Jeevan Scientific Technology Ltd Management Discussions.

Industry Structure & Developments:

Indian Generic market is a $40 billion industry in which the domestic market accounts for $21 billion, and exports account for $19 billion. Within the export market, Formulations and Biologicals account for $14 billion. The rest being bulk drugs and surgical. Most of the Formulation and Biologicals market consists of manufacturing; only a small portion accounts for services like formulation development, Bioavailability, and Bioequivalence (BA/BE) studies, and other post-marketing studies. The estimated size of the BA/bE services market is at $0.1 billion (?800 cr market in India).

The Indian generic drugs market is experiencing growth of 10% CAGR (201219) driven by an increasing number of drugs losing patents globally and increasing price pressure in the US drug distribution market (end customers of India Generic pharma companies) due to significant consolidation in the last ten years. Within the next five years (2020-2024), patented drugs with sales potential of $170 billion will be losing patents. On average, 40-50 drug molecules are losing patent each year only in the US market, and that creates growth opportunities for generic drug companies.

54% of the drugs losing patents in 2019 are specialty generics like Biosimilars, Inhalers, Injectables, and Transdermal, and the rest 46% are oral. To enter the specialty generics market, pharma companies and the pharma service companies will have to develop new capabilities. For a decade, small molecule drugs losing patents are decreasing gradually. BioSimilars have emerged as a growing market opportunity.

Bioavailability and Bioequivalence (BA/BE) Market

Before launching a new drug into a market, regulatory approval is mandatory, and to get regulatory approval, a BA/BE study is required. In the US, these applications are called Abbreviated New Drug Applications or ANDAs. Among the Indian Generic Pharma companies Lupin, Sun Pharma, and Dr. Reddys are the leaders in filing ANDA applications.

The BA/BE market is estimated at ?800cr and is growing at a CAGR of 8% (the growth rate of ANDA applications). Almost 70% of the BA/BE studies are outsourced by pharma companies so that they get an independent review of the drug. 30% of the BA/BE studies are done in-house. Jeevan is an independent CRO.

Within the BA/BE market, Bio-similars is a new growth opportunity based on patent expiry trends. Most small and mid-sized pharma companies in India are still not addressing this opportunity, and the same is true for most CROs in India.

Pharma covigilence (PV) Market

As per regulations in most countries, it is mandatory to track and report adverse drug reactions (ADRs) after a drug is launched into the market. The service related to this activity is called Pharmacovigilance. This is a service required by both Generic Pharma companies and also Innovative pharma companies. The market in India is estimated at ?8,000 crores (~$550 million) and is growing at CAGR 15%.

This market is similar to IT/BPO services and hence is dominated by IT majors like Cognizant, Infosys. In recent years, several global CROs like Covance, Paraxel have established offshore centers in India to take advantage of the 30%-40% cost advantage in India compared to the US and Europe and the availability of a skilled workforce. The recent acquisitions evidence the growing importance of India as a destination for PV services for global pharma companies.

Hyderabad, where Jeevan is based, is one of the PV hubs in India. The other cities are Delhi, Mumbai, and Bangalore. Growth in the PV market is driven by increasing drug safety regulations globally and also an increased outsourcing trend. In the USA, only 15% ADRs are reported, and in India, that figure is estimated at less than 0.01%.

Clinical Trials (CT) Market

Clinical Trials are an important activity in the new drug discovery process (Phase I to Phase III). Clinical Trial projects in India declined as a result of lower approvals by DCGI (Drug Controller General of India) in 2013 due to quality issues. Since 2017, the Clinical Trials market is back at historical levels. The market size in India is ?3,500 crores.

Although India has 20% of the worlds population, the market share in the global clinical trials market is 1.5%. So the potential for growth of the Clinical Trials market is high.

Even in the Indian market, the domestic clinical trials market has started increasing due to changing regulations.


In the BA/BE market, growth opportunities exist in innovation and also driving cost efficiency. As market trends indicate (described in the market section), the growing segments within BA/BE are specialty generics.

Jeevan has the ambition to become a full-service CRO by expanding its service portfolio. It will focus on building the PV and CT businesses.

Within PV, Jeevan would look at targeting small and medium-sized pharma companies and building its internal capabilities through automation.

Within CT, Jeevan would look at both international and domestic opportunities.


In the BA/BE business, the barriers to entry are low, and this has resulted in many new players entering the market and creating a pricing pressure. To deal with this, CROs like Jeevan will have to be highly efficient.

Regulatory changes are another threat to the business. Approvals by DCGI, USFDA approval of the facilities, and ANDA approvals create demand in CROs. In recent years, regulation both in India and the US has been favorable to pharma related businesses in India.

Internal Control & Adequacy:

Jeevans current business model consists of executing projects which have a duration of 6-12 months. During FY 2019-20, Jeevan has successfully implemented a new project costing system. This system has given management more significant control of all the project activities and project costs.

During the year, the company has implemented monthly budgeting and monthly financial controls. Management has implemented new routines in the Clinic and the Lab for better capacity utilization and planning.

Risk Management System:

Risk and Concerns:

The most significant risk in the company is getting an observation during a USFDA audit. The company has been focusing on being prepared for these surprise audits with a well defined Quality Management System (QMS). During FY 2019-20, USFDA audited the company and there has not been a single observation. To date, four USFDA audits and one WHO audit have been conducted successfully.


Based on recent market trends, the outlook for CRO services like BA/BE, PV, and CT looks positive. These trends have been explained in the industry structure section. The company is positioned well to benefit from these market trends.

The overall focus on digital and innovation in the company is high. Several automation projects have been initiated and are ongoing. Entry into new segments like complex generics is being planned and executed.

The overall focus of being a full-service CRO will enable the company to provide a range of services to its existing customer base. Focus on delivering high-quality services on time and at competitive prices should allow the company to improve customer satisfaction.

Human Resource:

CROs are a people-centric business. Jeevan employes close to 200 employees, and the management team has more than 200 person-years of pharma experience. In 2019-20, Jeevan took several initiatives to improve people-focus in the company. For the first time, an employee survey was conducted, and the management team discussed the results. The company has initiated several new HR processes. The most prominent among them is to implement an HRMS system. Also, all the HR processes in the company like recruitment, performance management, training, employee engagement are being re-defined.

Cautionary Statement:

Towards the end of March 2020, the government started implementing COVID-19 related lockdowns. These restrictions have impacted business in FY 2019-20 and will continue to affect the company in the next financial year. However, the management of the company is taking all necessary actions in mitigating the risks associated with Covid-19.

Details of any change in Return or Net Worth as compared to the immediately previous financial year:

Particulars 2019-20 2018-19
NET PROFIT MARGIN -0.340 0.052
PAT / NETWORTH ( ROE) -0.314 0.042
NET DEBT / EQUITY 0.720 0.554
CURRENT RATIO 0.843 1.228