Medicamen Biotec Management Discussions


COMPANY OVERVIEW

A diversified enterprise, MBL is a research-led pharmaceutical company involved in developing, manufacturing and marketing of finished dosage formulations for domestic as well as international markets. The Company has presence in 40+ countries. Its offerings include Finished Dosage Forms (FDFs) to African countries. In India, MBL is among the leading companies in oncology segment with its own salesforce and a branding team that has helped garner a strong foothold in the domestic market.

MBL has three pharma formulation facilities including two in Haridwar (Uttarakhand), one in Bhiwadi (Rajasthan). In addition, dedicated R&D Centers at Bhiwadi (Rajasthan) provide the foundation for business excellence year-on-year.

ECONOMY OVERVIEW

Indian Economy

India faced various challenges in 2022-23 but managed to emerge as one of the fastest-growing major economies with a growth rate of 7.2%. The Reserve Bank of Indias efforts to control inflation showed promising results, with a decline in retail inflation. Additionally, India showcased resilience with positive growth in GST and net direct tax collections. The countrys rank in ease of doing business globally improved over the years. Looking ahead, Indias GDP growth for 2023-24 is estimated to range between 6-6.5%, driven by domestic demand, capital formation, structural reforms, and budgetary capex investments.

INDUSTRY OVERVIEW

Global Pharmaceutical Sector

The global pharmaceutical industry is experiencing oversignificant $2.4 trillion by the end of 2029. The COVID-19 pandemic has highlighted the importance of the healthcare sector. Governments worldwide are prioritizing the efficiency and quality of healthcare systems. The pharmaceutical companies are now focusing on emerging markets for new growth opportunities.

The Pharmerging markets are expected to grow at a compound annual growth rate of 10.4% from 2021 to 2026, driven by factors such as increasing consumer awareness, government actions, aging populations, and growth in health insurance schemes.

The US pharmaceutical market, which contributes significantly to the global market, is projected to grow steadily, while the European market is expected to expand due to increased healthcare expenditure. Overall, the industry is witnessing significant investments and funding in areas such as oncology, central nervous system disorders and other chronic disesas.

Indian Pharmaceuticals Sector

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications.

The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry growing at a CAGR of 9.43% since the past nine years. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry.

The domestic pharmaceutical industry includes a network of 3,000 drug companies and 10,500 manufacturing units. India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers with a potential to steer the industry ahead to greater heights. India is rightfully known as the "pharmacy of the world" due to the low cost and high quality of its medicines.

Indian pharmaceutical industry is known for its generic medicines and low-cost vaccines globally. Transformed over the years as a vibrant sector, presently Indian Pharma ranks third in pharmaceutical production by volume. The

Pharmaceutical industry in India is the third largest in the world in terms of volume and 14th largest in terms of value. The Pharma sector currently contributes to around 1.72% of the countrys GDP. Indian pharmaceutical market is estimated to touch USD 130 Billion in value by the end of 2030. Meanwhile, the global market size of pharmaceutical products is estimated to cross over the USD 1 trillion mark in 2023.

OUR BUSINESS SEGMENTS

MBL is today a fast growing pharmaceuticals company with forward integrated business model. The Company manufactures products across various therapeutic categories including Pain Management, Cough & Cold, Cardiovascular & Central Nervous System, Anti-Diabetic,

Gastrointestinal, Anti-Allergic among others.. The current revenue of Medicamen comes from 150 SKUs across 20 different therapeutic segments. Out of the total revenue, 80% comes from Direct Exports and 20% from Merchant Exports.

The majority of the revenue is from Africa, Latin America and Southeast Asia. The R&D team continues to widen the therapeutic basket. With robust pipeline of drugs in areas of cancer, pharma specialities, cardiology, and diabetology, the prospects of business growth remain strong for the

Company.

A. Research & Development

Our R&D team is crucial for creating the future assets that will emerge as growth levers for us. Our qualified team of scientists works towards new product development of health solutions that are safe, efficacious, and cost-effective. MBL develops novel, innovative formulations at par with global quality standards.

Domestic Market

Indias domestic pharma market has a potential of

Rs. 1.75 Lakhs Crores. It was one of the objectives of the Management to target a small share out of this big size. Out of total domestic pharma market, Cardio- vascular therapeutics contribute the maximum share to the tune of Rs. 56,000 Crores growing at a CAGR of 11%.

To attain this objective Medicamen has formed a subsidiary Medicamen Life Sciences Pvt Limited, with 51% holding and has entered the domestic market to offer Cardio-vascular & Diabetes (CVD) formulations for Indian market.

Medicamen has launched 33 products of CVD in India and many more products are in the pipeline.

Overseas Market

The focus of the management will be on product registration in various territories and on marketing of its products in domestic, Rest of the World (ROW) and regulated markets. The Company have plans to market 100 branded products in each of the 10 Francophone Countries making a total 1000 product registrations targeted in the next two years. The Company has started receiving product registrations and is hopeful to get approximately 200 product registrations by the end of year 2023 out of these 1000 targeted product registrations. The management expects to generate decent revenue from this market in

2024-25.

The Company is having 35 product registrations and it plans to file 100 product dossiers in Ethiopia end of the year 2023, since Ethiopia is a big and established market for Medicamen. The Company has collaborated with Vital Pharma of Denmark for Marketing of Clonidine 25mcg & 150 mcg and Paracetamol 665 SR for Arthritis for Europe market. The dossiers for Clonidine tablets are ready however the bioequivalence for Paracetamol 665 SR is under way. Both the dossiers shall be filled once approval for its plant.

B. Oncology

We perceive that Oncology has become one of the most crucial segments in the healthcare industry.

Your Management decided to setup a dedicated Oncology plant with an investment of Rs. 75 Crores to manufacture Tablets, Capsules and Injectable RTU including Lyophilized. The plant was delayed due to Covid. However, we have worked overtime and made the plant operational from January 2022.

In the oncology domain, Medicamen has launched its oncology products in the domestic market during this financial year with a team of 30 senior experienced executives in four zones. Medicamen has filed its first ever Medicamen has firm plans & investments for global roll out of its oncology products, including in USA, Europe,

Latin America, Asia Pacific, MENA, Etc through alliance partners.

HUMAN RESOURCES

Medicamen Biotech Limiteds human resource policies have reinforced its market leadership. The Company invests in on-the-job learning and creates a positive work environment with challenging job profiles and open communication with management. This has led to a high employee retention rate, promoting internal leadership and enhancing future prospects. As of March 31, 2023, the Companys total number of payroll employees was 388.

FINANCIAL OVERVIEW

On a consolidated basis, the revenue for 2022-23 was Rs. 14,086.74 Lakhs, higher by 22.02% over the previous years revenue of Rs. 11,544.53 Lakhs. The profit after tax (PAT) attributable to shareholders for 2022-23 and 2021-22 was Rs. 1472.85 Lakhs and Rs. 1489.77 Lakhs respectively. The PAT attributable to shareholders for 2023 was experiencing a regression of (1.13)% over the PAT of 2021-22.

THREATS, RISKS AND CONCERNS

Our risk management systems are robust with a well defined framework, that is governed by the Board and the Management. Our risk management framework seeks to balance shareholder expectations for risk-adjusted returns.

INTERNAL CONTROL SYSTEM

The Company has a robust system of internal controls comprising authority levels and powers, supervision, checks and balances, policies and procedures. The system is reviewed and updated on an on-going basis. The Company continuously upgrades its internal control systems by Medicamen gets EU measures such as strengthening of IT infrastructure and use of external management assurance services. The Company has in place a well-defined internal audit system whereby the internal audit is performed across locations of the Company and the results of the audit findings are reviewed by the audit Committee.