter of 2022 in the best case scenario.

The Company is working diligently to extend its expertise from traditional generics to complex generics portfolios to drive future growth in the US as the challenges and difficulties involved in the development of these products starting from active ingredient to drug-device and multiple other barriers make complex generics an attractive, low competition opportunity. The Company has made the investments in this space through partnership efforts (complemented by internal R&D expertise). The Company has entered into partnerships for some of these products so as to expedite the development timelines and favourably balance associated risks and investments.

Currently, several complex generics, such as modified release oral solids, complex injectables, transdermals and drug-device combinations are either under registration and/or under development, for the US market. Till date, the Company has successfully in-licensed 20 products to build a portfolio of complex generics. This includes 2 products where the Company is likely to hold an exclusive first to file status and likely to have 180 days exclusivity upon launch.