INDUSTRY DEVELOPMENTS
The Indian Pharmaceuticals Market continued to see growth in FY23,
though the pace of growth slowed down, also due to the pandemic base effect. The industry
growth rate for the year under review i.e. FY 22-23 was at 8% (IQVIA MAT Mar23) as
compared to 18% (IQVIA MAT Mar22) for the previous financial year, and the growth was
largely price driven. The Chronic therapy market outperformed the acute market growing at
11% vs 6% growth in Acute (IQVIA MAT Mar23). The performance of the acute therapy also
impacted the industry growth. As per IQVIA MAT Mar23 data, the domestic formulations
industry sales stood at 200,507 crores recording growth of 8% in value while the volumes
dropped by 0.4%. The market resumed normalcy with no covid wave during the year.
Antineoplast/Immunomodulator was the fastest growing therapy in the IPM, growing at 23%
(IQVIA MAT Mar23 data). On the international front, the inflationary environment was
witnessed globally. Even though there was a revival in demand across markets, operating
margins were under pressure. During the year under review, logistics costs reached
near-normal levels which was a respite for pharmaceutical companies servicing export
markets. However, the geopolitical and economic developments in some regions continue to
be a reason of concern and impacting demand.
OPPORTUNITIES & THREATS AND SEGMENTS WISE PERFORMANCE
Domestic Business:
The Company is engaged in only one segment viz. pharmaceuticals.
During the year under review, while the Indian Pharmaceuticals market
grew by 8% (IQVIA MAT Mar23), JB Pharma outpaced industry to record growth of 22%. During
the year under review, the Company was the fastest growing company among the top 25 pharma
companies in the industry. This is the second financial year in a row that the Company has
been the fastest growing among the top 25 companies.
For the year under review, the domestic formulations business recorded
revenue of 163,965 lakhs as compared to 118,827 lakhs for the previous financial year
recording growth of 38%. The domestic formulations business set new peaks during the year
under review. The business performed well across all parameters. While JB Pharma
outperformed industry growth, it performed well across its therapy areas and there was
rank improvement in all its big brands.
The Companys five pronged strategy showed results during the year.
1. Realigned Go-To-Market(GTM) model to drive productivity
The Companys GTM model is focussed on improving the productivity and
enhancing focus on key brands and their lifecycle management. The Company also gained rank
during the year under review and ranks #24 in the Indian Pharmaceuticals Market. Its
growth rate in prescription for the year under review was 27% and it maintained #15
position by prescription in the market. The newly acquired brand ‘Azmarda became the
6th brand to enter the
Top 300 in IPM and is ranked #261 (IQVIA MAT Mar23). The other 5
brands continue to dominate their respective covered markets and gained ranks during the
year. During the year under review, the Company launched 17 new products in FY23.
2. Increasing Contribution from Chronic Therapies
The focus for the Company continues to be to strengthen its presence in
chronic therapies. The acquisition of Azmarda and the Razel franchise reinforce this
commitment. During the year under review as per IQVIA MAT Mar 23 data, the Companys
chronic cluster grew by 24.4% as compared to the previous financial year.
During the year under review, the Company was the fastest growing
company in cardiology segment, among the top 10 players growing by 17.6%. The Company now
ranks No. 8 in the cardiology segment and has gained 5 ranks in the last financial year.
The Company will continue to focus on chronic therapies.
3. Making big brands bigger
All the five focussed brands continue to perform well in their
respective categories gaining ranks in IPM top 300 brands list (IQVIA). Rantac
(anti-peptic ulcerant), with market share of 42% in its category now ranks # 35 among the
top 300 and grew by 22% as per IMS MAT Mar23 data. Cilacar (Calcium Channel Blocker) with
market share of 52% in its category was ranked # 44 among the top 300 and grew by 18% as
per IMS MAT March 23 data. Metrogyl (amoebicide) with market share of 77% in its category
was ranked # 142 among the top 300 and grew by 30% as per IMS MAT Mar23 data. Cilacar - T
(calcium channel blocker/angiotensin receptor blocker) with market share of 36% in its
category was ranked # 194 among the top 300 and grew by 24% as per IMS MAT Mar23 data.
Nicardia (calcium channel blocker) with market share of 91% in its category was ranked #
172 among the top 300 and grew by 27% as per IMS MAT Mar23 data. Azmarda became the sixth
brand in IQVIA Top 300, ranking at # 261 as per MAT Mar23 data.
4. Accelerating Growth through New launches
The Company continued its focus on its newly introduced products in the
market. During the year under review, the Company introduced 17 new products in FY23 in
the field of Gastro Intestinal, Gynaecology, Respiratory and Anti Diabetes.
New Introductions accounted for 2.4% of the total domestic sales as per
IQVIA MAT March23 data.
5. Acquisition-led growth, via strong brand franchises
One of the pillars of the strategy has been acquisition-led growth with
the objective to invest in value-accretive brands and franchises which can further
strengthen the India business. During the year under review, the Company completed three
major acquisitions - the ‘Azmarda brand from Novartis, a niche Paediatric portfolio
from Dr Reddy and the ‘Razel franchise from Glenmark.
Azmarda (Sacubitril-Valsartan) from Novartis which expanded Companys
cardiac portfolio to now include heart failure. Sacubitril-Valsartan is one of the fastest
growing molecules in the cardiology segment for the last few years and Azmarda has a
sizeable market share in the segment.
The Paediatric portfolio, which included 4 brands - Z&D, Pecef,
Pedicloryl and Ezinapi, was our second acquisition for the year and complemented our
existing Paediatric division. 3 out of the 4 brands are among the top 3 in their
respective molecule market space with Z&D and Pedicloryl being market leaders. The
brands did not require any significant manpower addition and improved our market coverage
by almost 30% in the paediatric segment.
The Razel franchise, our latest acquisition, marked our entry into the
‘Statin market which is the largest segment in cardiac therapy growing at double
digit rates. Razel ranks among the top 10 brands in the Rosuvastatin molecule space. The
brand is now placed under high priority promotion in an existing team and will enhance our
prescription productivity with cardiologists and consulting physicians. Post the
acquisition of Razel and Azmarda, JB Pharma now ranks # 8 in the cardiac therapy segment
as per IQVIA MAT March23 data.
International business:
The Company operates distinct operating models across multiple
international markets with direct presence in Russia and South Africa as well as
distributor relationships in the U.S. and large number of markets across Asia, Africa and
Latin America.
The Company also has a leading global position in the contract
development and manufacturing (CDMO) of medicated lozenges driven by marquee client
relationships. The CDMO business witnessed growth of 60% on the back of increased demand
from existing clients while the Company also added one new global multinational customer.
The CDMO business provides a great opportunity for growth. The
organisation is currently ranked among the top 5 manufacturers of lozenges globally and
boasts of some big consumer health/ FMCG companies.
Enhanced focus on ANDA filings, new product introduction in home
markets, increased focus on the private market segment in South Africa and growing CDMO
business remain our key growth drivers for the international business. This is backed by
the state-of-the-art manufacturing facilities that are approved by regulatory bodies such
as US FDA, TGA Australia, EU GMP, SAHPRA South Africa, MoH-Russia, Ukraine (PICs), MoH
Japan with a wide range of products across injectable, solids and semi-solids.
During the year under review, the Companys international business
recorded revenue of 150,963 lakhs as compared to 123,597 lakhs recording growth of
22%. The Companys overall International formulations business during the year under
review was 101,026 lakhs; the CMO business was 40,578 lakhs and the API business was
9,359 lakhs.
OUTLOOK
The Indian economy looks to be in a bright spot and remain largely
unaffected by the global headwinds. The Indian Pharmaceuticals Market grew by 8% in the
year under review and is indicated to grow at higher pace in the upcoming Financial Year.
JB Pharma endeavours to continue to grow faster than the market thereby
maintaining its growth momentum by executing its laid down strategy of new product
introduction and making existing brands bigger.
On the international front, the global macro environment continues to
remain challenging and a moderated inflationary environment will continue in this year.
The Companys endeavour shall be to continue growth on the back of new product launches,
ANDA commercialisation and geographies/ customer expansion. These growth measures shall
help mitigate some of the challenges of volatility in currency, geopolitical issues and
variability of the cough and cold season.
However, given all the challenging conditions we still remain
optimistic about the next financial year.
RISKS AND CONCERNS
The Company does not perceive any risks or concerns other than those
that are common to the industry such as regulatory risks, exchange risk, cyber risks and
other commercial and business-related risks.
internal control systems and their adequacy
The Company has an adequate system of internal controls, which ensures
that its assets are protected from loss and unauthorized use as well as business affairs
are carried out in accordance with established procedures. These systems of internal
controls also ensure that transactions are carried out based on authority and are recorded
and reported in line with generally accepted accounting principles. The Company also has a
system of regular internal audit carried out by competent professionals retained by the
Company. The internal audit programme is approved by the Audit Committee, and findings of
the internal auditor are placed before the Audit Committee and the Board at regular
intervals. The internal control system are adequate keeping in view size and nature of the
Companys business.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
Consolidated financial performance of the Company with respect to
operational performance for the financial year ended on March 31, 2023 is as under:
Parameter |
2022-23
( in lakhs) |
2021-22
( in lakhs) |
Growth
(%) |
Revenue
from operations |
314,928 |
242,424 |
30 |
Total
income |
315,922 |
246,347 |
28 |
Reported
EBITDA |
69,575 |
54,346 |
28 |
Operating
EBITDA (excl ESOP Cost) |
76,513 |
60,611 |
26 |
Profit
before tax and exceptional item |
55,523 |
50,490 |
10 |
Profit
after tax |
41,001 |
38,604 |
6 |
During the year under review, the Company recorded revenue growth of
30% with the domestic business growing by 38% while the international business grew at
22%. The reported EBITDA witnessed an improvement of 28% to 69,575 lakhs vs 54,346
lakhs in FY22. The Operating EBITDA (excluding ESOP costs) increased by 26% to 76,513
lakhs.
Standalone financial performance of the Company for the financial year
ended on March 31,2023 is as under:
Parameter |
2022-23
( in lakhs) |
2021-22
( in lakhs) |
Growth
(%) |
Revenue
from operations |
288,416 |
218,988 |
32 |
Total
income |
289,281 |
222,849 |
30 |
Reported
EBITDA |
66,469 |
50,891 |
31 |
Operating
EBITDA (excl ESOP Cost) |
73,160 |
56,984 |
28 |
Profit
before tax and exceptional item |
52,704 |
47,129 |
12 |
Profit
after tax |
38,889 |
36,100 |
8 |
HUMAN RESOURCE
There has been no material development on human resources and
industrial relations front. The relationship with employees and workers continued to be
cordial at all levels. As on March 2023, permanent employees strength and temporary
employees strength was 5,095 and 2,193 respectively.
KEY FINANCIAL RATIOS
The key financial ratio for 2022-23 and changes therein as compared to
the immediately preceding financial year along with detailed explanation in cases where
the change is 25% or more is as under:
a) Debtors Turnover ratio: Net Sales/Average account receivables
This ratio for the year was 5.57 (times) as against 5.13 (times) in the
previous year.
b) Inventory Turnover ratio: Cost of Goods sold/Average inventory
This ratio for the year was 2.78 (times) as against 2.23 (times) in the
previous year.
c) Debt service coverage ratio: Earnings Available for Debt Services
/(Finance Cost + Current borrowings including lease liabilities)
This ratio for the year was 2.97 (times)* as against 12.81 (times) in
the previous year.
*(Mainly driven due to higher debts repayment during the year)
d) Current Ratio: Current assets/Current liabilities
This ratio for the year was 2.65 (times) as against 3.27 (times) in the
previous year.
e) Debt-Equity ratio: Borrowings/Total Shareholders Equity
This ratio for the year was 0.231:1 (times)* as against 0.026:1 (times)
in the previous year.
A(Mainly driven by term loan taken for acquisition of brands)
f) Operating Profit Margin : EBITDA(excl ESOP charge)/Sales
Operating profit margin for the year was 24.29% as against 25% in the
previous year.
g) Net Profit Margin: Net Profit/Net Sales
Net profit margin for the year was 13.02% as against 15.92% in the
previous year.
The ratio for the previous year has been re-stated wherever necessary
to make it comparable to current year calculation.
RETURN ON EQUITY
Return on Equity during the year was 16.53% as against 18.09% in the
previous year. The ROE was impacted due to ESOP charges, lower treasury income, higher
depreciation and financial costs with respect to acquisitions.
For and on behalf of the Board of Directors
Ranjit Shahani Chairman
Place : Mumbai Date : May 24, 2023
+91-9892691696
