Shilpa Medicare Management Discussions

Global Pharma

The global pharmaceutical sector, central to healthcare and disease management advancements, is anticipated to breach the $1.5 trillion mark by 2023. Pioneering this colossal industry are stalwarts like the United States and Europe, which together constitute over two-thirds of global pharmaceutical sales. Emerging markets, particularly China, India, and Brazil, also play pivotal roles. India, aptly titled the ‘pharmacy of the world, is not just a significant exporter of generic drugs but also an indispensable node in the global pharma supply chain. The nations vast manufacturing capabilities and cost-effective production have made it a go-to destination for global pharmaceutical needs. China stands as a dominant force in the active pharmaceutical ingredients (APIs) market. However, the Chinese pharma sector grapples with challenges, including concerns related to intellectual property rights, quality assurance, and increasing scrutiny from global regulatory bodies. The overarching trends in the sector revolve around personalised medicine, integration of real-world data, burgeoning biopharmaceutical investments, and a surge in digital health platforms. Notably, the COVID-19 pandemic magnified the industrys significance while spotlighting vulnerabilities in global supply chains, prompting a re-evaluvation of dependency matrices. Amidst this backdrop, the trajectory of the pharmaceutical realm remains marked by innovation, rigorous research, technological advancements, and the incessant tug of global geopolitics and market dynamics.

India Pharmaceutical Sector

The Indian pharmaceutical industry is a significant player globally, ranking third in pharmaceutical production by volume. It is renowned for its production of generic medicines and low-cost vaccines. In terms of its contribution to the Indian economy, the sector accounted for approximately 1.32% of the Gross Value Added in 2020-21, based on constant prices from 2011-12. The fiscal year 2021-22 saw a total annual turnover of 3,44,125 crore (USD 42.34 billion) in the pharmaceutical sector. In FY23, the Indian pharma market reached $49.78 billion. While exports grew a modest 3%, the domestic market increased 7% year-on-year. Among export markets, emerging markets remained relatively flat, while developed markets recorded an 8% growth in FY23.

The major segments of the Indian pharmaceutical industry include generic drugs, over-the-counter (OTC) medicines, bulk drugs, vaccines, contract research and manufacturing, biosimilars, and biologics. India has established itself as a global leader in the supply of vaccines such as DPT, BCG, and Measles, accounting for 60% of global vaccine production. In terms of active pharmaceutical ingredients (APIs), India boasts 500 API manufacturers, representing approximately 8% of the global API industry. Furthermore, India is the largest supplier of generic medicines globally, producing around 60,000 generic brands across 60 therapeutic categories. It accounts for 20% of the global supply of generics.

Market size of Indias pharmaceuticals industry is expected to reach ~US$ 130 billion by 2030.

Indian Exports (USD Million)*

Indias pharmaceutical exports totalled $25.39 billion in FY23, a shade better than the previous fiscal but short of the $27 billion target as headwinds, including the impact of the Russia-Ukraine war, hampered the pace of growth. Negative growth in the important market of Africa, on account of an economic slowdown, as well as in the CIS countries, primarily in Russia on account of the war and sanctions, were key factors that weighed in on the performance. An increase in raw material costs and withdrawal of GST exemption on ocean and air freight charges were among the headwinds despite which pharma exporters clocked year-on-year growth.

FY22 24594.27 USD million FY23 25394.05 USD million Year on Year Growth 3.25%

SWOT Analysis of India Pharma Sector


Manufacturing capabilities: India has a robust pharmaceutical manufacturing sector, with a wide range of production facilities capable of producing high-quality generic drugs at competitive prices. The country is known for its cost-effective production methods and has a vast pool of skilled labor.

Large market potential: India is the worlds most populous country, providing a vast domestic market for pharmaceutical products. The growing middle class and increasing healthcare awareness are driving the demand for pharmaceuticals, presenting significant opportunities.

Regulatory compliance: The Indian pharmaceutical industry adheres to stringent regulatory standards, with many companies complying with international regulations like WHO, The U.S. FDA. This compliance enhances the credibility and acceptance of Indian pharmaceutical exports in global markets.

Research and development (R&D): India has a strong pharmaceutical research and development base, with several pharmaceutical companies investing in R&D activities. This allows for the development of new drugs, improved formulations, and cost-effective manufacturing processes, which can be leveraged for export opportunities.


Infrastructure challenges: Despite significant progress, India still grapples with infrastructure challenges such as inadequate logistics and transportation networks. Efficient cold chain systems and reliable supply chains are critical for pharmaceutical exports, and addressing these weaknesses can improve competitiveness.

Intellectual property concerns: India has faced criticism regarding intellectual property rights (IPR) issues. Some Indian pharmaceutical companies have been involved in disputes over patent infringements, which have raised concerns among international partners. Strengthening IPR protection can enhance Indias reputation and trustworthiness.


Growing global demand: The global demand for pharmaceutical products continues to rise, driven by population growth, ageing populations, and increasing healthcare expenditure. India can tap into these opportunities by expanding its export markets and catering to the evolving needs of the healthcare industry worldwide.

Emerging markets: There is a growing demand for affordable pharmaceuticals in emerging markets across Asia, Africa, and Latin America. India can leverage its cost-effective manufacturing capabilities to penetrate these markets and establish strong export partnerships.


Intense competition: The global pharmaceutical market is highly competitive, with several countries, including China, emerging as formidable competitors. Indian pharmaceutical exporters face competition in price, quality, and regulatory compliance. Continuous innovation and maintaining high-quality standards are necessary to stay competitive.

Regulatory challenges: Compliance with different regulatory frameworks across various export markets can be complex and time-consuming. Keeping up with evolving regulations, documentation requirements, and product registrations can pose challenges for Indian pharmaceutical exporters.

Review of Operations – API

Shilpa Medicare focuses on launching generics with high entry barriers, and improving medication accessibility. The company company eagerly collaborates with partners to expand its generics market presence.

API Manufacturing Capabilities

Shilpa boasts of two top-tier API manufacturing sites located in Raichur, India. A proficient team which supports operations across domains such as R&D, IPM, Production, Engineering, and Quality Assurance. API manufacturing highlights encompass state-of-the-art facilities, certifications, environmental safety, utility services, and quality control.

World-Class API Facilities

Shilpas API facilities in Raichur uphold cGMP standards and have accreditations from prestigious regulatory bodies like USFDA, EU, Cofepris, PMDA, and TGA Australia to name but a few.

Oncology vs. Non-Oncology Manufacturing

Shilpa focuses on leadership in complex Oncology APIs through a research-driven model. Manufacturing for Oncology uses precise isolators to ensure production safety. These Oncology blocks can handle batches ranging from 500 gm to 350 kg.

Quality & Safety Certifications

Facilities at Shilpa maintain ISO 9001:2015, ISO 14001:2015, OSHAS 18001:2007, and DSIR certifications.

Containment Technology Investment

Shilpa remains Indias pioneer in containment technologies for oncology drug manufacturing.

Waste Management

Waste undergoes processing at a ZERO discharge facility belonging to Shilpa. Treatment methodologies include Stripper, MEE, ATFD, and RO, ensuring minimal environmental effects.

Safety Focus

Safety features encompass air units, rupture discs, alarms, and firefighting systems. Dedicated safety teams exist on-site, and regular emergency drills are conducted.

Utilities and Water Systems

Continuous utility support, such as HVAC and air systems, gets provided at the facilities, with steadfast performance monitoring.

Quality Control

A robust quality control unit exists, equipped with instruments like LCMS, GCMS, and HPLC for thorough product testing.


API capabilities are witnessing expansion with a new block for non-Oncology products, and introduction plans for Polymer and Peptide blocks are underway.


Research is central to Shilpas strategy, focusing on generic portfolio expansion, complex API processes, flow chemistry, and consistent technology enhancement. A strong commitment remains to the development of affordable medicine.

Generics Commitment

Grasping the pivotal role of generics in cost reduction, Shilpa supplies ingredients to pharmaceutical entities and collaborates extensively to amplify market presence.

API Process & Flow Chemistry Development

The R&D centre dedicates itself to the development of generics as per international standards, especially for Oncology molecules. The flow chemistry team has already showcased two products, aiming for more introductions in 2023-2024.

Self-reliance on KSM & Intermediates

Emphasis on self-reliance for starting materials and intermediates is evident, aiming to reduce dependency on external sources.

Process Technology Improvements

Optimisation of processes for cost-effective API manufacturing is a continual effort at the R&D front.

Regulatory Filings

Regulatory filings of Shilpa highlight adherence to global standards. Engagements with regulatory bodies globally testify to an unwavering commitment to API safety and quality.

Regulatory Inspections

In 2020, the USFDA inspected two API facilities of Shilpa in Karnataka, India. Subsequently, an EIR was received, confirming compliance with regulatory standards. During the year Companys API facility (unit-1) located at Raichur, Karnataka has received GMP certificate from MOH-Russia.

API – Review of Performance

Overall, while the API business experienced marginal growth, with total revenue increasing from 747.7 crores in FY22 to 757.8 crores in FY23, the performance varied across different segments. Oncology showed a decline, CDMO services demonstrated significant growth, CRAMS experienced a planned substantial decrease, and non-oncology and API others exhibited notable growth.

Review of Operations – Formulations

Finished Dosage Formulations - Manufacturing Capabilities

Shilpa runs an advanced Finished Dosage Formulations (FDF) manufacturing facility at SEZ in Jadcherla, Mahaboobnagar district of Telangana. This facility produces a variety of drugs, including injectables and oral solids like tablets and capsules. It serves regulated markets like the US and EU, and other markets in developing nations. The facility is equipped to handle potent drugs, including oncology medications.

Regulatory Approvals:

Shilpas FDF facility has secured approvals from international regulatory agencies, confirming its adherence to high-quality standards.

Manufacturing Capabilities:

The facility has production lines for tablets, capsules, and packaging, with a special focus on oncology injectables. Serialisation is implemented for supply chain tracking.

Utilities and Equipment:

It features a utility block with water treatment, HVAC, and more. All equipment complies with regulatory standards.


The facility includes chemical and microbiology labs, ensuring product quality and compliance.

Market Presence:

Shilpa delivers various dosage forms worldwide, addressing healthcare needs effectively.


The FDF facility can produce millions of vials and oral solids, depending on product specifics.

Regulatory Filings (Formulation Unit) FY- 2022-23

There were no new US submissions this year, but EU saw three new submissions. All filings emphasise the companys progress in regulatory compliance.

Regulatory Inspections and Approvals:

Recent approvals from countries such as Russia and Canada underscore Shilpas commitment to quality. The company awaits feedback from an Australian inspection.

Finished Dosage Formulation - Domestic Business

Indias pharmaceutical sector is evolving, with a focus on innovative cancer treatments. The country faces an alarming rise in cancer cases. This underscores the demand for advanced treatments like immunotherapies. Its crucial for pharmaceutical companies to invest in R&D for effective therapies.

Shilpa concentrates on oncology, providing top-tier drugs at competitive prices across India. They focus on innovative solutions like the Capecitabine 1000 mg tablet and prioritise educating the medical community about their products.


Shilpa is a fast emerging player in oncology formulations in India. The Company emphasise training for its teams and have a patient-centric approach to product development. Their innovations are aimed at improving patient compliances and outcomes. Communication strategies, like medical education programs, are used to engage with professionals. They also aim to reduce wastage with ready-to-use formulations.

FDF – Review of Performance

In FDF Shilpas performance across different business segments varied in FY23. The Europe business saw a notable decline of 36% in revenue, dropping from 196.1 crores to 126.3 crores, primarily due to price erosion. Conversely, the License Fee CDMO segment demonstrated a robust 75% growth, climbing from 30.9 crores to 54.1 crores, reflecting the companys strong R&D capabilities and promising pipeline products. The Rest of the World business segment witnessed an impressive 99% surge in revenue, jumping from 9.2 crores to 18.3 crores. However, the US business faced a 53% reduction, with revenue falling from

112.1 crores to 53 crores, mainly attributed to price erosion. Similarly, the domestic business segment experienced a decrease of 61%, with revenues declining from 16.8 crores to 6.5 crores.

Emerging Business

Venturing into emergent domains of pharmaceuticals showcases our strategic focus on innovation and commitment to meeting global healthcare demands. Our foray into Transdermal Patches and Oral Films highlights this dedication. Establishing a dedicated, state-of-the-art manufacturing facility, Unit VI, reflects our vision to align with the rising global preference for these medical alternatives. Upholding stringent GMP standards, securing accreditation from esteemed authorities like MHRA (UK), and achieving multiple ISO certifications emphasise our undeterred emphasis on quality and international compliance. Our proactive approach to global registrations, exemplified by recognition from the Ministry of Health in UAE, unveils our ambitions to extend our influence beyond domestic horizons. Holding the COPP/WHO License further solidifies our positioning in this promising market segment. The company has also effectively orchestrated the supply of nutraceutical products to the US market by leveraging strong and strategic partnerships. Concurrently, our venture into Biologicals symbolises a visionary leap to tap into the burgeoning potential of biologics and biosimilars, both in the Indian market and on a global scale. The establishment of Shilpa Biologicals Pvt. Ltd. (SBPL) demonstrates our intent to service high-demand therapeutic areas, notably Orthopedics, ophthalmics & Rheumatology.

Our ambitious market share goals, underlined by a diversified biosimilar pipeline, portray a meticulously strategised blueprint to address and satisfy a broad patient demographic. Landmark achievements, such as the impending launch of Oriadali? and aflibercept phase III clinical trial approvals, manifest our relentless commitment to R&D. During the year Recombinant Albumin- Initiation of phase 1 trails Granted patents in the US & EU Its a product with short global supply Dedicated fermentation facilities of 220 kl. Our unwavering focus on regulatory compliance, evident from successive audits and recognitions like that from CDSCO, promises a bright future. Moreover, our strategic global alliances and collaborations, underscore our holistic growth approach, ensuring a pronounced footprint across multiple geographies.


As the Contract Development and Manufacturing Organization (CDMO) outsourcing market surges towards a projected worth of USD 160 billion by 2028, Shilpa is tactically positioned to seize this tremendous growth opportunity. With a potent mix of quality workforce, cost benefits in research & development, and diversified expertise across industry verticals, Shilpa ambitiously eyes a preferred partnership stature for pharma and non-pharma entities.

Shilpas CDMO strategies are honed to foster long-lasting and value-driven partnerships. These strategies underpin brand building, innovation, impeccable service delivery, and ensuring a sustained supply chain. By embedding a Deep Science methodology, a profound understanding of partners clinical pipelines, chemistry, and biology becomes the foundation for future collaborations.

In a transformative move, Shilpa is instituting a Program Management approach. This pivotal strategy will shift partners from a project-centric outlook to a comprehensive lifecycle model. Our Pharmaceutical Sciences Platform promises a continuum of value, safeguarding knowledge throughout the drug development journey.

A panoramic view of our CDMO market strategies reveals a calculated multi-pronged approach: Oncology Specialization: Leveraging expertise in tyrosine kinase inhibitors and anti-cancer compounds, we are poised to meet the burgeoning demands of the oncology sector, making strong inroads by partnering with pioneering biopharma entities.

Biologics: Fortified with facilities optimised for mammalian and microbial systems, our prominence in monoclonal antibodies, fusion proteins, gene therapies, and vaccines is proven. Drug Product Development: Years of experience empower us to offer diverse finished dose formulations tailored to enhance patient experiences with a tech-driven approach underpinning drug R&D.

Speciality Chemicals & Therapeutic Peptides: Expertise in chemical development couples with a keen focus on evolving peptide therapeutic demands, ensuring optimal cash flow and capitalising on commercial potential.

Polymers, Vaccines, & ADCs: Our dexterity in speciality polymers, vaccine production solutions, and antibody-drug conjugates promises lasting relations with elite clientele and a distinct space in these sectors.

AI & ML: Our investment in Sravathi Artificial Intelligence Technology elucidates a commitment to harnessing tech-driven methodologies for drug discovery, optimising the discovery process and enhancing molecule quality.

Flow Chemistry: Innovations like Sravathis Advance Process Technologies introduce flow chemistrys transformative capabilities, ensuring synthetic optimisations and significant cost savings.

Performance in FY23

The License Fee/CDMO revenue in formulations saw a growth from 30.0 crore in FY22 to 54.1 crore in FY23, an impressive uptick of 75%. Similarly, the CDMO/API revenue trajectory highlights a rise from 5.8 crores in FY22 to 21 crores in FY23. Such positive indicators underscore the strength and promise of the CDMO strategies being implemented.

Furthermore, the acquisition of FTF Pharma, a globally recognised CDO & CDMO, amplifies our portfolio. With FTF Pharmas state-of-the-art facilities, a dedicated team, and a proven track record in product development and patent filings, Shilpas leadership promises to usher in a new era of growth, expansion, and milestones.

Review of financial performance (Consolidated)

During the FY23, the Company faced many challenges like pricing pressures, the aftershocks of the pandemic and the formidable business scenario triggered by the Russia-Ukraine conflict. Due to these reasons, operating revenue decreased by 8.3% to 1,05,011.2 lakhs from previous years 1,14,552.3 lakhs. These challenges, coupled with factors like inflation and increased complexity impacted the bottom line also leading to a net loss of 3,247.6 from a profit of 6,066.2 lakhs.

Product mix analysis of operating revenue is as follows:

(INR in lakhs)

FY23 FY22 Change

A Products

API 71647.0 66330.0 8.0%
Formulations 20599.1 32238.0 -36.1%
CRAM 2958.5 7690.0 -61.5%
Other products 1485.0 2580.0 -42.4%

Total products

96,689.6 1,08,838.0 -11.2%

B Services

License fee 8321.6 5,714.3 45.6%

Total services

8321.6 5,714.3 45.6%

C Total operating revenue (A+B)

1,05,011.2 1,14,552.3 -8.3%

Other income increased to 1,740 lakhs from 1,425 lakhs, mainly due to write back of liabilities which could not materialise as per envisaged terms.

Cost of raw materials (including the purchase of traded goods and changes in the stock of finished goods and work-in progress) for the current year at 41,592.2 lakhs represented 43% of operating revenue, while the previous years cost at 38,321.8 lakhs was 35.2% of operating revenue. Higher proportion of raw material cost was mainly on account of two reasons, decrease in the selling price and margins overall, this was compounded by the fact that non-oncology sales as a % of total sales increased as compared with oncology sales.

Employee cost increased by 8.6% to 28,733 lakhs from 26,448.6 lakhs, due to annual increments and new hiring.

Finance costs went up by 42.5% to 5,865.2 lakhs from 4,116.5 lakhs, due to increase in the rate of interest and also because the company had to utilise higher working capital borrowings from banks.

Depreciation and amortization amounting to 9,549.9 lakhs for the year was 19.7% higher than the previous years 7,980.2 lakhs. This higher amount of depreciation is the result of the capitalisation of assets which were hitherto a part of capital work in progress.

Other expenses for FY23 were 24,457.7 lakhs whereas such expenses for FY22 stood at 29,396.2 lakhs. This decrease of 16.8% is mainly on account of reduction in brokerage costs, remedial costs for the SEZ unit, sales promotion costs, legal & patent fees net of higher costs like travel, miscellaneous expenses, power and foreign exchange fluctuations.

Key financial ratios



FY23 FY22
1 Current ratio Current assets / Current liabilities Times 0.98 1.45
2 Debt Equity ratio Total debt / Shareholders equity Times 0.45 0.38
3 Debt service coverage ratio Earnings available for debt service/debt service. Times 0.72 1.03
4 Inventory turnover ratio COGS/Avg. Inventory. Times 1.23 1.14
5 Return on net worth Net Profit / Average Equity net of Goodwill % -1.72 3.7
6 Trade receivables turnover ratio Revenue / Avg. receivables Times 2.96 3.79
7 Net profit margin Net profit / Total revenue % -2.94 5.3

8 EBIDTA margin

Earnings before Interest, Depreciation, Tax and Amortisation / revenue

% 11.14 18.8
9 Trade payable turnover ratio Purchases/ Avg. payables Times 2.76 3.81
10 Net Capital turnover ratio Revenue /Working Capital Times -70.47 4.16
11 Return on Capital Employed Earnings Before Interest and Tax /Capital employed % 0.95 6.67


Internal Control Systems and Their Adequacy

The Company has established a robust internal control framework to ensure dependable financial reporting, timely operational feedback, and compliance with relevant laws and regulations. The adoption of SAP further enhances financial reporting capabilities, offering stringent measures to mitigate potential financial discrepancies. Beyond the introduction of sophisticated monitoring software, comprehensive information and control systems have been integrated across production, materials, and marketing divisions.

Regular internal audits serve as a testament to the effectiveness and proper functioning of these controls. Our internal auditors consistently assess the controls and identify any potential risks. Over time, these controls undergo evaluations and refinements to bolster efficiency and efficacy.

Human Resources and Industrial Relations

Human resources are the bedrock of an organisations growth and prosperity. The Company takes pride in fostering a collaborative atmosphere with its employees across diverse locations. Presently, the Company boasts a workforce of approximately 2500 permanent employees. We have emphasised skill development throughout the past year, hosting numerous training workshops to elevate individual competencies and overall operational performance. The Company takes pride in having assembled a proficient team adept at navigating complex tasks. This past year has witnessed unwavering harmony and constructive industrial relations.

Opportunities, Risks, Concerns, and Threats

The aftershocks of COVID-19 are anticipated to redefine traditional business paradigms, nudging companies towards adapting to novel dynamics. The governments proactive stance on bolstering domestic production of critical APIs and Key Starting Materials heralds promising growth prospects for the pharmaceutical sector. Domestic production initiatives are poised to provide much-needed stability to API pricing structures. Moreover, the governments intent to revamp the National List of Essential Medicines is expected to augment the quality of medical care, optimise medicine management, and promote judicious use of healthcare resources.

While the pharmaceutical landscape presents its generic business and industry-centric challenges, additional threats emerge in foreign exchange volatility, regulatory shifts, and more. The Company remains vigilant, ensuring that emerging risks are promptly addressed at the departmental level or escalated to senior management when necessary.