Shree Ganesh Remedies Ltd Management Discussions.

(a) Global pharmaceutical industry:

Global pharmaceutical market is expected to grow in the upcoming years despite recent slowdown in key markets across the globe. The reasons are simple: aging and growing population, rising income levels, and emerging medical conditions and emergence of new diseases.

We expect that the global pharmaceutical industry will be worth USD 1.57 trillion by 2023. The growth in this market is predicted on the basis of various factors like market drivers, current and upcoming trends, current growth pattern, and market challenges.

Pharmaceuticals Market to Reach USD 1,310.0 Billion in 2020; Eruption of the COVID-19 Pandemic to Accelerate the Demand for Effective Treatments and Drugs Worldwide: Fortune Business Insights. The global pharmaceutical landscape is undergoing a massive overhaul with the advent of new technologies and cheaper and more efficient manufacturing techniques. This is paving the way for a whole new world of user-conscious drugs of the future. With big data, artificial intelligence, and a deeper understanding of the human body, the medical industry is on the verge of creating a deeper symbiotic relationship with modern tech unlike ever before.

As of 2019, approximately 1.25 trillion U.S. dollars had been spent on medicines, up from just 887 billion U.S. dollars in 2010. That number is expected to increase to 1.59 billion by the year 2024. Spending on medicines has increased everywhere globally. Globally the pharmaceutical industry is a growing industry fueled by aging populations and new drugs to treat rare and specially diseases.

Growth in global pharmaceutical spending through 2023 will primarily be driven by developed markets and the accelerated adoption of new innovative products. Spending on medicines in developed markets is estimated to grow at 3-6% CAGR from US$ 800 Billion in 2018 to US$ 990-1,020 Billion in 2023. The US will continue to be an important contributor, with its medicine spending expected to remain higher that of the top five European economies.

All developed countries will show moderation in growth through 2023, as compared to the 2014-18 period. Specifically, in the US, the positive impact of new specialty launches will be partly moderated by loss of patent protection on older products.

(b) Indian pharmaceutical market:

India is the largest provider of generic drugs globally. Indian pharmaceutical sector supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in the UK.

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. Presently, over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.

Indian pharmaceutical sector is expected to grow to US$ 100 billion, while medical device market is expected to grow US$ 25 billion by 2025. Pharmaceuticals export from India stood at US$ 20.70 billion in FY20. Pharmaceutical export include bulk drugs, intermediates, drug formulations, biologicals, Ayush and herbal products and surgical.

Indias biotechnology industry comprising biopharmaceuticals, bio-services, bio-agriculture, bio-industry, and bioinformatics is expected grew at an average growth rate of around 30 per cent a y-o-y to reach US$ 100 billion by 2025.

Indias domestic pharmaceutical market turnover reached Rs 1.4 lakh crore (US$ 20.03 billion) in 2019, up 9.8 per cent y-o-y from Rs 129,015 crore [US$ 18.12 billion) in 2018.

Medicine spending in India is projected to grow 9-12 per cent over the next five years, leading India to become one of the top 10 countries in terms of medicine spending.

Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers, which are on the rise.

The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.

Indian pharmaceutical sector supplies over 50 per cent of the global demand for various vaccines, 40 per cent of the generic demand for US and 25 per cent of all medicines for UK. India contributes the second largest share of pharmaceutical and biotech workforce in the world. Indias domestic pharmaceutical market turnover reached Rs 1.4 lakh crore (US$ 20.03 billion) in 2019, up 9.8 per cent y-o-y from Rs. 1.29 lakh crore [US$ 18.12 billion) in 2018. In May 2020, pharmaceutical sales grew 9 per cent y-o-y to Rs 10,342 crore [US$ 1.47 billion).

During December 2019, on moving annual total (MAT) basis, industry growth was at 9.8 per cent, price growth was at 5.3 per cent, new product growth was at 2.7 per cent, and volume growth was at two per cent y-o-y.

Indian drugs are exported to more than 200 countries in the world, with US being the key market. Generic drugs account for 20 per cent of the global export in terms of volume, making the country the largest provider of generic medicines globally. It is expected to expand even further in the coming years. Pharmaceutical export from India, which include bulk drugs, intermediates, drug formulations, biologicals, Ayush & herbal products and surgical, reached US$ 20.70 billion in FY20.

Medical devices industry in India has been growing 15.2 per cent annually and is expected to reach US$ B.16 billion by 2020 and US$ 25 billion by 2025.

Government expenditure on healthcare increased to 73.24 lakh crore (US$ 45.96 billion) in FY20, growing at a CAGR of 18 per cent from FY16. As per Economic Survey 2019-20, Government expenditure [as a percentage of GDP) increased to 1.6 per cent in FY20 from 1.2 per cent in FY15 for health. FDI increased to 74 per cent in existing pharmaceutical companies and 100 per cent in new projects.

India plans to set up a nearly 7. 1 lakh crore (US$ 1.3 billion) fund to provide boost to companies to manufacture pharmaceutical ingredients domestically by 2023.

(c) Opportunities and Threats:

(i) Opportunities:

With rising income levels, growing health awareness and better access to healthcare, emerging markets offer significant growth potential for the pharmaceutical industry.

(ii) Threats:

There continues to be increase in capacity of manufacturers resulting in over supply coupled with inflation led increases in costs of not only raw materials but also operating expenses. This is a big threat from operating margin perspective.

Your Company however mitigates this by continuous increase in productivity and catering to value added products. Further with the delivery of quality products, the margins are ensured, and performances are achieved.

(c) Segment-wise or product-wise performance:

The company is primarily engaged in the business of Bulk Drug Intermediates, which constitute a single reportable segment.

(d) Outlook:

The Indian economy is one of the fastest developing economies in the world. The government of India is taking continuous steps towards the easy of doing business as a result of which the economy of India may see future years. Your Companys business continued to perform well steered by strong focus on high growth specialty segments.

(e) Risks and concerns:

The Company being a manufacturer is always exposed to the general risks such as government regulations and policies, statutory compliances, etc. The Company from time to time identifies the risk and has put in its place appropriate measures for mitigating such risks.

(f) Internal control systems and their adequacy:

Your Company has in place adequate internal control systems commensurate with size and nature of its operations. Internal control processes which consist of adopting appropriate management systems and implementing them are followed. The Company has a qualified Audit Committee, independent Statutory Auditors and also Internal Auditors who submit reports periodically which are reviewed and acted upon.

(g) Discussion on financial performance with respect to operational performance:

During the year the performance of the Company has substantially increased compared to the previous year.

(a) Total turnover for the year was Rs. 58.43Cr. as compared to Rs.35.31 Cr. in previous year, a growth of 65.44%.

(b) Profit Before Tax for the year was Rs. 12.74 Cr. as compared to Rs. 8.86 Cr. increased by 47.05%.

(c) Profit After Tax for the year was Rs. 9.62 Cr. as compared to Rs. 6.24 Cr. increased by 54.36%.

(h) Material developments in Human Resources/Industrial Relations front, including number of people employed:

Your Company is giving special attention to Human Resources/lndustrial relations development. Industrial relations remained cordial throughout the year and there were no incidences of strike, lock out etc. Total 66 employees are on the Compan/s payroll as on 31st March, 2020 as compared to 49 employees on the Compan/s payroll as on 31st March, 2019. The working atmospheres for all the employees are very favorable and suitable systems are in place for optimum working efficiency of all the employees.