Highlights for FY 2023-24: 13%
Increase in consolidated revenue year-on-year (YoY)
17% YoY R&D spend increased by 16%
PAT margin Highest achieved till date 31%
Highest Return on Invested Capital (RoIC) % achieved till date
Global overview
As per IQVIA report, the global medicine market is expected to reach USD 2.3 trillion by 2028, growing at a 4-year Compound Annual Growth Rate (CAGR) of 5% to 8% over the period of 4 years (2024-2028). Higher global spending growth occurred in key regions after the pandemic, particularly in 2023 in North America. Oncology and obesity will lead growth through 2028, while immunology and diabetes growth will slow down.
Global oncology spending is expected to reach USD 440 billion by 2028, with growth accelerating from novel drugs. Diabetes spending growth is in the low single digits in most developed markets, with some, like the United States experiencing declines. This trend is largely due to a shift towards obesity management. Meanwhile, new therapies in Alzheimers and anxiety/depression are anticipated to drive spending growth in the neurology sector.
Top 20 therapy areas in 2028 in terms of global spending with forecast 5-year CAGRs, const USD billion 2028 Spending
Cipla is moving in line with the global trends
Respiratory
One India business leads in respiratory, ranking no. 1 with a market share of ~25% and growing at healthy ~10% as per IQVIA MAT March 2024.
In North America, Cipla is the fourth largest player in terms of number of prescriptions as per IQVIA MAT March 2024. Albuterol continued to retain its market share in the range of 12-13% during the year. In FY 202425, the Company has adopted a strategy to improve its market share by few percentage points. As per IQVIA April 2024, market share has already scaled to 15.5%.
Oncology
North America has consolidated its oncology portfolio with gRevlimid and Lanreotide. Lanreotide is scaled up by achieving a market share of ~21% as per IQVIA February 2024, which is a benchmark in 505(b)(2) market. This product will be further boosted by launch of generic version of Lanreotide injection. gRevlimid continues to be a key part of our oncology portfolio.
Other Chronic therapies
India branded prescription business boosted its presence in Diabetes and Central Nervous System (CNS) therapies by entering into in-licensing partnerships with Novartis for Galvus and Sanofi India for CNS portfolio. Cardiac is growing at double-digit as per IQVIA MAT March 2024.
On a long-termbasis, the Company has also planned to bolster its existence in 505(b)(2) and Oligonucleotides assets along with one Global Biosimilar asset in early stage of development. The Company also aspires to become Future Fit by investing in new age therapies like Mental health and Obesity.
Company overview
Ciplas relentless commitment and contribution over the last 88 years towards improving healthcare outcomes and standards of care have positively impacted the lives of patients globally. The Companys purpose of Caring for Life enables us to deliver unmatched capabilities across the care continuum in various therapeutic areas, including the widest range of drug-device combinations and cementing its position as a lung leader in India and other key emerging markets. The Company has elevated its business models, remodelled its portfolio and expanded its footprint to strengthen its competitive position in key geographies.
Cipla continues to invest in automation and digitalisation to drive sustainable efficiencies across its portfolio selection, manufacturing, supply chain and quality operations. The Company has also consistently invested in talent to nurture an agile, innovation and excellence-focused culture. Cipla continues to maintain a robust quality management system to ensure full compliance with regulatory requirements. For manufacturing, the Company possesses advanced capabilities which produce high- quality products exported in various regulated and emerging markets. In Research and Development (R&D), over the medium term, clinical trials for respiratory products, peptide injectables and biosimilars are likely to gradually inch-up spends. Cipla continues to put significant efforts in moving up the innovation curve by leveraging data science and digital technology in R&D coupled with best-in-class commercialisation. With the Companys growing scientific understanding of rare diseases, it shall continue to introduce ground-
breaking therapies to give patients their new beginnings.
Cipla has been at the forefront of offering complex products at affordable prices, representing core purpose of Caring for Life, serving patients with innovative respiratory drug-device combinations, complex formulations and broad-spectrum capabilities in injectables, oral solids and inhalation amongst others. The Company takes a balanced and structured approach between leveraging opportunities and managing the overall risk exposure. Ciplas team across the world works tirelessly every day to ensure that the Company delivers on patient expectations, builds fundamental strengths in core areas of operations and identifies opportunities and trends to deliver superior shareholder value. Over the last few years, the businesses have surpassed the stakeholder expectations by continuing rigor on portfolio execution and financial discipline to drive higher profitability, improved cash flow generation and return on investment. Cipla endures to focus on reinforcement of its core franchises while venturing into newer portfolios of complex generics, codeveloping biosimilars, new therapies, inhalation devices, diagnostics solutions, new age technology platforms and digitised business models. Consumer business is growing steadily and has contributed significantly to global consumer franchise, backed by deep consumer insights and innovation.
The Company is focused on creating solutions to address the unmet needs of consumers across various categories including pain, cold & cough, smoking cessation, gut health, skincare, feminine hygiene, etc. Recent acquisition of Actor Pharma (Pty) Limited in South Africa and OTC brands acquisition of Ivia Beaute including Strawberry? in India are tracking in-line with its Global Wellness Agenda.
Evolving framework across key regulated markets
In 2023, global regulatory bodies accelerated on-site regulatory inspections to reduce the backlog of approvals that had accumulated during the COVID-19 pandemic. Approvals for novel drugs, first generics, novel biologics and biosimilars continued across countries to ensure that patients have continued access to chronic medications. In addition, the following key factors are impacting the global pharmaceutical economy:
Localisation
Local production of pharmaceuticals plays a vital role in maintaining resilience of national healthcare systems, especially when it comes to facilitating access to needed medicines and decreasing exposure to imports and international supply chains. Pharma is a researchintensive industry and the systemic lack of governance and support to R&D activities in this sector, among other host of related issues such as unsupportive regulatory regimes and human resources capacity limitations, is one of the major impediments to the diversifying of locally produced pharmaceuticals portfolio.
US Inflation Reduction Act
The Inflation Reduction Act, August 2022, resulted in groundbreaking changes in the U.S. pharmaceuticals market, as it includes measures to prevent increases in drug prices from surpassing inflation. The legislation to reform Medicares drug-pricing policy includes two main components: price negotiations, which allow Medicare to
negotiate lower drug prices directly with manufacturers and a higher inflationary cap, which sets limits on price increases to protect against excessive price hikes.
National List of Essential Medicines (NLEM), 2022 - Indian Pharmaceutical Market
In a bid to make drugs affordable, Ministry of Health and Family Welfare revisits and revises National List of Essential Medicine (NLEM) every five years. The NLEM 2022 was released by the Ministry in September 2022, a revision to the previous NLEM 2015 (delayed by around two years due to the pandemic). Pricing of several antibiotics, vaccines, anti-cancer drugs and many other important drugs have become more affordable, effective from 11th November, 2022.
The NLEM focuses on aspects such as safety, efficacy, availability and affordability. It comprises of 384 drugs across 27 categories. While the 2022 list has 34 new drugs, 26 drugs from the 2015 list have been removed. Cipla is compliant with the Drug Price Control Order (DPCO) and ensures adherence to pricing regulations set by the government.
The Company is committed to patient well-being by prioritising patient-centricity, affordability and accessibility through the production of high-quality medicines.
Uniform Code for Pharmaceuticals Marketing Practices (UCPMP) 2024
The Department of Pharmaceuticals has released the Uniform Code of Pharmaceutical Practices (UCPMP), 2024 on 12th March, 2024 to the pharmaceutical associations in the country who in turn have to ensure the compliance to the same by the
member companies. UCPMP 2024 is a quasi-judiciary code and provides mandatory guidelines to be followed with respect to the interactions between pharmaceutical companies and healthcare professionals. The objective of this code is to enhance ethical conduct and bring more transparency to the marketing practices of pharmaceutical companies. Cipla recognises the new UCPMP guidelines and is adhering to them by incorporating them as an integral part of its internal guidelines and processes.
^
Increased quality focus in Indian Pharma market
In the post-COVID-19 world, the focus is to ensure that best quality standards and drugs made in India must also align with these changing standards. The Health Ministry has made regulatory changes to make marketing companies who outsource manufacturing of products equally responsible for quality, at par with their in-house products.
National Medical Commission (NMC)
The National Medical Commission (NMC), registered medical practitioner (Professional Conduct) Regulations,
2023 was notified in the Gazette of India on 2nd August, 2023. Key highlights of the regulations included the mandate for prescription drugs only by their generic names, rather than by brand. However, vide notification dated 23rd August, 2023, the said regulations have been kept in abeyance by NMC until further notification in the Official Gazette. The Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002 shall, therefore, continue to be in force.
Cipla Limited I Annual Report 2023-24
Medical Devices
In 2023, Indian government has published the National Medical Devices Policy, with a mission to boost domestic growth of the medical devices sector and provide affordable and good quality medical devices to global population. In response to this, Cipla has identified key focus areas in medical devices that will compliment and solidify its leadership position in respiratory devices. The Company has streamlined internal regulatory frameworks and overall device strategy for domestic and export markets.
USFDA Inspections
In FY 2023-24, there were 52 regulatory inspections conducted across Cipla. The inspections were conducted by major regulatory authorities such as USFDA, MHRA, German Health Authority, EMA (Europe),MOH (Egypt), SUKL (Czech Republic), TGA (Australia), PMDA (Japan), Anvisa Brazil, WHO Geneva, CDSCO and local FDA.
Artificial Intelligence (AI) potentially offers once-in-a-century opportunity for businesses. This technology, if estimates are to be believed, could
generate USD 60 billion to USD 110 billion every year across the pharma industry value chain - research, clinical development, operations, commercial and medical affairs. Artificial Intelligence (AI) technology creates value through its ability to synthesise diverse sources of data, both structured and unstructured and generate bespoke visual, textual and even molecular content. Though pharma companies have long been using AI to simulate mechanism of disease, AI revolution promises unheard effects on human health and well-being in the areas of accelerated drug discovery process, personalised treatments. Cipla has started experimenting with this technology, primarily in the areas of customer engagement and operations.
Starting next quarter, Company anticipates AI embedded initiatives across the organisation.
Financial capital
Ciplas strong financial management system combines several financial functions, such as accounting, fixed-asset management, revenue recognition and payment processing. By integrating these key components, it ensures real-time visibility into the financial state of the Company while facilitating day-to-day operations, like period-end close processes. This approach creates long-term value for all stakeholders including customers, investors, employees and the communities in which it operates.
Revenue from operations*
In FY 2023-24, the Company reported revenue of RS.25,774 crores
(FY 2022-23: Rs 22,753 crores) and grew by 13% on a YoY basis. This performance was supported by growth in focused portfolios of One- India, North America and South Africa.
Revenue from
Operations (in H crores)
Earnings before Interest,
Tax, Depreciation and Amortisation (EBITDA)1:
In FY 2023-24, the Company reported EBITDA of H 6,291 crores (FY 2022-23:Rs 5,027 crores) with EBITDA margins of 24.4% (FY 2022-23: 22.1%). This 230+ bps expansion was driven by product mix, continued rigor on cost and operating efficiency while continuing focus on growth linked investments.
EBITDA and EBITDA margin
(in H crores) & (%)
Optimizing working capital and cash conversion cycle
Working Capital (in J crores) and Working Capital Turnover Ratio3
5 Year CAGR:
Cipla has consistently prioritised effective working capital management, implementing targeted initiatives to manage inventory, receivables and payables. In FY 202324, the Company was committed to enhancing liquidity and mitigating risks associated with supply disruptions by taking proactive measures to ensure the timely collection of receivables, maintaining sufficient stock of essential raw materials and finished products and extending support to its suppliers and distributors, as necessary. Such efforts help to ensure that the markets have adequate supply of products, so that consumers can access products conveniently and continually.
Cash Conversion cycle (Number of days)2
— Working Capital
Profit after tax: The Company has achieved the highest Profit After Tax (PAT) to date, amounting to Rs 4,122 crores (47% YoY growth), a testament to the Companys ability to generate profitability, while simultaneously fulfilling social responsibility.
PAT and PAT Margin
(in Rs crores) & (%)
Cash flow from operations and free cash flow
Record profits and improved cash conversion cycle enabled the Company to maintain consistent cash generation. The Company is pleased to announce an increase in dividend per share from H8.5 in FY 2022-23 to RS.13 in FY 2023-24 in order to maximize shareholder returns.
2
Cash Conversion Cycle = Average Working Capital * Revenue Per Day3
Working Capital = Trade Receivables + Inventory - Trade Payables I Working Capital Turnover Ratio = Revenue * Average Working Capital During the current year, the Group has restated the comparative financial information for 31st March 2023, due to change in classification of accrued expenses (included in other financial liabilities) to trade payables amounting to H 77.47 Crores as required under schedule III. The impact of such reclassification/regrouping is not material to the consolidated financial statements.The trends in cash flows are highlighted below:
Sustained value creation
Effective capital management is also reflected in rising Return on Invested Capital (RoIC) and Earnings per share (EPS) ratios and a stable trend in Return on Equity (RoE) ratio. These ratios reflect the Companys ability to generate higher returns for shareholders, allocate capital efficiently and sustain profitability. Such trends highlight Ciplas commitment to maximising shareholder value and solidifying its position as a financially robust organisation.
Reduced Net Debt ratios
Ciplas financial prudence and commitment to sustainable growth is evident in negative net debt to equity and net debt to EBITDA ratios, as well as a favorable increase in the Interest coverage ratio.
R&D expenditures
R&D expenditure as a % revenues
The absolute trajectory of the spends and product filings remain intact, with all priority assets progressing well and other portfolio development efforts remaining on course.
Abbreviated New Drug Application (ANDA) and New Drug Application (NDA) Portfolio and Pipeline
In FY 2023-24, the Companys spend in R&D increased by about 17% which was Rs 1,571 crores or 6.1% of revenues, reflecting its commitment to developing cutting-edge healthcare solutions and strengthening its position as a provider of high-quality, affordable medicines.
(As on 31st March, 2024)
Approved ANDA and NDA |
Tentatively approved ANDA and NDA | Under- approval ANDA and NDA | Total ANDA and NDA |
164 |
32 | 81 | 277 |
Note: Cumulative 277 ANDA + NDAs Includes under approval, tentatively approved, approved ANDAs /NDAs/PEPFAR ANDAs for Cipla/InvaGen/Partner.
Employee expenses: Ciplas employee expenses for the year stood at H4,310 crores, an increase of 12.5% over FY 2022-23. The increase was largely due to annual increments and performance-linked components.
Other expenses: In FY 2023-24, the other expenses which included R&D, quality, sales and marketing, regulatory, manufacturing, etc. stood at H6,353 crores, increasing by 12.6% over FY 2022-23. The other expenses accounted for 24.7% of the revenue (FY 2022-23: 24.8%) due to YoY increase in IPD spends, professional fees and travel expenses.
Depreciation and Amortization:
During FY 2023-24, depreciation and amortisation expenses stood at Rs 1,051 crores (FY 2022-23: Rs 1,172 crores). This includes impairment of intangible assets under development.
Finance cost: During FY 2023-24, finance expenses stood at H90 crores, which is in line with FY 2022-23 expenses of Rs 110 crores.
Tax expenses: The effective tax rate stood at 27.1% for FY 2023-24.
Leverage position: Robust operating profitability and strong free cash-flow generation enabled the Company to maintain a healthy net-debt to equity ratio, improving it to 0.29 in FY 2023-24 (FY 2022-23: 0.23). Driven by relentless focus on cash generation and rigor on cost discipline, we continue to be a net cash positive Company as at March, 2024.
Operating Profit Margin (%): Operating profit FY 2023-24 stands at healthy 20.3% (FY 202223: 16.9%) majorly accounted by favorable product mix.
Other key ratios:
Ratio |
FY 2023-24 | FY 2022-23 |
Interest coverage ratio |
70.0 | 45.9 |
Debtors turnover ratio |
5.8 | 6.1 |
Return on Net-worth |
16.4% | 12.6% |
Inventory turnover ratio |
1.7 | 1.6 |
Current ratio |
3.7 | 3.4 |
Debt-service coverage ratio |
32.6 | 14.5 |
Net profit margin |
16.0% | 12.3% |
Operating profit ratio |
20.3% | 16.9% |
trust and also providing the capital required for growth aspirations.
The Companys capital allocation policy aims to strike a judicious balance between retaining cash for operations and contingencies, while also rewarding and creating value for shareholders.
The Board has a policy of dividend pay-out of up to 30% of consolidated Profits After Tax (PAT). Nonetheless, it retains the flexibility to recommend a lower dividend based on a comprehensive analysis of the business environment and other internal, external and regulatory factors.
No material changes and commitments have occurred after the close of the year till the date of this report, which may affect the financial position of the Company. Interest coverage ratio and Debt- service coverage ratio have improved due to increase in EBITDA. Further, there have been no significant changes in other key financial ratios requiring disclosure and explanation as per the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Capital Allocation9
Ciplas management and the Board strives to optimize capital allocation based on business and financial parameters, ensuring a sustainable foundation for its operations. Shareholders play a crucial role in success, demonstrating continued
Cipla recognises the importance of cash retention for its growth, expansion and diversification endeavors. The Company has a robust financial management process that assesses the requirement of funds for sustainable business operations and continues to strategically commit capital across value-accretive avenues and future growth levers.
l Organic and inorganic growth opportunities |
Enhancements/ sustenance in manufacturing infrastructure |
? |
% |
Working capital requirements |
Research and development to strengthen portfolio |
FY 2017-18 |
FY 2018-19 | FY 2019-20 | FY 2020-21 | FY 2021-22 | FY 2022-23 | FY 2023-24 |
To align the growth with the overall profitability it is proposed to increase the dividend per share to RS.13 in FY 2023-24 (FY 2022-23: H8.5 per share)
Financial Performance and growth in key markets
One-India
In FY 2023-24, the One-India business experienced significant traction led
by strong core portfolio check - tail winds in branded prescription and trade generics businesses. Overall, the One India business grew 10% during the year. The focus for FY 2024-25 will be towards maintaining market beating growth, increase in the share
of chronic therapies, traction in big brands, industry leading medical representatives productivity and enhancing patient experience with digital analytics and data science.
North America
Ciplas North America business delivered the highest-ever revenue of USD 906 million, growing 24% on a YoY basis. This was achieved through strong pipeline and execution, which has provided a well-defined balance to differentiated portfolio. Lanreotide is scaled up by achieving a market share of ~21% as per IQVIA February2024 and Albuterol market share was in the range of 12-13% during the year as per IQVIA March2024 robust strategy in place to improve this market share by a few percentage points. The Company continues to maintain strong serviceability levels across respiratory and complex portfolios. It expects the business to continue the growth path in FY 2024-25 led by traction in existing portfolio and new peptide launches.
South Africa, Sub-Saharan Africa
and Cipla Global Access (SAGA)
Cipla continued to deliver market beating growth in private market (prescription and OTC). South Africa prescription business ranked no. 1 in the market as per IQVIA MAT March 2024. In line with strategy to strengthen global wellness portfolio, the Company acquired and integrated Actor Pharma (Pty) Ltd in FY 2023-24 to provide new growth engine to OTC business in South Africa. The focus for the upcoming financial year continues on growth with substantial margin improvement.
Emerging Markets and Europe
The region navigated extreme volatility, forex movement and geopolitical headwinds during the year. Revenues were flat YoY however, business was able to deliver growth on margins. The DTM business, where it has its own sales force and local team, is focused on driving growth across key geographies.
Active Pharmaceutical Ingredients (API)
The API business faced headwinds due to a drop in demand in regulated markets, however, emerging markets continued showing traction. The business maintained high visibility in seedings and lock-ins.
Business performance and Outlook One-India
Ciplas One-India business comprises of branded business, trade generics and consumer health business (incorporated under Cipla Health Limited). The One India Business posted a healthy growth of 10% for the year, propelled by traction in branded prescription and trade generics, while Consumer Health was impacted by seasonally slow market. The business continues to witness strong growth across core therapies which are likely to sustain in FY 2024-25.
Branded prescription business
Ciplas robust growth in the branded prescription business has continued in FY 2023-24, solidifying its position as an industry leader. Internally, India sales of Rx business grew at 11%, surpassing sales of USD one billion in FY 2023-24*. Cipla is currently ranked 2nd in chronic therapies, continues to grow faster than the market as per IQVIA MAT March 2024 and has maintained strong market shares and leadership positions in core therapies of respiratory, cardiology, urology and anti-infectives.
Key highlights
1 Ciplas brand Foracort has become #1 brand of Indian Pharmaceutical Market (IPM) as per IQVIA MAT March 2024.
I Market Share in Anti-Diabetics therapy, compared to FY 2022-23 has increased by 130 bps, driven by ILD brand, Galvus.
^ Contribution of chronic to overall sales compared to FY 2022-23 has increased by 110 bps to 61%.
1 Cipla now has 11 brands
clocking Rs 200 crores revenue as per IQVIA MAT March 2024 compared to nine in FY 202223, which is also the 2nd highest among all IPM players.
Therapy |
Market rank | Market Share | Cipla Growth | Market Growth |
Overall |
3 | 5.4% | 8.0% | 7.6% |
Chronic |
2 | 8.6% | 9.9% | 9.7% |
Acute |
7 | 3.5% | 5.1% | 6.3% |
Respiratory |
1 | 24.6% | 10.3% | 2.7% |
Urology |
2 | 11.9% | 13.0% | 13.7% |
Anti-infectives |
4 | 6.7% | 3.1% | 4.7% |
Cardiac |
6 | 5.0% | 11.3% | 10.0% |
Gastro-Intestinal |
12 | 2.8% | -2.6% | 7.2% |
Anti-diabetics |
9 | 3.4% | -0.5% | 6.0% |
Source: IQVIA MAT March 2024
Cipla has consistently strengthened & expanded its presence across chronic therapies through various strategic partnerships with global pharma companies. The In-licensing portfolio has reached 7% of overall One-India sales over the last five years. The collaborations include ventures with Novartis & Eli Lilly for anti-diabetes medication and with Roche for oncology treatments. In line with this strategy, recently Cipla has entered into a partnership with Sanofi to distribute and promote its CNS products in India. This portfolio was sized at 98.5 crores (IQVIA MAT March 2024) and is expected to be a strong contributor to strengthening presence in CNS segment in future.
*Note- Internal Sales numbers in H Crores. Some ILD products have been transferred back to their parent companies; sales of these products is excluded here from the earlier years.
Branded prescription business Outlook FY 2024-25
India branded prescription business aims to sustain the upward momentum and is committed to enhancing core business through strategic measures such as outpacing market growth, concentrated emphasis on big brands, launching high value new products, increasing field presence across geographies & therapies, implementing market shaping initiatives and optimising mass market portfolio.
At the same time, focus will be on building new business by strengthening presence in emerging therapies and consumer segments, leveraging digital tools and analytics for improved engagement with doctors and launch of innovative patient centric initiatives.
Modification to National List of Essential Medicines (NLEM) will affect pricing in the coming financial year also, coupled with no price growth in Drug Price Control Orders (DPCO) products. The business is planning to mitigate the impact by focusing on volume led growth.
Trade generics business
In the FY 2023-24, the Trade Generics business unit at Cipla continued to thrive in a dynamic market environment, demonstrating resilience and adaptability in the face of challenges. Responded to competitive pressures in the market by implementing strategic initiatives to differentiate offerings and enhance value proposition. The trade generics business unit is now an independent subsidiary of Cipla under the name Cipla Pharma and Life Sciences Limited. The business also underwent a change in distribution model to consolidate channel and increase direct touchpoints for improved trade visibility and positioning the unit closer to the market.
Key Achievements
This business verticals growth is driven by consumerisation initiatives, new product launches and various marketing campaigns.
1 Successfully expanded into new channels like retail to increase market share in existing regions with dedicated focus on the selected brands in growing categories.
^ Implemented initiatives that enhanced customer experience and loyalty, leading to increased customer satisfaction at the retail and trade level.
Entered the injectables market with over 35 products, contributing to business revenue and expanding market coverage. Additionally, partnered with multiple e-commerce platforms to enhance distribution and expand presence.
Trade generics business Outlook FY 2024-25
Looking ahead, the business unit aims to:
1 Ensure smooth transition to new distribution model. Streamline operations and optimise processes to drive profitability and sustainability through newly formed distribution structure.
The retail vertical is poised to make a significant impact in the Indian market, engaging with over 1.5 lacs retail and pharmacy stores. Investing in digital capabilities and digital marketing to reach a broader audience.
Introducing new products to cater to evolving customer / patient needs.
1 Expanding horizon of consumerisation initiatives to take more products closure to its users.
In the dynamic regulatory environment with uncertainty over governing trade margin rationalisation and increase in regional competitors, the business aims to continue fortification of its leadership position.
Consumer business
In India, Ciplas consumer health business is housed under its wholly owned subsidiary, Cipla Health Limited (CHL). In FY 2023-24, the business continued to drive "illness to wellness" theme led by brand building initiatives, deep distribution and category innovations.
Consumer reached |
|||
Retailers* |
Grocers and other over s | Modern trade | E-commerce |
~5,20,000 |
85,000 | 9,500 | 11 |
*Note: Including pharmacies
The business crossed RS.1,000 crores mark in FY 2023-24 led by healthy traction in both core and emerging brands driven by high consumer awareness through robust media campaigns and in-depth consumer insights conducted throughout the year. The business has five core RS. 100 crores+ brands and is well positioned for growth across brands.
CHL plays across all key channels including chemists, grocers, modern trade, e-commerce, quick commerce, cosmetic stores and also has D2C channels for consumer forward brands like Rivela Dermascience (Skin Care), Tugain Essentials (Hair Care) and Endura Mass Range.
Top brands like Nicotex, Omnigel, Cofsils, Prolyte, Cipladine, Endura Mass, Maxirich continue to build a strong connect with their consumers through an "Always On Media" approach.
Brand |
Therapy | Market Position |
Anchor Brands |
||
Nicotex |
Nicotine replacement therapy | #1* |
Cofsils |
Sore Throat | #2 ** |
Omnigel |
Pain Care | #1 ** |
Cipladine |
Medicated Ointments | #1** |
Prolyte ORS |
ORS | #2 ** |
Note: Market share as per latest market estimates (*IQVIA estimates as on February2024 I ** AC Nielsen Estimates as on February2024)
Consumer Business Outlook for FY 2024-25
1 CHL will continue the growth momentum by making big brands bigger, strengthening current portfolio position in the market and build a formidable franchise to improve consumers lives every day.
CHL will focus on brand-building of existing brands while also exploring inorganic opportunities and strengthening its play in digital channels of growth.
North America
Ciplas North America business delivered highest ever revenue ever by scaling USD 906 million led by strong traction in the differentiated portfolio. The North America core formulation business contributes 30% of Ciplas topline, growing 24% YoY in FY 2023-24. This performance was achieved through successful commercial execution of Lanreotide and other low competition products in the portfolio. During the year, the business achieved 21% market share for Lanreotide as per IQVIA MAT February 2024 a 505(b)(2) and also launched Lanreotide generic ANDA recently in the oncology therapy area and continue to expand its presence in this segment, setting a new market share benchmark among the 505(b) (2) products that are launched in the US so far.
During the year, the Company has made further progress in building future pipeline and successfully filed ANDA for gSymbicort and gQVAR. The business is planning to launch ANDA version of Lanreodtide injection and three more peptide assets in FY 202425. Within the respiratory segment, the business continues to retain its market leading position in Arformoterol, 2nd in Budesonide respules market. In Albuterol, post retaining market share in the range of 12-13% throughout last financial year, the business is looking forward to implementing strategies to improve the market share. As a result, market share has improved to 15.5% as per IQVIA April 2024 with target to improve it further by few more percentage points. With a well-designed strategy of differentiated portfolio and
commercial execution, Cipla continues to be one of the fastest growing generic companies in the US in last four years, amongst mid-size generics companies in the US market.
During the year Cipla USA Inc. got certified as "Great Place to Work" in the US. Cipla is the only generic Company to have achieved this recognition in the USA. In-line with its aspiration to expand the respiratory footprint, the business completed first Lung Force Walk in New York, USA in collaboration with American Lung Association and also kicked off a partnership with the COPD Foundation.
Market Segment |
TRx Overall Market Rank | TRx Overall Market Share |
Anchor Brands |
||
Albuterol HFA* |
4 | 12.9% |
Budesonide Solution |
2 | 26.7% |
Gabapentin Caps |
3 | 14.2% |
Esomeprazole Granules |
1 | 50.7% |
Arformoterol Inh. Sol. |
1 | 37.1% |
North America Outlook FY 2024-25
Near to medium term focus for the business is targeted on expanding the peptide portfolio through internal development and partnerships, strengthening high value complex generic pipeline and de-risking US portfolio. With focused investments in complex generics and consistent efforts to increase market share, the Company continues to expand its footprint in the US. We expect the business run-rate to continue in FY 2024-25 by investing in de-risking key pipeline products and capacity expansion for respiratory products in US through facilities in Fall River & Long Island. The business is also looking forward to supply respules from newly approved China facility.
Note:* UA- Under Approval, TA- Tentative approval, FA- Final approval
South Africa, Sub-Saharan Africa and Cipla Global Access (SAGA)
FY 2023-24 delivered strong performance across multiple parameters. Despite an intensive competitive environment, SAGA landed at a revenue of USD 408 million with growth of 3%.
South Africa
Cipla South Africa continues to perform exceptionally well, marked by core revenue growth. Overall, the Cipla South Africa primary business grew by 11% in local currency terms; led by the exceptional performance in the private market. The private business contributed 82% to the overall revenue, with the balance contributed by Tender business.
Actor Acquisition
Cipla South Africa recently acquired 100% equity stake in Actor Pharma (Pty) Limited (Actor Pharma) on 7th February, 2024, this is in line with Ciplas strategic vision and the ability to adapt to the changing market dynamics. Actor Pharma was a privately owned pharmaceutical Company in South Africa that was founded in 2009 and specialises
in Consumer health and generic medicines. Actor Pharma established brand equity in consumer driven markets and has a solid pipeline of new launches in niche markets. The acquisition offers Cipla a high mix of OTC revenue and a portfolio that supplements Ciplas strengths.
By integrating Actor Pharmas business into operations, the business anticipates synergies that will optimise cost structures and bolster revenue streams. Additionally, the expanded market reach and diversified product portfolio resulting from acquisition will strengthen the competitive position, enabling to capture new opportunities. Key brands from Actors current portfolio have potential to be big brands in near future.
Private Market - OTC and Rx Views
Private market business excelled beyond market trends with healthy secondary revenue growth of 11.2%, more than 5x the market growth.
For the first time Cipla ranks 1st in prescription market with sustained rank of 3rd in OTC market, overall Cipla continues to be the 3rd largest pharmaceutical corporation in South Africa private market.
Ciplas OTC business and Rx business have grown ahead of the market increasing their market share in comparison to last year.
Market Segment |
Market Rank | Market Share Cipla Growth | Market Growth |
OTC |
3 | 8.6% 7.2% | -0.2% |
Rx |
1 | 8.7% 13.5% | 3.4% |
Total Market |
3 | 8.7% 11.2% | 2.1% |
Source - IQVIA MAT March 2024
South Africa Private Market - Therapy View
At a therapy level, Cipla has increased its market shares across key therapies including Respiratory, Nervous System, Antineoplast, System Anti-Infectives, Cardiovascular and G.U. System + Sex Hormones.
South Africa; rankings and market share across segments
Therapy |
Market Rank | Market Share | Cipla Growth | Market Growth |
Systemic Anti-infectives |
1 | 11.4% | 5.1% | 0.5% |
G.U.System+sex hormones |
2 | 10.6% | 30.6% | 3.4% |
Respiratory system |
2 | 15.3% | 4.3% | -3.1% |
Nervous system |
3 | 11.4% | 9.3% | 3.2% |
Cardiovascular system |
3 | 7.9% | 6.0% | 2.7% |
Alimentary Tr+metabolism |
3 | 6.2% | 25.5% | 2.1% |
Musculo-skeletal system |
4 | 7.3% | 18.1% | 1.8% |
Antineoplast+immunomodul |
5 | 7.0% | 35.9% | 6.9% |
Source - IQVIA MAT March 2024
Total UA/TA* March 2023 |
71 |
Filed in FY 2023-24 |
13 |
Final Approvals FA* & TA to FA in FY 2023-24 |
3 |
Withdrawals |
1 |
Total UA/TA March, 2024 |
80 |
Brand |
Therapy | Revenue |
Cipla Actin |
Respi OTC | ZAR 130+ million |
Coryx |
Cough, cold & flu | ZAR 95+ million |
Broncol |
Cough, cold & flu | ZAR 90+ million |
Asthavent |
Respi OTC | ZAR 85+ million |
Accurate |
Pain management | ZAR 80+ million |
(Basis IQVIA MAT March 2024).
Top Rx Brands in South Africa private market
The brands listed below account for approximately 42% of the FY 2023-24 revenue of the OTC business unit, with a strong primary growth of about 12.3% (in ZAR). This represents a robust bounce back from FY 2022-23, achieving solid double-digit growth in a flat market.
Brand |
Therapeutic Group | FY 2023-24 YoY Growth% |
Lexamil |
CNS | 25.7% |
Epitec |
CNS | 27.6% |
Uromax |
Mens health | 33.2% |
Nurika |
CNS | 3.1% |
Serdep |
CNS | 15.0% |
Reydin |
Infectious diseases | 62.5% |
Vusor |
Cardio & diabetes | 19.7% |
Top OTC Brands in South Africa Private Market
The following brands, account for ~34% of the FY 2023-24 revenue of OTC business unit and have reported a strong primary growth of ~12.4% (in ZAR) in FY 2023-24. In addition, it is a strong bounce back from FY 2023 with solid double-digit growth where market is flat.
(Basis IQVIA MAT March 2024).
New Products
New launches are a significant revenue growth driver in the South African private market, positioning Cipla for success in the coming years.
No. of brands launched
Below are the major key launches in South Africa in FY 2023-24:
Brand |
Therapeutic Group |
Sagalatin |
Cardio & diabetes |
Colcin |
Pain & other s2 |
Palbociclib |
Oncology |
Ondansetron |
Oncology |
Urton |
Mens health |
Pomalidomide |
Oncology |
Synglutra |
Cardio & diabetes |
Aubamide |
Cns |
Dasatinib |
Oncology |
Bupyra |
Cns |
Tender vaccines
This year also marked Cipla South Africas entry into vaccines and was awarded Pneumococcal conjugate vaccine tender & Measles Rubella tender in FY 202324 for a tenure of three years. Vaccines supplied by Cipla to Department of Health would be used to treat approximately one million pediatric patients each year for next three years.
Cipla Select
Cipla launched Cipla Select to promote products with high potential but low historical growth. Cipla Select continues to focus on the growth of its portfolio with minimal overheads while offering competitive, high-quality products to customers and patients. Cipla Select is showing consistent growth and has ignited the potential to build its portfolio of products to give a wider offering to customers in FY 2023-24 and beyond.
Mirren
Acquired in 2018, Mirren continues to be a strategic asset for Cipla as a key driver for its wellness business, while promoting the South African governments policy for local manufacturing in the pharmaceutical industry. Mirren continues to enhance its product manufacturing basket through various technology transfers. Having successfully completed significant productivity improvements, Mirren is committed to enhancing efficiencies, upgrading capacity and pursuing expansions.
BrandMed
Strategic cross-collaboration between Cipla and BrandMed is focused on optimising BrandMed to drive increased commercial business acumen and accelerate its growth journey.
In 2019, Cipla Medpro South Africa (Pty) Limited acquired a 30% stake in BrandMed, a connected healthcare firm which develops software to seamlessly integrate a combination of connected solutions across the health continuum for patients, healthcare professionals, practices and institutions and aims to deliver personalised patient care. The Companys vision is to achieve better patient outcomes for non-communicable diseases (NCDs) through digital monitoring of a patients healthcare journey. The COVID-19 pandemic has evidenced the importance of digital healthcare solutions, bringing BrandMed solutions into sharp focus.
QCIL Divestment
After a thorough evaluation of Uganda business, strategic decision of divestment of the business was taken. Cipla sold 51.18% stake held in Cipla Quality Chemicals Industries limited QCIL to focus on capital allocation on growth projects to avoid overlapping portfolio. Cipla continues to provide lifesaving medicines in Africa via Cipla Global Access and will also continue to support QCIL by proving access to certain technology for predetermined period.
Cipla Global Access (CGA)
Ciplas revolutionary efforts and established alliances with global funding organisations have been at the forefront of extending the reach of affordable care for HIV/AIDS and Malaria patients since 2001. TLD (Tenofovir/Lamivudine/Dolutegravir 300/300/50) is the 1st line regiment for Anti Retro Viral (ARV) treatment and has reached patients across the globe through various institutional agencies, with the focus on capacity expansion, efficient operations and addition to new customers. Cipla continues to deliver lifesaving medicines to 64 countries in FY 2023-24 with strong growth in TLD.
Sub Saharan Africa (SSA)
Ciplas Sub Saharan Africa business is committed to bring innovative treatment solutions to the patients of Sub Saharan Africa as a part of delivering its strategic goals. Through digitised innovation in asthma and Chronic Obstructive Pulmonary Disease (COPD) diagnosis, the business is aiming to drive improved access to early diagnosis of respiratory diseases and as a result to further solidify the strong market share in the respiratory segment.
As per IQVIA MAT March 2024,
Cipla delivered market-beating growth in Kenya, with a corporate ranking of seven, driven by capturing >10% market share in Gastrointestinal, Pain and Respiratory markets, demonstrating the soundness of the strategy.
SSA business launched its first diabetes product, initiating its growth journey in the chronic therapeutic category of cardiovascular and diabetes, the fastest growing therapy area in SSA markets. Furthermore, Cipla SSA is well positioned to continue to drive its rapid growth and expansion through the hard work delivered by the team in setting the foundation and driving a culture of execution excellence.
Outlook for the region FY 2024-25 South Africa
As we look ahead to the coming year, Cipla South Africa outlook is optimistic with the strategic opportunities. Building upon the success of the current year, we anticipate continued growth and expansion. The focus is to continue to maintain a strong market position and enhance its market presence in the private market through organic launches as well as deepening its footprints through strategic partnerships and collaboration. Business will also accelerate growth within the OTC segment fueled by Actor acquisition.
Sub-Saharan Africa also remains committed to bringing innovative treatment solutions to the patients of Sub-Saharan Africa while achieving its strategic goals. Focus on building Cardiovascular + Diabetes portfolio targeting three new launches in the upcoming year.
Cipla Global Access continues to deliver lifesaving affordable medicines in multiple countries and is targeting to launch new products and entering into new therapy areas with the goal of providing patients access to affordable medicines and launches related to oncology, anti tuberculosis and reproductive health.
Emerging Markets and Europe
In FY 2023-24, Emerging Markets and Europe delivered USD 373 million revenue despite some operational challenges and continued volatility across markets. However, the core focus markets continued to show a strong growth trajectory. Emerging Markets and Europe contribute 12% of Ciplas overall revenue. Profitability continues to improve over last year.
Key Highlights from Emerging Markets
^ Cipla sold its entire stake of 51% in Saba Investment Limited, UAE (Saba) to Shibam Group Holding Limited, UAE. Consequent to the sale, Saba and its subsidiaries viz Cipla Middle East Pharmaceuticals FZ LLC, UAE (CME) and Cipla Medica Pharmaceutical and Chemical Industries Limited, Yemen (Cipla Medica), ceased to be subsidiaries of the Company.
^ Cipla Maroc awarded as "Best Place to work in Morocco 2023".
^ Cipla continues to hold leadership position in Respiratory segment at key markets like Sri Lanka, Nepal, Morocco [IQVIA MAT September 2023].
Portfolio Update:
Companys focus is to build future pipeline of differentiated products, both in-house and through licensing route, to drive growth in deep markets. In FY 2023-24. The Company continued to file 100+ products across markets.
Key Launches during FY 2023-24 across Emerging Markets and Europe
Molecules |
Therapy | Geography |
Salbutamol MDI |
Respiratory | Paraguay, Singapore, Kazak, Morocco |
Ertapenem Injection |
Anti-infectives | United Kingdom, Spain |
FPSM MDI |
Respiratory | France, Italy, Paraguay |
Beclo+Formo MDI |
Respiratory | United Kingdom, Netherlands |
Mometasone Nasal Spray |
Respiratory | Mexico, Myanmar |
Budesonide Respules |
Respiratory | United Arab Emirates |
Gefitinib Tabs |
Oncology | Iraq |
Emerging Markets and Europe Outlook for FY 2024-25
Emerging Markets and Europe shall continue to focus on deep markets to drive growth. Portfolio, on-time launches and meaningful partnerships will enable the business to deliver on growth aspirations.
Active Pharmaceutical Ingredients (API)
With its 60+ years experience in manufacturing APIs, Cipla has produced 200+ APIs of various complexities. The APIs are supplied to 50+ countries across the globe helping local pharmaceutical companies reach out to their patients.
The Company continues to be a preferred partner to many large generic pharmaceutical companies globally due to its focus on niche molecules and manufacturing scale. A strong dedicated team of over 300+ scientists aid the Company to differentiate itself with the capability to handle a wide range of chemistries and complex molecules.
Cipla covers a wide array of therapies with 2,204 Drug Master Files (DMFs) submissions till date. Within FY 2023-24, Cipla made 499 DMF filings in various countries. The Company has a robust portfolio of over 156 APIs across regulated markets in various stages of development.
API Manufacturing Capability
Cipla has four cGMP compliant API sites, approved by the major international regulatory agencies including the United States Food and Drug Administration (US FDA), European Directorate for the Quality of Medicines (EDQM), Pharmaceuticals and Medical Devices Agency (Japan) (PMDA), World Health Organization (WHO), Therapeutic Goods Administration (Australia) (TGA) and Korea Food and Drug Administration (KFDA). These sites include dedicated facilities for oncology, hormones and corticosteroid APIs. Cipla offers a total capacity for API manufacturing of over 1,000 MT. Cipla offers high competency in handling broader range of batch sizes and expertise in particle engineering and micronization to meet required particle sizes for Respiratory APIs.
The Company has three API R&D Centers, two pilot plants and three safety screening labs. All facilities and Ciplas plants have zero liquid discharge and waste-water treatment facilities that include ETP with Multi Effect Evaporators (MEE), Agitated Thin Film Dryer (ATFD), Vertical Thin Film Dryer (VTFD) and Reverse Osmosis (RO) facilities.
API Business Performance
In FY 2023-24, the API Business had multiple headwinds like geopolitical issues, global supply chain interruptions, high inflation rates and pressure on margins for commercialised molecules. Geopolitical issues majorly impacted the prices of key starting materials and intermediates thereby increasing the API prices. However, the API Business team was not only agile with regular supplies but also ensured timely supplies to support customers with their critical launches and lock-in with multiple customers.
API Business revenue had discreet growth as compared to the previous financial year. The FY 2023-24 revenue stood at USD 70.1 million (H582 crores) Successful deliveries of differentiated product mix, improved traction in seeding and lock-ins are the key drivers for API business. The API team in Cipla successfully supplied 95+ distinct molecules to 250+ customers.
FY 2023-24: API Revenue by Geography
0 Europe & Global Key Accounts 0 Emerging Markets 0 North America 0 India
FY 2023-24: Revenue by Therapy
0 Gastrointestinal 0 Oncology
0 Respiratory 0 Cardiovascular
0 Central Nervous 0 Others
System
Cipla continues to partner with leading generic companies and innovators for their new products to further expand in markets in Europe, Japan, Korea and Brazil. Strong relationship with the worlds largest generic pharmaceutical companies has helped Cipla to take necessary steps to provide better realisations to its partners. Additionally, it aims to support higher number of seeding and lock-ins for new molecules under development that will help in achieving sustainable growth plans to enhance its API, R&D and manufacturing capacities and is focused on productivity to achieve cost optimization through continuous process/yield improvements.
Strategic initiatives adopted and implemented in FY 2023-24
Using Theory of Constraints, the business team came up with the forecast-based manufacturing model and shifted from pull strategy to push supply chain strategy. In FY 2023-24, business implemented multiple digital initiatives to improve the ability to identify white spaces and pursue untapped business opportunities.
API Outlook for FY 2024-25
API team stays committed to Ciplas focus on "Caring for Life" by improving the health conditions of the people over the upcoming years. The API business continues to work with reimagined strategy to focus on its critical and high-demand APIs and to ensure uninterrupted supplies to customers. In FY 2024-25, API business will continue to focus on maintaining a strong market position in Top 10 APIs and bringing new business on board with new pipeline molecules and enhancing its market presence via organic launches, partnering with innovators and deepening its footprint by increasing outreach to newer untapped markets.
Human Resource Management and Industrial Relations
For details on Ciplas approach towards Human Resources, refer to Human Capital on page no. 70 of this report.
Adherence to accounting standards
The Company continues to adhere to standard accounting policies under the Indian Accounting Standards (Ind AS), applicable since 1st April,
2016. We have also complied with the recent regulatory change in Ind AS 1, concerning the disclosure of material accounting policy information. These policies are to be read along with the relevant applicable rules and accounting principles. Changes in policies, if any, are approved by the Audit Committee.
Threats, risks and concerns
The Cipla Enterprise Risk Management (ERM) program covers its key risks across all its business areas. The Investment and Risk Management Committee of the Board reviews and discusses the risk updates on quarterly basis.
During the reporting period, the Company faced heightened risks due to delayed launches in key products, escalations in geopolitical conflicts, supply chain complexities, regulatory audits at manufacturing sites, increased input costs, cyber and information security risks exacerbated by advancements in artificial intelligence and continued foreign exchange volatility. Additionally, the pharmaceutical industry is witnessing heightened regulatory oversight both, domestically and globally. Finally, climate change and adverse weather events continue to be a concern which has potential to disrupt business.
Please refer Page No. 46 for risk management framework and key risks including the mitigation measures.
The Company laid down risk response measures to:
Address business continuity challenges;
Overcome growth hurdles;
Navigate through geopolitical complexities;
Strengthen and secure enterprise wide cyber security;
^ Ensure continued compliance with applicable laws and regulations and
Further the agenda of achieving excellence in relation to Environment, Sustainability and Governance (ESG) norms.
The Company continued its efforts to maintain sound financial discipline and explore partnerships in niche therapies to expand its presence and meet its mission of Caring for Life.
Internal control and its adequacy
Cipla has an adequate system of internal controls commensurate with the nature of its business and the size and complexity of its operations. The Company has adopted policies and procedures covering all financial, operating and compliance functions. These controls have been designed to provide a reasonable assurance over:
^ Effectiveness and efficiency of operations;
^ Prevention and detection of frauds and errors;
^ Safeguarding of assets from unauthorised use or losses;
Compliance with applicable laws and regulations;
1 Accuracy and completeness of the accounting records and Timely preparation of reliable financial information.
The current system of Internal Financial Controls (IFC) is aligned with the requirement of the Companies Act, 2013 and is in line with globally accepted risk-based framework as issued by the Committee of Sponsoring Organisations (COSO) of the Treadway Commission.
The Company has an Internal Audit (IA) function which functionally reports to the Chairperson of the Audit Committee, thereby maintaining its objectivity. The IA function is supported by a dedicated internal audit team and resources from external audit firms.
The annual internal audit plan is carved out from a comprehensively defined Audit Universe which encompasses all businesses, functions, risks, compliance requirements and controls maturity. The internal audit plan is approved by the Audit Committee at the beginning of every year. Every quarter, the Audit Committee of the Board is presented with key control issues and the actions taken on issues highlighted in the previous reports.
The Audit Committee deliberates with the management, considers the systems as laid down and meets the internal auditors and statutory auditors to ascertain their views on the internal control framework. The Company recognises the fact that any internal control framework would have some inherent limitations and hence has inculcated a process of periodic audits and reviews to ensure that such systems and controls are updated at regular intervals.
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