A CASE STUDY ON

SUBMITTED BY GROUP-4 ANIL KUMAR TOPPO (2010MB0019) SATYAJIT PAUL (2010MB0020) PRAVEEN KUMAR (2010MB0021) MALINI MRIDHA (2010MB0022) SHARAD CHATURVEDI (2010MB0023) SUSHMA MANJHI (2010MB0024)

THE INDIAN PHARMACEUTICAL INDUSTRY

Initial Market dominance by pharmaceutical MNCs. Hindustan Antibiotics Ltd. and India Drug and Pharmaceuticals Ltd. Established by Indian government in 1960. In 1970 two regulation was passed India Patent Act (IPA) and the Drug Price Control Order (DPCO). The industry experienced phenomenal growth in earlier days. Output of Rs.168 crore grew to Rs. 19,737 crore within 35years. Annual growth rate of Market was about15%. Roughly two-thirds of the output stayed in the domestic market. Over 20,000 pharmaceutical companies are operating in India these days. Global pharmaceutical industrys trend toward outsourced research, development, and manufacturing.

INDIA AS A GLOBAL OUTSOURCED HUB OF PHARMACEUTICAL PRODUCTS

Large pool of well educated and trained scientists and professionals. Cheap labour in India. Genetically diverse people. Big market for the products. Clinical trials services emerging as prime targets for outsourcing. India has set up both internal and external supports to encourage the R&D and biotech facilities. Initiatives taken to build international-standard biotech parks. Ease in tax, duty, and lease obligations for residents of the biotech parks. Attracted venture capital funding.

BIOCON INDIA

Biocon is a research-driven, global healthcare company. Fully integrated healthcare company that delivers innovative biopharmaceutical solutions. Discovery to development and commercialization Set up by Kiran Mazumdar Shaw in 1978. Focuses on biopharmaceuticals, custom research and clinical research. Leveraging Indias globally competitive cost base and exceptional scientific people resource. Developed a robust drug pipeline. The successful commercial launch of first anti-cancer drug.

BIOCON INDIA

MAJOR ACHIEVEMENTS OF BIOCON:

US patent office grants patent to BIOCON. First Indian company to manufacture and export enzymes to USA and Europe. First Indian biotech company to receive US funding for proprietary technologies. First Indian company to be approved by US FDA for the manufacture of Lovastatin, a cholesterol-lowering molecule. First company worldwide to develop human insulin on a Pichia expression system. India's largest producer and exporter of enzymes. Second Indian company to cross the $ 1 billion mark on the day of listing. Launched India's first cancer drug BI

MAJOR AWARDS AND RECOGNITIONS OF BIOCON

Biocon is awarded the Biotech Product and Process Development and Commercialization Award, 2001 by the Department of Biotechnology, Ministry of Science and Technology, Government of India . Syngene is awarded the Certificate of Excellence for Export Achievement by the Government of India, for two consecutive years 2002-2003 .

Syngene receives "BioServices Company of the Year", BioSpectrum Awards, 2007.

Biocon's BIOMAb EGFR wins "Product of the Year" BioSpectrum Awards, 2007 . Biocon is ranked among the top 20 global biotechnology companies (Med Ad News), 2008

ENTREPRENEURIAL TRAITS OF KIRAN MAJUMDAR SHAW

Visionary. Innovative. Risk Taker. Opportunity seeker. Highly determined. Exploiting the skill sets available to capitalize on the opportunities.

SWOT ANALYSIS
STRENGTHS Cost Competitiveness Well Developed Industry with Strong Manufacturing Base Access to pool of highly trained scientists, both in India and abroad. Strong marketing and distribution network Rich Biodiversity Competencies in Chemistry and process development.

WEAKNESSES Low investments in innovative R&D Lack of resource to compete with MNCs Lack of strong linkages between Industry and Academia. Low medical expenditure and health care spend in country. Strong marketing and distribution network Shortage of medicines containing psychotropic substances.

.CONITINUED
OPPORTUNITIES Significant export potential.

Licensing deals with MNCs for NCEs and NDDS. Marketing alliances to sell MNC products in domestic market. Contract manufacturing arrangements with MNCs Potential for developing India as a centre for international clinical trials Niche player in global pharmaceutical R&D. Supply of generic drugs to developed markets.

THREATS

Product patent regime poses serious challenge. R&D efforts hampered by lack of enabling regulatory requirement. Drug Price Control Order puts unrealistic ceilings on product prices and profitability. Lowering of tariff protection. Small scale pharma units involved in contract manufacturing.

RATIO ANALYSIS
Y/E March OPM % NPM % ROE % ROCE % Int. Cover (x) D/E (x) Asset Turnover(x) Debtors Days Inventory Days Mkt Cap/Sales(x) FY2007 28.8 15.1 18.7 17.0 29.4 0.2 0.6 113.5 83.8 1.5 FY2008 28.3 12.1 15.1 13.6 32.9 0.2 0.5 89.8 86.5 1.4 FY2009 22.9 5.1 14.2 13.1 25.0 0.2 0.0 85.0 85.0 2.0 FY2010E 22.1 17.8 14.8 13.8 28.1 0.2 0.0 85.0 85.0 1.6

PROFITABILITY RATIO
Year end march 2009 Ratios Profit Margin Ratio Asset Turnover Ratio Return on Assets Return on Equity Earning per Share Biocon Panacea GSK Year end march 2008 Biocon Panacea GSK

1.

0.2

0.15

0.41

0.21

0.16

0.40

2.

0.52

0.68

0.47

0.68

0.72

0.52

3.

0.11

0.12

0.18

0.14

0.13

0.21

4.

0.14

0.15

0.18

0.17

0.19

0.21

5.

Rs. 22.5

N/A

N/A

N/A

Rs. 26.6

N/A

Contd

LIQUIDITY RATIO
Year end march 2009
Ratios Biocon 1.8 Panacea 6.3 GSK 13.74

Year end march 2008

Biocon 1.8 Panacea 2.8 GSK 3.4

1.

Current Ratio Quick Ratio (acid-test ratio) Debtors Turnover Ratio

2.

1.1

N/A

12.71

1.2

N/A

1.5

3.

3.37

N/A

84.89

3.73

N/A

84.44

CONTINUED..

SOLVENCY RATIO
Year end march 2009
Ratios Biocon
0.35

Year end march 2008

Biocon
0.17

Panacea
N/A

GSK
All Eq.

Panacea
0.5

GSK
4.62

1.

Debt. Equity Ratio Liabilities to Equity Ratio Interest Coverage Ratio Net Worth

2.

0.63

N/A

N/A

0.37

N/A

N/A

3.

23.64

4.6

N/A

24.1

18.2

17.1

4.

Rs.15194 Rs 7642.9 million million

Rs 820 million

Rs 14840 Rs 6966.7 million million

Rs 675 million

BCG ANALYSIS
ENZYMES BIOPHARMACEUTICAL

ENZYMES

BIO-PHARMACEUTICAL

CLINIC RESEARCH

CUSTOM RESEARCH

CLINIC RESEARCH

CUSTOM RESEARCH

COMPETITIVE ANALYSIS

Major Competitors: -Serum Institute of India -Panacea Biotech -Vankateshwara Hatcheries -Glaxo Smith Klein - Aventis Pharma etc

FUTURE PROJECTIONS: INDIAN PHARMACEUTICAL MARKET

INDIAN PHARMACEUTICAL BY 2011

FURURE PROJECTIONS:BIOCON
2011 Projected figure: Expected revenue of 17796.7 mn Growth approx by 23.5% Expected pat of 2781.7 mn