granules india ltd share price Management discussions

Global Economy

According to the World Banks Global Economic Prospects report (June 2022), global growth is expected to come down from 5.7% in 2021 to 2.9% in 2022 - lower than the estimated 4.1% in January. Growth is projected to hover in that same space over 2023-24, given geo-political strains, investment, and trade in the near term, fading of pent-up demand, and withdrawal of fiscal and monetary policy accommodation.

Growth in advanced economies is projected to decelerate from 5.1% in 2021 to 2.6% in 2022. Growth is expected to moderate to 2.2% in 2023, largely reflecting the unwinding of the fiscal and monetary policy support provided during the pandemic. Among emerging market and developing economies (EMDEs), growth is projected to fall from 6.6% in 2021 to 3.4% in 2022- well below the annual average of 4.8% over 2011-2019.

The COVID pandemic has put the healthcare industry, including pharmaceutical industry at the centre stage. There is a sharp upswing in demand in the pharmaceutical industries, aided by rising awareness as well as health and wellness focus among consumers. It is the need of the hour to ease supply-side disruptions and make proactive adjustments to the tightening monetary policies across EMDEs to reign in the inflationary environment. Global inflation is expected to moderate next year, albeit still likely remaining above inflation targets in many economies. The wars effects on energy markets continue to keep global growth outlook uncertain, with price surges across wide ranging, energy-related commodities. Higher energy prices will have to be actively normalized to prevent rise in production costs, tighter financial conditions, and macroeconomic policy constraints especially energy-importing countries.

Indian Economy

The Indian economy grew by 8.7% during FY22 and consolidated its recovery, with most constituents surpassing pre-pandemic levels of activity. Indias long-term growth prospects remain viable beyond the near-term risks stemming from slowed growth, elevated inflation, supply disruptions and financial market volatility, among others.

As per the World Bank in its April 2022 Issue of the Global Economic Prospects, Indias GDP is expected to grow at 7.5% in FY23 aided by the recovery of service consumption following the pandemic. Indias economic growth will be supported by fixed investment undertaken by the private sector and by the government, which has introduced incentives and reforms to improve the business climate.

The RBIs State of the economy bulletin (May 2022) highlights that activity in contact-intensive services is gaining traction, and consumer confidence is inching up to its highest level since the outbreak of the pandemic. An uptick in economic activity in April 2022 is evident in high frequency indicators. With the tapering down of infections, mobility indicators have improved while labour participation is picking up across urban and rural constituents.

Global Pharma Outlook

As per IQVIA publication titled ‘Global use of medicines 2022, the global medicine market - using invoice price levels - is expected to grow at 3-6% CAGR through 2026, reaching ~$ 1.8 trillion in total market size. This implies an increase of nearly $ 350 billion in global spending over the next five years, with most of the increase expected from developed countries, despite their lower rates of growth. Spending across major Pharmerging markets is expected to grow 5-8% CAGR through 2026, with China slowing to 2.5-5.5%, offsetting higher growth in other large markets - Brazil, India, and Russia - and smaller Pharmerging markets, which are growing at a rate of 6.5-9.5% over the same period. During the last 10 years, the relative spending of countries has shifted; generally, Pharmerging countries have risen while slower growing, developed markets dipped.

The outlook for global medicine spending shifted considerably in the years between 2020 and 2022, but afterwards is expected to be like the pre-COVID outlook, excluding the spending for COVID-19 vaccines. As a result of lower spending in the near-term, spending is expected to be $ 175 bn lower over seven years till 2026 than it would have been without the pandemic, excluding the incremental spending on vaccines and therapeutics for COVID-19. The phased rollout of vaccines and booster shots in the base case estimate will result in $ 250 bn in incremental spending globally and an additional spending on COVID-19 therapeutics at $ 58 bn, resulting in a net impact on spending of $ 133 bn, or about 3% of the cumulative global spend during that period.

Global invoice spending and growth in selected countries

2021 SPENDING US$BN 2017-2021 CAGR 2026 SPENDING US$BN 2022-2026 CAGR
Global 1423.5 5.1% $1,750-1,780 3-6%
Developed 1344.9 4.9% $1,635-1,665 2.5-5.5%
10 Developed 935.2 4.3% $1,100-1,130 2-5%
United States 580.4 4.9% $685-715 2.5-5.5%
Japan 85.4 -0.5% $73-93 -2-1%
EU4+UK 209.7 4.8% $245-275 3-6%
Germany 64.6 6.2% $76-96 4.5-7.5%
France 42.0 3.0% $48-52 2-5%
United Kingdom 36.6 5.9% $46-50 4-7%
Italy 36.5 3.0% $41-45 2-5%
Spain 29.8 5.4% $32-36 1.5-4.5%
Canada 27.4 5.2% $32-36 3-6%
South Korea 17.9 6.0% $21-25 3.5-6.5%
Australia 14.4 0.6% $15-19 1.5-4.5%
Other Developed 115.2 4.7% $132-152 3-6%
Pharmerging 354.2 7.8% $470-500 5-8%
China 169.4 6.1% $190-220 2.2-5.5%
Brazil 31.6 11.7% $47-51 7.5-10.5%
India 25.2 11.1% $37-41 8-11%
Russia 18.8 11.4% $27-31 7.5-10.5%
Other Pharmerging 109.2 8.3% $151-171 6.5-9.5%
Lower Income Countries 19.0 0.1% $21-25 2.5-5.5%

Source: IQVIA Market Prognosis, September 2021; IQVIA Institute, November 2021

The largest uncertainty in the next five years will be the potential impact of economic factors on countries budgeting and whether there will be shifts in policies for healthcare and medicine spending. It is expected that the pricing and value of medicines will be under increased scrutiny during this period, but this was already underway in most developed markets and an increasingly key issue in the U.S. market. Global spending on medicines continues to be driven by innovation and offset by losses of exclusivity and the lower costs of generics and biosimilars.

US Market

Spending in the U.S. is expected to increase by $ 119 billion through 2026, driven by new and existing brands. Overall medicine spending at invoice prices is expected to reach ~$ 700 bn by 2026, while off-invoice discounts and rebates are expected to reach 39% and net spending is expected to increase by only $ 44 bn over five years.

The largest driver of growth will be increased usage of existing protected branded products, which are expected to add $ 149 bn in spending over five years. The contribution from new brands is expected to increase to $ 114 bn over the next five years. Generics, including biosimilars, had a modest impact on growth due to price deflation, growth from the related patent expiry events, notwithstanding. The impact of losses of exclusivity is expected to increase to $ 141 bn, from $ 57 bn in the prior five years, with both small molecule and biologic product exposure to LOE multiplying.

U.S. Impact of brand losses of exclusivity 2017-2026, US$Bn


Medicine spending in the top five European markets is expected to increase by $ 51 bn over the next five years, up from $ 44 bn growth in the past five years but with large shifts in growth drivers. Overall spending is forecasted to reach $ 261 billion by 2026. Generics, including biosimilars, are expected to add $ 15 bn in growth over the next five years, about the same as in the past five years despite a larger impact of losses of exclusivity due to price deflation. Payer actions will be shaped by the pace of economic and COVID-19 recovery and may be more impactful later in the forecast.

The impact of losses of exclusivity (LOE) in the five largest European markets (Germany, France, Italy, Spain and the UK), are expected to triple over the next five years and over half of the impact is expected to be reflected in biologics, with $ 19.4 bn of the $ 33.3 bn total impact.


Spending growth in Japan is projected to maintain a consistent -2 to 1% growth rate over the next five years to $ 83 billion in 2026, as COVID-19 recovery and long-term trends affecting long-listed brands continue. Over the past decade, protected brands share of spending rose from 47% to 54%, reversing a long historical trend where the share would decline over time. Generic share of spending is also expected to rise, supported by policies that were principally effective over the last 15-year period, encouraging doctors to alternate available generics with a combination of incentives and penalties.

Pharmerging markets

Chinas growth remains the largest driver of this group of countries and is being driven by a shift in the types of products used, with spending being driven by new medicines to a greater degree. By 2026, China is projected to exceed $ 205 billion, an increase of over $ 35 bn in the next five years. Over the next five years, the government policies to update the national reimbursement drug list (NRDL) annually is contributing to a greater share of new original medicines being reimbursed, resulting in higher levels of spending, though these are generally subject to lower negotiated net prices. In parallel, the government introduced volume-based procurement policies with tenders for off-patent and generic drugs to control the spend in off-patent categories.

Brazil, India and Russia are the next three largest pharmerging markets and they are all expected to grow by over 7.5% CAGR through 2026. Saudi Arabia, Philippines and Indonesia had significant impacts on spending in 2020 from the pandemic but have rebounded in 2021, with compounded annual growth projected through 2026 to continue steadily in low- to midsingle digits.

Developed market impact of brand losses of exclusivity 2017-2026, US$Bn

Generic Pharma Outlook

Outlook for Generic spending growth will be modest, as volume increases are offset by price deflation, but the influx and maturation of biosimilars, particularly in the U.S., is expected to result in higher absolute growth. In the last five years, losses of exclusivity resulted in $ 111 bn in lower brand spending as relatively few of the largest-selling products faced LOE, in contrast to the next five years, which are expected to generate $ 188 billion in lower brand spending, including biosimilars.

Losses of exclusivity in the U.S. are expected to be nearly $ 140 bn through 2026, with significant impact on spending for both small molecules and biologics, from $ 57 bn in the preceding five years, as both small molecule and biologic product exposure to LOE increased substantially. Small molecule expiries are expected to lower brand spending by $ 95 bn through 2026, over double the impact of the last five years, including the impact of high-profile products in the anticoagulants therapy area, including rivaroxaban (Xarelto).

The impact of losses of exclusivity (LOE) in the five largest European markets (Germany, France, Italy, Spain and the UK), are expected to triple over the next five years and more than half of the impact is expected to be biologics, accounting for $ 19.4 bn of the $ 33.3 bn total impact. Small molecule LOE is expected to double in terms of impact on brands in the next five years even as they have been a smaller share of overall impact.

Generic share of spending in Japan, is expected to rise, supported by policies that were largely effective over the past 15-year period, encouraging doctors to substitute available generics with a combination of incentives and penalties.

The Generic Pharma industry continued to suffer from price erosion in their US generics business, Cost inflation and supply chain woes, thereby significantly impacting the margins of Generic players.

The pricing pressure is the result of customer consolidation, increased competition, and recent measures by the US government to lower drug prices for customers. We believe that the resulting price erosion will lead to consolidation towards the stronger generic players. This strength will be on the back of control over the supply chain and backward integration through innovative routes and differentiation through use of innovative manufacturing technology.

Prices for the Key Raw Materials have increased due to plant closure, and COVID shut down in China, geo-political instability, Energy cost increases as well as Logistics costs increases. This has led to challenges related to raw material availability and higher prices of certain products. The ongoing Russia-Ukraine war has pushed the oil prices to multi-year highs. As regards its impact, higher crude prices are the major headwinds for various sectors, including the pharma industry as oil derivatives such as solvents are key inputs. Most of the solvent prices have surged to record highs.

Cancellation of flights, congestion at the ports, and limited availability of containers and manpower at the ports have caused a huge slowdown in the supply chain, thereby impacting the incoming raw materials and outbound shipments. Logistics cost has gone up drastically for all regions due to nonavailability of container space and port congestions across the globe. The logistics cost from China has increase up to almost three folds and has almost doubled for Europe and US regions.

Over the Counter (OTC) Drugs Market

OTC or over-the-counter drugs are pharmaceutical products that are perceived to be safe to buy without prescription and are used to treat common symptoms for cold, body pain, allergy, flu, heartburn, acne, and other basic health problems.

As per Global Market Insights Report of 2020, the OTC drugs market size was valued at $ 152 billion in 2020 and is expected to grow at a CAGR of over 5.1% to reach $ 209 billion in 2027.

Emergence of COVID-19 has affected millions of people across the globe, affecting several industrial sectors. The outbreak has considerably influenced the sales of OTC drugs with increased focus on personal health during the pandemic. This has significantly augmented the intake of cold and flu products besides vitamins. However, in some regions, OTC drug sales were restricted to counteract stockpiling and maintain supply.

Increasing availability and manufacturing of OTC drugs for a broad range of common disease conditions will significantly drive the over-the-counter drugs market revenue in the impending years. Repetitive occurrence of common flu and cold impels the demand for therapeutics. Awareness on and demand for vitamin supplements and weight loss products will majorly contribute to the industry value during the forecast period i.e. from 2020 to 2027. Cost-benefits, positive results and broader accessibility are projected to highly fuel demand for over-the-counter drugs.

Indian pharmaceutical industry

The current market size of the Indian pharmaceutical industry is at ~$ 50 billion, according to the Ministry of Commerce & Industry, Government of India and is likely to reach $ 130 billion by 2030, growing at a CAGR of12.3%. The Indian pharmaceutical industry is the worlds third largest in terms of volume and 11th largest in terms of spending as per the IQVIA report on ‘Global use of medicines 2022. Its footprint transcends the value chain, with Indian pharmaceutical companies leading in APIs as well as formulations. Indias API industry is ranked the third largest in the world, and the country contributes ~57% of APIs to the prequalified list of the WHO. Globally, India is the largest provider of generic medicines, commanding 20% share in the global supply by volume, and the leading vaccine manufacturer. India supplies over 50% of Africas requirement for generics, ~40% of generic demand in the US and ~25% of all medicines in the UK. India also accounts for ~60% of the global vaccine demand and is a leading supplier of DPT, BCG and Measles vaccines. Of WHOs vaccines, 70% are sourced from India. The country has the highest number of US-FDA-compliant pharma plants besides USA with a strong network of manufacturing facilities and a highly skilled resource pool.

In shaping public health outcomes, the pharmaceutical industry contributed to Indias economic growth. It is estimated that the industry directly and indirectly provides employment to 2.7+ million people, in high-skill areas like R&D and manufacturing. It generates Rs 11 bn of trade surplus every year and is among the top five sectors contributing to the reduction of Indias trade deficit.

The Indian government took several initiatives to support the Indian pharmaceutical industry. Initiatives such as the production linked incentive (PLI) schemes, medical device and bulk drug parks are likely to boost domestic production of active pharmaceutical ingredients (APIs), biopharmaceuticals, complex generics, patented drugs, and various medical devices, helping India transform as the global manufacturing hub.

India supplies low-cost generic drugs globally, and over the past two decades, the countrys reliance on imports for several KSMs, intermediates and APIs increased substantially. Currently, India imports nearly 68% of the API, by value, from China. The latter is also a single supplier for several critical intermediaries and APIs, including high-burden disease categories such as cardiovascular diseases, diabetes and tuberculosis. These are also listed in the National List of Essential Medicines (NLEM). India is largely dependent on China for antibiotic APIs manufactured by the fermentation route such as Penicillin, Cephalosporins and Macrolides. Any disruption in Chinas bulk drugs market bears direct influence on the Indian pharma industry.

When the COVID-19 outbreak ensued, multiple sectors in India faced a raw material supply shortage. The Indian pharmaceutical sector was among the worst hit sectors. With factories in China hit by lockdown, India was stretched in maintaining continuous supply of active pharmaceutical ingredients (APIs). Prices of commonly used APIs shot up significantly due to increased wages and other costs in China, as well as the pandemic, environmental issues, pollution, safety and regulatory concerns.

Over 70 per cent of all APIs imported from China (in %)

API Proportion
Oxytetracycline(antibiotic) 100%
Paracetamol 100%
Metformin 100%
Ampicillin 100%
Ciprofloxacin 100%
Tetracycline 99.8%
Azithromycin 99.4%

Source: "Relief for Pharma firms as govt starts clearing API imports from China", Business Standard accessed on 9th March 2022, "Indian API industry reaching the full potential Thought Leadership", KPMG in India, accessed on 9th March 2022

Indias import dependency can largely be attributed to the lack of cost-effective options in domestic API manufacturing as compared to imports. Indias raw material demand for essential APIs, including Paracetamol, Metformin and other antibiotics has high reliance on China, in some cases up to 100%.

Indias API import dependency; ~68 per cent being imported from China

Note: FY20 refers to imports between April 2019 and December 2019

This high import dependency is majorly due to availability of APIs and bulk drugs in China at low prices. Indian API manufacturers are working towards maintaining their competitive edge in the manufacture of APIs at the lower end of the spectrum and fermentation technologies. The Chinese API industry has an inherent advantage because of economies of scale and support from the Chinese government in the form of financial incentives, infrastructure, and regulatory policies, enabling advantages in capex requirements due to large Special Economic Zones, tax incentives, borrowing costs, logistics costs and conversion costs as labor and electricity costs in China are relatively cheaper. Initially, huge capacity was created by the public and private fermentation sectors to cater to growing demand. However, owing to commercial unviability, substantial quantities were being imported from China, which prompted local manufacturers to halt operations. As the sole manufacturer of penicillin, China has started manufacturing intermediates from penicillin G (6-APA, 7-ADCA and 7-ACCA) and, therefore, has strategically priced penicillin, which makes even the production of intermediates uneconomical in India.

Any disruption in Chinas bulk drugs market has a direct influence on the Indian pharma industry. A considerable increase in the prices of raw materials was recorded due to traffic restrictions and staff shortages,

Production Linked Incentive (PLI) scheme: A clear vision for the API industry will mean ensuring greater self-sufficiency. The recently launched government schemes to promote API (bulk drug) through clusters and Production Linked Incentive (PLI) program will support the ‘Make in IndiaRs initiative for domestic manufacturing. PLIscheme was announced for Key Starting Materials (KSMs) and APIs to boost domestic manufacturing of 53 bulk drugs, with a financial outlay of Rs 6,940 crores. It includes financial incentives for eligible manufacturers on incremental sales over base year FY20 for a period of six years. The scheme is expected to boost the exports by ~$ 25 billion over a period of 6 years. However, challenges around land acquisition, ease of doing business, environmental clearances, taxation, R&D need to be considered and resolved by respective stakeholders.

Company Overview

Granules India Limited (GIL) is a leading, vertically integrated pharmaceutical Company dedicated to manufacturing Active Pharmaceutical Ingredients (API), Pharmaceutical Formulation Intermediates (PFI) and Finished Dosages (FD) products. Established in 1991, we have since successfully forayed into key international pharmaceutical markets of the United States of America, Canada, Latin America, Europe, Asia Pacific, and India.

GIL has built one of the largest PFI and single site FD facilities in the world. We have the worlds largest Paracetamol APIfacility. Our two state-of-the-art R&D centres are in Hyderabad and Virginia.

Known for our process innovation and unparalleled efficiencies, today, we supply pharmaceutical products to 300+ customers in 80+ countries. We are also a preferred supplier of superior quality pharma products for some of the worlds leading branded pharma and generics companies. Our exports now contribute over 88% of the revenue.

We progressively moved from being an API to a fully integrated player with dominant finished dosage sales, we have had a US driven growth trajectory built on scale, manufacturing excellence, focused execution, and cost leadership. We are also making good inroads within Europe and contribution from the region has been on an upward trend.

We are focused on moving towards manufacturing of complex formulations through differentiated technology. During the year, we completed new finished dosage block for the manufacturing of MUPS (multi-unit pellet system) products in our existing manufacturing plant with an capex of Rs 240 Cr.

Today, we have seven manufacturing units, of which six are India and one in the USA.

Value chain Facility location Installed capacity
API Bonthapally 34,560 TPA
Jeedimetla 4,800 TPA
Vizag (Unit 4) 380 KL
Vizag (Unit 5)
PFI Gagillapur 23,200 TPA
Jeedimetla 1,440 TPA
Finished Dosage Gagillapur 26.8 Bn
Virginia, USA 1.5 Bn
API Intermediates Bonthapally 61.5 KL


FY22 was a challenging year for the industry with considerable headwinds around the availability and price of raw materials, solvents, catalysts, uncertainties arising out of the Ukraine- Russia conflict as well as the re-emergence of COVID-19 cases in China. The global supply chain and the logistics continue to remain under duress. The logistics costs remained at elevated levels. We continue to combat pricing challenges in the US market.

Granules demonstrated unrelenting resilience in the face of an adverse external environment within the industry. We faced Pricing pressures from the customers on one side and Cost increases from the suppliers and supply disruptions from China on the other hand. While the input costs are at elevated levels, there may likely be a positive trend in terms of PAP supplies (the KSM for Paracetamol) as one of the biggest manufacturers in China is expected to start and stabilise its production in the near term. We continue to remain agile to the changing business environment and doing our best to fulfil customer commitments and maintain service levels.

World around us is changing and presents a unique opportunity. We see an opportunity in this disorder, and we are preparing ourselves and striving to benefit from emerging mega trends. The world is set to move towards environmentally responsible, and green chemistry at the heart of it.

Transitioning from inefficient and waste intensive processes to acceptable, resource efficient alternatives require a significant change in approach and technology. Our human civilization has been built on the foundation of consistent scientific and technological progress. Technology has influenced our course and revolutionized the way we work and live in a persistent manner. In recent decades the pace of progress has accelerated leading to many important breakthroughs. For example, Biotech and Biomanufacturing is driving incredible, unprecedented technological advancements, being fuelled by nature-based tools such as fermentation, enzymes, and microorganisms.

At Granules, we are going through a major business transformation to propel excellence in science, technology, and innovation. Our strategy focuses on three elements. The first of which is strengthening the core by exploiting the current business. Second is to build technology platforms to fortify existing businesses and create new businesses. The third part is to create a strategic lever through ESG by combining the strength of science and technology and reimagining manufacturing.

Building relevant technology platforms and innovation is an integral part of our strategy going forward and set to move the organization towards excellence in Science, Technology and Innovation while protecting the manufacturing excellence, as the DNA of the organization.

We are leveraging our technology alliances to achieve backward integration for some of the key raw materials, including PAP and DCDA, employing innovative routes and process technologies, and focusing on manufacturing quality with sustainability at the forefront.

Enzyme/protein engineering is an exciting opportunity for us to drive future innovation from the perspective of Innovative product offerings, Cost competitiveness, Manufacturing excellence & productivity and Sustainability & Green chemistry.

We believe that what is good for the society, is good for the business as well. We will strive to reduce the carbon footprint comprehensively across all our activities. These technology platforms using novel approaches and procedures, coupled with innovation in reuse and recycle of by products, will lead to utilization of minimal resources of energy, minimal generation of waste and green process development.

In Summary, our strategy is to build technology platforms in chemistry and biotransformation to bring the innovation engine to full throttle and to look at creating the synergies for existing and new businesses. Our efforts are concentrated on reimagining manufacturing, through innovative process technology and become an industry leader in segment over long-term through partnerships and internal innovations. We are dedicating our efforts towards executing on our strategy through the followings

• Strong R&D engine for both API and Formulation

• Bring excellence in the technical, IP and regulatory engines

• Relook at the commercial engines to propel growth in the US as well as in other geographies. B2B business with focus on value-add APIs.

• Strong focus on cost management, review, and governance

• Creation of systems and processes for sustainability

• Technology development and partnerships

Our people are central to all what we have achieved so far, and key to our future success. We are building an effective organizational design, which focuses on these growth drivers and building management capabilities -both organically and inorganically - and transform ourselves into a learning organization.

Business overview and key business segments

Key business segments

Active Pharmaceutical Ingredients (APIs)

Known as one of the most cost-effective and efficient manufacturers of APIs, we have emerged as a leading manufacturer and supplier of Paracetamol, Metformin, Guaifenesin, and Methocarbamol. We are continuously working to improve our API manufacturing capability to add new products to our portfolio. Today, most of the new PFI and FD products developed by us are supported by vertical integration of respective APIs. An emphasis on adopting advanced technology, backward integration to critical steps combined with the strength of a robust, resolute team, empowers us to consistently meet evolving customer demands with precision and excellence.


(Rs in Lakhs)

FY22 FY21 FY20
API 97,513 91,242 81,707

Pharmaceutical Formulation Intermediates (PFI)

We emerged as one of Indias largest PFI manufacturers with a batch processing capacity of six tons. Ensuring economies of scale and cost-efficiency, we brought breakthroughs in the PFIspace. The PFIs produced by us can be directly taken to the hoppers from the drums and it has enabled us to become a preferred PFIsupplier for some of the most renowned global pharma companies. Presently, the PFI business accounts for 22% of our revenue.

Currently, we are using the PFIfacilities at Jeedimetla and Gagillapur to further process into Finished Dosages.


(Rs in Lakhs)

FY22 FY21 FY20
PFI 84,556 62,619 42,140

Finished Dosages (FD)

Over the years, we have sustainably grown our FD capabilities and it is currently contributing over 50% of our revenue. The existing portfolio of finished dosages comprises Caplets, Tablets as well as Press-fit Capsules in Bulk, Blister packs and Bottles. Our state-of-the-art manufacturing facility at Gagillapur is equipped with automated processes, robust infrastructure, and superior quality systems to efficiently produce finished dosages that are marketed in 80+ countries, including the highly regulated markets of the US and Europe. It also produces Bi-layered tablets, Rapid release tablets, and Extended release (ER) tablets. We developed our own ANDAs and dossiers to offer an added advantage to our customers.


(Rs in Lakhs)

FY22 FY21 FY20
FDs 194,423 169,893 136,018

Research and development

With experienced and qualified human resources, our R&D strengths are the driving force of our current and future growth. With innovation instilled into the culture of the Company at various levels, R&D is a crucial attribute in fostering our vision to become a global leader in the pharmaceutical product development and manufacturing process. We have increased our investment in Research and Development, which stood at Rs 143 crores during FY22. We are strengthening our R&D capabilities and our team is committed to translating science and technology into innovative pharmaceutical products and manufacturing processes, meeting global regulatory standards.

We are working towards strengthening our product pipeline and our portfolio with a new vigour. We are bolstering our R&D capabilities to enhance its scale and quality. Several launches are were planned for the next 18 months. Our pipeline is moving from ‘similar-to-industry-peer products and other generics to products which focus on innovation, science, and technology. Going forward we will target more first wave launch products, niche products and balance the portfolio with high volume products.

Granules India limited has recently inaugurated a new state of art Integrated Product Research and Development centre at MN Park Genome valley Hyderabad. The R&D has been set up in a sprawling 20,000 Sq. ft and will function with an initial strength of more than 150 scientists across both the divisions.

The new facility brings API R&D and Formulation R&D teams together under one umbrella. This will enable seamless coordination between both the teams leading to agile product development processes and collaborative problem solving. The common analytical resources will help us become efficiency in the R&D processes. Our vision is to develop integrated R&D products with vertical integration which will see Granules evolve into an R&D driven organization.

FY 2021-22 Highlights

Existing Business: The existing core business remained our focal point, while we constantly expanded our product portfolio and global presence with focus on high volume products built on maximizing process efficiencies and vertical integration.

US Generics: Since setting up US sales and marketing operations in 2019, we launched 24 generic products under the GPI label. Focused product selection, development and manufacturing brought in significant growth of the US Generics business. Our portfolio has been constantly evolving from large volume immediate release (IR) products to complex extended/ delayed release (ER/DR) products. We had the highest generics prescription in terms of absolute growth (17.8%) in the US market during FY22.

Emerging business: The product selection process for our ‘Emerging business focuses on identifying and developing high entry barrier products, with diverse complexities at API and/or formulations development. We developed APIs that cover a broad spectrum of therapeutic categories and expanded capabilities into the segment of High Potent APIs (HPAPI) with our state-of-the-art facility at Visakhapatnam. We also offer development and manufacturing services for customers across the world aligned with their High Potent Formulation requirements.

In finished dosage forms, we filed 64 ANDAs with the U.S. FDA, of which 50 ANDAs were approved and 14 are currently under review. We continued to leverage our ANDA filings into other markets outside US. We filed six dossiers in the European region and 5 dossiers in Canada.

We received 6 ANDA approvals from the USFDA. The on- time approvals exemplify the quality of our ANDA filings. In addition, the approval for the dossiers filed in other countries also gained momentum. Approvals were received for one dossier in EU and for two dossiers in Canada.

We aim to continue the products of different complexity in each dosage form viz. Immediate release, Extended release, Delayed release, MUPS and Oral suspensions.

We embarked on a journey to build our intellectual property assets and currently hold 8 granted patents and 13 pending patent applications across several countries. In FY22, we filed 2 patent applications in India. These patent filings were primarily directed towards new process to manufacture intermediates and/or APIs, purification, and pharmaceutical composition thereof.

Safeguarding business objectives with proactive risk mitigation

Enterprise Risk Management

Managing risks effectively helps us stay on top of volatilities and maintain our business excellence. The company has adopted Enterprise wide Risk Management (ERM) framework to identify, prioritise and monitor top rated business risks. Based on interviews with the key business stake holders, leveraging internal knowledge repository and using industry benchmark data related to the similar risks, top risks of the company have been identified. The internal Risk committee as created by Board evaluates, manage and monitor major risks of the company on an ongoing basis. The risk committee also evaluates the residual risk and the strategic risk that the company must live with given its risk appetite. The company has defined a process through which it monitors its present risk profile and risk appetite to re-prioritise some of the risks as part of a long-term risk mitigation plan. Some high impact risk which, if not mitigated, can affect the business severely. The Board Committee has gone through each of the risks and reviews quarterly status update of the projects that are undertaken or are to be undertaken to mitigate these risks. The all-important point is to start / monitor risk mitigating projects and offer the status report for each project for the Internal Risk Committee and the Board Risk Committee on a periodic basis. Each project is tracked and reviewed on following parameters:

• Project Milestones and key deliverables with time duration

• Project Budget spending pattern over the project duration

• Sequence of activities - is there any interdependencies of activities - whether the same can be done in parallel

• Project status - on time or running overtime etc.

Our identified top-priority risks and our mitigation strategies of the company are mentioned as below.

Our business is subject to supply chain uncertainty and increased input costs leading to the concerns of Failure to supply would lead to loss of business and reputation.

Our mitigation strategy is directed towards Alternate vendor development and partnership with vendors, extended geographies for vendor selection, and continuous engagement with the customers in a transparent manner with respect to the pricing that reflects added input cost

We are working in a Regulatory environment in which adherence to standards of Quality and compliance is mandatory, the failure of which could adversely affect our Business performance and loss of business

Our mitigation strategy is directed towards strengthening our capabilities by continuous learning and development initiatives on best practices and regular audits to stay in tune with ever evolving regulatory expectations. We are ensuring implementation of stringent review systems and suitable preventive actions are rolled out.

We are subject to Operational risks wherein high operation costs may lead to loss of profitability and may result in low business performance

Our mitigation strategy is directed towards establishing a seamless co-ordination between R&D, technology transfer and manufacturing teams with continuous emphasis on Innovation and operational excellence

Our growth and sustainability may be hindered due to poor product pipeline selection, delays in regulatory approvals and product launches, inability to gain market share, increase in competitive intensity and price erosion

Our mitigation strategy is directed towards robust product selection and any course correction, if required. We are investing in science and technology to achieve cost leadership and we are monitoring the Market intelligence data to be on top of competitive landscape in the industry

We strive to adhere to the standards as per Environment, Health & Safety (EHS) and Sustainability. the failure of compliance to these standards would lead to regulatory, reputational and business continuity risks which may in turn impact sustainability of our business adversely Natural calamity risks may also result in business disruption & would serve as a threat to our sustainability

Our Corporate EHS function provides EHS guidelines to all manufacturing sites and target for reduction in waste, GHG emission & water utilization. Various projects are underway to ensure that EHS parameters always remain as per expectable standards. Disaster management plan is put in place to deal with natural calamities.

Human Capital

Our people are central to all what we have achieved so far, and source of our optimism for a better and a bright future. At Granules India, we believe that people who feel truly associated with the organization are the ones who perform to their true potential. As a core part of our business strategy, we are committed to providing an environment where all our employees feel enabled with a strong a sense of belonging. We have launched Granules Learning Academy concept that includes Training of Grass-Root employees on Fundamentals of Unit of Operation, in Manufacturing and in Quality Control. Role based training pertaining to guidelines and standards is being initiated for managers engaged in pharmaceutical manufacturing. Our new Performance Management System connects companys objectives and Units/functional objectives with individual employee goals, up to managerial level through rigorous review process. This enables our employees to work on stretched targets while meeting companys objectives. Granules has undertaken a Self-Directed Teams (SDTs) initiative to provide a livelihood opportunity for young 10+2 students from the rural areas of Telangana and Andhra Pradesh through Learn & Earn model. They are being recruited through a structured and rigorous selection process after which they undergo a two-month Pharmaceutical Manufacturing Training and an additional two-month On-the-Job Training. This program is now Granules engine for deployment of grass-root level employees in our manufacturing units across various functions.

Financial overview:

Revenue by Business Segments

(in %)

Business segments FY22
API 26
PFI 22
FD 52
(in %)
Business segments FY21
API 28
PFI 19
FD 52

Revenue by Geography

(in %)

Regions FY22
North America 52
Europe 21
Latin America 10
India 12
(in %)
Regions FY21
North America 54
Europe 18
Latin America 9
India 14

Financial review

Consolidated abridged Profit & Loss Statement

(Rs in Lakhs)

Particulars 2022 % 2021 % Growth%
Revenue 376,492.10 323,754.28 16.3%
EBITDA 72,223.30 19.2% 85,522.91 26.4% (15.6%)
PAT 41,275.81 11.0% 54,945.90 17.0% (24.9%)
EPS 16.66 22.05

Revenue from operations

Revenue from operations increased by 16.3% to Rs 376,492.10 lakhs in 2021-22 across all geographies. Major growth is driven by PFIs and Finished dosages and increase in market share for the new launches. During the year, some of the customers moved up the value chain from APIs to PFIs and Finished Dosages, which Granules expects will continue.


EBITDA margin down by 720 bps over the previous year is due to the non-availability of Para Amino Phenol (PAP) and increase in prices of Key starting raw materials (KRM) and solvents and logistic cost in the current year.


The Board of Directors have recommended final dividend of 75 paise per equity share of Rs 1/- each in addition to interim dividend of 75 paise per equity share of Rs 1/- each paid during the year.

Consolidated Balance Sheet

(Rs in lakhs)

Particulars As on March 31, 2022 As on March 31, 2021
Tangible and Intangible Assets 189,740.52 157,107.74
Non-Current Assets other than above 11,051.09 14,537.13
Current Assets 250,498.15 199,700.17
Total 451,289.76 371,345.04
Total equity 258,709.04 217,327.43
Non-Current liabilities 28,420.72 36,707.80
Current liabilities 164,160.00 117,309.81
Total 451,289.76 371,345.04

Shareholders Funds:

Shareholders funds increased 19.02% over the previous year due to increase in profits.

(Rs in Lakhs)

Particulars As on March 31, 2022 As on March 31, 2021 Change
Long-term debt (Current portion) 9,348.02 9,537.35 -189.33
Long-term debt (non-current portion) 23,370.06 33,380.74 -10,010.68
Short-term borrowings 76,557.65 40,927.05 35,630.60
Total Debt 109,275.73 83,845.14 25,430.59

Tangible and Intangible Assets

Tangible and Intangible assets increased to Rs 189,740.52 lakhs as on March 31,2022, is primarily due to capitalization of MUPS blocks and expansion of MPP-2 in the existing facilities and also acquired new lands for projects expansion.

(Rs in Lakhs)

Particulars For the year ended March 31, 2022 For the year ended March 31, 2021
Opening Cash and Cash equivalents 4,183.59 18,592.89
Cash flow from
Operating activities 33,205.41 43,247.78
Investing activities (38,011.49) (27,713.50)
Financing activities 18,999.71 (29,931.31)
Effect of exchange rate changes 94.12 (12.27)
Closing cash and cash equivalents 18,471.34 4,183.59

Consolidated Ratios

Key Ratios As on March 31, 2022 As on March 31, 2021 % variance Reason for variance
Debtors Turnover 4.45 4.54 -2%
Inventory Turnover 4.28 5.30 -19%
Interest coverage ratio 25.04 27.80 -10%
Current Ratio 1.53 1.70 -10%
Debt equity ratio 0.42 0.39 9%
Operating profit margin (EBITDA)% 19.2% 26.4% -27% EBITDA (%) for the year is lower due to the non-availability of Para Amino Phenol (PAP) and increase in prices of Key starting raw materials (KRM) and solvents and logistic cost in the current year. All these could not be recovered fully from customers.
Net profit margin % 11.0% 17.0% -35% PAT for the year is lower due to the non-availability of Para Amino Phenol (PAP) and increase in prices of Key starting raw materials (KRM) and solvents and logistic cost in the current year. All these could not be recovered fully from customers.
Return on Networth % 18.1% 29.6% -39% Return on Networth (%) for the year is lower due to the non-availability of Para Amino Phenol (PAP) and increase in prices of Key starting raw materials (KRM) and solvents and logistic cost in the current year. All these could not be recovered fully from customers.

Internal Control Systems and Adequacy

Commensurate with the size and nature of operations, the Company has adequate systems of internal control and procedures covering all financial and operating functions. It believes that a strong internal control framework is one of the most indispensable factors of Corporate Governance. Continuous efforts are being made to enhance the controlling systems response to unauthorised use or losses. The audit committee supervises all aspects of internal functioning and advises corrective action as and when required.

Cautionary Statements

Certain statements in the Management Discussion and Analysis, describing the Companys objectives, and predictions may be ‘forward-looking statements, within the meaning of applicable laws and regulations. Actual results may vary significantly from forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India.