The financial performance of leading 50 listed pharmaceutical companies remained under pressure during the year ended March 2022 basically due to Covid-19 impact, stiff competition, escalation in raw material costs, R&D expenditure, war between Russia and Ukraine and problems in supply chain.
The net profit of 50 companies declined by 8.2 per cent to Rs. 31,860 crore during 2021-22 from Rs. 34,716 crore in the previous year despite lower interest as well as tax burden. Exceptional items also impacted profit level significantly. Major players like Aurobindo Pharma, Lupin, Jubilant Pharmova, Alembic Pharma, IOL Chemical & Pharma, Natco Pharma, Shilpa Medicare and Bliss GVS Pharma, registered sharp drop of over 50 per cent in bottomline during financial year 2021-22. Further, Strides Pharma, Solara Active Pharma also registered net loss as against net profit in the previous year.
However, Sun Pharmaceutical & Industries, Divi’s Laboratories, Glaxo Pharmaceuticals, Sanofi India and Indoco Remedies posted significant jump in profits. Similarly, Dishman Carbogen, Necter Lifescience and Panacea Biotec managed to turn the corner and registered net profits as against loss in the year 2020-21.
These companies have taken several steps like launching of new products, acquisitions, corporate restructuring, entry in the new markets and capacity expansion to overcome challenging global situation. The poor performance also impacted share price movements recently and BSE Healthcare index nosedived.
Out of Pharmabiz sample of 50 pharma companies, eight companies notched up revenues of over Rs. 10,000 crore and 35 players posted revenues of more than Rs. 1,000 crore during 2021-22 despite global challenging situation. Top eight companies maintained their ranking as per revenues. The revenues of top fifty company increased by 10.3 per cent to Rs. 2,75,365 crore from Rs. 2,49,652 crore. Only eight companies grabbed over 20 per cent growth in revenues during the year under review and seven companies received setback in revenue growth. Thus, the overall revenue growth remained under pressure during 2021-22.
We have not included Piramal Enterprises (PEL) in the study due to diversified business activities. The company is engaged in financial and pharmaceutical segments with sales of Rs. 7,293 crore and Rs. 6,700 crore respectively during year ended March 2022. Further, P&G Health also not included due to change in year ending for nine months period ended June 2022. Its revenues for nine months period worked out to Rs. 723 crore as compared to Rs. 1,009 crore in the 12 months period.
Sun Pharmaceutical and Industries has successfully maintained its top position in the Indian pharmaceutical segment with consolidated revenue growth of 15.6 per cent to Rs. 38,426 crore as against Rs. 33,233 crore in the previous year. Aurobindo Pharma also maintained its second position with revenue of Rs. 23,367 crore, slightly lower than Rs. 24,558 crore in the last year. Cipla and Dr Reddy’s Labs (DRL) won fourth and fifth position. Cipla’s revenue went up by 13.9 per cent to Rs. 21,623 crore and that of DRL’s improved by 13 per cent to Rs. 21,438 crore. Lupin stayed at fifth position with revenues of Rs.16,193 crore.
The other income of top 50 companies increased by 3.7 per cent to Rs. 5,675 crore during 2021-22 from Rs. 5,470 crore in the previous year. The employees cost moved up by 7.9 per cent to Rs. 48,398 crore from Rs. 44,863 crore. However, interest cost declined by 9.7 per cent to Rs. 2,895 crore from Rs. 3,205 crore. Several companies reduced their borrowings which help to push profitability. The depreciation charges went up by 5.6 per cent to Rs. 13,967 crore from Rs. 13,229 crore.
The interest charges of Aurobindo Pharma, Cipla, Glenmark, Torrent Pharma, Jubilant Pharma, etc, declined significantly during 2021-22. However, interest burden of Laurus Labs, Wockhardt and Strides Pharma went up to Rs. 102 crore, Rs 299 crore and 177 crore respectively. Several pharma companies incurred single digit interest cost and making efforts toward debt free status. Divi’s Laboratories, IPCA Labs, Gland Pharma, Ajanta Pharma, Glaxo, Sanofi, Pfizer, Eris Lifesciences, Caplin Point, AstraZeneca, Unichem Labs, Marksans Pharma, J B Chemicals, IOL Chem & Pharma, etc., reported negligible amount of interest as compared to their business size.
The profit before tax (PBT) and exceptional charges remained flat at Rs. 47,507 crore as against Rs. 47,181 crore in the previous year. Major companies among top ten players like Aurobindo Pharma and Lupin registered sharp fall of 22.9 per cent and 27.5 per cent in PBT. Other major companies viz., Jubilant Pharmova, IPCA Labs, Alembic Pharma, Laurus Labs, Granules India, Wockhardt, Aarti Drugs, IOL Chem & Pharrma, Natco Pharma, FDC, Unichem Labs, etc also received major setback and their PBT declined by over 20 per cent in 2021-22.
Tax provision of Pharmabiz 50 pharma companies declined by 7.4 per cent to Rs. 9,720 crore from Rs. 10,501 crore in the previous year. Exceptional expenses like profit on sale of assets, restructuring of the commercial functions, product withdrawal, demerge of manufacturing activities, transfer of business activities, etc, went up sharply by 142 per cent to Rs. 5,285 crore from Rs. 2,185 crore. These exceptional items put extra pressure on bottomline. Aurobindo posted exceptional charges of Rs. 128 crore as against income of Rs. 2,815 crore in the previous year, followed by GSK shown extra ordinary income of Rs. 1,326 crore, Biocon reported exceptional income of Rs. 527 crore, Cipla Rs. 182 crore and Zydus Rs. 112 crore. Panacea incurred exceptional cost of Rs. 1,676 crore and Lupin Rs. 708 crore during the year ended March 2022.
The financial performance of 5 MNCs i.e. Abbott India, AstraZeneca Pharma, Glaxo Pharma, Pfizer and Sanofi India posted revenue growth of 10.5 per cent to Rs. 14,571 crore in 2021-22. Their profit before tax and exceptional items moved up by 13.7 per cent to Rs. 3,471 from Rs. 3,068 crore. With Glaxo’s extra-ordinary income of Rs. 1,326 crore, net profit of MNCs touched to Rs. 4,113 crore from Rs 2118 crore. As against the equity capital of Rs. 264 crore, their reserves & surplus increased to Rs. 10,819 crore from Rs. 8,784 crore.
To overcome global challenges and strengthen bottomline, these companies focused on R&D, restructuring, expansion and acquisitions. Indian companies received higher ANDA approval from US FDA and launched several new products in highly regulated markets. The R&D expenditure of Sun Pharma increased to Rs. 2,219 crore from Rs. 2,150 crore, followed by DRL Rs. 1,748 crore, Aurobindo Pharma Rs. 1,581 crore, Lupin Rs. 1,402 crore, Cipla Rs. 1,122 crore, Glenmark Rs. 1,238 crore and Zydus Lifesciences Rs. 1,041 crore. Further, Biocon, Torrent Pharma, Alkem Labs also invested funds over Rs. 500 crore each on R&D activities.
The equity capital of 50 leading pharma companies touched to Rs. 3,291 crore during 2021-22 and their reserves & surplus went up by 11.7 per cent to Rs. 2,69,778 crore from Rs. 2,41,487 crore in the previous year. Torrent Pharma declared liberal bonus issue in the ratio of 1:1 and Ajanta Pharma announced bonus shares in the ratio of 1:2. Wockhardt’s equity capital increased to Rs. 72 crore from Rs. 55 crore due to rights issue of 332 lakh shares at an issue price of Rs. 225 per share. Recently, FDC had completed the buyback of 29,00,000 equity shares having face value of Re. 1 each at a price of Rs. 475 per share.
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