Analysis of Abbott India Ltd.

1. Brief history of the company

Abbott Laboratories is an American multinational medical devices and health care

company with headquarters in Abbott Park, Illinois, United States. The company was
founded by Chicago physician Wallace Calvin Abbott in 1888 to formulate known drugs;
but today, the company sells medical devices, provides diagnostics, branded generic
medicines and nutritional producers. Abbott established its office in India in 1910, and
registered itself as Boots Pure Drug Company (India) Ltd on 22nd August 1944 with its
registered office in Mumbai, Maharashtra. Abbott India Ltd is a subsidiary of Abbott
Laboratories of USA.

Abbott India Ltd. is a public listed company and is listed on both the National Stock
Exchange (NSE) as well as on the Bombay Stock Exchange (BSE). The company
commissioned a plant with a licensed capacity of 1500 mega units per annum in January
1965. In September 1965, a sterlite manufacturing unit for the vialing of insulin
injections was commissioned. On 19 th October 1965, the company entered into a
technical collaboration agreement with Boots Pure Drug Co. Ltd., England, for
manufacturing crystalline insulin and formulations thereof. The company was listed on
BSE on 15 December 1965 at a price of Rs.23 per share. At that time, the company
manufactured `Boots' brand of medical and pharmaceutical products and agricultural
and animal health products. The company name was changed to The Boots Company
(India) Ltd on November 1 1971. In 1976, the company undertook to set up a new
chemical plant at Ahmednagar, Maharashtra, for the manufacture of Ibuprofen from the
basic stage in technical collaboration with its parent company. In 1988, the company
undertook a project to set up a new formulation factory at Jejuri in Pune district of
Maharashtra. The company name was changed to Boots Pharmaceuticals Ltd on January
1 1991. On October 31 1995 the name of the company was changed to Knoll
Pharmaceuticals Ltd. In the year 1997, a new plant in Goa and two state-of-the-art
plants to manufacture speciality dyes and dispersions in Mangalore were commissioned.
In the same year, the company became the fifth-largest domestic formulations
company. In 1999, the company. In 1998, the company sold off its Sion plant in Mumbai
and paid off its workers via a VRS. In the year 2002 the company sold their Jejuri
Undertakings together with assets and liabilities as a going concern. In the year 2003 the
company's wholly owned subsidiary company Lenbrook Pharmaceuticals Ltd was
amalgamated with the company. In the year 2004 the company started the production
of Capsules with the capacity of 27 million capsules. In the year 2005 they further
increased the capacity to 56 million capsules. Also they started a new project of
producing Nutritional Products with the installed capacity of 600 Tons. In the year 2006
the company increased the production capacity of Tablets by 236 million to 686 million
 tablets. In the year 2008 they further increased the production capacity of Tablets by
769 million to 1455 million tablets. Abbott India launched Digene Total buffered
pantoprazole tablet for quick and sustained antacid action and Brugel a novel
formulation for sprains and strains. Also they launched Thyronorm 150 Digene Sugar
Free Tablet and Gel during the same year. The Board of Directors of Abbott India Ltd.
and Solvay Pharma India Ltd. at their respective meetings held on 24 November 2010
unanimously approved the draft scheme for the amalgamation of Solvay Pharma India
into Abbott India under sections 391 to 394 of the Companies Act 1956. In 2010, Abbott
India acquired Piramal's Healthcare Solutions business (Domestic Formulations) for an
up-front payment of US$ 2.12 billion and an additional US$ 400 million annually for the
next four years. On September 7, 2011, Abbott India completed the allotment of 75.74
lakh equity shares to the shareholders of Solvay Pharma India Ltd in the ratio of 2:3 in
terms of the Scheme of Amalgamation of Solvay Pharma India Ltd with Abbott India. The
Drug Price Control Order 2013 has brought several of the company's products under
price control. The company reduced the prices of the products covered under the new
DPCO which resulted in an adverse impact of Rs 1100.00 Lakhs on Sales and Profits of
the company during the period 2013-14. With effect from the financial year ended 31
March 2014 the company changed its accounting year from year ended 31 December 31
to the year ended March 31. Currently, Abbott India has invested in manufacturing
plants in India for its biggest businesses—nutritional products and pharmaceuticals.
Abbott Nutrition’s first green-field plant in India will be operational in 2021. And our
pharmaceuticals business fulfills most of its product requirements in India through two
local plants—Baddi in Himachal Pradesh and Verna in Goa. It also has a global R&D
centre in Mumbai.

2. Company profile

2.1. Scope of business

Abbott India Ltd is one of the largest MNC pharma companies operating in India. The
company is engaged in the discovery development manufacture and marketing of
pharmaceutical diagnostic nutritional and hospital products. They are having their
presence in both OTC drugs and formulations. The six key areas in which Abbott India
has major operations and strong brand recognition are gastroenterology, women’s
health, cardio-metabolic, pain and central nervous system, respiratory anti-infectives
and influenza vaccines. Abbott has more than 400 branded generics products in the
pharmaceutical segment in India. The product portfolio mix is as follows:
Some of the major products of the company include:

Brand Usage
Colospa Irritable Bowel Syndrome
Creon Exocrine Pancreatic Insufficiency
Cremaffin Constipation
Duphaston Miscarriage and Infertility
Influvac Prevention of Influenza
Ganaton Gastroesophageal Reflux Disease
Prothiaden Depression and Anxiety
Thyronorm Hypothyroidism
Vertin Vertigo
Duvadilan Preterm Labor
Digene Antacid
Enteroshield Prevention of Typhoid
Librax G1 Disorders
Udiliv Chronic Liver Diseases
ArachitolNANO Vitamin D Deficiency
Heptral Liver Disease
Combinorm Bacterial Vaginosis
Estrabet Menopasue
Zolfresh Insomnia

16 of the top 20 brands of Abbott India rank #1 and #2 in their respective participated
market while 14 of its top 20 brands are growing faster than the market. Some of the
most dominant brands of the company and their market share in their respective
categories is as follows:

Brand Market Share (%)

Thyronorm 51.60%
 Duphaston 25.50%
Udiliv 16.70%
Vertin 30.80%
Duphalac 13.90%
Influvac 63.40%
Digene 13.30%
Cremaffin Plus 9.50%
Creon 32.40%
Prothiaden 7.30%

2.2. Geographical scope

Abbott India Ltd is one of the largest MNC pharma companies operating in India. Abbott
India Ltd. develops and distributes over 600 products for healthcare professionals that
promote health and well-being for Indians in all stages of life. The parent company,
Abbott Laboratories has presence in over 160 countries. Abbott India started the export
of its products post 2015. Abbott India currently exports its products to multiple
emerging markets across the world including Indonesia, Malawi, Pakistan, Iraq, China,
Singapore, Cayman Islands and many others.

2.3. Key managerial personnel

1. Anil Joseph – Managing Director
Mr. Anil Joseph, aged 45, has an excellent track record of working with reputable
companies across different business sectors (predominately Healthcare & FMCG). With
over 25 years of experience, his focus areas included driving revenue and income
growth; business turnaround and managing emerging markets. He has an extensive
exposure in Sales & Marketing and General Management. Besides, having managed
both Developed and Emerging Markets, Anil also has diverse experience of different
countries and market types. As a P&L Head, he has managed multiple functions
including Sales, Marketing, Key Account Management, Finance, Supply Chain, Quality,
Customer Experience & Technical Service.
Prior to joining Abbott India, Mr. Anil was working with Abbott Laboratories, Singapore
heading the Diagnostics Division (Transfusion Medicine) for APAC, China and Japan since
March 2016. At Abbott Singapore, he was instrumental in setting up the Transfusion
Medicine Business Unit in Asia Pacific building a team, developing retention and growth
strategies and executing strategy in a high-pressure environment. He has worked with
Johnson & Johnson and Coca-Cola in various senior leadership positions in India and
across the Asia Pacific Region and has experience in managing growth, sustaining
success, in a “start-up” environment as well as working in “turn around” situations.
Mr. Anil holds a Master’s in Business Administration (dual specialization – Marketing &
Human Resources) from Symbiosis Institute of Business Management, Pune University
and Bachelor of Science (Mathematics) from C.M.S College, MG University, Kerala.
2. Rajiv Sonalker – CFO and Whole-time Director
Mr. Rajiv joined as Director - Finance in November 2006 and has 29 years of experience
in the Pharmaceutical, FMCG and Engineering sectors. Prior to joining Abbott India, he
worked with Bristol-Myers Squibb as Director – Finance. Rajiv has also worked with
Voltas Ltd, Johnson & Johnson, Sanofi - Aventis in India and Germany. Mr. Rajiv has a
Bachelor’s Degree in Science from the University of Bombay and is a fellow member of
the Institute of Chartered Accountants of India.
3. Krupa Anandpara – Associate Director - Secretarial & Company Secretary
Ms. Krupa joined as Company Secretary in 2006 and was subsequently appointed as
Associate Director – Secretarial & Company Secretary. She has over 16 years of
experience in handling secretarial compliance with companies such as Borosil Glass
Works Limited and Wimco Limited. Ms. Krupa is a Member of the Institute of Company
Secretaries of India and has a Law degree from Mumbai University. Krupa obtained Post
Graduate Diploma in Securities Laws from Government Law College, Mumbai.
4. Milind Tendulkar - Commercial Director - GenNext & Vaccines
Mr. Milind joined in January 2017 as a Commercial Director - GenNext & Vaccines
Business. He has over 27 years of rich experience in sales and marketing. Prior to joining
Abbott India, he was associated with Abbott Healthcare Pvt Ltd (AHPL), Zydus Cadila,
Emcure, and Ipca Labs Ltd. He holds a Masters degree in Pharmacy with specialization in
Pharmacology from University of Pune.
5. T Ramakrishna Prasad - Commercial Director - Specialty Care
Mr. Prasad has over 22 years of diverse experience in the area of Supply chain, Sales and
Marketing. He joined Abbott in August 2004 and since then has successfully served
multiple roles in the areas of Supply Chain, Sales and International Business. In July
2017, he took over as Associate Director of GenNext division and has been instrumental
in transforming this complex multi-therapy business and bringing in performance
excellence. After a long period of around three years, GenNext business exceeded the
plan in 2018 and is positioned to close 2019 with a strong performance.
6. Kunal Chowdhury - Commercial Director - GI Businesses
Mr. Kunal joined Abbott India limited in May, 1996. He has transitioned through
multiple roles in Sales and Marketing and advanced to leadership roles in both the
functions. He has been instrumental in leading many business transformation in his
previous assignments including launch of new business unit, brand transition to OTC,
setting up of Task Force and Activation teams as well as scaling up of businesses. Mr.
Kunal holds a certification in Marketing from IIM Calcutta and have completed his
Bachelor’s degree in Botany, Zoology and Chemistry from University of North Bengal.
7. Sridhar Kadangode – Director - Finance
Mr. Sridhar has worked with Abbott Healthcare Private Limited, Nutrition Division and
was part of the core management team which evolved the Path to Profitability for the
Nutrition Business of the Company. He has been part of some of the key business
projects linked to Demonetization and Distributor Optimization. Mr. Sridhar has over 20
years’ of experience and started his professional career with Britannia Industries. He
then moved to Danone where he had multiple assignments overseas (Singapore, US,
Malaysia, South Africa) before moving back to India in 2011. He has handled Finance,
Supply Chain and Procurement functions in his last assignment in Danone prior to
joining Abbott Healthcare in 2014. He is a qualified Chartered Accountant and Cost
Accountant.
8. Dr. Vijay Patil - Associate Director – New Product Introductions and Therapy Area
Strategy
Dr. Vijay joined (erstwhile Solvay Pharmaceuticals India Limited) in January 2009 as
General Manager – Technical and has 34 years of experience in the Industry. Vijay is a
post graduate in Pharmaceutical Technology from Mumbai University and has
completed his Doctorate in Complementary Medicine and Diploma in Business
Management. Prior to joining Abbott India, he was associated with reputed organization
like Schering Plough Fulford, Aventis, German Remedies and Novartis. As Associate
Director – New Product Introductions and Therapy Area Strategy, he has contributed
significantly to Abbott - NPI function through innovative projects, sourcing new
products, driving Legal, Regulatory & Quality Compliance & Standards. In his career
span of 20+ years in NPI, he has instrumental in designing, developing and supporting
commercial team to launch 90+ new products.
9. Dr. Srirupa Das – Director – Medical Affairs
Dr. Srirupa has over 15 years of experience in Medical Research, Clinical Research and
Drug Development. Prior to joining Abbott in 2011, she was associated with Fresenius
Kabi, Lupin and Sun Pharma.
10. Ms. Keya Phatnani - Director – Business Human Resources
Ms. Keya joined Abbott in December, 2012. She has over 17 years of experience in
Human Resources across Talent Acquisition, Business HR and Internal Communications
across large Pharmaceutical, Insurance and ITES companies, including IBM and
Prudential. She holds a post graduate degree in Clinical Psychology from Mumbai
University.
 11. Mr. Mandar Keskar - Associate Director - Consumer Care
Mr. Mandar comes from a rich consumer marketing background. He worked with
Perfetti vanMelle for more than 17 years across sales, marketing and P&L roles, before
joining Abbott in 2018. At Abbott, Mr. Mandar leads the Consumer Health Business,
where he has led a successful transformation in 2019 to deliver market beating growth,
while managing a restructuring of the entire team.

2.4. Controlling shareholders of the company

The detailed shareholding pattern of the company is as follows:

Entity Shares (in %)

Abbott Capital India Limited 50.44
Abbott Healthcare Products Limited 17.62
British Colloids Limited 6.92
Total Promoter Holding 74.99
Mutual Funds 3.22
Foreign Portfolio Investors 1.01
Financial Institutions/Banks 0.47
Insurance Companies 0.92
Other Institutional Investors 0.89
Total Institutional Holding 6.51
Individual share capital in excess of Rs.2 Lacs 0.22
Individual share capital upto Rs.2 Lacs 15.93
Other Public investors 2.35
NBFCs registered with RBI 0
Total Public (Non-Institutional) Holding 18.50
Total Holding 100

3. Industry profile

3.1. Nature of rivalry amongst competitors

Abbott India Ltd is a well-established firm in India. But its competitors like Sun Pharma,
Divis Labs, Dr Reddys Labs, Cipla, Aurobindo Pharma and a few others are well
established and reputed as well. This makes the pharmaceuticals industry highly
competitive in India. The Indian Pharmaceutical Industry is highly fragmented with
around 250-300 manufacturing and formulation units in organized sector which
contribute to only 70% of the market share of the total sales in the country. Overall,
there are as many as 10,000 different companies in this industry who are all fighting for
the same consumer base. The concentration ratio (proportion of total industry output
by the largest firm in the industry) for the industry is very low. The rivalry in the industry
can be estimated from the fact that the top company in the country has only 6% market
share, and the top five companies together have about 10% market share. Hence, we
can conclude that the rivalry amongst competitors is high.

3.2. Entry barriers in the industry

Firstly, there are existing economies of scale in manufacturing, R&D, marketing, sales etc
in the pharmaceuticals industry. The existing companies have advantage in terms of
costs involved in launching new drugs & formulations. Whereas the new entrants need
to establish manufacturing facilities of international regulatory standards to tap the
potential of generic exports and domestic consumption demand. Secondly, new
entrants will face difficulties in gaining trust of doctors/patients and they also need to
develop efficient distribution channels & preferred arrangements with
doctors/pharmacists. Thirdly, the introduction of Product Patent 2005 of TRIPS part of
WTO agreement has led to huge barriers for potential entrants. But, the market for
generics is growing rapidly in India and currently holds 70 percent market share in
Indian pharmaceuticals. Generics, due to non-requirement of R&D, are easy for new
entrants to develop. Hence, the entry barriers in the industry are also medium.

3.3. Threat of substitutes

Whatever be the phase of the economy of a country, demand for pharmaceutical
products continues and the industry thrives. Moreover, lack of product differentiation in
the Indian market leads to rising threat of substitutes. But for Abbott, its power brands
in the Indian markets command a leadership position in their respective segments. 13 of
the top 20 brands are ranked #1 and 3 of them are ranked #2 in their respective
categories. The company’s two key brands, Thyronorm and Duphaston, command 52%
and 25% market share in their respective categories. So, for Abbott in specific, the
threat of substitutes is low as its products have established themselves well in the
market. But for the synthetic pharmaceutical industry as a whole, the main substitutes
to the synthetic pharmaceutical industry would be the emerging biotechnology chemical
industry. Also in a developing country like India, the traditional medicines (Ayurvedic
medicines) also play a major substituting role. This as lead to a major constraint on the
size of the Indian Pharmaceutical Industry. E.g. According to industry estimates, around
70% of the Indian population is supposed to supplement and at times even replace
pharmaceutical medicines with traditional medicines. Hence, threat of substitutes is
high in the industry.

3.4. Bargaining power of buyers

In the pharmaceutical industry, the buyer does not have much power over the
manufacturer because of the presence influencing element in this case, i.e. the doctor.
The lack of knowledge of substitute medicines also is a major factor for reduction in
 bargaining power of the buyer. But this does not imply that the manufacturers can scale
up the cost due to low bargaining power of buyers. Due to the extremely fragmented
nature of industry and government policies like DPCO (Drug Price Order Control), 1970
under which the power to control prices is with the NPPA ( National Pharmaceutical
Pricing Authority), it is evident that the prices of the drugs are bounded by a cap which
leads to the low power of buyers to not have much effect on the manufacturers. Hence,
the bargaining power of buyers is low in this industry.

3.5. Bargaining power of suppliers

The pharmaceutical industry depends upon several organic chemicals. The chemical
industry is again very competitive and fragmented. The chemicals used in the
pharmaceutical industry are largely a commodity. The suppliers have very low
bargaining power and the companies in the pharmaceutical industry can switch from
their suppliers without incurring a very high cost. However, what can happen is that the
supplier can go for forward integration to become a pharmaceutical company.
Companies like Orchid Chemicals and Sashun Chemicals were basically chemical
companies who turned themselves into pharmaceutical companies. The fragmented
nature of the organic chemicals industry prevents it from having much bargaining power
over the manufacturers as the switching cost is low for the manufacturers. Hence, the
bargaining power of suppliers is low in the industry.
The pharma industry is dynamic in nature with changes in national and international
regulations taking place frequently. Going forward, there is likely to be an increasing
competition in the industry but the form of competition will be different. It will be
between large players (with economies of scale) and it may be possible that some kind
of oligopoly or cartels come into play. This is owing to the fact that the industry will
move towards consolidation. The larger players in the industry will survive with their
proprietary products and strong franchisee. Smaller fringe players, who have no
differentiating strengths, are likely to either be acquired or cease to exist.

4. Corporate Strategy of Abbott India

4.1. Plans for expansion, mergers and acquisition

Abbott India Ltd. has currently no future plans for expansions, mergers or acquisitions.

4.2. New products being developed by Abbott India

Abbott India launched 21 new products in FY20. During the year, 5 new products,
namely Femoston (Hormone Replacement Therapy), Femilon (Contraception), Novelon
(Contraception), Cetropro (Prevention of premature ovulation) and Parihep
(Thromboembolic conditions) were launched in the Women’s Health category. In the
 Gastroenterology segment, 12 new products namely Evitol (Non alcoholic fatty liver
disease), Fidonal (Anal Fissures), Udisyp (Liver Disorders), Tenfoplus (Hepatitis B), Viadek
(Pancreatic Exocrine Insufficiency or PEI), Udistrong Orange (Liver Diseases), Creon SD
(Pancreatic Exocrine Insufficiency), Cremadiet + 300 (Constipation), Udistrong sachet –
Cranberry (Liver Diseases), Antoxipan sachet, Duphalac Bears 1.6 (Constipation –
Pediatrics) and Duphalac Chews 3.3 (Constipation - Pregnancy) were launched. Also,
during the year, Epishield (Micronutrients/Epilepsy) was launched in the Central
Nervous Systems category and Influvac Tetra (Flu vaccine) was launched, which was a
big hit in the first three months of its launch. In the Consumer Health segment, two new
products - Brufen Rapid (Analgesics) and Digene Ultra Fizz (Antacid) were launched.
During FY 19, 16 new products were launched by the company. The company lined up
100 product launches at the end of FY18, over the next five years. So, we can estimate
that 63 more products are expected to be launched in the next 3 years, which stresses
the focus of the company on innovation and R&D.

4.3. New markets targeted by Abbott India

Since Abbot India is an Indian subsidiary of Abbott Laboratories, the company is focused
on India markets and has a very low exposure to the highly regulated markets across the
globe. There are no plans to target new markets and current exports also form a very
small share of sales of total sales of the company.

4.4. Plans for diversifying in related or unrelated business

The pharmaceutical business of Abbott India covers 90 percent of therapies in India
already. The company has plans to increase the depth and breadth of the medicines
offered in these areas, and launch improved medicines. The company is planning to
explore targeted partnerships with other industry players and start-ups to expand to
additional therapies and is going to introduce a pregnancy focused patient support
programme as well. The company has no plans to diversify in unrelated business.

4.5. Other significant policy announcements

There are no significant policy announcements by Abbott India.

5. Competitive Strategy of Abbott India

5.1. Cost leadership

Jigest 10 mg, which is manufactured by Sanzyme Ltd., has the same composition as that
of Duphaston 10 mg manufactured by Abbot India, but is 59% cheaper. VaxiFlu-S
Vaccin, which is manufactured by Zydus Cadila, is a substitute to Influvac manufactured
by Abbot India, and is 63% cheaper. These examples clearly indicate the fact that Abbott
India does not have the cost leadership advantage.
 5.2. Differentiation
The pharmaceutical business of Abbott India covers 90 percent of therapies in India. The
company’s products are developed after significant R&D, and are their sales are aided
by strong alliances and partnerships. Abbott India Ltd employs over 2,600 people and
reaches customers through a wide network of 35 distribution points, catering to over
4,500 stockists and 150,000 retail outlets. The company’s state-of-the-art formulation
plant at Verna, Goa is designed to produce high quality, high volume formulations. The
company also has well equipped laboratories and trained personnel to ensure
compliance with international quality standards.

5.3. Focus
Abbott India is focused on pharmaceuticals alone, but has highly diversified range of
products in the pharmaceutical category catering to the verticals of gastroenterology,
women’s health, cardio-metabolic, pain and central nervous system, respiratory anti-
infectives and influenza vaccines. With a broad market coverage offering a variety of
products in the pharmaceutical segment, it can be said that the company is not very
focused.
Hence, the company seems to follow broad differentiation strategy.

6. Financial Analysis

6.1. Liquidity Analysis

FY 20 Abbott Sun Divis Lab Dr Cipla Median
India Pharma Reddy’s
Current 3.40 1.75 3.05 1.58 2.39 2.39
Ratio
Quick 3.00 1.51 2.04 1.26 1.67 1.67
Ratio

Since Abbott India has higher current ratio and quick ratio than all of its peers, and
having both the ratios greater than 1, the company has better ability than its peers to
pay off its short term debt using its short term liquid assets.

6.2. Efficiency of Asset Utilization Analysis

FY 20 Abbott Sun Divis Lab Dr Cipla Median
India Pharma Reddy’s
Inventory 7.22 4.17 2.97 5.10 4.11 4.17
Turnover
Days 51 88 123 72 89 88
 Inventory
in Stock
Receivables 13.78 3.59 4.19 3.89 4.26 4.19
Turnover
Average 27 102 87 94 86 87
Collection
Period
(days)

Since Abbott India has lower days inventory in stock as compared to its peers, which
may be an indication that the company has inadequate stock on hand, which could hurt
sales. Since Abbott India has lower average collection period as compared to its peers, it
means that the company’s credit policy is too rigorous, which might hamper sales again.

6.3. Solvency Analysis

FY 20 Abbott Sun Divis Lab Dr Cipla Median
India Pharma Reddy’s
Debt Ratio 0.04 0.18 0.01 0.17 0.19 0.17
Debt- 0.04 0.22 0.01 0.20 0.24 0.20
Equity
Ratio
Interest 95.10 17.55 255.83 20.18 12.04 20.18
Coverage
Rate

Since Abbott India has lesser debt ratio (and debt to equity ratio) as compared to the
industry median, the company has lesser reliance on debt (almost no dependence on
debt) as a source of financing as compared to its peers. Since Abbott India has higher
interest coverage ratio as compared to the industry median, it will be easier for the
company to meet its debt (interest) payments as compared to most of its peers.

6.4. Profitability Analysis

FY 20 Abbott Sun Divis Lab Dr Cipla Median
India Pharma Reddy’s
EBITDA 23.10 31.76 41.56 29.31 32.70 31.76
Margin
(%)
Operating 21.28 22.43 37.31 17.97 20.72 21.28
Margin
(%)
Net 14.49 12.75 25.52 11.57 9.03 12.75
 Margin
(%)
Return on 18.36 6.58 15.11 8.95 6.56 8.95
Assets (%)
Return on 26.71 9.66 19.30 13.68 10.05 13.68
Equity (%)

Since EBITDA margin of Abbott India is lower than its peer, it indicated that the company
is not able to convert its sales into effective cash profit as efficiently as its peers. Since
the operating margin of Abbott India is the same as the industry median, the company is
able to generate similar profit after paying off variable expenses, as that of the overall
industry. Since Abbott India has higher net margin as compared to its peers, the
company is generating better profit from its sales as compared to its peers, by limiting
the operating and overhead costs effectively. Since Abbott India has higher return on
assets as compared to its peers, the company is better in utilizing the assets to generate
net profit as compared to its peers. Since Abbott India has higher return on equity as
compared to its peers, the company is better in using the shareholders’ funds to
generate net profit as compared to its peers.

6.5. Stock Market Performance Analysis

FY 20 Abbott Sun Divis Lab Dr Cipla Median
India Pharma Reddy’s
Earnings 279.04 15.69 51.86 121.90 19.18 51.86
Per Share
(Rs)
Dividend 250.00 4.00 16.00 25.00 4.00 25.00
Per Share
(Rs)
Dividend 89.59 25.49 30.85 20.51 20.86 25.49
Payout
Ratio (%)
Retention 10.41 74.51 69.15 79.49 79.14 74.51
Ratio (%)
Dividend 1.62 1.14 0.80 0.80 0.95 0.95
Yield (%)
P/E Ratio 49.12 72.57 57.84 39.97 30.92 49.12
P/B Ratio 13.04 6.46 12.19 5.15 3.83 6.46

Abbott India has higher EPS than its competitors, indicating that the company is more
profitable as compared to its peers, encouraging investors to pay a higher price for the
 company’s share. The dividend payout ratio of the company is also higher as compared
to its peers, which is likely a result of no future plans of company for expansion. The
same reason is valid for the company’s higher dividend yield ratio. The company’s P/E
ratio is the median P/E indicating that the company is fairly valued when compared to
peers; although the P/B ratio indicated otherwise. The company’ P/B ratio is higher than
its peers, indicating the company is overvalued as compared to its peers. Since different
companies can use differing accounting practices, it is better not to take P/B into
consideration unless P/E becomes invalid to use (in case of non-profit making scenarios).
Hence, we can conclude that the company is fairly valued.

7. Conclusion
Abbott India Ltd. Has established itself well in its last 110 years of operations in India.
The company ranks ninth and thirteenth in Indian pharmaceutical sector when
considered with market capitalization and net sales point of view respectively. With
over 600 healthcare products actively under distribution, the company covers 90
percent of therapies in India already. With over 15 of its products in the top 2 of their
respective categories, the company has proven itself to be a reputed brand among
households. Led by a strong and experienced management team, Abbott India is poised
to ride the tide of the pharmaceuticals sector growth expected in the next decade, on
account of increased healthcare expenses. The company is an all-rounder performer,
having better liquidity, solvency, profitability, efficiency and valuation when compared
to its peers. The company has no apparent weaknesses, and its profit can be expected
to grow at a CAGR of more than 20 percent for the next 5 years.