SWOT Analysis of Pharmaceutical Sector in India:
Strengths:
1. Indian with a population of over a billion is a largely untapped market. In fact the penetration of modern medicine is less than 30% in India.
2. The growth of middle class in the country has resulted in fast changing lifestyles in urban and to some extent rural centers.
3. Indian manufacturers are one of the lowest cost producers of drugs in the world. With a scalable labor force, Indian manufactures can produce drugs at 40% to 50% of the cost to the rest of the world. In some cases, this cost is as low as 90%. 4. Indian pharmaceutical industry posses excellent chemistry and process reengineering skills.
Weakness:
1. The Indian pharma companies are marred by the price regulation. Over a period of time, this regulation has reduced the pricing ability of companies. The NPPA (National Pharma Pricing Authority), which is the authority to decide the various pricing parameters, sets prices of different drugs, which leads to lower profitability for the companies.
2. Indian pharma sector has been marred by lack of product patent, which prevents global pharma companies to introduce new drugs in the country and discourages innovation and drug discovery.
3. Very low penetration in India. To put things in to perspective, India accounts for almost 16% of the world population while the total size of industry is just 1% of the global pharma industry.
4. Due to very low barriers to entry, Indian pharma industry is highly fragmented with about 300 large manufacturing units and about 18,000 small units spread across the country. This makes Indian pharma market increasingly competitive. Opportunities
1. The migration into a product patent based regime is likely to transform industry fortunes in the long term. The new patent product regime will bring with it new innovative drugs.
2. Large number of drugs going off-patent in Europe and in the US between 2012 to 2015 offers a big opportunity for the Indian companies to capture this market. 3. Opening up of health insurance sector and the expected growth in per capita income are key growth drivers from a long-term perspective. This leads to the expansion of healthcare industry of which pharma industry is an integral part.
4. Being the lowest cost producer combined with FDA approved plants, Indian companies can become a global outsourcing hub for pharmaceutical products. Threats:
1. There are certain concerns over the patent regime regarding its current structure. It might be possible that the new government may change certain provisions of the patent act formulated by the preceding government.
2. Threats from other low cost countries like China and Israel exist. However, on the quality front, India is better placed relative to China. So, differentiation in the contract manufacturing side may wane.
3. The short-term threat for the pharma industry is the uncertainty regarding the implementation of VAT. Though this is likely to have a negative impact in the shortterm, the implications over the long-term are positive for the industry Other Important News about Pharma Industry:
Third Largest in the world in terms of volume & 13th largest in terms of value Total Market Size: Rs. 1233 bn
Domestic Consumption: Rs. 600 bn & Exports: Rs. 633 bn
Compounded Annual Growth Rate of the industry in past 5 years: 12.5% Expected to grow at 15.1% during 2013-2017
Main Drivers for higher R & D costs in Indian Companies are: a) increased pace of product filings in US and Europe,
b) focus on complex generics, some of which require clinical trials to demonstrate basic safety and efficacy and
c) investments in developing biosimilars for emerging markets and eventually for developed markets.
About Dr Reddys:
Started in 1984 by Anji Reddy Garu.
The company has over 190 medications, 60 active pharmaceutical ingredients (APIs) for drug manufacture, diagnostic kits, critical care, and biotechnology products. Reddy’s was linked to UK Multinational GLAXO SMITHKLINE.
First Indian Pharma Company to be listed on US Stock Exchange.
Share Price of the Company traded on NSE: Rs 2377 as on Sept 19 2013. Market Capitalization: Rs 40410 crores
P/E Ratio: 35.09
Industry P/E: 30.48
Tag Line: Life. Research. Hope
USP: Strong vertically integrated portfolio of products, businesses & geographies SWOT Analysis of Dr Reddy’s:
1. Company launched Peg-grafeelTM, an inexpensive variety of pegfilgrastim, used to fight infection in chemotherapy where company has sold some 1.5 million units of it.
2. Dowpharma/Chirotech acquisition provided proprietary chiral and biocatalysis technology
3.The acquisition of Beta pharma helped to introduce an array of generic products and show its presence in the European markets. Strength
4. Has a strong workforce of over 15,000 employees
1. Discovery of drugs is a highly unpredictable business
Weakness
2. Strict govt regulations and policies affects operational efficiency
1. Leverage Biologics & Cytotoxic Infrastructure to deal with the need of Oncology Market
2.New partnerships to develop Biosimiler business
3. Develop cost effective ways of new drug development to improve Opportunity
business in emerging markets
1.Preliminary investment for Drug discovery is very high
2. long gestational period for new drug development
Threats
3. increasingly stringent regulations for new drug developme
About Lupin:
Tagline: Being Lupin, Enriching lives everyday.
USP: Lupin is the world’s largest manufacturer of anti- tuberculosis drugs Share Price: Rs. 849.55
Market Cap: 38,058 crores
P/E: 28.97
Industry P/E: 30.48
SWOT Analysis:
1. World wide leader in Cephalosporin and Anti TB drugs
2. Considerable presence in market for drugs against Asthma, Pediatrics, Diabetes, and CNS boosts the sales
3. In the US and Japanese market it is the largest generic player 4. Acquisition of I’rom pharma helped to increase its product list and in turn sales
Strength
5. Wide global footprint as it is present in over 70 countries
1.High dependence on global formulation business with 84% revenue coming from US market
3. Forecasting done on technological level is less
Weakness
4. It operates in low growth segments such CNS, respiratory diseases
1.Increased health awareness
2. Emerging technological trends in drug delivery
Opportunity
3. Increasing prevalence of TB in developing countries
1.Unsuccessful assimilation of questions
2.Rigid opposition both from locals and global company
Threats
3. Soaring cost of discovering novel products
About Granules:
Share Price: Rs. 149.5 as on 19th Sept 2013
Market Cap: Rs. 302.43
P/E: 7.7
Industry P/E: 30.48
Vision: To be the global leader in pharmaceutical manufacturing by process innovation and unparalleled efficiencies.
Compounded annual growth rate: 29%
Major source of revenue from: Europe (32%), India(21%).
Managing Director: Mr. P Krishna Prasad
About CIPLA:
Tagline: Caring for Life
Share Price: 439.50
P/E: 22.32
Industry P/E: 30.48
Market Cap: 35, 288 crores
USP: Commitment to make medicines affordable and accessible particularly to cancer patients 1. Cipla has developed good positive image by providing support to cancer patients by issuing drugs at low cost
2. Imminent commencement of the Fixed-Dose combination for
treatment of uncomplicated P. falciparum malaria to tackle the 200+ million
cases of malaria globally
3. Initiation of ‘No Touch Breast Scan’ a step forward in the screening technology in India.
4. A foremost player in anti-infective and anti-asthmatic formulations. Strength
5. Has a strong employee force of over 16,000
1. Strong competition from international and domestic giants means limited market share
Weakness
2. Cipla had faced problems during negative campaign by AHF
1. It can venture into Alzheimer’s disease medication
2. They can use Viramune generic to achieve higher growth.
3. Increased investment in the budding markets, to push expansion Opportunity
in the global economy
1. Constant price rises in the Indian country is taking its toll and compounding the problem
2.The Indian Rupee depreciated as compared to the US Dollar
3. Fluctuations in currency exchange rates have a noteworthy impact Threats
on the Company’s operations and financial results.
About SUN PHARMA:
Managing Director -Dilip S Shanghvi
Sun Pharmaceutical Industries Ltd is an international specialty pharma company. The company manufactures and markets pharmaceutical formulations as branded generics, as well as generics in India, the United States and several other markets across the world. The company’s business is divided into four segments: Indian Branded Generics, US Generics, International Branded Generics (ROW) and Active Pharmaceutical Ingredients (API). Their
brands are prescribed in chronic therapy areas like cardiology, psychiatry, neurology, gastroenterology, diabetology and respiratory. They make specialty APIs, including peptides, steroids, hormones and anticancers. APIs and Dosage forms are made at 20 plants across India, Israel, the United States, Canada, Hungary, Brazil, Mexico and Bangladesh.
Sun Pharmaceutical Industries Ltd was incorporated in the year 1983. The company began operations in Kolkata with just 5 products to treat psychiatry ailments. They set up a compact manufacturing facility for tablets/capsules at Vapi. Sales were initially limited to two states in Eastern India. In the year 1986, the company set up an administrative office in Mumbai. They extended the customer coverage to select cities in Western India. In the year 1987, they rolled out their marketing operations nation-wide.
Sun Pharma Industries
Parent Company
Sun Pharma Industries
Category
Pharmaceutical
Sector
Healthcare
Tagline/ Slogan
Leadership through focused research
USP
Sun pharma fifth largest & most profitable company in India
STP
Segment
Cardiology, psychiatry, neurology, gastroenterology, dibetology
Target Group
Healthcare professionals, pharmacists
They are international specialty pharma company with strong Positioning
presence in Indian & US generics market
SWOT Analysis
1. Strong growth in emerging market business
2. Introduction of Pantoprazole & Eloxatin in US market has very limited competition
3. They have strong marketing & sales force of over 12,000
employees
4. They have successfully acquired Taro pharma which has further consolidated their position in Indian markets
Strength
5. Strong brand presence in India and US markets
1. Stiff competition from many Indian and other global brands means limited market share growth
Weakness
2. Limited presence in emerging markets and European countries
1. They can leverage their acquisitions to further increase the growth 2.
They can increase their presence in contract manufacturing Opportunity
3. Increasing healthcare awareness in India
1. There is growing competition in generics market
2. Stringent patent regulations
Threats
3. High price sensitivity of consumers
Recent Developments
In the year 2005, the company bought a plant in Bryan, Ohio, US and the business of ICN, Hungary from Valeant Pharma. In December 2005, they acquired the intellectual property and assets of Able Labs from the US District Bankruptcy court in New Jersey. In the year 2007, the company de-merged the innovative research and business into a new company, SPARC Ltd. SPARC Ltd was listed on the stock exchanges in India, the first pure research company to be so listed.
In May 2007, the company along with their subsidiaries, signed definitive agreements to acquire Taro Pharmaceutical Industries Ltd., (TAROF, Pink Sheets), a multinational generic manufacturer with established subsidiaries, manufacturing and products across the U.S., Israel, Canada for $454 mill.
In November 2008, the company along with their subsidiaries acquired 100% ownership of Chattem Chemicals, Inc., a narcotic raw material importer and manufacturer of controlled substances with an approved API facility in Tennessee. This offers vertical integration for our controlled substance dosage form business in the US.
In September 2010, the company acquired Taro Pharmaceuticals. This acquisition doubled the size of their US business and brought them a range of generics including a strong line of dermatologicals.
In April 2011, MSD in India and Sun Pharmaceutical Industries Ltd announced
formation of an India-specific strategic partnership agreement under which Sun Pharma will have the right to market, promote and distribute MSD’s diabetes products, sitagliptin and sitagliptin plus metformin, under different brand names in India. In June 14, 2011, Caraco Pharmaceutical Laboratories Ltd (Caroco) merged with a subsidiary of the company, Thus, Caraco became a wholly owned subsidiary of the company.
Financial Information
Stock price- 562.15
MARKET CAP (RS CR) -116,730.80
P/E- 212.68
BOOK VALUE (RS) 83.29
DIV (%) – 425.0%
INDUSTRY P/E – 30.79
About RANBAXY:
Director
Takashi Shoda
Chairman
Tsutomu Une
Director
Rajesh V Shah
Company Secretary
S K Patawari
Managing Director & CEO
Arun Sawhney
Ranbaxy Laboratories Ltd, India’s largest pharmaceutical company, is an integrated, research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. Ranbaxy today has a presence in 23 of the top 25 pharmaceutical markets of the world. The company has a global footprint in 46 countries, world-class manufacturing facilities in 8 countries
and
serves
customers
in
over
125
countries.
The company operates in two segments: pharmaceuticals and other business. Pharmaceuticals segment comprises manufacture and trading of formulations, active pharmaceuticals ingredients (API) and intermediate, generics, drug discovery and consumer health care products. Other business comprises rendering of financial services. The company has manufacturing facilities in eight countries, namely India, the United States, Brazil, Ireland, Malaysia, Nigeria, Romania and South Africa. Their major markets include the United States, India, Europe, Russia/ Commonwealth of Independent States and South Africa. The research and development activities of the company are principally carried out at their facilities in Gurgaon, near New Delhi, India.
Ranbaxy
Parent Company
Ranbaxy
Category
Pharmaceuticals
Sector
Health care
Tagline/ Slogan
New boundaries, new Horizons; Trusted medicines healthier lives
USP
It is India’s largest pharmaceutical company
STP
Anti-Infectives, Cardiovascular & Diabetes, Dermatological, NeuroSegment
Psychiatry, Pain management, Gastro-Intestinal, Nutritional
Healthcare professionals, wholesalers, generic distributors, and Target Group
hospitals
Positioning
A diversifies global healthcare company focused on patient’s needs
SWOT Analysis
1.Top 10 Global Generic Company with a spread over 125 countries 2. over 13,000 well trained Employees, over 50 nationalities 3. Strong presence in the International market with a major share and a strong presence in India as well
4.It has operations in nearly 50 countries and has 7 manufacturing Strength
plants
1. It is heavily dependent upon generics for its revenue generation 2. Constantly regulated policies by the govt means operational Weakness
efficiency is affected
1.increasing health awareness
2.Improvement in distribution network & brand building
Opportunity
3. They can leverage Synriam, anti-malarial drug in brand building
1.Increasingly stringent FDA Regulations
2.Exchange rate fluctuations
Threats
3.Global economic slowdown
Recent Development
In the year 2010, the company set up a wholly owned subsidiary in Morocco under the name of Ranbaxy Morocco LLC with a view to create a sustainable business base in North Africa. In view of the business model of the Company in Japan, Ranbaxy Japan K.K., a wholly owned subsidiary of the company was liquidated. Further, two non-operating wholly owned subsidiaries viz. Lapharma GmbH at Germany and Ranbaxy N.A.N.V, at Antilles, (The Netherlands) were also liquidated.
In January 2011, the company signed MoU with The Government Of Yaroslavl Region, Russia on cooperation in the field of Healthcare and Medical Science. In April 2011, they
launched Generic Olanzapine Tablets in Spain. In July 2011, the company entered into an inlicensing agreement with Gilead Sciences, Inc. for three new HIV/AIDS drugs which are currently in late stage clinical development. Ranbaxy will have the rights to produce and sell generic versions of these durgs, under license, in India and other developing nations, after gaining necessary regulatory approvals.
In March 2012, the company aunched the generic versions of Atorvastatin tablets, 10mg, 20 mg, 40mg and 80mg in Italy and Sweden and 10mg, 20mg and 40mg in the Netherlands, after receiving approval from the respective local Regulatory Authorities. They opened a new production facility in Morocco, a move which would help the drug maker access the African nation’s $1 billion pharma market.
Financial Information
Share price- 336.20
Market Cap (Rs Cr)- 14,168.49
Book Value (Rs) – 45.40
Div (%) – 0.00%
