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PHARMACEUTICAL INDUSTRY
BY VLSS CONSULTANCIES
INTRODUCTION
• Pharmaceutical Industry in India is one of the largest
and most advanced among the developing countries
• (B)QUANTITATIVE ANALYSIS
RATIO ANALYSIS
Opportunities :-
Strengths :- 1. Significant export potential.
1.Cost Competitiveness 2. Marketing alliances for MNC products in
2 Developed Industry with Strong domestic market and international market.
Manufacturing Base 3.Contract manufacturing arrangements with MNCs
3.Well Established R&D infrastructure 4. Potential for developing India as a centre for
4. Access to pool of highly trained international clinical trials.
scientists,
Weaknesses:- Threats :-
1. Low investments in innovative R&D. 1.Product patent regime poses serious challenge to
2. Lack of resources to compete with domestic industry unless it invests in research and
MNCs for New Drug Discovery & development
Research 2. R&D efforts of Indian pharmaceutical companies
3. Lack of strong linkages between hampered by lack of enabling regulatory
industry and academia. requirement.
4. Low medical and healthcare expenditure 3.Drug Price Control Order puts unrealistic ceilings
in the country on product prices and profitability
4. Export effort hampered by procedural hurdles in
India as well as non-tariff barriers imposed abroad.
Power of Suppliers
Volume benefits occur
Inputs standard, available locally
Numerous suppliers-switching cost low
Suppliers can go for forward integration
Raw material cost constitute more than 50% of
the total expenses
Barriers to Entry
Very low barriers to entry Industry Competition Threats of Substitutes
Government policies supportive Highly competitive. No substitutes for the medicines
For entry price regulation exists Top five players have mere
Biotechnology is a threat to
Economies of scale exist 18% market share
Lower fixed cost and high working capital synthetic pharma products
Proprietory technology and
Product will exist after 2005
Power of Buyers
End consumers do not have bargaining power
Brand identity exists but is in the hands
Of Influencer (Doctors)
Price Sensitivity is less
Highly fragmented market, so buyer
Concentration v/s industry is low
RATIO ANALYSIS
• We have analyzed the top five companies in the Indian
pharmaceutical industry for the purpose of doing the
quantitative analysis.
• Our rationale behind selecting the top five companies has been
the –SALES AND PROFIT.
• The companies being:
Cipla
Ranbaxy
Sun Pharma
Piramal Healthcare
Dr. Reddy’s Laboratories
Dr Sun Ranbaxy
Cipla Reddy's Piramal Pharma. Labs.
Aggrega
YRC te 200803 200803 200803 200803 200712
Key Ratios
DE Ratio 0.98 0.1 0.09 0.43 0.18 1.37
Long Term DE
Ratio 0.69 0.1 0 0.28 0.18 0.92
Current Ratio 1.58 2.66 2.37 1.54 3.04 0.98
Turnover Ratios :
Fixed Assets 1.78 2.05 2.27 1.74 3.62 2.04
Inventory 5.02 3.9 6.11 8.34 8.88 4.64
Debtors 4.53 3.38 3.53 7.5 3.96 4.72
Interest Cover
Ratio 5.82 47.45 40.76 5.61 208.94 9.29
Sales: Segment -wise
EXPORTS
• BULK DRUGS
• FORMULATION
DOMESTIC EXPORTS
(Source: DGCIS)
Source: (CRISINFAC)
• Bulk Drugs Export- grew 28%CAGR (2001-02 and 2007-08)
• Reached $4.2 billion
India’s Formulation Export
(SOURCE: CRISINFAC)
REGULATORY BODIES & PATENT – THE
KEY FACET OF PHARMACEUTICAL
INDUSTRY IN INDIA
• National Pharmaceutical Pricing Authority (NPPA):
Established to fix/ revise the prices of controlled bulk drugs and
formulations under the Drugs Prices Control Order, 1995.
(SOURCE: CRISINFAC)
GOVERNMENT POLICY
• POLICY MEASURES:
Nov-05
Roche’s API Dr.Reddy’s Increasing 58.97 Mexico
Facility Labs presence in
Contract Mfg
Nov-05
Avecia Nicholas Increasing 17.1 UK,Canada
Piramal presence in
Contract Mfg
Oct-05
CONCLUSION
• Pharma industry being a growth industry
• Unaffected by the business cycle
• As per the present growth rate, the Indian Pharma
Industry is expected to be a US$ 20 billion industry by
the year 2015
• India has
competitive strength in research services
availability of low cost skilled doctors and scientists
large patient population with diverse disease
characteristics
adherence to international quality standards
• VLSS agencies recommends investment in this industry
to be a wise decision.
THANK YOU