presentation on pharma cue ti cal industry

8/3/2019 Presentation on Pharma Cue Ti Cal Industry

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Indian Pharmaceutical Industry

FINANCIAL ANANLYSES

PREPARED BY:

ASHA PATELROLL NO. 28


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INTRODUCTION

A pharmaceutical company, or drug company, is acommercial business whose focus is to research,develop, market and/or distribute drugs, most commonly

in the context of healthcare. They can deal in genericand/or brand medications. They are subject to a varietyof laws and regulations regarding the patenting, testingand marketing of drugs. From its beginnings at the startof the 19th Century, the pharmaceutical industry is now

one of the most successful and influential, attracting bothpraise and controversy.


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Presentation Structure

Indian Pharmaceutical Evolution

India Advantage

Financial analyses


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Indian Pharmaceutical Evolution

Phase IIGovernment Control

Indian Patent Act 1970

Drug prices capped

Local companies beginto make an impact

Phase III

Development Phase

Process

development

Production

infrastructure

creation

Export initiatives

Phase IV

Growth Phase

Rapid expansion of

domestic market

International marketdevelopment

Research orientation

Phase V

Innovation and Research

New IP law

Discovery Research

Convergence

1970 1980 1990 2000 2010

Phase I

Early Years

Market sharedomination byforeign companies

Relative absenceof organizedIndian companies


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India Advantage

Large skill base Experts in process chemistry

Long history of reverse engineering

Unmatched cost competitiveness Lower cost of infrastructure and skilled manpower

Vertical integration


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India Advantage

Strong local industry Growing expertise with international regulatory compliance

High quality manufacturing with abundant capacities

Speed Very strong entrepreneurial spirit

Hungry for growth and recognition

Quick learners and fast movers

Availability of capital Stock market has seen unprecedented growth in the last decade

Continues to be bullish on the pharma industry


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Financial analyses

BALANCE SHEET

SOURCESDec 2004

Rs in crore

Dec 2005

In crore

Dec 2006

In crore

Capital 1,858.91 1,862.21 1,863.43

Reserves 23,218.49 23,405.03 23,986.48

Deferred Tax Liability 1,908.47 1,899.27 1,636.03

Minority Interest 208.77 168.69 343.22

LTL 8,527.30 20,042.62 39,556.19

CL 18,389.06 15,007.92 17,596.57

Total 54111 62,385.74 84,981.92

Fixed Assets 15,294.13 20,591.41 38,953.34

Investments 183.77 171.72 362.35

Deferred Tax Asset 836.66 2,698.34 981.16

Capital(WIP) 2,875.54 5,595.49 3,580.98

CA 34,920.90 33,328.78 41,104.09

Total 54111 62385.74 84981.92


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Ratio analyses Liquidity Ratios:

Liquidity refers to ability of firm to meet it shortterm requirements. Here, short term meansrequirements which are to be meet in a period of 1year. Liquidity is generally dependent on twothings current assets and current liabilities.

Working capital ratio:

Working capital refers to the cash a business requires

for day-to-day operations

2004 2005 2006

CA (in Rs mn) 18283.77 23529 37045.39

CL 4410.227 6103.3 7363.989

Working Capital 13873.54 17425.7 29681.4


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Current ratio

An indication of a industry's ability to meet short-term debt

obligations; the higher the ratio, the more liquid the company is.Current ratio is equal to current assets divided by currentliabilities. If the current assets of a company are more than twicethe current liabilities, then that company is generally consideredto have good short-term financial strength.

Current ratio = Current assets / current liabilities

liquidity ratio

As current ratio includes some items which are not veryliquid, so liquid ratio is more accurate measure of liquidity

of firm

Liquid ratio = Current assets inventory/

Current liabilities


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Cash ratio

As liquid ratio contains debtors, so it does not gives a clear

picture of cash and near cash items. So we calculate cash ratio

to know about the liquidity of firm for very short terms.

Years 2004 2005 2006

CA (in Rscrore) 34,920.90 33,328.78 41,104.09

Inventory 14350.94 13624.02 16115.52

Debtors 11356.67 11403.52 15716.33

CL 18,389.06 15,007.92 17,596.57

Current ratio 1.899004 2.220746 2.335915

Liquid Ratio 1.118598 1.312957 1.420082

Cash Ratio 0.50102 0.553124 0.526935


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Comparison


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Interpretation The industrys current ratio for period of three years is somewhat

equal to 2 for 2005 it is less than 2 but it can be almost equivalent totwo). So industry has very sound liquidity position. It signifies thatindustry can easily meet its short term obligations. Also the liquidratio is equal to one that is a equivalent to its ideal value.

The cash ratio is 0.5 it implies that companies has cash or near cashitems which is equivalent to 50% of current liabilities.

As current ratio is double of Liquid ratio, and four times of cashratio, it shows that debtors, inventory and cash forms significant part ofthe current assets. And industry has properly distributed its current

assets.

The company is also able to maintain the liquidity of companythroughout the period of three years. As the values for ratios remainsame for the industry even value of current assets has over the period.


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EPS(Earnings Per Share):

EPS = PAT/ No. Of Shares

It denotes the profit earned by the money of each share

holders.

Particulars Dec 2004 Dec 2005 Dec 2006

EPS 35.23 4.42 8.62

From the above table it is quite cleat that EPS is decreasing

for industry. But the reason for low EPS is not low profit earned

by the industry but it is due the fact the industry raised more

equity capital in this year.


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Interest Coverage ratio: A ratio used to determine how easily a industry can

pay interest on outstanding debt.

The lower the ratio, the more the industry is

burdened by debt expense

Particulars Dec 2004 Dec 2005 Dec 2006

PBIT 9599 2282.86 7546.66

Interest 334.88 671.16 1036.32

industry is covering its interest expenses very well.


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Closing Comment

India is an acquired taste

Give it some time & it will grow on you


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Thank you!

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