Take Solutions Ltd Management Discussions.

Life Sciences Industry Outlook

Global prescription drug sales set to grow at 6.4% to reach USD 1.2 Trillion in2024

Worldwide drug sales are set to grow to USD 1.2 Trillion at an impressive 6.4% over the next few years. This is a significant increase compared to the 2.2% growth rate between 2012 and 2016. The growth is fuelled by an increased focus on high-priced treatments like orphan drugs (set to 20% of the market accounting USD 262 Billion in sales by 2024), despite increased pricing pressures from governments across the globe and the risk posed by generics and biosimilars.

Growth is centred around the US & APAC markets

Analysts report that while drug sales are set to grow in almost every market across the globe, the US dominates with 33% of the global market. Meanwhile, the Asian markets are experiencing strong growth with increasing government support through policies and initiatives. China pharma is slated to grow up to USD 175 Billion by 2022 from USD 122 Billion in 2017. The Indian pharmaceutical industry will reach USD 55 Billion in 2020 due to numerous growth drivers including a growing population and strong economic growth. South Koreas market will be USD 20.4 Billion by 2020, spurred by government initiatives to become an R&D hub.

Record numbers of new drugs coming into the market

Regulators are working hard to speed up new drug approvals, with the USFDA approving a record 46 novel drugs in 2017, the highest in the last 21 years. The regulator has setup multiple paths for sponsors to bring their drugs to market faster, including Fast Track, Breakthrough Therapy, Priority Review and Accelerated Approval. Over 61% of the new drugs approved in 2017 came through at least one of these expedited pathways.

Patent cliff spurs growth in global Generics market to USD 380 Billion by 2021

With USD 251 Billion in prescription sales at risk between 2018 and 2024, some of the largest blockbusters are going to become generics. While this poses a threat to the growth of the prescription market, it is expected to spur the growth of the generics market significantly. Research indicates that the global generics market will grow at 10.8% to USD 380 Billion by 2021.

Biologics and biosimilars are predicted to account for 30% of the global marketby 2020

By 2024, biologics and biosimilars will represent over 30% of the overall market, and 52% of the top 100 products (by sales) will be biotechnology products. This focus on biotechnology products is indicative of a shift towards novel drug targets. Biosimilars are coming to the forefront, with countries like China and India leading the world in biosimilar development.

Oncology will account for 17% of drug sales in 2022

With current sales at USD 93.7 Billion, the Oncology therapeutic area is poised to grow to USD 192.2 Billion by 2022. Anti-diabetics, Anti-rheumatics, Anti-virals and Vaccines are next in line to Oncology, making up nearly USD 200 Billion in sales in 2022.

The market for orphan drugs will nearly double by 2022

Orphan drugs are developed to treat rare diseases (which occur in less than 200,000 people). The US has identified over 7000 rare diseases, however, treatment options are approved for only 600 of them. This has created an untapped market that pharma companies are investing in strategically, resulting in 75 orphan drug approvals in 2017, as compared to 27 in 2016.

Companies are turning to technology to accelerate drug development

Biopharma companies are increasingly leveraging artificial intelligence, big data and predictive analytics, and real-world evidence to improve their R&D processes and break down silos. Large data sets from clinical trials, health records and pre-clinical studies are being analyzed to define patterns and trends that can speed up clinical trials. These technologies are still nascent and have the potential to improve study design, deployment and in-trial decision-making right from start-up to regulatory filing and post-market safety surveillance.

Regulatory landscape is constantly evolving

Drug authorities across the globe are looking to ensure patient safety through the imposition of regulations that require biopharma companies to constantly course-correct in order to comply. The impact of non-compliance is drastic and might impact the revenue, and even reputation of the company. Recently, China has re-invented its drug regulatory body, which is already bringing in sweeping changes to regulations in the Chinese market. In Europe, new regulations like IDMP and GDPR have significantly impacted drug development.

Increased competition through consolidation

With positive trends in the Life Sciences R&D Outsourcing market, competition is increased and intensified with the consolidation of CROs competing for market share. The recent years have seen several large and mid-size full-service CRO consolidations. Traditional CROs are acquiring technology and other capabilities, and core technology companies are acquiring full-service CRO capabilities, blurring the lines of competition between pure-play CROs and other vendors. This consolidation has led to significant benefits to the industry players, including increased scale and geographic presence, access to additional therapeutic expertise and service capabilities, technology improvements and economies of scale. Differentiated technology offerings will be the key value-driver for companies.

Life Sciences Outsourcing is set to reach USD 39.1 Billion by 2020

In order to gain a cost advantage, while ensuring speed and efficacy of the drug development process, biopharma companies are embracing new and dynamic partnership models. The concept of Everything-as-a-Service (XaaS) is taking root in the industry, removing discreet operations in silos, creating a collection of horizontal services that span across the value chain. The Life Sciences Outsourcing industry is set to grow to USD 39.1 Billion by 2020, with Clinical comprising the largest segment (nearly 85% of the market) growing at 6%, Regulatory (9%) and Safety (6%) growing at 11.5% and 10.5% CAGR respectively.

TAKEs Performance Business Highlights

The financial year 2017-18 has been a landmark year for TAKE, ending with a revenue of INR 15,872 Mn (USD 246 Mn), an 18% growth YoY and a profit of INR 1,599 Mn (USD 25 Mn), growing at 9.4% YoY.

Life Sciences

In the Financial Year 2017-18, we have set records in winning deals of larger scope and duration than ever before. At the end of this year, the Life Sciences business accounted for 91%. In the Life Sciences vertical, revenues grew by 25.1% YoY to INR 13,982 Mn (a 30.16% growth in USD terms). This growth is a result of our focus on Life Sciences and our ability to build partnerships with our clients through transformational business models. Today, we are proud to be recognized as a preferred partner by several global marquee customers.


In this year, TAKE launched an ICH E6(R2) Readiness Assessment Framework to help industry players become pro actively compliant with the latest requirements to run successful clinical trials. To augment our breadth of knowledge and deepen our expertise, we initiated the institution of a Medical & Scientific Advisory Board. TAKE further leveraged its domain knowledge and technology expertise to launch OneClinical, an eClinical platform to the market. OneClinical delivers near real-time, high-quality data and optimizes clinical trials. Proven across a variety of global trials, the platform offers short setup time with low fixed costs, and provides global accessibility with near real-time data analytics and visualizations.


TAKEs flagship IP for regulatory submissions, pharmaREADY, crossed a milestone 150 customers in this year. TAKEs strong experience in regulatory affairs has enabled us to build a robust system for handling regulatory submissions world over. TAKE now makes regulatory submissions to authorities in over 130 countries, and has enabled almost 40% of global regulatory submissions for a top global pharma.


As a testament to our domain excellence and quality delivery, TAKE was named as a Leader in IDC Market Scape: Worldwide Life Science Drug Safety Services 2017 Vendor Assessment. TAKE also celebrated 15 years of its exclusive industry network forum pvnet. This network provides a neutral platform for Pharma covigilance (PV) leaders from some of the largest global pharma companies to network, debate, compare performance and share ideas.

Supply Chain Management

In the Financial Year 2017-18, the Supply Chain vertical has seen a decline in line with TAKEs strategic aspiration to move towards a Life Sciences organization. In this year, we disinvested from Towell TAKE Investments LLC, Muscat. Revenues from Supply Chain stand at INR 1,890 Mn, a 16.7% decrease from FY 2017 revenues.

In FY 2018, our Engineering Services sub-vertical added another offering that enables compliance across the industry. The Green Check Software Platform helps companies assess their supply chains to ensure they meet the requirement of the Safe Drinking Water and Toxic Enforcement Act, also known as Proposition 65, of the State of California, USA.

Infrastructure Investments

In this Financial Year 2017-18, TAKE has invested in its infrastructure across geographies. TAKE inaugurated a state-of-the-art, 80-bedded Clinical facility in Chennai to cater to the growing demand for high quality clinical trials. We have also expanded our facilities in Bangalore, Princeton and Bogota to take advantage of exciting market opportunities across Asia, Europe and North and South America.

Internal Controls

The principle of operations in the different functional units of TAKE has been to ensure entrepreneurship and ownership of responsibility, and financial controls have been set up under this perspective. All authorizations to functional units ultimately originate from policies and principles as laid down by the Board and are based on a system of checks and balances at various points in each process.

Our well-documented Internal Control System is reviewed and approved by the Board of Directors. This document covers all aspects of financial controls, right from frameworks adopted, systems & processes in place, delegation of authority, standard operating procedures, budgetary controls and audits.

Financial Performance

The financial statements of TAKE Solutions Ltd and its subsidiaries (collectively referred to as "TAKE" or the "Company" are prepared in compliance with the Companies Act, 2013 and Indian Accounting Standards (IND-AS)).

Details of Significant Accounting Policies used for the preparation of the financial statements are presented in the notes to the consolidated financial statements appended later in this Annual Report.

The discussions below relate to the Consolidated Statement of Profit & Loss for the year ended March 31, 2018 and the Consolidated Balance Sheet as at March 31, 2018. The Consolidated results are more relevant for understanding the financial performance of TAKE, which has global operations and significant presence outside India.

Results of Operations (Consolidated)


The Company continued its strategy to focus and grow in niche segment of Life Sciences for improved long-term growth and margins. During Q4 FY 2018, one of the Supply Chain subsidiaries, Towell TAKE Investments LLC was disinvested. TAKEs Total Income and Operating Revenue registered a growth of 17.40% and 18.05% in Rs terms respectively over FY 2017. EBITDA has grown by 13.74% from 2,751Mn in FY 2017 to Rs 3,129 Mn in FY 2018. Our Operating Revenues and Operating EBITDA have grown at a Compound Annual Growth Rate (CAGR) of 29.52% and 27.04% respectively over the last 3 years.

Particulars Units Revenue EBITDA PAT after Noncontrolling Interest EPS (Basic)
FY 2018 Rs Mn Rs 15,937 Rs 3,129 Rs 1,605 Rs 12.19
FY 2017 Rs Mn Rs 13,574 Rs 2,751 Rs 1,431 Rs 11.22
Y-o-Y Comparison % 17.41% 13.74% 12.16% 8.65%

In Q4 FY 2018, the promoters of the Company infused Rs 2,500 Mn (approx.) via preferential allotment of shares.

The current years comparative income statement is given below in tabular form:

FY 2018

FY 2017

Particulars Amount Rs Mn % of Total Income Amount Rs Mn % of Total Income
Revenue 15,872 99.59% 13,446 99.06%
Other Income 65 0.41 % 128 0.94%
Total Income 15,937 100.00% 13,574 100.00%
Cost of Revenue 9,034 56.69% 7,831 57.69%
Administration and Other Expenses 3,774 23.68% 2,993 22.05%
Finance Costs 208 1.30% 226 1.66%
Depreciation 399 2.51 % 344 2.54%
Amortisation of Capitalised Software Costs 642 4.03% 530 3.91%
Total Expenses 14,057 88.20% 11,924 87.84%
Profit before tax (PBT) 1,880 11.80% 1,650 12.16%
Provision for Tax 281 1.76% 188 1.39%
Non-controlling interest (6) (0.04)% 31 0.23%
Profit after Tax and Non-Controlling interest 1,605 10.07% 1,431 10.54%

Revenue Analysis

Revenue by Vertical

The Company continues to focus on the Life Sciences vertical to steer growth. The financial year ended March 31, 2018 saw Revenues from Life Sciences grow by Rs 2,805 Mn, a growth of 25.10% year-on-year amounting to Rs 13,982 Mn. In USD terms, revenue from Life Sciences grew by 30.16% in FY 2018 year-on- year.

Revenue from Supply Chain Management vertical has seen a decline of 16.7% over the previous financial year. This financial year also saw disinvestment of one of the Supply Chain subsidiaries, Towell TAKE Investments LLC, Muscat, during the last quarter.

Revenue by Vertical FY 2018 Rs Mn FY 2017 Rs Mn % Change
Supply Chain Management (SCM) 1,890 2,269 (16.70%)
Life Sciences (LS) 13,982 11,177 25.10%
Total Revenue 15,872 13,446 18.04%

Revenue by Geography

TAKE Solutions continues to derive majority of its revenues from USA. Revenues from USA grew by19.16%to Rs 12,707 Mn in FY 2018 compared to Rs 10,664 Mn in FY 2017 on account of new offerings in the Life Sciences vertical in the USA. Revenue from USA grew at a CAGR of 21.77% over the last 5 years.

Revenue by Geography FY 2018 Rs Mn FY 2017 Rs Mn % Change
Asia-Pac 2,128 1,782 19.42%
United States 12,707 10,664 19.16%
Europe 1,037 1,000 3.75%
Total Revenue 15,872 13,446 18.05%

Revenue from Europe grew moderately from Rs 1,000 Mn in FY 2017 to Rs 1,037 Mn during FY 2018 recording a growth of 3.75% over the last financial year. Europe contributed to 6.53% of total revenues in FY 2018.

Revenue contribution from Asia-Pac stood at 13.41% in FY 2018 compared to 13.25% in FY 2017.

Cost Analysis

Total Cost in FY 2018 of Rs 14,057 Mn has increased by 17.89% against a figure of Rs 1 1,924 Mn in FY 2017. Total cost as a percentage of revenue has shown a marginal increase of approximately 40 bps as compared to the last financial year.

Direct Costs of Revenue

Direct Costs are those that are required to be incurred for purposes of completing the contractual obligations entered with customers - Employee and Contracted Resources compensation costs as well as technology licenses, subscriptions and such related costs necessary for the delivery of contracted services. This expense group stands at Rs 9,034 Mn in the current financial year compared to Rs 7,831Mn in FY 2017. As percentage of Revenue, this is a decrease of 100 bps over the previous year. SG&A expenses as a percentage of revenue has increased by 164 bps in FY 2018 over the previous financial year.

FY 2018

FY 2017

Particulars Amount Rs Mn % of Total Income Amount Rs Mn % of Total Income
Employee Costs 4,467 28.03% 3,871 28.52%
Other Direct Costs 4,567 28.66% 3,960 29.17%
TOTAL DIRECT COST 9,034 56.69% 7,831 57.70%
SGA expenses 3,774 23.68% 2,993 22.05%
Amortization 642 4.03% 530 3.91%
Depreciation 399 2.50% 344 2.53%
Finance Expenses 208 1.31% 226 1.66%
TOTAL COST 14,057 88.20% 11,924 87.84%

Depreciation & Amortization

Non-cash expenses including Depreciation & Amortization continue to comprise approximately 6.53% of the total revenue. Depreciation and amortisation expenses stood at Rs 1,041 Mn in FY 2018 as against Rs 874 Mn in the previous financial year. Both these expenses are amortization of intangible/tangible assets over defined life of assets as per accounting policy typically over a 3-5 years timeframe. While write off of purchased intangibles and tangibles is termed depreciation, that of IP internally developed by the company are termed amortization.

Finance Cost

Finance Cost reported during the year includes Interest charges on credit facilities availed by the company as well as impact of forex rate fluctuation pertaining to interest payments in other currencies incurred by subsidiary companies and related expenses like processing charges.

Finance Cost reported at Rs 208 Mn in FY 2018 is lower than the previous financial year by Rs 18 Mn. There has been a decrease in interest cost in spite of increase in short term borrowings during the current financial year on account of refinancing of existing borrowings from banks and raising additional funds at lower interest rates.


Tax expense for the current financial year stands at Rs 281 Mn. The Tax rate is approximately at 14.95% for the current financial year.

Non- controlling interest

Non-controlling interest has shown a decrease during the current financial year and is at Rs (5.95) Mn.

Earnings per Share

The Net Profit for the year ended March 31,2018 at Rs 1,605 Mn, has improved by 12.16% over the Rs 1,431 Mn reported for the year ended March 31,2017.

This has resulted in the EPS (Basic) also going up correspondingly from Rs 11.22 per share to Rs 12.19 for the current year.

Foreign Currency Transactions

The company has a substantial part of its revenue generated outside India, significantly the USA. The accounting treatment for reporting financial performance and position at the end of the year is in consonance with the requirements of the IndAs.

In conformance to this, the Statement of Profit and loss for the year reflects the 3.89% decrease in average USD exchange rates over the previous year, in both Revenue and Expenses. Performances of international subsidiaries have been translated at the average USD to INR rate for the current financial year at Rs 64.54 as against INR 67.15 in FY 2017. However, on account of the significant natural hedge for risks associated with foreign currency fluctuations by virtue of its international operations both in terms of Revenue and Costs, there is no significant impact on the Result of Operations reported.

Similarly, conforming to IndAs in Balance Sheet reporting, requiring reporting at the Closing rate on the last date of year, there would be an impact of about 0.30% increase in closing rates of the Indian Rupee as at March 31, 2018vis-a-vis March 31, 2017 respectively. Balance sheet has been reported at a closing USD to INR rate of 65.07 in FY 2018 as against 64.88 in FY 2017.

Share Capital

The paid up share capital of the Company has increased from Rs 131 Mn in FY 2017 to Rs 145.88 Mn in FY 2018 on account of Preferential allotment of 14,697,200 shares of Rs 1/- each to TAKE Solutions Pte Ltd, Singapore (Parent Company of TAKE Solutions Limited).

Reserves and Surplus

Reserves and Surplus of the Group stood at Rs 13,136 Mn as at March 31,2018 as against Rs 8,978 Mn as at March 31,2017.

Of the Rs 4,158 Mn increase in the Reserves & Surplus during the year, Rs 1,478 Mn increase is attributable to profit accretion after relevant appropriations. Rs 2,515 Mn increase is due to increase in Securities Premium Account on account of cash inflow from preferential allotment of shares and exercise of stock options. Decrease in Rs 151 Mn is on account of movement in Foreign Currency Translation Reserve. The balance is attributable to changes in Capital Reserves, mainly due to change in closing forex rates over the previous year.

Borrowings Rs Mn
Particulars As on March 31, 2018 As on March 31, 2017
From Banks 3,225 2,371
Finance Lease Obligations 1 2
Total 3,226 2,373

Loans availed from Banks are term loans and working capital loans predominantly in foreign currency, and as such are shown at closing rates prevailing as at March 31, 2018. Secured borrowings have increased by Rs 853 Mn as on 31 March 2018 vis-a-vis March 31,


Trade Payables (Current Liabilities)

Trade Payables (Current Liabilities) representing payables for Purchase of Goods and Services has marginally increased from Rs 459 Mn to Rs 493 Mn during the financial year ended March 31,


Deferred Tax Liability and Deferred Tax Assets

According to our Accounting Policies, Deferred Tax Assets and Deferred Tax Liability are offset tax jurisdiction-wise.

Deferred Tax arises on certain items like Depreciation, Amortization, Employee benefits etc., on account of timing differences between expense recognition for financial reporting purposes and Income Tax purposes, and is appropriately reflected as a Deferred Tax Asset or Liability.

During the year, Deferred Tax Asset remained stable at Rs 34 Mn, while Deferred Tax Liability increased from Rs 232Mn to Rs 339 Mn. This is attributable to the time effect of capitalization of fixed assets during the year on Ind -AS reporting and tax reporting in the relevant tax jurisdiction.

Other Current Liabilities and Provisions

Other Current Liabilities includes Current Maturities of Long Term Debt, Unclaimed dividends, Interest due, Statutory Payables and Deferred Revenue.

Provisions (Long term & Short term) include provision for Employee Benefits only.

Fixed Assets and Software Product Costs

This includes Tangible assets by way of Buildings, Furniture & Fixtures, Vehicles, Computers & related assets as well as Intangible assets like Goodwill on acquisition and internally generated software capitalized in accordance with appropriate Accounting Standards.

The net additions during the year ended March 31, 2018 amounts to Rs 521 Mn significantly in Computer & Related Software, both by way of replacement & additions.

The Company has continued its strategy of developing and offering services across different technology platforms to offer bundled services including providing infrastructure & data security management related services. These initiatives are domain and customer focussed with a view to strengthen our thought, leadership, domain strength and strategic relationships and to augment future revenues.

Goodwill on Consolidation

The increase in Goodwill on Balance Sheet reported as at March 31, 2018 compared to the previous year of Rs 42 Mn reflects the forex impact on Rupee value as on March 31, 2018 compared to March 31, 2017 and the disinvestment of the Supply chain subsidiary Towell TAKE Investments LLC.

Current and Non-Current Investments

Current investments have increased from Rs 33 Mn as on March 31, 2017 to Rs 530 Mn as on March 31, 2018 due to increase in mutual fund investments.

Non-current investments have remained stable at Rs 62 Mn during the current financial year.

Cash and Bank Balances

Balances held in Banks and as Cash increased by Rs 2,308 Mn from Rs 1,101 Mn as at March 31, 2017 to Rs 3,409 Mn as at March 31, 2018. This is essentially on account of infusion of funds through preferential allotment of shares.

The Reported figure includes deposits of 1,495 Mn and other Earmarked balances of Rs 3 Mn as at March 31,2018.


Inventory is held in the course of delivering respect of certain supply chain related solutions to clients. As at March 31,2017, the value of inventory marginally decreased from 174 Mn to Rs 167 Mn. This is a function of the work in progress of contracts that are at various stages of completion.

Trade Receivables

Receivables from customer stood at Rs 4,692 Mn as at March 31, 2018, an increase of Rs 330 Mn over the Rs 4,362Mn balance shown as at March 31,2017. However, DSO days as on March 31,2018 has reduced to 93 days against 110 days as on March 31,2017.

Loans, Advances and Other Current Assets

This represents security deposits of various nature, advances to staff, suppliers of service, and products of capital nature, Interest receivable and other tax receivable as well as Unbilled Receivables. This increased from Rs 2,121Mn as on March 31,2017 to Rs 2,979 Mn as at March 31,2018.