FDC Management Discussions

The Management of the Company presents the analysis of its performance for the financial year ended 31st March 2021 and its outlook for the future. This outlook is based on assessment of the current business environment. It may vary due to future economic and other developments, both in India and abroad.


The global pharmaceutical industry is amongst the fastest growing industries globally and one of the biggest contributors to the world economy. As per a research report from the IQVIA Institute for Human Data Science, the global pharmaceutical industry is estimated to be at US$1,228.45 billion in 2020.

In 2021, the global pharmaceuticals market is expected to grow by 1.8% to reach US$1,250.24 billion. The growth is likely to be mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is further expected to reach US$1,700.97 billion in 2025 at a compounded annual growth rate (CAGR) of 8%. North America dominated the global pharmaceuticals market with 46% share in 2020. Asia Pacific accounted for 26%, while Africa was the least contributing region.


Domestic Market

The Indian pharmaceuticals market (IPM) is dominated by generic drugs which constitute nearly 70% of the market, whereas over the counter (OTC) medicines and patented drugs make up to 21% and 9%, respectively.

Due to COVID-19 impact, as per IQVIA Report, the Indian Pharmaceutical Market (IPM) grew in single digit at 4% with total sales reported at Rs. 1,56,797 Crore in FY 2020-21. IPM de-grew by 4% in the 1st Quarter (Q1) FY 2020-21, but maintained positive growth from second quarter onwards growing by 4% in Q2 and 9% in both Q3 and Q4 of FY 2020-21. According to the Indian Economic Survey 2021, the domestic market is expected to grow three times in the next decade. It is estimated at US$ 41 billion in 2021, having grown 10 times in the last 2 decades, and is likely to reach US$ 65 billion by 2024 and further expand to reach ~US$ 120-130 billion by 2030.

Source: IQVIA Mar 21

COVID-19 Impact _ghtback from the Indian Pharmaceutical Industry: Research & Development related to COVID-19: On 14th July 2020, Bharat Biotech started the first phase of human clinical trials for Indias first COVID-19 vaccine candidate COVAXIN. The drug was being developed by Bharat Biotech in collaboration with Indian Council of Medical Researchs Pune-based National Institute of Virology.

Indian Players Global Exposure: In February 2021, the Russian Ministry of Health allowed Glenmark Pharmaceuticals to market its novel fixed-dose combination nasal spray in Russia. In November 2020, Hetero Drugs, a Hyderabad-based pharmaceutical company, reached an agreement with the Russian Direct Investment Fund (RDIF) to produce >100 million doses per year of the RDIFs Sputnik V COVID-19 vaccine in India.

Technological Initiatives: On 15th October 2020, India and the Netherlands unveiled plans to collaborate with the aim of providing digital health facilities and security to all citizens. As a part of Indias National Digital Health Mission (NDHM), through this cooperative initiative, the two countries will work closely to create capacities and put in place the requisite technology to enable this initiative.


The Indian pharmaceuticals market is the third largest in terms of volume and 13th largest in terms of value. Indian drugs are exported to more than 200 countries in the world, with US being the key market. Generic drugs account for 20% of the global export in terms of volume, making the country the largest provider of generic medicines globally. It is expected to expand even further in the coming years. The Indian pharmaceutical exports, including bulk drugs, intermediates, drug formulations, biologicals, Ayush and herbal products and surgical, stood at US$ 20.14 billion in FY 2020-21 as compared to US$ 16.28 billion in FY_2019-20. India has exported US$ 3.89 billion of bulk drugs & drug intermediates in FY 2019-20 and US$ 3.66 billion in FY_2020-21. India has one of the lowest manufacturing costs in the world. It is lower than that of USA and almost half of Europe.

Source: Directorate General of Commercial Intelligence and Statistics. EXIM Analytics

Industry Developments

Cost Ef_ciency: Low cost of production and R&D boosts efficiency of Indian pharma companies, leading to competitive exports. Indian pharma export reached US$ 16.28 billion in FY_2019-20. As of 2019, Indias cost of production is ~33% lower than that of the US. Indias ability to manufacture high quality, low priced medicines presents a huge business opportunity for the domestic industry.

Economic Drivers: India is a fast-growing nation. The economic prosperity as a result of it is likely to improve drug affordability. This will also contribute to increase in penetration of health insurance which will drive expenditure on medicine. Further, with the increasing penetration of pharmacies, especially in rural India, OTC drugs will be readily available.

Policy Support: The Governments approval of Production-linked Incentive (PLI) scheme for the pharmaceuticals sector from FY 2020-21 to FY 2028-29 is expected to attract investments of

Rs. 15,000 Crore (US$ 2.07 billion) into the sector. It is also expected to lead to incremental sales of Rs. 2,94,000 Crore (US$ 40.63 billion) and exports of Rs. 1,96,000 Crore (US$ 40.63 billion) between FY 2022-23 and FY 2027-28.

Increasing Investments: The foreign direct investment (FDI) inflows in the Indian drugs and pharmaceuticals sector stood at US$ 17.75 billion between April 2000 and December 2020.

Biosimilar: The Governments plans to allocate US$ 70 million for local players to develop Biosimilar will boost the domestic market and it is expected to reach US$ 35 billion by 2030.

Formulations: India is the largest exporter of formulations in terms of volume, with 14% market share and 12th in terms of export value. Double-digit growth is expected over the next five years.

Source: RNCOS, BMI, Datamonitor, Kemwell Biopharma, Chemical Pharmaceutical Generic Association, ICRA Report estimates, pharmanewsprwire.com

Industry Growth Drivers
ACCESSIBILITY: New business models are expected to penetrate tier-2 and 3 cities. Over 1,60,000 hospital beds are expected to be added each year in the next decade. LAUNCH OF PATENTED DRUGS: Following the introduction of product patents, several multinational companies are expected to launch patented drugs in India. Growth in the number of lifestyle diseases in India could boost the sale of such drugs. High Court has also allowed to export patented drugs to foreign players in the Indian market.
ACCEPTABILITY: Pharmaceuticals is likely to see increased acceptability with rising literacy, increased propensity of patients to self-medicate which will boost the OTC market, rising acceptance of biologics and preventive medicine and surge in medical tourism. MEDICAL INFRASTRUCTURE: Pharma companies have increased spending to tap rural markets and develop better medical infrastructure. Hospitals market size is expected to increase by US$ 200 billion by 2024. Medical devices industry in India has been growing 15.2% annually and was valued at US$ 5.2 billion in 2018 and is expected to reach US$ 50 billion by 2025.
PRADHAN MANTRI BHARTIYA JANAUSHADHI KENDRAS (PMBJK): Over 650 million people are expected to be covered by health insurance by 2020. The Government plans to provide free generic medicines to half the population at an estimated cost of US$ 5.4 billion. SCOPE IN GENERIC MARKET: Indias generic drugs account for 20% of global exports in terms of volume, making it the largest provider of generic medicines globally. The generics drug market accounts for around 70% of the India pharmaceutical industry and it is expected to reach US$ 27.9 billion by 2020.
Affordable medicines under PMBJK achieved an impressive sale of Rs. 100.40 Crore (US$ 14.24 million) in first two months of FY 2020-21.
EPIDEMIOLOGICAL FACTORS: Patient pool is expected to increase over 20% in the next 10 years (until 2030), mainly due to rise in population, new diseases and increasing prevalence of lifestyle diseases. OTC: Indias OTC drugs market is estimated to have grown at a CAGR of 16.3% to US$ 6.6 billion over 2008-16 and is further expected to grow on the account of increased penetration of chemists, especially in rural regions. The India OTC market was accounted at US$ 4.61 billion in 2018 and is expected to reach US$ 10.22 billion by 2024.
PATENT EXPIRY: About 120 drugs are expected to go off-patent over the next 10 years; with expected worldwide revenue between US$ 80 to US$ 250 billion.

Source: BMI, India Biz, Nicholas Hall & Company, IQVIA. ICRA Report on Indian Pharmaceutical Sector, Pharmaceutical Industry: Developments in India- Deloitte, Mckinsey Pharma Report 2020

Opportunities in Healthcare

Clinical Trial Market: India is among the leaders in the clinical trial market. Due to a genetically diverse population and availability of skilled doctors, India has the potential to attract huge investments to its clinical trial market.

High-end Drugs: Due to increasing population and income levels, demand for high-end drugs is expected to rise. Growing demand could open up the market for production of high-end drugs in India.

Penetration in Rural Market: With 70% of Indias population residing in rural areas, pharma companies have immense opportunities to tap this market. Demand for generic medicines in rural markets has seen a sharp growth. Various companies are investing in the distribution network in rural areas.

CRAMS: The Contract Research and Manufacturing Services (CRAMS) industry - estimated at US$ 17.27 billion in FY 2017-18, is expected to reach US$ 20 billion by the end of 2020. The market has more than 1,000 players.

Source: BMI, Drug Controller General of India

Industry Risks and Outlook

The Indian pharmaceutical industry has been a world leader in generics, both globally and in domestic markets, contributing significantly to the global demand for generics in terms of volume. Made-in-India drugs supplied to the developed economies such as the US, EU and Japan are known for their safety and quality. While in recent years, the US market had remained subdued for Indian pharmaceutical companies due to competitive intensity in the generic space and consolidation of pharmaceutical distributors, the situation has seen an improvement. Further, Indian pharmaceutical players have steadily migrated up the value chain to focus on value-added formulations with higher margins. Indias ability to manufacture high quality, low priced medicines will continue to present a huge business opportunity for the domestic industry.

In the domestic market, medicine spending is projected to grow 9-12% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for anti-diabetes, anti-depressants and anti-cancers segments which are on the rise.

The Government aims to increase healthcare spending to 3% of the Gross Domestic Product (GDP) by FY 2021-22. This will also drive the growth of the pharmaceutical market in India. Several steps are also being taken by the Government to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. Additionally, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.

Finally, the Indian pharmaceutical industry has been relatively resilient to the COVID-19 disruption and is poised to gain from favourable currency tailwinds and stable outlook for India and US business.


In FY 2020-21, the Company registered a standalone total income of Rs. 1,42,259.50 Lakhs compared to Rs. 1,41,375.05 Lakhs in the previous year.

The Earnings before Interest and Depreciation amounted to Rs. 42,147.58 Lakhs in FY 2020-21 as compared to Rs. 36,623.81 Lakhs in the previous year. The Net Profit after Taxation stood at

Rs. 29,948.96 Lakhs in FY 2020-21 as compared to Rs. 24,677.86 Lakhs in the previous year.

On a consolidated basis, the Company registered a total income of Rs. 1,43,022.90 Lakhs in FY 2020-21 as compared to

Rs. 141,308.88 Lakhs in the previous year, thereby registering a growth of 1.21%.

Financials Performance and Operations ratios are as follows:

2019-20 2020-21 diff % change
Debtors Turnover 34 30 (4) -14.59%
Ratio (days)
Inventory 58 59 1 2.30%
Ratio (days)
Interest Coverage 107 124 17 13.43%
Ratio (times)
Current Ratio 3.77 4.57 1 17.48%
Debt Equity 0.01 0.00 (0) -53.59%
EBIDTA 28% 32% 0 13.47%
Margin (%)
Net profit 19% 22% 0 16.56%
Margin (%)

*Due to r epayment of loans and lease liabilities, Debt equity ratio has changed more than 25%.



1st Quarter FY 2020-21: Due to COVID-19 pandemic and subsequent lockdown beginning in the first quarter of FY 2020-21, the IPM has de-grown by 4% in FY 2020-21. The de-growth was sharper in April 2020 and May 2020 at 11.4% and 7.6% respectively. Except Cardio-Diabetic market, rest all therapies de-grew by double digit. However, from June 2020 onwards, the IPM slowly paced growing at 6.3%.

Anti-viral Market: From June 2020 onwards, the Anti-Viral market started pacing. It grew by more than 25% in June 2020 thereafter registering a triple digit growth in the balance quarters. For FY 2020-21, the Anti-Viral market grew strongly at 161.2% largely led by the new initiatives (growth of Remdesivir and Favipiravir which contributed 60% to the total Anti-Viral Market. While the NI grew by 196.2%, the volume and price de-grew by 17.4% and 18.1% respectively.

As usual, the top 10 therapies contributed 85% to total IPM growth of 3.2%. Cardiac, led by volume and subsequently price growth, and Vitamins/ Minerals/ Nutrients (Vits/ Mins/ Nutri), led by price and NI growth, segments grew in double digits.

Gastro-Intestinal, Dermatology (Derma), Nuero/CNS and Gynaecology therapies grew by single digit due to price growth followed by NI growth. Except Neuro/CNS, rest therapies witnessed negative volume growth.

Source: IQVIA Secondary Sales Audit Mar 21

Considering the pandemic scenario, the Company launched selective molecules like Favipiravir, Hand Sanitiser, Ivermectin, Dexamethasone and Paracetamol during the year. In total, the Company launched the following 13 brands in FY 2020-21:

99F, ATA, Favenza, Piflu, Ivsit, Salmodil-DX, Salmodil-LS, Zifi-SB, Trigaurd Sanitiser, Unox, Cefponz, Dexis and Zivas ASP.

During the year, the Companys Gastro-Intestinal, Derma, Vits/ Mins/ Nutri and Cardiac segments performed well registering growths of 5%, 7%, 3% and 10% respectively. In FY 2020-21, incremental value measuredly came from Gastro-Intestinal and Anti-viral, followed by Derma and Cardiac.

Source: IQVIA Secondary Sales Audit Mar 21

Research and Development

The Research & Development (R&D) centres located at Kandivali (Mumbai) are duly recognised by the Indian Governments Department of Science and Technology (DST). The Company carries out its various R&D activities in the following areas:

? Formulations

The endeavour of the R&D Formulation team at FDC Limited is to develop quality products at affordable prices. The team constantly innovates to develop top quality pharmaceutical products for the domestic and global markets. The scientists are engaged in developing new products using innovative technologies and robust development strategies. A stimulating work environment provides the impetus to deliver the best. There is a constant thrust to address patient needs, and efforts to develop products for their treatment are undertaken and delivered with utmost priority. The team has successfully developed and transferred challenging complex products from the laboratory to the commercial level.

Some achievements of FY 2020-21 are as follows:

Ready for commercialisation of challenging MPSD (Multiparticulate Pharmaceutical Solid Dosage) technology-based products at plant

Development and successful transfer of technology of Pepcia D capsules and Zipant D capsules for domestic market

Commercialisation of Preservative Free UV Lube Ophthalmic solution to offer a better result for patients with dry eyes for domestic market

Abbreviated New Drug Application (ANDA) batches of Azelastine Oph 0.05% Solution for the US market

ANDA batches of Pilocarpine Oph Solution 1% for US market

Exhibit batches of Preservative Free Chloramphenicol Solution 0.5% for UK market

Filing of Ofloxacin Otic Solution 0.3% ANDA for the US market.


The Research and Development centre located at Kandivali (Mumbai) engages in process development of niche products, particularly in area of Ophthalmic, Antihypertensive, Antifungal, Anti diabetic, Antihistaminic, Bronchodilator and Antibacterial New Chemical entity (NCE). Currently, it also focused on development of API for COVID-19; for example Favipiravir. The work on life cycle management of existing drug substances and synthesis of generic Peptide molecules for treatment of Leucoderma (skin Pigmentation), Obesity and Anti diabetic are also being carried out. These initiatives are aimed at cost effectiveness, backward integration and meeting regulatory requirement to attain accreditation from various World Drug Regulatory Authorities.

The other highlights of the process developments of generic drug molecules are:

Non-infringing processes

Usage of environment friendly chemicals

Application of green chemistry principles for protection of environment and to reduce aqueous effluents

Development of desired polymorphs

Usage of classical chemistry for development of chiral drugs

Advanced state-of-the-art new flash and preparative chromatography technique for enhancing purity and yield on commercial scale

Implementation of electronic laboratory notebook software with 21 CFR compliance for recording daily experiments. Moving towards state-of-the-art 21 CFR compliant R&D center

Scale up and technology transfer activities ensuring overall chemical safety and protection of inventions through intellectual property rights, i.e. patents.


Nutraceuticals are products which, other than nutrition, are also used as medicine. A nutraceuticals product may be defined as a substance which has physiological benefits or provides protection against chronic diseases. Nutraceuticals may be used to improve health, delay the aging process, prevent chronic diseases, increase life expectancy, or support the structure or function of the body.

The division works towards increasing its product categories of Infant Milk Substitute (IMS). It is working on advanced formulations on all four categories of IMS with some added micro nutrients and beneficial ingredients, Enerzal Fortification with added nutritional benefits, development of new P2P and LL parties. With this, the Company will be ready to supply current market requirement by launching new range of products under Nutraceuticals & Health Supplement category.

The achievements and quality enhancement for the year are as follow:

Sinnar facility successfully got ISO 22000:2018/HACCP and GMP certified by TUV laboratory

New third parties developed for Tetrapak 200 ml to meet the market requirement

Enerzal Powder Orange Flavour alternate vendor developed and launched

Turmyl Immunity Milk product development completed and launch initiated

Developed new P2P for Enteroplus Probiotic supply in powder as well as capsule format

Many products under development such as Enerzal and

Enerzal Zero Flavour, Enerzal Plus Fortification, Enerzal Zero Powder, Enerzal Natural Colour Incorporation, Enerzal Carbonation, Protein Water, etc.

? Biotechnology a. G-CSF PROJECT:

As mentioned earlier, the Company obtained Test license (Test License No: 201515686 dated 31st March 2020 under Form 29 for manufacturing of clinical trial batches of Filgrastim 300 ?g/ml drug substance after the Joint inspection conducted by CDSCO (West Zone) and local FDA at its R&D bioprocess Jogeshwari facility.

Validation activity for Bioanalytical methods such as SDS PAGE to test in-process samples of the clinical trial batches has been completed. Process validation documentation preparation and Bioassay validation studies are in-process.

b. THIRD GENERATION THROMBOLYTE PROJECT: The Company has tied up with third party for developing purification strategy for Reteplase molecule.

The Company has successfully completed fermentation trials (10L capacity) and downstream processing trial (lab scale) till refolding stage for Reteplase molecule.


R&D MTL lab has performed screening of the promising NCEs synthesised in large quantities (TNF-18 and

HY-27) to ensure that the efficacy observed in primary screening is consistent and reproducible.

These molecules have been handed over to R&D Formulation department in large quantities for further development. Based on the feedback from R&D Formulation & Medical department, CROs shall be explored to test efficacy of developed formulation.


During FY 2020-21, the Companys annual export turnover of Finished Formulations has grown by 21% to Rs. 270 Crore from Rs. 223 Crore in FY 2019-20. Major contribution was from revenue of the US and the UK markets which increased 37% from Rs. 155 Crore in FY 2019-20 to Rs. 213 Crore in FY 2020-21, helping the Company to deliver even amidst challenges posed by COVID-19 outbreak.

The US pharmaceutical market is the second largest market for the Company. The Companys US business is riding high on the back of opportunities created in the market place on account of competitive environment. The Company has reached a critical size in the US market and operate Rs. 184 Crore business with the commercialised portfolio. The Company holds leading position in several of them.

The Company continues to work on filing additional ANDAs in the US market to support existing basket of ophthalmic products.

With a strong presence in some of the major and most regulated pharma markets across the world, the Company has also widened its global presence by entering the emerging economies. The Company has marked its presence in a number of other countries of Asia Pacific, CIS, Africa, Middle East and LATAM. FY 2020-21 saw most regions delivering solid performance. The CIS region supported with a significant growth of 134%, and Uzbekistan market was started successfully with receipt of 2 ophthalmic product registrations and their first Launch Purchase Order in the financial year.

LATAM region has grown by 63%, Africa region by 68% and Australasia by 40%.

Products of the Company are now exported to more than 35 countries across the globe.

To augment the growth in these markets, the Company is focusing on introducing new products and growing the share in existing products through strategic partnership agreements for product out-licensing.

Active Pharmaceutical Ingredients

In FY 2020-21, the Companys annual export business of Active Pharmaceutical Ingredients has grown by 24% to Rs. 61 Crore as compared to

Rs. 49 Crore in FY 2019-20.

Top 10 countries that contributed an appreciation of 75% to the API revenue for the FY_2020-21 are USA, Germany, Taiwan, Pakistan, Turkey, South Korea, Bangladesh, Japan, UAE and France whose revenues grew to Rs._46 Crore as compared to Rs._27 Crore in FY 2019-20.

The Companys Top 10 markets of API export are:







South Korea



Saudi Arabia

The Company is exporting its API range of products to more than 50 countries across the globe and its major revenue of the API business comes from Asia at Rs. 30 Crore, followed by Europe at Rs. 17 Crore and America (USA, Canada and Latin America) at Rs. 10 Crore.

The Company is progressively committed to introducing new range of product mix to its API portfolio and also continues to focus on the existing business as it gears up for FY 2021-22 for new opportunities.

As regulatory initiative, the Company continues to file several new, as well as maintain the existing registrations and accreditations. Its team has successfully completed

10 CEP applications which include new as well as the updated existing applications. 17 New API DMF applications for Ophthalmic range were filed in Asia, South-East Asia, CIS, Europe, Africa and Latin America markets. Whereas, 4 DMFs were updated as a complete DMF in ‘Base Line format submission with the USFDA.

With determined companionship, the Company is also pivoting to introduce its ophthalmic range of APIs as its core products to new and emerging markets. The Company has successfully partnered with a few customers in the Asia region for its Ophthalmic APIs and has also exported some of its ophthalmic products to these countries.

The Company continues to work in line with its strategic plan and road map to obtain a substantial share in the international market for its API business.

A. Internal Financial Controls and their Adequacy

The Company has in place a robust Internal Financial Control commensurate with the size, scale and complexity of its operations. These controls ensure that the transactions are recorded and reported diligently, adhere to the Companys policies & systems, safeguard the assets, prevent and detect the frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information.

The Company has an internal audit department which carries out audits throughout the year and appropriate actions are taken by the management based on their recommendations.

B. Human Resources

The Company believes that the employees are the most valuable assets and key drivers of business success and sustained growth. The Human Resource (HR) policies and practices are well aligned to meet business objectives.

As the Company operates in a highly competitive environment, the HR function attracts and retains the best talent for its operations across all locations. The Company encourages and provides the platform for individuals to excel in their professional and personal goals, along with the focus on a healthy work life balance. Several initiatives were carried out through the year to serve employees, including fitness programmes.

Being future-ready is one of the key processes for sustainable growth; the Company is therefore building synergy and cultural integration through coherent leadership programmes for top leaders as a part of its core initiative. The Company has an in-house Training and Development team to help the sales team on products, scientific knowledge, and selling techniques. The Company also conducts various programmes on managerial effectiveness to improve individual competencies and leadership abilities for sales leadership. Understanding the importance of newer training techniques, the Company would be migrating from classroom training to an e-learning platform for its sales team in the next financial year. The web-based training will provide self-paced learning using interactive methods.

In line with the requirement of SEBI listing regulations, Company has adopted a "Code of Conduct and Work Ethics Policy and Whistle Blower Policy". The policy on Whistle Blower are uploaded on the Companys website .i.e. www.fdcindia.com.

C. Cautionary Statement

Certain statements in respect to Management Discussion and Analysis Report may be forward-looking and are stated as required by the applicable laws and regulations. The future results of the Company may be affected by many factors, which could be different from what the Directors envisage in the terms of future performance and outlook.