GLOBAL PHARMACEUTICAL INDUSTRY STRUCTURE AND DEVELOPMENTS:
The global economy is experiencing several turbulent challenges. Inflation higher than
seen in several decades, tightening financial conditions in most regions, and Russias
invasion of Ukraine all weigh heavily on the outlook. Normalization of monetary and fiscal
policies that delivered unprecedented support during the pandemic is cooling demand as
policymakers aim to lower inflation back to target. The global economys future health
rests critically on the successful calibration of monetary policy, the course of the war
in Ukraine and consumption increase in China.
Global growth is forecasted to slow from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023.
This is despite a surprisingly resilient labour market and consumer spending in most
advance economies, and upliftment from Chinas reopening. Global inflation is forecast to
rise from 4.7% in 2021 to 8.8% in 2022 but to decline to 6.5% in 2023 and to 4.1% by 2024.
Strong and coordinated monetary and fiscal policy actions over the past years prevented
a much worse outcome. But with rising geopolitical tensions and still-high inflation, a
robust recovery remains elusive. This harms the prospects for the entire world, especially
for the most vulnerable people and countries. Trends such as global warming, green energy,
sustainability, and digital adoption will continue to affect countries and industries.
Some will be positively impacted by these changes while others will find it challenging.
Overall, while there are several short to medium term concerns, we believe there are
several opportunities as well that can be exploited by companies for the longer term.
INDIAN ECONOMY:
Our overall outlook for the Indian economy remains positive. We expect investments to
see a turnaround, and this will in turn thrust the economy into sustainable growth. India
will likely grow at a moderate pace of 6.0%-6.5% in FY 2023-24, as the global economy
continues to struggle. Indias exports increased 14% to a record US$770 billion in FY23,
supported primarily by the services sector, while imports scaled to a new high of US$892
billion amid a muted demand for goods owing to global headwinds. Undoubtedly, the Reserve
Bank of India (RBI) has shouldered a major responsibility of cushioning the economy from
rising prices and maintaining liquidity. Yet, navigating inflation and preserving
financial stability, while boosting growth drivers, has been a tightrope walk for
policymakers. Growth in the next year will likely pick up as investments kickstart the
virtuous circle of job creation, income, productivity, demand, and exports supported by
favorable demographics.
INDIAN PHARMACEUTICAL INDUSTRY
The Indian pharmaceutical industry has seen a massive expansion over the last few years
and is expected to reach about 13% of the size of the global pharma market while enhancing
its quality, affordability, and innovation. This impressive growth is an outcome of a
series of sound legislation and economic environment, timely actions, and to a greater
extent, the motive of welfare of the masses. Performing as per its tag as the pharmacy of
the world, India has been a global generic medicine supplier for over 200 countries from
both developed and emerging markets.
It is important to note that the boom for Indian pharma is not sporadic. It continues
to experience sustained and robust growth in the post-pandemic period as well. The Indian
pharma sector has turned from volume to value creator.
With a heightened sense of collaboration between the industry and the government, the
industrys focus has shifted to other diseases, the advancement of cell therapies, and
policies for IP and government procurements. Recently, the government of India extended
support to pharma companies using the Production Linked Incentive (PLI) scheme to ensure
selfreliance through enhanced domestic manufacturing capacity for high-value products. The
PLI schemes are for bulk drugs and pharmaceutical manufacturing, together accounting for
an outlay of around USD 2.7 billion. Another important aspect of the pharma landscape in
India is the stress on the welfare of the masses using its legislative provisions.
According to an EY-RCQ report, the Indian pharmaceutical market is estimated to touch
$130 billion in value by the end of 2030.
RISKS AND CONCERN
The Indian pharmaceuticals market is the third largest in terms of volume. India is the
biggest provider of generic medications internationally and enjoys a significant position
in the world pharmaceuticals sector. The country also has a huge talent pool and
scientists having the capability to steer this industry forward to a much greater degree.
The cost efficiency also continues to create opportunities for Indian pharmaceutical
companies in the emerging global economies. The Indian pharmaceutical industry is expected
to outperform the global pharmaceutical industry and grow in the next couple of years and
thereby emerge as one of the top 10 pharmaceutical market globally by absolute size.
Indian pharmaceutical companies are focusing on global generic and API business,
R&D activities, contract research and manufacturing alliances. India is also fast
emerging as a preferred pharmaceuticals manufacturing location. Increasing use of
pharmaceutical generics in developed markets to reduce healthcare cost will also provide
attractive growth opportunities to Indian generic formulations manufacturers and thus
Indian pharmaceutical industry is poised for an accelerated growth in the coming years.
However, poor public healthcare funding and infrastructure, low per capita consumption
of medicines in developing and underdeveloped countries, currency fluctuations, regulatory
issues, government mandated price controls, inflation, and resultant all round increase in
input costs are few causes of concern for the industry.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Companys internal control system is commensurate with its size and complexity. The
Internal Financial Control System of the Company is being regularly monitored by the
Internal Auditors of the Company. Any deficiency in the controls is viewed seriously and
corrective actions are taken to avoid repetition. The Internal Auditors monitors the
efficiency of the internal controls/compliance with SOPs and provides required information
to the Audit Committee on a time-to-time basis. The Audit Committee of the Board of
Directors reviews the adequacy and effectiveness of the internal control system and
suggests improvements for strengthening them. These controls are regularly monitored by
the Internal Auditors to check the effectiveness of the controls. The Audit Committee
Members/ Board of Directors are regularly updated on the same. The financial statements
are prepared in conformity with the established Accounting Standards and Principles.
There are certain policies adopted by the Company for maintaining internal control
within the organization, which are as follows: -
a) Risk Management Policy:
This policy sets out the Companys risk, oversees management of material business risks
and internal control. The purpose of this policy is to encourage an appropriate level of
risk tolerance throughout the Company; establish procedures to analyze risks within agreed
parameters across the Company; establish appropriate risk delegations and corresponding
risk management framework across the Company and ensure the Company has a risk management
framework that can noticeably respond the risk profile of the Company.
b) Whistle Blower Policy:
This policy is formulated to provide opportunity to all employees to have access to the
Management or the Chairman of the Audit Committee in case they observe any unethical and
improper practice or behavior or wrongful conduct in the Company and to prohibit any
person from taking adverse personal action against such employee.
c) Policy on Related Party Transactions:
This policy is framed to ensure compliance of the applicable provisions of the
Companies Act, 2013 and the rules made there under and SEBI (LODR) Regulation,2015 as
amended from time to time and intended to ensure the proper approval and reporting of
transactions between the Company and related parties. Such transactions are appropriate
only if they are in the best interest of the Company and the shareholders.
FINANCIAL PERFORMANCE AND ANALYSIS
During the year the company achieved a turnover of Rs 398.89 Crores against turnover of
Rs 391.30 Crores in the previous financial year registering growth of 1.94%. The company
achieved an export turnover of Rs. 282.66 Crores as compared to Rs. 293.19 Crores in the
previous financial year. Although the exports have decreased marginally by 3.59% but
domestic saleshave shown growth of 18.47%. During the year the company earned EBIDTA of Rs
51.13 Crores as compared to EBIDTA of Rs 59.32 Crores in the previous year. EBIDTA has
reduced in this year primarily due to increase in R&D expenditure and due to increase
in employee benefit expenses. During the year the company increased its R&D activities
mainly to focus on future growth with wider product range in the both export and domestic
market.The company incurred a loss before exceptional item and tax of Rs 34.54 Crores
during the year as compared to loss before exceptional item and tax of Rs 20.33 Crores in
the previous year. The company earned profit after exceptional item and tax of Rs 26.04
Crores as compared to loss after exceptional item and tax of Rs 20.02 Crores in the
previous year.
OPERATIONS REVIEW & COMPANYS OUTLOOK
Exports through ourstate-of-the-art manufacturing facilities situated at Derabassi
Punjab continued to be the focus of the Company. Besides Exports, the Company is also
focusing on increasing its presence in the Domestic Markets.
Over the past few years, the pace of progress of our international business has
accelerated. With stable tie-ups in the key export markets international formulations
business has been on an upward growth. However, during the Financial Year 2022-23 the
Company earned an exports turnover of Rs. 282.66crores against the turnover of Rs. 293.19
crores during FY2021-22. Ind Swift Limited-Global Business Unit (ISL-GBU) was commissioned
in 2006, to cater exclusively to the demand of the international markets for finished
dosage forms. Products from GBU are now available in many countries of EU, Australia,
Canada, Central & Latin America, Asia, Russia &CIS and Africa-including South
Africa. ISL-GBU is approved by UK-MHRA, TGA, Health Canada, WHO-GMP & other leading
regulatory agencies for tablets, hard gelatin capsules and dry powder-sachet & stick.
ISL-GBU is one of the few facilities that can provide specific environmental conditions
for highly sensitive products.
Our focus for the prospective years is on both the developed markets (UK, European
Union, Australia, Canada, Brazil, South Africa) & semi regulated markets (Africa,
Southeast Asia, Latin America, & the CIS countries). For the developing markets,
ISL-GBU has a dedicated approach of developing products and out licensing to customers
through flexible and customer oriented strategic alliances either through partnership,
dossier rights or other strategic alliances for exploring various avenues of
collaboration.
ISLGBU today has become a leading player as a contract Manufacturer due to its
efficient and lean supply management delivering quality products on time as per customer
demand. The current contract manufacturing operations extend to complete European Union,
Australia & Canada. Being a research driven organization, we have developed our own
dossiers which have been out-licensed to our clients in Europe, Australia, South Africa
& Russia.
Further we also undertake co-development of projects with our partners. In a major
success, Ind-Swift through its JV partner submitted dossier of Atorvastatin &
Ezetimibe combination on 1st day of patent expiry in EU. In semi-regulated markets,
Ind-Swift has successfully launched its own branded generics in multiple countries like-
Tanzania, Kenya, Ethiopia, French West Africa, Uganda & UAE with expansion plans in
other GCC countries.
In the year 2022-23 we have launched our products in various countries of
CIS-Uzbekistan, Tajikistan, Yemen, Iraq & also in Nepal. Today Ind-Swift has over 400
Marketing Au-thorizations and more than 300 under registration dossiers spread across
Africa, South East Asia, Central & Latin America and CIS region. All activities are
carried out by professionally qualified team members with expertise in respective.
With its strong R & D capabilities, ISL-GBU has built a strong portfolio of complex
generic products thus giving its end customers the flexibility of cost along with assured
quality standards, thus creating a strong portfolio of niche products.
Plant Capacity & Capability:
Sachets |
111 million per annum |
Hard Capsules |
90 million per annum |
Tablets |
9 billion per annum |
Stick Pack |
84 million per annum |
Dry Syrup |
33 million per annum |
Pallets |
6000 kg per annum |
Offices in Singapore, Dubai and China underline ISL-GBUs direct market presence in key
regions. Tough and rough market and regulatory environment are not a deterrent for
ISL-GBU, but a challenge to overcome and create a sustainable niche.
With our proven record of quality, cost effectiveness & on time delivery, we have
recently bagged tech transfer of 2 branded products which will boost sales by a minimum of
Rs 125 Cr once commercialized.Validation batches of these products are planned in 2023-24
& commercialization in 2024-25.
In our endeavor to serve humanity by providing quality medicines, Ind-Swift embarked on
an expansion journey to create its presence globally. MENA- Middle East and North Africa
region has been an important addition in this regard.
Ind-Swift is present in GCC member states of Saudi Arabia, the United Arab Emirates,
Qatar, Bahrain, Oman, Iraq, Yemen through various business models like-its own sales force
or through a distributor. In the year 2023-24, Ind-Swift Limited has been able to
successfully register 25 products in this region and 28 under registration thus giving the
company a significant opportunity to take a big leap in sales for the coming financial
year 2024-25.
In UAE, Ind-Swift has a direct presence & has a field force consisting of Regional
Head, NSM, SM & 8 MRs and a growing product portfolio of 30 Stock Keeping Units
(SKUs). Further we are planning to expand the product portfolio with another set of 25 to
50 products by 2025 aiming to achieve an annual sale of USD 5 Million.
In Saudi Arabia, we are strategically working on multiple business models for this
largest market in the region to achieve a sales value of USD 5 Million by 2025.
In Qatar (6 SKUs registered), Oman (25 SKUs registered) & Bahrain (3 SKUs
registered) we are working on a distributor model. In these countries many more products
are in the pipeline for registration. In Iraq, Kuwait & other markets of MENA, our
target is to achieve annual sales of USD 3Million by 2025.
With a robust development pipeline of 20+ products annually & 23 EU CTD products,
the prospects for future growth are bright and we aim to achieve a sales target of Rs 800
Cr in the next 5 years through ISL GBU.
With respect to our manufacturing facility situated at Jammu known as our Industrial
Growth Centre (IGC),we have launched many new products such as Linezolid, Ticagrelor,
Etoricoxib, and Diclofenac Hot gel and Four Derm ointment etc. During 2022-23,Cipla
Limited has outsourced the production of Sitagliptin to our manufacturing facility.
Coming- financial year, our focus will be on providing quality products to our customers.
Further, we are focusing more on External formulations and have also come up with Glycerin
Cream 15% w/w, which is a skin cherish Moisturizing Cream and are in the advanced stage of
launching new molecules in External formulations also.
In the domestic market, the Ethical division of the company is dedicated to
Gynaecology, Paediatrics, Dermatology segments and its ambit extends to a wide range of
medicines. The aim of this division is to provide patients and physicians with new and
improved medicines that have better efficacy and fewer side effects.In this division the
most popular and the best-selling products are:Anin, Suprox, Cozy, Distone, Oliade.
Through our Nova Division we entered the therapeutic segments inclusive of
anti-infective, cardio-diabetic and orthopedic therapies. The range of medicines produced
by the Nova Division is recognized for its effectiveness, long-shelf life and exact
compositions catering to the ever-increasing demand. This division produces a wide range
of products, amongst which the most popular and the best-selling are: Zoxiclav, Glypar,
Olmiswif, Telhim, Ozodom-DSR, Cefextil-O, Swiclo-Sp, Swifix-O, Swifix 200,
Stemin&Stemin Forte.
Our Generic Division has a current portfolio of 145 products and by the end of this
year, we are going to increase our portfolio to 175 products depending upon different
seasons. We have a field strength of 100 people all over India. Number of current
distributors working with us are 28 and we are opting for different strategies in
different states to increase our network and distributor base.We have introduced many new
products to our port folio and we are looking for more profitable products which we take
benefit from. Some of our new product sare: Thyroxin 50 & 75 Mcg, Amoxicillin 250
& 500 mg, Povidine Iodine 5% & 10% Solution & Jar, Iron Ferrous Syrup,
Cholecalciferol 60000 IU Soft Gel Capsules and Satch- es, Ofloxacin & Paracetamol IVs
and Omeprazole & Omeprazole with Domperidone. As the Indian Generic Market is growing
at an astounding rate of 7%, we have high hopes and are working towards providing
affordable and quality medicines to the market.
Further, the company also has a separate Over-the-counter (OTC) division, which is
expected to increase the revenue of the company in the coming years.
OTHER KEY FINANCIAL INDICATORS:
Ratios |
2022-23 |
2021-22 |
% Change (If there is more than 25% change the reason thereof as well) |
Debtors Turnover Ratio (No of days) |
86.69 |
91.11 |
-4.85 |
Inventory Turnover Ratio (No. of days) |
133.02 |
114.53 |
16.15 |
Interest Coverage Ratio |
0.42 |
0.64 |
-34.37 |
Current Ratio |
0292 |
0338 |
-13.61 |
Debt Equity Ratio# |
- |
- |
|
Operating Profit Margin (%) |
5.96 |
8.74 |
-31.81 |
Net Profit Margin (%) |
6.16 |
(4.75) |
229.68 |
Return on Net Worth# |
- |
- |
- |
# Debit Equity Ratio and return on Net Worth ratio have not been caicuiated as the
Equity/Net worth of the Company is negative.
Interest Coverage Ratio: Reduced primarily on account of less operating margin due
to decrease in export turnover.
Operating Profit Margin: Reduced primarily on account of less operating profits due
to decrease in export sales turnover.
Net Profit Margin: Net Profit Margin Ratio has primarily improved due to an
increase in net profit due to exceptional/extraordinary item gain.
HUMAN RESOURCE DEVELOPMENT/ INDUSTRIAL RELATIONS
The company considers its human capital as the foremost resource that drives business
performance and sustains growth in the face of a volatile external environment. The
Company pays utmost attention to creating a learning and growing ecosystem. Over the
years, it has made considerable investments towards the professional growth of its team.
Our people-friendly policies have gone a long way in strengthening the teams loyalty to
the company. The Management continues to strive to foster a best-in-class working
environment for creating a future-ready workforce.
The HR department continued to build peoples competencies through its skill
development and training initiatives. The HR department celebrated special events and
festivals for enhancing team bonding and infusing energy into the organization.
Entering FY24, the HR department of the company will focus its energies on
strengthening the teams for full operations of its facilities. The team also plans to
undertake time and motion study to improve shop floor productivity. The HR department will
be working closely with management and business leaders in making the company an employer
of choice, building a strong talent pipeline, and preparing internal key talent to be
future leaders of the organization.
Your Company has 1200 employees on its payroll as on March 31, 2023.
MATERIAL FINANCIAL & COMMERCIAL TRANSACTIONS INVOLVING SENIOR MANAGEMENT:
The Company has in place a Code of Corporate Governance which stipulates that senior
management personnel shall make disclosures to the Board of Directors of the Company
regarding any material financial and/or commercial transactions in which they are
interested which may have a potential conflict with the interest of the Company.
ACCOUNTING TREATMENT
The current financial statements have been prepared incompliance with the requirements
of the Companies Act, 2013 and Generally Accepted Accounting Principles (GAAP) in India.
The management accepts responsibility for the integrity and objectivity of these financial
statements as well as for various estimates and judgments used therein. These estimates
and judgments relating to the financial statements have been made on a prudent and
reasonable basis, in order that the statements are reflected in a true and fair manner.
CAUTIONARY STATEMENT:
Statement in this Management Discussion and Analysis describing the Companys
objectives, projections, estimates, expectations, or predictions may be
“forward-looking statements" within the meaning of applicable securities laws
and regulations. Actual results could differ materially from those expressed or implied.
Important factors that could make a difference to the companys operations include raw
material availability and prices, cyclicaldem and, movements in companys principal
markets, changes in Government regulations, tax regimes, economic developments within and
outside India and other incidental factors.
|
Sd/- |
Place: Chandigarh |
S.R Mehta |
Date: 31.08.2023 |
Chairman |
+91-9892691696
