PHARMACEUTICAL

SECTOR
ADA FINAL PROJECT

GROUP-6; SECTION -C
SUBMITTED TO: MOHAMMAD JIBRAN -18157
Dr. SRILAKSHMINARAYANA G NIKHILESH MAHESH -18159
NISHANTH M -18160
NUNNA SAI SRINIVAS -18161
PRCHURYA SARMA -18163
Contents
Chapter 1: Details about pharmaceutical sector.....................................................................................2
Chapter 2: Objectives of the study.........................................................................................................3
Chapter-3: Data relating to objectives of study......................................................................................3
Chapter-4: Analysis of the data.............................................................................................................4
Chapter-5: Descriptive statistics............................................................................................................5
Chapter-6: Construction of research hypothesis, statistical hypothesis & test of the same....................6
Chapter 7: Regression analysis............................................................................................................14
Chapter 8: Discussion based on the analysis........................................................................................20
Chapter 9: Conclusion and suggestions...............................................................................................20
References...........................................................................................................................................21

1
Chapter 1: Details about pharmaceutical sector

The pharmaceutical industry in India ranks 3rd in the world terms of volume and 14th in
terms of value. According to Department of Pharmaceuticals, Ministry of Chemicals and
Fertilizers, the total turnover of India's pharmaceuticals industry between 2008 and
September 2009 was US$21.04 billion. Hyderabad, Mumbai, Bangalore and Ahmedabad are
the major pharmaceutical hubs of India. The domestic market was worth US$13.8 billion in
2013.
 At the same time, Indian pharmaceuticals market is expected to touch USD 55 billion
by 2020 from USD 33 billion in 2017, growing at a compound annual growth rate
(CAGR) of 15.92 per cent
 By 2020, India is likely to be among the top three pharmaceutical markets by
incremental growth and sixth largest market globally in absolute size
 There are over 10,500 manufacturing units and 3,000 pharma companies in India.
Over 60,000 generic brands exist across 60 therapeutic categories
 India accounts for 20% of global exports in generics, making it the largest provider of
generic medicines globally. Indian vaccines are exported to 150 countries
STATISTICS
 India’s total exports of Pharmaceuticals (APIs, Generics and Alternative system of
medicine) during 2017-18 was USD 17.3 billion
 India has a market share of almost 42% of Generic drugs produced globally, a market
size of Africa and Middle East put together.
 North America is India’s largest export market, receiving over 34% of India’s
pharmaceuticals exports. Africa is the second largest, receiving over 19% of India’s
exports.
 The Indian pharmaceutical industry is largely dominated by generics drugs as the
industry earns around 70% of its revenues from the same.
 India’s Pharmaceutical industry has filed the highest number of Drug Master Files
(DMFS) with USFDA and by the end of year 2016, number of filings stands at 3,950.
India’s Abbreviated New Drug Applications (ANDAS) totalling over 4,000 by June
2017
RESEARCH & DEVELOPMENT
Weighted tax deduction of 200% under section 35 (2AB) of the Income Tax Act for both
capital and revenue expenditure incurred on scientific research and development. Expenditure
on land and buildings are not eligible for deduction.
KEY ACHIEVEMENTS
 Indian Drugs and Pharmaceuticals Limited (IDPL), Gurgaon modernized for mass
production of drugs for diabetes, oncology, nephrology and cardiology
 1143 Jan Aushadib stores are operationalized
 Coronary Stents price reduced by 85%
 ‘Pharma Data Bank’ launched to facilitate online filing of mandatory returns
2
  Pharma Jan Samadhan & Pharma Sahi Daam launched
 11 National Institutes of Pharmaceutical Education & Research (NIPERs) approved

Chapter 2: Objectives of the study

The objective of the project is to conduct various analysis tests such as F-test, T-test, Simple
regression analysis, Multiple Regression analysis and Kruskal walli’s of 3 pharmaceutical
companies’ data to find out the relation between the total sales and total expenses, Relation
between material consumption, employee expense and income of the company. The
companies are Cipla Pharmaceuticals, Sun Pharmaceuticals, Torrent Pharmaceuticals.

Chapter-3: Data relating to objectives of study

Employee
Raw Material Consumed
Years Cipla Pharma Ltd/Total Income in Cr. Expenses
Mar-18 11779.69 3303.31 1785.94
Mar-17 11104.43 2956.04 1728.97
Mar-16 12398.02 3633.34 1778.56
Mar-15 10279.69 3426.74 1505.58
Mar-14 9660.57 3145.34 1284.75

Employee
Years Sun Pharma Ltd/Total Income in Cr. Raw Material Consumed Expenses
Mar-18 9075.64 2167.52 1617.69
Mar-17 8321.11 2284.52 1486.17
Mar-16 8308.78 1838.31 1476.69
Mar-15 8122.18 2261.11 1486.69
Mar-14 2865.58 894.62 278.96

Employee
Raw Material Consumed
Years Torrent Pharma Ltd/Total Income in Cr. Expenses
Mar-18 4580 995 826
Mar-17 4892 1177 699
Mar-16 5733 1041 572
Mar-15 3781 968 507
Mar-14 3401 876 419

3
Chapter-4: Analysis of the data

Descriptive Data Analysis

Analysis based on Income

Total Income
14000

12000

10000

8000

6000

4000

2000

0
Mar'14 Mar'15 Mar'16 Mar'17 Mar'18

Torrent Sun Pharma Cipla

 From the graph we can see that in the year 2016 all the three companies are having
high income compared to other years.
 The income is fluctuating over the period for all the three companies.
 From the above analysis we could say that Cipla is maintain good market share
among the three companies.

Analysis based on Profits

Profit
3500
3000
2500
2000
1500
1000
500
0
Mar'14 Mar'15 Mar'16 Mar'17 Mar'18
-500
-1000

Torrent Sun Pharma Cipla

4
  The above table shows the pattern of profit for three companies from march2014 to
march2018. Here we could see that in year 2018 all the three companies are
performing better compared to previous years.
 Initially torrent company had good earnings but after 2016 its earning gradually
decreased. As in the case of Cipla the company shows a steady profit irrespective of
slight changes compared with other companies.
 From the analysis we analyzed that the total income and the total expenses of sun
pharmaceuticals were almost equal and they were not able to control the expenses as a
result the company is running under loss in the year 2015.

Chapter-5: Descriptive statistics

Descriptive analysis
Profit
Torr Sun Pharma Cipla
Mean 1568.6 Mean 411.978 Mean 2193.86
345.706609
Standard Error 7 Standard Error 271.9859458 Standard Error 135.0121062
Median 1240 Median 519.77 Median 2269.81
Mode #N/A Mode #N/A Mode #N/A
Standard 773.023479 Standard Standard
Deviation 6 Deviation 608.1790638 Deviation 301.8962472
Sample Variance 597565.3 Sample Variance 369881.7736 Sample Variance 91141.3441
4.45815091
Kurtosis 1 Kurtosis -0.221469357 Kurtosis 1.204664453
2.09398145
Skewness 6 Skewness 0.194763668 Skewness -0.933490564
Range 1838 Range 1598.1 Range 804.32
Minimum 1095 Minimum -347.04 Minimum 1726.11
Maximum 2933 Maximum 1251.06 Maximum 2530.43
Sum 7843 Sum 2059.89 Sum 10969.3
Count 5 Count 5 Count 5

 From the analysis among the three pharmaceutical companies, the mean profit of
Cipla is better compared to other two companies. As mean will be affected by
extremely high or low profit or losses.
 From standard deviation we can come to know about the consistency of profits among
the companies. Here standard deviation of Cipla is lower compared to other
companies. Thus, we can understand that Cipla is having better consistency in profits.

5
Chapter-6: Construction of research hypothesis, statistical hypothesis
& test of the same

Conducting a Test for difference of means:

The purpose is to build a model to understand whether there is difference in the profit earned
by the companies in the pharmaceuticals sector. To study the impact, we take profit and loss
of the Cipla Pharma, Sun Pharma and Torrent Pharma for 5 years. To study this, we are
taking past 5 years data from economictimes.com
The data of the above companies are mention below:

So, by taking the above data we will test for difference of means
Firstly, we will test for whether there is difference between profit earned between Torrent &
Sun Pharmaceuticals. Here research hypothesis is taken as there is mean difference between
the two companies.

Data Obtained

Null Hypothesis:

1

Both the companies mean profit earned is equal to each other.

Alternative Hypothesis:

1≠

Both companies mean profit is not equal to each other.

Errors in Hypothesis:
Type I error: (Rej Ho/ Not Rej Ho)

1≠1

6
Type II error: (Not Rej Ho/ Rej Ho)

11≠

Assumptions:

 Populations are independently normally distributed.

 Both the population variances are equal.

Testing Equality of Variance

Ho: ¬₁²  ¬₂²

H1: ¬₁² ≠ ¬₂²

Type I error: (Rej Ho/ Not Rej Ho)

¬₁² ≠ ¬₂²¬₁²  ¬₂²

Type II error: (Not Rej Ho/ Rej Ho)

¬₁²  ¬₂²¬₁² ≠ ¬₂² 

Construction of Test Statistic

= 2.1519

= P(F> 2.1519)
= 0.7324
Since p>α, we do not reject Ho, and hence the assumption is satisfied.
Construction of Test Statistic

7
 =-2.79766

Using this we take decision.

Decision

=0.01
Since p value > α we reject Ho.
Secondly, we will test for whether there is difference between profit earned between Sun &
Cipla Pharmaceuticals. Here research hypothesis is taken as there is mean difference between
the two companies.
Data Obtained

Null Hypothesis:

1

Both the companies mean profit earned is equal to each other.

Alternative Hypothesis:

1≠

Both companies mean profit is not equal to each other.

Errors in Hypothesis:
Type I error: (Rej Ho/ Not Rej Ho)

1≠1

8
Type II error: (Not Rej Ho/ Rej Ho)

11≠

Assumptions:

 Populations are independently normally distributed.

 Both the population variances are equal.

Testing Equality of Variance

Ho: ¬₁²  ¬₂²

H1: ¬₁² ≠ ¬₂²

Type I error: (Rej Ho/ Not Rej Ho)

¬₁² ≠ ¬₂²¬₁²  ¬₂²

Type II error: (Not Rej Ho/ Rej Ho)

¬₁²  ¬₂²¬₁² ≠ ¬₂² 

Construction of Test Statistic

=13.46862

= P(F> 13.46862)

= 0.027341
So, we reject Ho, and accept the alternative hypothesis.
Finally, we will test for whether there is difference between profit earned between Torrent &
Cipla Pharmaceuticals. Here research hypothesis is taken as there is mean difference between
the two companies.

9
Data Obtained

Null Hypothesis:

1

Both the companies mean profit earned is equal to each other.

Alternative Hypothesis:

1≠

Both companies mean profit is not equal to each other.

Errors in Hypothesis:
Type I error: (Rej Ho/ Not Rej Ho)

1≠1

Type II error: (Not Rej Ho/ Rej Ho)

11≠

Assumptions:

 Populations are independently normally distributed.

 Both the population variances are equal.

Testing Equality of Variance

Ho: ¬₁²  ¬₂²

H1: ¬₁² ≠ ¬₂²

Type I error: (Rej Ho/ Not Rej Ho)

¬₁² ≠ ¬₂²¬₁²  ¬₂²

Type II error: (Not Rej Ho/ Rej Ho)

¬₁²  ¬₂²¬₁² ≠ ¬₂² 

Construction of Test Statistic

10
 = 6.258904

= P(F> 6.258904)
= 0.103411
Since p>α, we do not reject Ho, and hence the assumption is satisfied.
Construction of Test Statistic

= -1.36136

Using this we take decision.

Decision

= 0.122519

Since p value < α we accept Ho.

From the above test we could see that while tested for all 3 companies among each other
twice the result showed that the profit earned between the companies are in same proportion.
Only once it appeared that the profit earned between the companies were in the same
proportion. So, we can conclude that there are lot of factors which affect the profit or loss and
11
we can cannot compare each other without properly understanding all the factors affected,
So, the result differs from company to company in the same sector.

Kruskal-Wallis Test on Change in Price of Pharma Industries

The purpose is to conduct non-parametric test for the three Pharmaceuticals Companies
Torrent Pharma, Sun Pharma and Cipla Pharma. Here, we are going to take the data of
individual firm for last four days and list out the high price and low price for the stock and
understand how it will impact.
We must individually make a list of the data first for each of these three companies and
conduct the test further. The list which we have got is mention below:

Sun Pharma Limited

Date Open High Low Close Volume
28-12-2018 415 428.7 413.5 425.2 12805576
27-12-2018 423 423.3 410 411.15 12839897
26-12-2018 423.45 423.45 410 413.65 8406699
24-12-2018 427.05 434 422.3 424.35 7052582

Torrent Pharma Limited

Date Open High Low Close Volume
28-12-2018 1754.9 1787.15 1742 1779.3 152301
27-12-2018 1769.9 1773.55 1726.2 1739.6 122208
26-12-2018 1755 1767.95 1718 1753.25 131513
24-12-2018 1775.6 1797 1760.65 1769.6 66751

Cipla Pharma Limited

Date Open High Low Close Volume
28-12-2018 514.3 525.35 514.3 522 1933464
27-12-2018 518.9 521 514 517.9 1351636
26-12-2018 515.6 519 507.3 514.3 1318560
24-12-2018 518.8 520.8 513 518.8 1214348

As we have already had the data above, so we are going to further see using Kruskal Wallis
test to construct a non-parametric model. The individual KT model can be prepared after we

12
assign group no. for each area like high (1) and low (2). So, by putting the necessary data we
will get the following outcome.

Cipla Pharma

Sun Pharma

13
Torrent Pharma

Since, from the above after conducting the KT-test for Cipla Pharma, Sun Pharma and
Torrent Pharma it has been observer in all the three cases the alpha value is greater than p-
value. Therefore, from seeing all the segment we can say there might be significant change in
high and low prices of the stock and coming to the managerial concept to study in large
aspect we need to take more data and should go for other hypothesis testing.

Chapter 7: Regression analysis

Conducting a Simple Regression Analysis
The purpose is to conduct an analysis by taking two variables Total expenses and Total
Income and construct a simple regression analysis to understand whether the condition is
significant and insignificant.
Here, we are taking three pharmaceutical companies Cipla Pharma, Sun Pharma and Torrent
Pharma and their past 5 years total expenses and total income data from economictimes.com.
The data of the above companies are mention below:
Years Cipla Pharma Ltd/Total Income in Cr. TOTAL EXPENSES in Cr.
Mar-18 11779.69 9249.26
Mar-17 11104.43 9378.32
Mar-16 12398.02 10064.29
Mar-15 10279.69 8170.47
Mar-14 9660.57 7390.76

Years Sun Pharma Ltd/Total Income in Cr. TOTAL EXPENSES in Cr.

Mar-18 9075.64 7824.58
Mar-17 8321.11 7711.43
Mar-16 8308.78 8282.36
Mar-15 8122.18 8469.22
Mar-14 2865.58 2345.81
14
Years Torrent Pharma Ltd/Total Income in Cr. TOTAL EXPENSES in Cr.
Mar-18 4580 3340
Mar-17 4892 3466
Mar-16 5733 2800
Mar-15 3781 2632
Mar-14 3401 2306

So, by taking the above data we will create a simple regression model to understand the
relation between total expenses and total income by using excel template.

Cipla Pharma

15
Sun Pharma

Torrent Pharma

By, comparing all the three companies we have seen that Cipla Pharma and Sun Pharma
follows a significant approach as the p-value is less than alpha also all the assumption fulfils
the criteria. But, in case of Torrent Pharma the p-value is greater than alpha also further we
can see that the value of R2=0.29 which in the case of the other two companies are more than
50%. Therefore, we can say that Torrent Pharma follows an insignificant approach. Hence,
we can conclude that linear relationship between total expenses and total income exists
between Cipla Pharma and Sun Pharma where in case Torrent Pharma the linear relationship
does not exists.

16
Conducting a Multiple Regression Analysis
The purpose is to build a model to understand the impact of raw material expenses and
employee expenses on total income of Cipla Pharma, Sun Pharma and Torrent Pharma.
To study the Multiple Regression, we are taking past 5 years data from economictimes.com
The data of the above companies are mention below:
Employee
Raw Material Consumed
Years Cipla Pharma Ltd/Total Income in Cr. Expenses
Mar-18 11779.69 3303.31 1785.94
Mar-17 11104.43 2956.04 1728.97
Mar-16 12398.02 3633.34 1778.56
Mar-15 10279.69 3426.74 1505.58
Mar-14 9660.57 3145.34 1284.75

Employee
Years Sun Pharma Ltd/Total Income in Cr. Raw Material Consumed Expenses
Mar-18 9075.64 2167.52 1617.69
Mar-17 8321.11 2284.52 1486.17
Mar-16 8308.78 1838.31 1476.69
Mar-15 8122.18 2261.11 1486.69
Mar-14 2865.58 894.62 278.96

Employee
Raw Material Consumed
Years Torrent Pharma Ltd/Total Income in Cr. Expenses
Mar-18 4580 995 826
Mar-17 4892 1177 699
Mar-16 5733 1041 572
Mar-15 3781 968 507
Mar-14 3401 876 419

So, by taking the above data we will construct the Multiple regression analysis to understand
the impact of raw material expenses and labour expenses on the total income.
With the help of excel template we had put the data and got the following results:

17
Cipla Pharma

Sun Pharma
18
Torrent Pharma

After doing the multiple regression we need to understand whether the test is significant or
not. By looking at the p-value in case of Cipla Pharma from the Anova table we can directly
say that the model is insignificant, and no further analysis should be conducted in case of
Cipla Pharma.
Now, coming to Sun Pharma as we have seen that p-value is less that alpha, so the model is
significant and if we individually do the analysis then we see that the p-value of total income
is 0.03, employee expenses is 0.008 and material expenses is 0.45. Therefore, we will reject
the material expenses as it is more 0.05 (i.e. default value of alpha) and remodel the analysis
for Sun Pharma. After, remodelling we get below results:

19
So, from the above analysis we can see that the p-value of the whole model and individual
part is less than alpha and therefore we can say that in case of Sun Pharma both total income
and employees expenses are significant.
Lastly, if we see in case of Torrent Pharma the p-value of the whole model=0.5137 is greater
than alpha. So, the model is insignificant.

Chapter 8: Discussion based on the analysis

In our analysis part we have put our effort on studying the various variables of the pharmaceutical
sectors by using F-test, T-test, Simple Regression Analysis, Multiple Regression Analysis and
Kruskal Wallis Analysis. The purpose is to understand the impact of the variables and how one
variable impact the other. By using certain template and statistical tool we have done our best to
analyse the data.

Chapter 9: Conclusion and suggestions

From the whole project and by using various data analysis tool we can conclude that the analysis done
by our group we got a brief idea that analytics in pharmaceutical sector can help us to understand
futuristic approach that the company should take in order gain. In our case we see all three companies
showing some change basically Torrent Pharma was not showing that influence and from our
observation Torrent Pharma should make some changes to extract some profit. Lastly, from this
project we learnt that in Data Analytics we need sufficient data to have thorough understanding
because proper data can allow to do perfect hypothesis testing.

20
References
1.http://www.makeinindia.com/sector/pharmaceuticals

2. http://www.torrentpharma.com/

3. https://www.cipla.com/en/

4. http://www.sunpharma.com/

5. www.economictimes.com

21