Académique Documents
Professionnel Documents
Culture Documents
November 2012
Index
S.No. I.
Table of Contents
Executive Summary
Page No.
4-5 7-8 9
II.
Market Overview
Indian Healthcare Industry Market Segments Industry overview Porters Five Forces Analysis Growth Drivers Operating Business Models Innovative Delivery Formats Growth strategies in the Industry Key Trends Opportunities Challenges Government Initiatives
III.
Index
S.No.
Table of Contents
Risk Factors of Hospital Care New-age Healthcare solutions Senior Assisted Living In India Deals in the Hospital Industry Major Players Profile of Major Players Industry Overview SWOT Analysis Porters Five Forces Analysis Growth Drivers Demand Drivers Key Trends Opportunities Challenges Government Initiatives
Page No.
21 22 23-25 27-31 33-35 36-44
IV.
Index
S.No.
Table of Contents
Major Risk to Indian Pharma Companies Global Pharma Market Pharmerging Economies Deals in Pharma Industry Major Players Profile of Major Players Industry Overview Risk Cover Structure Challenges in Health Insurance Major Players
Page No.
55-56 57 58 60-62 64-68 70-96
V.
VI.
It is also interesting to note that India has the highest number of US Food and Drug Administration (FDA approval) plants outside the US, followed by Italy and China
In the last decade, health awareness and increasing healthcare costs have increased the demand for health insurance in the country, especially from the younger population who are more aware and demand better quality care Also healthcare education and awareness have led people in the country to take precautionary steps to fight lifestyle and other diseases Other minor segments of the Healthcare Industry include the medial equipment suppliers and diagnostics centers that play a role of support systems to hospitals and pharmaceutical companies
5
Market Overview
7
1Source:
Growth in the Healthcare sector is dominated by private players in India, unlike increased government dominance in developed nations
Private Hospitals Includes nursing homes, midtier, and top-tier private hospitals Includes the manufacturing, extraction and packaging of chemical materials to be used as medicines for human & animals Comprises of businesses and laboratories that offer analytic or diagnostic services including body fluid / blood analysis Includes establishments primarily engaged in manufacturing medical equipment and supplies, such as surgical, dental, laboratory instruments, etc
Pharmaceuticals
Healthcare Market
Diagnostics
Medical Equipments
Medical Insurance
Covers an individuals hospitalization expenses and medical care bills incurred due to sickness
9
10
Industry Overview
The hospital segment holds a major share of the healthcare industry and is outpacing the overall industry growth The size of the private hospital industry in India is estimated to be around US$25billion as per Assocham and growing at a CAGR of 20% The demand for hospital services has been consistently soaring in the country, with every class of the society demanding better quality and standards of healthcare Realizing the continuous growing demand, many investors worldwide have expressed their keenness towards investing in the Indian hospital service market. The country is making strides in the right direction as evident from the 100% allowance of FDI in the hospital segment under the automatic route, since January 2000 According to Indian Hospital Services Market Outlook by RNCOS Industry Research Solutions, the country needs to cover the cumulative deficit of around 3 million hospital beds to match up with the global average of 3 beds per 1000 population
11
threat of Substitutes
Home care and natural treatments
Hospitals face some threat from medical Consumers have little power and equipment companies basically cannot negotiate on as they could choose pricing not to sell their rivalry equipment, but there among Competitors are a fairly large number of suppliers Hospitals face less competitive available rivalry because there are usually not many hospitals in a given area and most people are brought to nearest hospital or where they know a doctor
12
Growth Drivers
Growing Demand
Policy Support
Increasing Investments
Increasing Lifestyle Related Issues and increasing population Affordable Treatment Cost and Increasing Disposable Income Medial Tourism and improving health insurance penetration Faster Diagnosis leading to early treatment Initiatives to Increase Sector Investments
Inviting
Result
Reduction of Custom Duty on Equipment
Increasing old age population will drive demand for hospital services
13
Spoke
HUB
Spoke
Spoke
Corporate Hospitals
Fixed Management Fee or revenue/EBITDA sharing
Target Hospital
14
Healthcare Cities
Specialty Hospitals
An institution where aged people can reside after their working life Offers medical facilities, options for entertainment such as libraries and TV rooms and members are encouraged to live a healthy community life with regular exercise, meditation and healthy food amongst peers (e.g Max Ventures new initiative Antara led by Analjit Singhs youngest daughter Tara Singh in Dehradun)
15
Organic Growth
Growth Strategies
Acquisition of existing hospitals Real estate assets to make operations asset -light Build/acquire businesses such as pharmacies etc
The asset light model is the preferred growth strategy for PE investors
16
Management contracts
Many healthcare players such as Fortis and the Manipal Group are signing management contracts to provide additional revenue stream to hospitals
Evolution of telemedicine
Telemedicine is evolving fast in India, supported by the ICT sector. Currently, about 650 telemedicine centers exist throughout India
Holistic well-being
Various hospitals have tied-up with holistic health centers to combine traditional healthcare knowledge and practices with conventional systems
17
Healthcare Infrastructure
Need 3 Million more hospital beds to match the global average of 3 beds per 1000 population
An additional 700,000 doctors will be required by 2025 to reach a ratio of one medical doctor per 1,000 individuals
Research
Contract research is a fast growing segment in the Indian health care industry Foreign players are entering into contracts to reduce their operational and clinical costs
Medical Tourism
The Indian Medical Tourism Industry is poised to grow at 30 % annually The cost of surgery in India is one-tenth of the cost in developed countries
Artificial limbs
Given Indias cost competitiveness analytical limbs ( plastics) can be manufactured / exported at a fraction of the cost in India
Online
Schedule appointments & provide simple medical advice online Patients records management on virtual servers
18
2.
Many hospitals and healthcare providers are struggling with outdated information technology in India today
A major challenge for our nation and the healthcare industry would be not only to retain the healthcare workforce but also to develop an environment, which would attract those abroad to return (reverse brain drain) The growing demand for quality healthcare and the absence of matching delivery mechanism pose a great challenge There is an acute shortage of faculty of medical teachers all over the country. One of the pivotal factors to sustain the projected growth of the healthcare industry in India would be the availability of a trained workforce, besides cheaper technology, better infrastructure etc Another challenge will be to find good talent in India to provide the ancillary healthcare services, especially the voice based ones which require not only good English communication skills but also very good analytical skills
19
3.
4.
5.
6.
Government Initiatives
1. The government plans to build 6 super specialty tertiary care hospitals with research and education centers across the country. These would cater to the economically challenged sections and make high-end clinical care available to the masses (but a lot more needs to be done) The government has also undertaken initiatives through its flagship programs such as the Rashtriya Swastha Bima Yojana (RSBY) and State level Insurance schemes like the Arogyashri and Chiranjeevi The Central government is setting up the first specialized device center National Center for Medical Devices in Gujarat to promote indigenous R&D efforts Customs duty on life-saving equipment has been reduced to 5% from 25%, and is exempted from countervailing duty. Import duty on medical equipment has been reduced to 7.5% in the current budget The government take on the current compulsory rural stint for medical professionals is that it should be continued; however it needs to be augmented with better facilities and support systems
2.
3.
4.
5.
20
Source: PWC Report, 2012
4.Lack of capital
Huge capital will be required to meet the growing demand of healthcare facilities and only a few big business houses can afford such expenditures and have the patience to reap the steady returns over a long period of time
21
22
98 million
Estimated that the population above 60 years (60+) of age in India will touch 240 million by 2050
12.6
60+
27 million
Challenge or Opportunity?
Source: Jones Lang Lasalle report, Healthcare and Senior Living, Novemvber 2011
23
Small scale, spread over 1-4 acres, are urban formats. Having modern amenities and located within city limits
Mid Scale, Spread over 4-10 acres. They can be apartments, villas or independent houses and located within city limits
Large scale, from 10 acres to 5060 acres. These are communities with large expanse of spaces and located at the outskirts of city
24
Entry of corporate firms and rising interest of regional real estate developers
25
Source: Jones Lang Lasalle report, Healthcare and Senior Living, Novemvber 2011
26
Deal Comp
Mergers & Acquisitions
Date
03/09/2012 06/02/2012 01/02/2012 27/01/2012 12/01/2012
Target
Bilcare Ltd., Global Clinical Supplies Guru Harkrishan Hospital, Management Rights 30 Years Radlink-Asia Pte Ltd. Max Healthcare Institute Ltd. Fortis Healthcare International Pte. Ltd.
Acquirer
United Drug Plc Radiant Life Care Pvt. Ltd Fortis Healthcare India Ltd. Life Healthcare Group Proprietary Ltd. Fortis Healthcare India Ltd.
29/08/2011
17/06/2011
Danone SA
Max India Ltd.
344.19
30.78
12/05/2011
04/03/2011
SRL Ltd.
The Lanka Hospitals Corporation Plc
178.75
36.30
27
Deal Comp
Mergers & Acquisitions
Date 24/02/2011 22/12/2010 2/12/2010 22/10/2010 11/10/2010 18/09/2010 01/09/2010 31/05/2010 Target Cancer Hospital in Singapore Dental Corp. Cardiac Science Corp. Piramal Diagnostic Services Pvt. Ltd. Quality Healthcare Asia Ltd., Healthcare Businesses iCare Health Projects & Research Pvt. Ltd. IVAX Diagnostics Inc. Parkway Holdings Ltd. Acquirer Fortis Healthcare India Ltd. Fortis Healthcare India Ltd. Opto Circuits India Ltd. SRL Ltd. Fortis Healthcare India Ltd. Nurture Health Services Pvt. Ltd. Erba Diagnostics Mannheim GmbH Fortis Healthcare India Ltd. Deal value ($ mn) 25.29 98.49 54.77 128.00 200.00 22.00 15.00 685.30
28
Deal Comp
Private Equity Deals
Date
28/09/2012
Target
Thyrocare Technologies Ltd.
Acquirer
Norwest Venture Partners
13/08/2012
New Enterprise Associates, Goldman Sachs (Principal Investments) International Finance Corp. Advent International Corp. GIC Special Investments Pte. Ltd IDFC Project Equity Co. Ltd. Fidelity Growth Partners India Olympus Capital Holdings Asia New Enterprise Associates, DaVita Inc.
54.56
Apollo Hospitals Enterprise Ltd. Quality Care India Ltd. Vasan HealthCare Pvt. Ltd. Sahyadri Hospitals Ltd. Aptuit Laurus Pvt. Ltd. DM Healthcare Pvt. Ltd. DaVita NephroLife Care India Pvt. Ltd
Deal Comp
Private Equity Deals
Date 15/12/2011 09/12/2011 04/11/2011 03/11/2011 29/09/2011 Target Nephrocare Health Services Pvt. Ltd. Max India Ltd. Moolchand Healthcare Pvt. Ltd. Fortis Healthcare India Ltd. Vivimed Labs Ltd. Acquirer Bessemer Venture Partners India Goldman Sachs (Principal Investments) Sequoia Capital India Growth Fund II GIC Special Investments Pte. Ltd. Kitara Capital Pvt. Ltd.,NYLIM Jacob Ballas India Fund III PremjiInvest , India Build Out Fund I Avigo Capital Partners Pvt. Ltd. Halcyon Group Deal value ($ mn) 37.00 59.59 20.17 100.00 26.68
Healthcare Global Enterprises Ltd. SRL Ltd. Radiant Life Care Pvt. Ltd.
30
Deal Comp
Private Equity Deals
Date 26/12/2010 25/12/2010 03/12/2010 22/11/2010 24/09/2010 Target Max India Ltd. Thyrocare Technologies Ltd. Medall Healthcare Pvt Ltd. Manipal Health Enterprises Pvt. Ltd. Shilpa Medicare Ltd. Acquirer Temasek Holdings Advisors India Pvt. Ltd. CX Partners Fund I Peepul Capital Fund II LLC Kotak India Growth Fund II Baring India PE Fund III Ltd. Deal value ($ mn) 26.62 41.71 19.00 23.80 15.00
31
Major Players
32
3,649 1,912
10,307
1,100 4,400
Source. Company Websites, Aranca Research *No. of Beds includes owned, subsidiaries, Joint-ventures and affiliations
SNo. 1 2 3
SNo. 1 2 3
Company Name Apollo Hospitals Max Healthcare Fortis Health Care Average Median Maximum Minimum
EV/Sales 2012 3.30x 0.72 3.84 2.62x 3.30x 3.84x 0.72x 2013E 2.68x 0.63 3.67 2.33x 2.68x 3.67x 0.63x
EV/EBITDA 2012 19.75x 14.38 23.22 19.12x 19.75x 23.22x 14.38x 2013E 15.75x 7.59 24.95 16.10x 15.75x 24.95x 7.59x
P/E 2012 44.65x 38.26 57.81 46.91x 44.65x 57.81x 38.26x 2013E 31.59x 17.31 40.30 29.73x 31.59x 40.30x 17.31x
Note: *Max Healthcare is a subsidiary company of Max India which is a listed entity and information shown in the CSC above is on a consolidated basis which represents the whole group (Max India) * Share price shown are as on 30th September 2012 and Sales, EBITDA & Net Income figures are based on March 2012 (financial year closing)
34
Listed Players
35
Apollo
Company Profile
Company Information Head quarter: Year of Incorporation Chennai, India 1979 The Apollo Hospitals Group is one of the largest healthcare groups in Asia and has some of the best hospitals in India It is an integrated healthcare organization with owned and managed hospitals, diagnostic clinics, dispensing pharmacies and consultancy services It also provides services to support businesses, telemedicine, education, training programs & research services It offers a broad range of Continuing Medical Education (CME) opportunities through Web broadcasts of its ongoing CME programs and other such academic events The Apollo Hospitals Educational and Research Foundation is recognized by the Department of Scientific and Industrial Research as a symbol of excellence Business Overview
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Dr. Prathap C.Reddy Dr. Preetha Reddy Ms. Suneeta Reddy Ms. Sangita Reddy Mr. N. Vaghul Mr. Deepak Vaidya Mr. T.K. Balaji
Executive Chairman
MD Joint MD Executive Director Non-Executive Director Non-Executive Director Non-Executive Director
36
Apollo
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 2,644.79 Rs. 3,265.78 Rs. 3,627.96 Rs. 4,277.00 697.13 937.34 982.24 829.05 1,468.87 87.60 372.39 157.23 1,653.46 311.67 393.84 (19.72) 1,898.92 178.11 333.50 (16.51) 2,505.93 236.80 394.50 (17.34) 2010 2011 2012 CAGR 24.62% 25.13% 28.79% 30.18% 34.38% 28.86% Rs. 1,632.94 Rs. 2,049.17 Rs. 2,610.16 Rs. 3,160.19 25.49% 27.38% 21.07% 815.57 49.94% 246.18 15.08% 182.21 11.16% 134.37 8.23% 102.49 6.28% 1,035.61 50.54% 323.27 15.78% 248.31 12.12% 197.69 9.65% 137.56 6.71% 1,295.30 49.63% 423.80 16.24% 329.05 12.61% 261.23 10.01% 183.92 7.05% 1,597.85 50.56% 525.85 16.64% 401.95 12.72% 326.06 10.32% 219.30 6.94%
37
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Apollo
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
3,500 30% 25% 20% 15% 10% 5%
2009 1,633 2010 2,049 25.49% 2011 2,610 27.38% 2012 3,160 21.07%
Amount in Crs.
0%
Chart Title
600 500 Amount in Crs. 400 300 200 100 EBITDA % Margin 2009 246 2010 323 2011 424 2012 526
6%
6% 6% 6%
14%
15.08%
15.78%
16.24%
16.64%
6.28%
6.71%
7.05%
6.94%
38
Max Healthcare
Company Profile
Company Information Head quarter: Year of Incorporation New Delhi, India 1985 Business Overview Max Healthcare is a subsidiary company of Max India and operates the hospital business of the group It is a leading provider of standard, seamless, integrated and international standards healthcare services Max Healthcare operates 8 centers in Delhi and the National Capital Region (NCR), offering services in over 30 medical disciplines The Max Healthcare network offers a full range of healthcare services, with its team of over 1,250 leading doctors, 1,900 nurses and 1,700 para-medical staff It has centers of excellence in Minimal Access, Metabolic & Bariatric Surgery, Cardiology, Aesthetic and Reconstructive Surgery, Internal Medicine, Neurosciences, Orthopaedics and Joint Replacement, Obstetrics and Gynecology and Paediatrics 39
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Analjit Singh
Dr. Ajay Bakshi Mr.Yogesh Sareen Ms. Shubhra Banerjee Mr. K.S.Ramsinghaney Mr. Anil Vinayak
Chairman
CEO CFO Director Executive Director Director
Note: Market Capitalization is shown of whole group (Max India) which is a listed entity
Max Healthcare
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 924.50 Rs. 1,060.14 Rs. 1,021.49 Rs. 1,292.18 235.97 349.56 343.94 323.12 624.27 32.02 51.69 375.49 626.13 35.69 8.56 478.11 465.83 27.26 15.27 54.17 765.92 72.92 165.37 55.43 197.53 68.68% 38.77 13.48% 25.79 8.97% 31.87 11.08% 47.61 16.55% Rs. 287.61 2010 Rs. 345.76 20.22% 221.55 64.08% 5.87 1.70% (7.72) -2.23% (3.29) -0.95% (3.32) -0.96% 2011 Rs. 409.39 18.40% 253.18 61.84% 6.65 1.62% (7.69) -1.88% 0.57 0.14% 0.57 0.14% 2012 Rs. 466.60 13.97% 284.51 60.98% (20.41) -180.75% -4.37% (39.37) -215.14% -8.44% (32.89) -201.06% -7.05% (32.89) -188.40% -7.05% CAGR 17.50% 12.93%
40
Note: The Financials shown above are of Max Healthcare which is a subsidiary company of Max India Ltd Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Max Healthcare
Financial Summary (Amount in Crores)
Sales & Sales Growth
Chart Title
Amount in Crs.
20%
15% 10% 5%
2009 288 2010 346 2011 409 2012 467
0%
20.22%
18.40%
13.97%
Chart Title
Amount in Crs.
2009
39 13.48%
2010
6 1.70%
2011
7 1.62%
2012
(20) -4.37%
EBITDA % Margin
48 16.55%
(3) -0.96%
1 0.14%
(33) -7.05%
41
Fortis
Company Profile
Company Information Head quarter: New Delhi, India Business Overview Fortis Healthcare Limited is a leading, integrated healthcare delivery provider in the Pan-Asia-Pacific region At present the company operates its healthcare delivery network in Australia, Canada, Dubai, Hong Kong, India, Mauritius, New Zealand, Singapore, Sri Lanka and Vietnam It is one of the fastest growing hospital chains, with a network of 51 hospitals and 6,700 bed capacity under management in India It forayed into diagnostics by acquiring Super Religare Labs (SRL) in 2012
Year of 1996 Incorporation Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Malvinder Mohan Singh Shivinder Mohan Singh Sunil Godhwani Balinder Singh Dillon Harpal Singh Joji Sekhan Gill Justice S.S. Sodhi
Executive Chairman
Executive Vice Chairman Non-Executive Director Executive Director Non-Executive Director Non-Executive Independent Director Non-Executive Independent Director
42
Fortis
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 4,282.86 Rs. 7,889.62 Rs. 4,773.86 Rs. 12,429.30 500.56 5,505.12 1,113.74 7,693.85 1,318.56 57.94 141.24 1.20 2,065.41 1,311.33 1,045.24 (1,275.07) 3,361.83 163.26 353.60 706.41 3,253.87 414.91 569.96 (218.82) 451.30 70.42% 96.16 15.01% 47.42 7.40% 21.86 3.41% 20.81 3.25% Rs. 640.83 2010 2011 2012 Rs. 3,072.53 65.43% 2,405.22 78.28% 493.22 16.05% 309.60 10.08% 107.76 3.51% 72.22 2.35% 51.40% 70.19% 86.90% 72.46% CAGR 68.62% 74.67% Rs. 975.12 Rs. 1,857.33 52.17% 90.47% 712.45 73.06% 178.50 18.31% 118.56 12.16% 73.39 7.53% 69.48 7.13% 1,464.64 78.86% 421.39 22.69% 315.27 16.97% 146.91 7.91% 124.36 6.70%
43
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Fortis
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
3,500 Amount in Crs. 3,000 2,500 2,000 1,500 1,000 500 Total Revenue % Growth 2009 641 2010 975 2011 1,857 2012 3,073 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Chart Title
100
-
2009
96 15.01%
2010
179 18.31%
2011
422 22.75%
2012
493 16.05%
0%
2009 21 3.25%
2010 69 7.13%
2012 72 2.35%
EBITDA % Margin
PAT % Margin
44
45
Industry Overview
The Indian Pharmaceutical industry is currently valued at US$20 billion and has been growing at a CAGR of 15.37% in past three years. It is the third largest market globally in terms of volume and 13th largest by value today The domestic pharma market is expected to grow at a CAGR of 15-20% annually to become a US$49 billion market by 2020 The growth of the sector has been fuelled by exporting life-saving drugs to developing countries and supplying quality drugs to the developed nations at affordable prices, which resulted in a 29.8% growth in FY12 in Indian drug exports in comparison to the prior year Indian pharma companies are increasingly filing Abbreviated New Drug Approvals (ANDAs) applications for the approval by the US Food & Drug Administration (FDA). Since the US is the largest market for generics, increasing number of approvals by the US FDA gives an opportunity to penetrate deeper into the global market Today, the Indian Pharma industry is the largest exporter of generics in the world. It caters to an ever-rising demand for generics from developed nations like the US, UK and Japan, as the governments of these countries are switching over to generic drugs from branded drugs in order to curb the rising healthcare costs
46
TRENGTHS
Cost Competitiveness Low-cost, highly skilled set of English speaking labour force Growing treatment naive patient population Diverse ecosystem Good marketing and distribution system
EAKNESSES
Stringent price controls Lack of data protection Poor all-round infrastructure is a major challenge Low investment in R&D Lack of coordination between the industry and academia
Internal factors
PPORTUNITIES
HREATS
Global demand for generics rising Increased penetration in non-metro markets Significant investments from MNCs Prescription Drugs Online Drug Retailing
Labor Shortage Spurious Drugs External Wage inflation factors Competition from other emerging economies Product patent regime is a major threat to the domestic industry
Positive
Negative
47
threat of Substitutes
Natural treatments (Ayurvedic, homeopathy, NAET) Biotechnology is also a threat to synthetic pharma products
bargaining
Pharma Industry Attractive
power of Suppliers
Suppliers have very low bargaining power because pharma companies can switch from their suppliers without incurring a very high cost
Consumers have no choice but to buy what the doctor says rivalry Buyers are scattered and they as such do not wield among Competitors much power in the pricing of the products Highly Competitive Top five players have mere 18% market share Lower fixed cost but high working capital
48
Growth Drivers
Accessibility of drugs to greatly improve Increasing penetration of health insurance Growing number of stressrelated diseases due to changing lifestyle
Growth Drivers Cost Advantage India is a major hub for the manufacturing of generics Over 120USFDA-approved facilities
Supplyside drivers
Reduction in approval time for new facilities Policy Support Focus on specialized pharma education Improved accessibility for economically challenged 49 section of the society
Acceptability
Rising levels of education to increase the acceptability of pharmaceuticals Patients to show greater propensity to self medicate, boosting the OTC market Acceptance of biologics and preventive medicines to rise Vaccine market could grow 20% per year in the next decade`
Demand Drivers
Affordability
Rising income could usher 73 million households into the middleclass segment over the next ten years Over 650 million people expected to be covered by health insurance by 2020 Government-sponsored programs expected to provide health benefits to over 380 million economically challenged people
Epidemiological Factors
Patient pool expected to increase over 20% in the next ten years mainly due to a rise in the population Newer diseases and changes in lifestyles to boost demand
50
Source: IBEF Report, November 2011
Clinical Traits
Due to its cost advantage, India is increasingly becoming a hub for clinical trials
Export Revenue
The pharmaceutical export market in India is thriving due to strong presence in the generic space
Joint Ventures
Several multinational companies are collaborating with Indian pharma firms to develop new drugs E.g.: Pfizer partnered with Aurobindo Pharma to develop generic medicines
Product Patents
The introduction of product patents in India in 2005 has boosted the discovery of new drugs India has reiterated its commitment to IP protection following the introduction of product patents 51
High-end drugs
Due to an increasing population and rising income levels, demand for high-end drugs is expected to soar Demand for high ends drugs could reach US$8billion by 2015 Growing demand could open up the market for the production of high-end drugs
2.
3.
4.
5.
6.
Government Initiatives
1. 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the drugs and pharmaceuticals industry in India Technology freely importable (Royalty applicable) The Department of Pharmaceuticals is mulling the creation of Drug research facilities which can be used by private companies for R&D who cannot afford independent facilities The government is also contemplating the creation of special purpose vehicles with an insurance cover to be used for funding new drug research Establishment of new mechanisms to promote public private partnership in R&D and to support new drug-development by way of providing soft loans to the Pharma Industry The government has introduced additional tax deductions for R&D expenses Two new schemes - New Millennium Indian Technology Leadership Initiative and the Drugs and Pharmaceuticals Research Program have been started The government has also initiated the recognition of the pharmaceutical industry as a knowledge base industry
2. 3.
4.
5.
6. 7.
8.
54
3. Fluctuations in currencies Indian pharma companies derive a considerable portion of their revenues from the overseas market and hence have high exposure to foreign currencies. Hence, the companies have resorted to the hedging of currencies to minimize the risk but face stringent limits under laws (dont want to get classified as currency arbitragers)
55
57
Source: IMS Health Forecast, 31st May 2012
Pharmerging Economies
58
Source: Edelweiss Research, March 2012
59
Deal Comp
Mergers & Acquisitions
Date 28/9/2012 17/9/2012 26/4/2012 Target Ahlcon Parentals India Ltd. Arch Pharmalabs Ltd. Star Drugs and Research Labs Ltd., Sterlite Formulations Facility Apex Drugs and Intermediaries Ltd. Kilitch Drugs India Ltd., Certain Assets Ascent Pharmahealth Ltd. Uquifa SA Universal Medicare Pvt. Ltd., Nutraceutical Business J.B. Chemicals & Pharmaceuticals Ltd., Russian CIS& OTC Business Acquirer B.Braun Melsungen AG Mitsui & Co. Ltd Agila Specialities Pvt. Ltd. Deal value ($ mn) 48.53 69.62 23.47
Anjaneya Lifecare Ltd. Akorn, Inc Watson Pharmaceuticals Inc. Vivimed Labs Ltd. Sanofi India Ltd. Cilag AG
Deal Comp
Mergers & Acquisitions
Date 15/4/2011 1/3/2011 28/12/2010 11/11/2010 2/11/2010 22/10/2010 Target Unimark Remedies Ltd. RFCL Ltd. ActiveOn Taro Pharmaceuticals Industries Ltd. Cambrex Zenara Ltd. Piramals Healthcare Solutions Business (Domestic Formulations) Arch Pharmalabs Ltd. Acquirer Hikma Pharmaceuticals Plc Avantor Performance Materials Holdings Inc. Surya Pharmaceutical Ltd. Sun Pharmaceuticals Industries Ltd. Cambrex Corp Abbott Healthcare Pvt. Ltd. Deal value ($ mn) 33.30 112.44 22.00 82.00 20.00 3720.00
23/9/2010
14.28
22/09/2010
454.00
61
Deal Comp
Private Equity Deals
Date Target Acquirer Deal value ($ mn) 56.20
25/4/2012
29/9/2011
Kitara Capital Pvt. Ltd., NYLIM Jacob Ballas India Fund III Sequoia Capital India III
26.68
13/9/2011
15.78
11/2/2011 24/9/2010
Arum Investments Pvt. Ltd. Baring India Private Equity Fund III Ltd.
17.41 15.00
62
Major Players
63
Cadila
$103
Cipla
439
South Africa and Latin America Russia and Venezuela, exposure to other markets through GSK Russia, Brazil, Mexico and Africa
Dr. Reddys
340
Glenmark
178
64
Lupin
110
South Africa, Australia, Philippines and Asia Pacific Russia, Ukraine, Brazil, South Africa Brazil, Mexico and South Africa
Ranbaxy
457
Sun Pharma
245
Over 550 strong field force in Emerging Markets. Focus on specialty led high margin segments
65
Generic Pharmaceuticals Companies 1 2 3 4 5 6 7 8 9 10 Sun Pharm aceuticals Cipla Ltd. Dr.Reddy's Laboratories Ltd. Lupin Pharm aceuticals .Inc Ranbaxy Laboratories Ltd. Cadila Pharm aceuticals Ltd. Glenm ark Pharm aceuticals Ltd. Biocon Ltd. Aurobindo Pharm a Ltd. Orchid Chem icals & Pharm aceuticals Ltd. Rs . 693.30 Rs . 71,798.15 380.60 1647.40 596.30 529.55 872.20 421.90 274.55 141.70 112.10 30,559.14 27,930.02 26,630.76 22,347.01 17,858.17 11,412.40 5,491.00 4,125.17 789.63 Rs . 69,913.14 30,497.86 29,557.82 27,868.22 23,850.48 19,680.87 13,336.82 5,242.30 7,070.45 2,616.26 Rs . 8,019.49 Rs . 3,478.07 7,020.71 9,538.80 7,082.91 10,161.41 5,263.30 4,020.64 2,086.50 4,627.40 1,873.60 1,789.96 2,557.47 1,449.83 1,940.32 1,106.80 723.64 573.90 580.34 408.94 Rs . 2,587.25 1,141.30 1,300.90 867.65 (2,899.73) 652.60 464.30 338.40 (123.50) 97.47
SNo.
Company Name
EBITDA Margin
PAT Margin
Generic Pharmaceuticals Companies 1 2 3 4 5 6 7 8 9 10 Sun Pharmaceuticals Cipla Ltd. Dr.Reddy's Laboratories Ltd. Lupin Pharmaceuticals.Inc Ranbaxy Laboratories Ltd. Cadila Pharmaceuticals Ltd. Glenmark Pharmaceuticals Ltd. Biocon Ltd. Aurobindo Pharma Ltd. Orchid Chemicals & Pharmaceuticals Ltd. Average Median Maximum Minimum 43.37% 25.50% 26.81% 20.47% 19.09% 21.03% 18.00% 27.51% 12.54% 21.83% 23.61% 21.43% 43.37% 12.54% 32.26% 16.26% 13.64% 12.25% -28.54% 12.40% 11.55% 16.22% -2.67% 5.20% 8.86% 12.32% 32.26% -28.54% 8.72x 4.34 3.10 3.93 2.35 3.74 3.32 2.51 1.53 1.40 3.49x 3.21x 8.72x 1.40x 7.67x 3.65 2.80 3.31 2.01 3.13 3.21 2.18 1.39 1.12 3.05x 2.96x 7.67x 1.12x 20.10x 17.04 11.56 19.22 12.29 17.78 18.43 9.13 12.18 6.40 14.41x 14.67x 20.10x 6.40x 20.97x 16.68 11.09 17.10 11.08 14.70 18.31 9.32 8.90 5.68 13.38x 12.90x 20.97x 5.68x 27.75x 26.78 21.47 30.69 (7.71) 27.36 24.58 16.23 (33.40) 8.10 14.19x 23.02x 30.69x -33.40x 26.12x 21.90 16.86 20.11 18.88 20.86 28.36 18.86 9.66 3.97 18.56x 19.50x 28.36x 3.97x
66
Note: *Share prices shown are taken as on September 2012 and Sales, EBITDA & Net Income figures are based on March 2012 (financial year closing) * Financial Year of Ranbaxy Laboratories Ltd closes in December
30th
Innovator CRAMS ( Contract Research and Manufacturing Services) 1 2 3 4 Divi's Laboratories Ltd. Piramal Healthcare Ltd. Jubilant Life Sciences Ltd. Dishman Pharmaceuticals Chemicals Ltd. Rs. 1,080.10 Rs. 14,332.93 Rs. 14,357.43 Rs. 1,864.03 Rs. 745.76 463.35 211.50 96.25 7995.57 3368.77 776.74 9,948.43 6,920.40 1,602.30 2,132.93 4,303.12 1,124.07 329.56 1,497.24 237.43 Rs. 533.26 111.50 114.10 56.80
SNo.
Company Name
EBITDA Margin
PAT Margin
Innovator CRAMS ( Contract Research and Manufacturing Services) 1 2 3 4 Divi's Laboratories Ltd. Piramal Healthcare Ltd. Jubilant Life Sciences Ltd. Dishman Pharmaceuticals Chemicals Ltd. Average Median Maximum Minimum 40.01% 15.45% 34.79% 21.12% 27.84% 27.96% 40.01% 15.45% 28.61% 5.23% 2.65% 5.05% 10.39% 5.14% 28.61% 2.65% 7.70x 4.66 1.61 1.43 3.85x 3.14x 7.70x 1.43x 7.24x 4.73 1.47 1.25 3.67x 3.10x 7.24x 1.25x 19.25x 30.19 4.62 6.75 15.20x 13.00x 30.19x 4.62x 19.25x 42.51 7.30 6.97 19.01x 13.27x 42.51x 6.97x 26.88x 71.71 29.52 13.67 35.45x 28.20x 71.71x 13.67x 24.50x 21.36 8.49 9.47 15.96x 15.42x 24.50x 8.49x
67
Note: *Share price shown are taken as on 30th September 2012 and Sales, EBITDA & Net Income figures are based on March 2012 (financial year closing)
Multinational Companies 1 2 3 Glaxosmithkline Pharmaceuticals Ltd. Rs. 1,977.05 Rs. 16,746.21 Rs. 14,708.06 Rs. 2,378.48 Rs. 802.25 IPCA Laboratories Ltd. Sanofi India Ltd. 481.80 2373.75 6,061.04 5,466.75 6,649.93 5,232.32 2,358.73 1,229.75 465.59 261.69 Rs. 428.59 276.20 191.19
SNo.
Company Name
EBITDA Margin
PAT Margin
Multinational Companies 1 2 3 Glaxosmithkline Pharmaceuticals Ltd. IPCA Laboratories Ltd. Sanofi India Ltd. Average Median Maximum Minimum 33.73% 19.74% 21.28% 24.92% 21.28% 33.73% 19.74% 18.02% 11.71% 15.55% 15.09% 15.55% 18.02% 11.71% 6.18x 2.82 4.25 4.42x 4.25x 6.18x 2.82x 4.66x 2.54 2.85 3.35x 2.85x 4.66x 2.54x 18.33x 14.28 19.99 17.54x 18.33x 19.99x 14.28x 13.29x 11.83 12.57 12.56x 12.57x 13.29x 11.83x 39.07x 21.94 28.59 29.87x 28.59x 39.07x 21.94x 20.62x 18.67 19.72 19.67x 19.72x 20.62x 18.67x
68
Note: *Share price shown are taken on September 2012 and Sales, EBITDA & Net Income figures are based on March 2012 (financial year closing) * Financial Year of GlaxoSmithKline and Sanofi India Ltd closes in December 30th
Listed Players
69
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Israel Makov Dilip S. Sanghvi Sudhi V. Valia Sailesh T. Desai Hasmukh S. Shah Chairman MD Executive Director Executive Director
With Taros acquisition, Sun Pharma has become the largest Indian company in US Non-Executive Independent Director generic space with the richest product pipeline
Non-Executive Independent Sun Director Non-Executive Independent Director
Keki M.Msitry
Ashwin Dhani
Pharma ranked 6th in the domestic formulations market with consistent outperformance amongst large-sized peers 70
71
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
-10%
Amount in Crs.
Chart Title
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 EBITDA % Margin
Amount in Crs.
2,500
2,000 1,500 1,000 500 PAT % Margin 2009 1,818 41.70% 2010 1,351 32.97% 2011 1,816 31.01% 2012 2,587 31.20%
72
Cipla
Company Profile
Company Information Head quarter: Year of Incorporation Mumbai, India 1935 Business Overview Cipla is the 3rd largest Indian pharma company (by revenue) with a dominant position in the domestic formulations market (ranked 2nd) It is the development and manufacturing partner of choice for generic companies like Teva, Watson etc and is regarded for its chemistry skills and low cost manufacturing It exports to 180 countries through its partners, (USA, Europe, South Africa, Australia and Middle East being its five core export markets). Exports account for 54% of its business Cipla uses the latest in pharmaceutical technology to funnel over seven decades of experience into one capsule that cures, one 73 drop that defends and one puff that protects
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 30,559.14 26.78x
Non-Executive Director
Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director
Cipla
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 6,856.77 Rs. 7,309.13 Rs. 8,596.65 Rs. 9,350.25 940.24 5.07 571.89 29.18 4,347.80 53.39 703.19 2,906.55 5,910.57 62.06 529.31 3,065.90 6,666.13 95.97 710.46 2,914.29 7,638.93 90.46 561.06 2,554.62 2010 2011 2012 CAGR 10.42% 17.43% 18.81% 17.31% 17.31% 13.97% Rs. 5,311.64 Rs. 5,694.61 Rs. 6,419.52 Rs. 7,151.82 7.21% 12.73% 11.41% 2,725.12 51.30% 1,067.17 20.09% 915.38 17.23% 896.84 16.88% 771.02 14.52% 3,241.63 56.92% 1,402.70 24.63% 1,235.63 21.70% 1,231.09 21.62% 1,082.59 19.01% 3,672.46 57.21% 1,426.83 22.23% 1,172.68 18.27% 1,162.49 18.11% 967.27 15.07% 4,412.52 61.70% 1,789.96 25.03% 1,477.74 20.66% 1,447.81 20.24% 1,141.30 15.96%
74
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Cipla
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 14% 12% 10% 8% 6% 4% 2% 0%
Amount in Crs.
2009 5,312
Amount in Crs.
Chart Title
2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 -
Amount in Crs.
1,000
800 600 400 200 2009 771 14.52% 2010 1,083 19.01% 2011 967 15.07% 2012 1,141 15.96%
EBITDA % Margin
75
Dr.Reddys
Company Profile
Company Information Head quarter: Hyderabad, India Business Overview Dr.Reddys Laboratories is engaged in the manufacturing and distribution of pharmaceutical products by way of finished dosage forms, active pharmaceutical ingredients and intermediates and biotechnology products Dr.Reddys was the first Indian pharmaceutical company to out-license an original molecule to an innovator pharmaceutical company in 1997 They do research in the areas of metabolic, cardiovascular, anti-bacterials, and pain & inflammation They operate their business through three core business segments : 1) Global generics (includes brand formulations and unbranded generics) 2) Pharmaceutical services and active pharma ingredients 3) Proprietary product division
76
Year of 1984 Incorporation Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : 27,930.02 21.47x 1489/1818
Key Management
Dr. K. Anji Reddy Mr. G.V. Prasad Mr. Satish Reddy Dr. Omkar Goswami Dr. Bruce LA Carter Mr. Anupam Puri Dr. Ashok Ganguly Mr. Sridar lyengar Chairman Vice Chairman & CEO MD & COO Independent Director Independent Director Independent Director Independent Director Independent Director
Dr.Reddys
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 7,326.30 Rs. 7,360.60 Rs. 8,963.10 Rs. 11,324.20 1,997.60 1,484.00 2,370.70 3,233.90 3,526.10 562.30 450.70 1,013.30 3,776.80 660.00 406.80 556.70 4,031.80 575.10 1,119.10 1,336.60 4,989.00 1,606.10 866.00 815.40 2010 2011 2012 Rs. 9,814.50 30.91% 7,144.77 71.87% 2,557.47 25.73% 2,039.37 20.52% 1,939.70 19.51% 1,300.90 13.09% 92.38% 33.98% 32.89% 23.23% CAGR 12.46% 16.76% Rs. 6,900.60 Rs. 7,031.00 Rs. 7,496.90 1.89% 6.63% 4,488.50 64.44% 1,366.70 19.62% 869.00 12.48% 806.50 11.58% (917.20) -13.17% 4,654.30 65.48% 1,496.00 21.05% 1,082.90 15.24% 1,076.60 15.15% 351.50 4.95% 5,351.40 70.99% 1,595.00 21.16% 1,196.90 15.88% 1,182.80 15.69% 998.90 13.25%
77
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Dr.Reddys
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
12,000 Amount in Crs. 10,000 8,000 6,000 4,000 2,000 Total Revenue % Growth 2009 6,901 2010 7,031 1.89% 2011 7,497 6.63% 2012 9,815 30.91%
Amount in Crs.
25%
Chart Title
3,000 Amount in Crs. 2,500 2,000 1,500 1,000 500 2009 1,367 2010 1,496 2011 1,595 2012 2,557
-5%
-10% 2009 (917) 2010 352 4.95% 2011 999 13.25% 2012 1,301 13.09%
0%
(1,500)
PAT
-15%
EBITDA
% Margin -13.17%
78
Lupin
Company Profile
Company Information Head quarter: Year of Incorporation Mumbai, India 1983 Business Overview Lupin Pharmaceuticals, Inc. is a U.S. wholly owned subsidiary of Lupin Limited It is among the top 5 pharmaceuticals companies in India and it has a program for developing New Chemical Entities The company has manufacturing operations in 5 cities in India and also has a site in Thailand In terms of R&D the company has set up a state of the art Research Park which is located at Pune, India and covers a 19 acre site with an area of 150,000sq.ft., which is a home to 320 scientists It has a core site for innovation including Process Development, Technology Development & Basic Preclinical, Phase1 and Phase2 research
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Dr. Desh Bandhu Gupta Chairman Managing Director Executive Director CEO Executive Director Independent NonExecutive Director Independent NonExecutive Director
79
Lupin
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 4,134.00 Rs. 5,085.45 Rs. 6,124.36 Rs. 5,916.20 1,237.47 1,174.34 1,213.89 1,712.18 1,424.80 77.77 339.91 811.13 2,567.80 201.53 670.85 1,135.88 3,281.00 420.12 428.65 1,019.82 4,012.89 402.47 509.86 1,614.68 2010 2011 2012 CAGR 22.38% 28.05% 25.15% 23.33% 25.43% 20.05% Rs. 3,866.95 Rs. 4,880.21 Rs. 5,834.75 Rs. 7,088.03 26.20% 19.56% 21.48% 2,135.64 55.23% 739.61 19.13% 651.62 16.85% 606.04 15.67% 501.54 12.97% 2,910.79 59.64% 993.31 20.35% 869.40 17.81% 835.69 17.12% 681.63 13.97% 3,596.82 61.64% 1,193.62 20.46% 1,022.44 17.52% 994.37 17.04% 862.55 14.78% 4,484.13 63.26% 1,449.83 20.45% 1,222.31 17.24% 1,196.07 16.87% 867.65 12.24%
80
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Lupin
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 70% 60% 50% 40% 30% 20% 10% 0%
Amount in Crs.
Amount in Crs.
56%
54% 52% 2009 2010 2011 2012 50%
2009 2,967
1,621
54.63%
2,911
59.64%
3,597
61.64%
4,484
63.26%
Chart Title
Amount in Crs.
Amount in Crs.
200 9 576
201 0 993
201 1 1,194
201 2 1,450
EBITDA
PAT % Margin
81
Cadila
Company Profile
Company Information Head quarter: Year of Incorporation Ahmedabad, Gujarat 1995 Business Overview Cadila Healthcare is privately held pharmaceutical company in India, which has strong presence in more than 50 countries around the world It is the first Indian company to get IND approval by US FDA for clinical trials to be conducted in India It has one of the best R&D set ups in India, manned by more than 350 scientists and engineers The company is the only Indian manufacturer of Streptokinase and Hyaluronic Acid-based products
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Mr. Pankaj R. Patel Mr. Mukesh M. Patel Mr. Humayun Dhanrajgir Mr. Apurva S. Dhawan Dr. Sharvil M.Patel Chairman & MD Non-Executive & Independent Non-Executive & Independent Non-Executive & Independent Deputy MD
Cadila
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 3,348.50 Rs. 3,743.40 Rs. 4,610.60 Rs. 6,379.20 1,290.20 1,129.70 1,158.50 2,379.70 1,235.20 251.70 429.60 385.10 1,628.50 250.70 332.10 410.00 2,171.50 295.20 502.10 453.20 2,573.60 466.60 1,224.40 646.70 2010 2011 2012 CAGR 21.50% 21.91% 20.96% 22.70% 26.33% 29.13% Rs. 2,947.13 Rs. 3,690.70 Rs. 4,632.60 Rs. 5,286.20 25.23% 25.52% 14.11% 1,990.53 67.54% 625.43 21.22% 513.63 17.43% 393.90 13.37% 303.10 10.28% 2,512.30 68.07% 812.50 22.01% 678.60 18.39% 608.50 16.49% 505.10 13.69% 3,157.20 68.15% 1,028.20 22.19% 901.30 19.46% 842.50 18.19% 711.00 15.35% 3,606.90 68.23% 1,106.80 20.94% 948.90 17.95% 794.20 15.02% 652.60 12.35%
83
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Cadila
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
6,000 5,000 Amount in Crs. 4,000 3,000 2,000 1,000 2009 2,947 2010 3,691 25.23% 2011 4,633 25.52% 2012 5,286 14.11%
68%
67%
Chart Title
1,200 Amount in Crs. 1,000 800 600 400 200 EBITDA % Margin 2009 625 21.22% 2010 813 22.01% 2011 1,028 22.19% 2012 1,107 20.94%
84
Glenmark
Company Profile
Company Information Head quarter: Year of Incorporation Mumbai, India 1977 Business Overview Glenmark is a leading player in the discovery of new molecules both NCEs (new chemical entity) and NBEs (new biological entity) It employs nearly 9,500 people in over 80 countries It has 13 manufacturing facilities in 4 countries and has 5 R&D centers It has been chosen as the Best Pharma Company Across Emerging Markets in 2011 & recognized for the Best Overall Pipeline 2011 by SCRIP, the largest selling and most respected pharmaceutical magazine in the world It has 400 scientists and extensive R&D facilities spread across the globe and 3 R&D centers dedicated for drug discovery Its subsidiary, Glenmark Generics Limited aims to become a leading integrated global generics organization and it comprises of US Generics, Europe generics, the API business 85 and the Oncology business
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Mr. Glenn Saldanha Ms. Cheryl Pinto Chairman & MD Director
Executive Director
Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director
Glenmark
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 4,208.90 Rs. 4,883.75 Rs. 5,097.77 Rs. 5,883.42 2,097.49 1,882.38 2,135.15 2,269.48 1,598.15 71.48 974.45 1,466.71 2,355.23 107.02 395.80 1,680.57 2,063.93 194.87 401.16 1,430.46 2,426.62 320.07 285.40 1,326.38 2010 2011 2012 CAGR 20.73% 23.80% 4.78% 5.94% 21.99% 34.30% Rs. 2,290.04 Rs. 2,549.60 Rs. 3,089.58 Rs. 4,029.90 11.33% 21.18% 30.44% 1,414.95 61.79% 629.01 27.47% 526.33 22.98% 268.91 11.74% 191.66 8.37% 1,530.27 60.02% 668.54 26.22% 547.93 21.49% 383.91 15.06% 324.47 12.73% 2,097.75 67.90% 732.79 23.72% 638.12 20.65% 481.56 15.59% 457.83 14.82% 2,684.51 66.61% 723.64 17.96% 625.77 15.53% 488.12 12.11% 464.30 11.52%
86
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Glenmark
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 35% 25% 20% 15% 10% 5%
2009 2,290 2010 2,550 11.33% 2011 3,090 21.18% 2012 4,030 30.44%
Amount in Crs.
1,500 1,000
500 -
0%
Chart Title
760 740 720 700 680 660 640 620 600 580 560
Amount in Crs.
EBITDA % Margin
87
Piramal Healthcare
Company Profile
Company Information Head quarter: Year of Incorporation Mumbai, Maharashtra 1999 Business Overview Piramal Enterprises is the flagship company of the Piramal Group and is a world leader in its various business verticals It has a global footprint in over 100 countries with manufacturing bases in the US, Great Britain, Sri Lanka, China and Canada The company has more than 115 issued patents and 395 pending patent applications in several countries It aspires to be the first Indian company to discover, develop and launch its own NCE (new chemical entity) drug in the global market It is one of the top 10 custom manufacturing companies in India, Europe and North America Piramal healthcare sold its generics business to Abbott Laboratories for $3.7 billion in 2011 88
Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Ajay G. Piramal Dr. Swati Piramal Nandini Piramal Vijay Shah S. Ramadorai Deepak Satwalekar N .Vaghul Keki Dadiseth Chairman Vice Chairperson Executive Director Executive Director & Chief Operating Officer Director Director Director Director
Piramal Healthcare
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 3,557.63 Rs. 3,752.71 Rs. 13,851.00 Rs. 14,696.68 1,339.08 1,294.96 762.62 2,021.02 1,317.07 94.55 472.40 480.13 1,684.89 41.18 286.86 808.71 11,836.42 1,770.26 225.73 420.51 11,242.03 57.82 234.93 21.96 2010 2011 Rs. 1,826.58 -50.43% 1,132.55 62.00% 97.86 5.36% 2.00 0.11% 16,414.53 898.65% 12,883.36 705.33% 2012 Rs. 2,489.36 36.29% 1,562.12 62.75% 329.56 13.24% 200.27 8.05% 120.89 4.86% 111.50 4.48% -29.35% -29.21% -24.71% -17.59% CAGR -8.86% -8.69% Rs. 3,288.48 Rs. 3,685.22 12.06% 2,051.94 62.40% 588.73 17.90% 469.16 14.27% 340.75 10.36% 316.25 9.62% 2,288.01 62.09% 740.97 20.11% 598.32 16.24% 499.77 13.56% 481.90 13.08%
89
Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Piramal Healthcare
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60%
Amount in Crs.
2,000 1,500
1,000 500 Gross Profit % Margin 2009 2,052 62.40% 2010 2,288 62.09% 2011 1,133 62.00% 2012 1,562 62.75%
2009
2010
2011
2012
3,288
3,685
12.06%
1,827
-50.43%
2,489
36.29%
Chart Title
800 700 600 500 400 300 200 100 EBITDA % Margin
2011 98 5.36%
0%
Amount in Crs.
90
Biocon
Company Profile
Company Information Headquarter: Bangalore, India Business Overview Biocon is a fully integrated healthcare company that delivers innovative biopharmaceutical solutions It is a global biopharmaceutical company with products and research services ranging from pre-clinical to clinical development through to commercialization In R&D they focus on the entire drug development pathway from process development to non-clinical and clinical research Within biopharmaceuticals, the company manufactures generic active pharmaceutical ingredients (APIs) which are sold in the developed markets of the US and Europe It is among the few companies in the world with a diverse scientific skill base and advanced 91 manufacturing capabilities
Year of 1978 Incorporation Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Ms. Kiran MazumdarShaw Mr. John Shaw Mr. Russell Walls Mr. Suresh N.Talwar Dr. Bala S. Manian Chairman & MD Vice Chairman Director Non-Executive & Independent Director Non-Executive Independent Director
Prof.Charles L.Cooney
Biocon
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital Rs. 2,543.54 548.67 1,510.74 11.80 281.53 333.76 2010 2011 2012 Rs. 2,935.99 Rs. 3,585.60 Rs. 3,945.00 547.38 371.80 274.60 1,757.85 139.92 167.03 230.29 2,032.79 441.50 189.00 (252.40) 2,272.40 523.30 274.50 (341.90) 776.04 46.38% 387.76 23.18% 277.51 16.59% 259.99 15.54% 93.12 5.57% Rs. 1,673.07 2010 2011 2012 CAGR 8.60% 18.51% 13.96% 12.91% 14.72% 53.74% Rs. 2,404.62 Rs. 1,852.40 Rs. 2,143.10 43.73% -22.96% 15.69% 1,021.60 42.48% 508.29 21.14% 368.15 15.31% 351.46 14.62% 293.24 12.19% 1,126.60 60.82% 568.00 30.66% 416.40 22.48% 398.50 21.51% 367.50 19.84% 1,291.60 60.27% 573.90 26.78% 399.50 18.64% 392.50 18.31% 338.40 15.79%
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Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Biocon
Financial Summary (Amount in Crores)
Sales & Sales Growth Chart Title
3,000 Amount in Crs. 2,500 2,000 1,500 1,000 500 Total Revenue % Growth 2009 1,673 2010 2,405 43.73% 2011 1,852 -22.96% 2012 2,143 15.69%
Amount in Crs.
Chart Title
Amount in Crs.
EBITDA % Margin
% Margin
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Aurobindo Pharma
Company Profile
Company Information Head quarter: Hyderabad, India Business Overview Aurobindo Pharma manufactures generic pharmaceuticals and active pharmaceutical ingredients The company markets these products in over 125 countries. Its marketing partners include AstraZeneca and Pfizer The companys main areas of activity include six major therapeutic areas: Antibiotics Anti- retrovirals Cardiovascular products Central nervous system products Gastroenterological Anti-allergies The company has one of the largest R&D facilities in India and has three research centers spread over 16,000 square meters. The company employs over 650 scientists (including 35 PhDs)
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Year of 1986 Incorporation Market Data ( 30-Sep-2012) Market Cap (Rs in Crs.): 2012 P/E : 52 week High / Low : Key Management
Mr.N.Govindarajan Mr.K.Nityananda Reddy Mr.M.Madan Mohan Reddy Dr.M.Sivakumaran Mr.P.Sarath Chandra Reddy Mr.K.Ragunathan Mr.P.V.Ramaprasad Reddy MD Vice Chairman Wholetime Director Wholetime Director
4,125.17 NA 164/80
Non-Executive Director
Non-Executive Chairman Wholetime Director
Aurobindo Pharma
Financials (Amount in Crores)
Profit and Loss Account 2009 Total Revenue % Growth Gross Profit % Margin EBITDA % Margin EBIT % Margin PBT % Margin PAT % Margin Balance Sheet 2009 Total Assets Total Debt Shareholder's Equity Cash & Bank Capital Expenditure Net Working Capital 2010 2011 2012 Rs. 4,226.47 Rs. 4,791.31 Rs. 5,841.10 Rs. 5,991.20 2,336.12 2,158.89 2,423.37 2,441.91 1,241.26 127.65 483.00 1,475.22 1,829.08 72.83 419.89 1,665.96 2,569.60 14.00 716.59 2,070.11 2,493.17 122.20 571.32 2,319.90 2010 2011 2012 CAGR 14.50% 24.04% 26.45% 33.56% 12.73% Rs. 3,094.93 Rs. 3,721.64 Rs. 4,450.71 Rs. 4,646.44 20.25% 19.59% 4.40% 1,114.21 36.00% 287.01 9.27% 159.41 5.15% 75.55 2.44% 100.26 3.24% 1,606.44 43.16% 969.64 26.05% 820.30 22.04% 752.50 20.22% 563.40 15.14% 2,277.69 51.18% 1,032.49 23.20% 860.99 19.35% 798.51 17.94% 563.45 12.66% 2,126.68 45.77% 580.34 12.49% 379.81 8.17% 108.23 2.33% (123.50) -207.20% -2.66%
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Note : Net Working Capital = Current Assets Cash - Short-term Investments Current Liabilities Short-term Borrowings Current Portion of Long-term Debt
Aurobindo Pharma
Financial Summary (Amount in Crores)
Sales & Sales Growth
Chart Title
6,000 Amount in Crs. 5,000 4,000 3,000 2,000 1,000 Total Revenue % Growth 2009 3,095 2010 3,722 2011 4,454 2012 4,646
20%
15% 10% 5% 0%
20.25%
19.68%
4.32%
Chart Title
1,200 Amount in Crs. 1,000 800 600 400 200 EBITDA % Margin
2009
287 9.27%
2010
970 26.05%
2011
1,033 23.18%
2012
580 12.49%
2009
2010
2011
2012
PAT % Margin
100 3.24%
563 15.14%
563 12.65%
(124) -2.66%
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Industry Overview
The Indian Health Insurance industry is currently pegged at US$3billion and is expected to reach around US$13billion by 2020, growing at a CAGR of around 20% The driving factors for the health insurance sector are rising healthcare expenditure, increasing disposable income, desire for better quality health services and medical care and the rise in the number of people with affluent lifestyles Health insurance accounts for 20% of the total general insurance industry in India and has been growing at a CAGR of 18-20% for the last few years Information Technology has also been one of the important drivers of growth in the health insurance industry. Several companies are now developing e-platforms such as PolicyBazaar.com and easyinsuranceindia.com which list all the aspects of the health insurance plans and allow consumers to compare, understand and apply for the health coverage online Health insurance portability is also gaining popularity in India as it allows health insurance policyholders to switch companies while retaining their no-claims benefits Less than 15% of the Indian population is covered under any form of health insurance today, including government-supported schemes
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CI
INTERMEDIATE SURGERIES
MINOR SURGERIES
MEDICAL MANAGEMENT
Frequency of Occurrence
IN - PATIENT TREATMENT OUT - PATIENT TREATMENT
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Healthcare infrastructure
There is a misalignment of physical and human infrastructure at the point of demand for healthcare The systems for clinical protocols, provider accreditation and medical coding standards for utilisation data are almost non-existent Limited engagement of providers with insurers / TPAs to pre-agree on the terms of business
Elderly population cannot afford health insurance premiums; aggravated by historic under-pricing Insurance is viewed politically as a panacea for health for all, but the poorest sections of society cannot afford products to meet even basic health needs Fiscal incentives do not support pre-funding of healthcare costs
No systematic practice of re-pricing the business to account for claims cost trend
A level playing field does not exist for all types of insurance companies to write medical insurance policies
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3 4
ICICI Lombard
6 7 8
Capital Raising
We advice clients on their capital needs and find them the right partner who brings more than just capital
Restructuring
We advise on business restructurings to help achieve financial, strategic and operational efficiency
Organizational Transformation
We work with companies to put systems, processes and people in place to help take advantage of both organic and inorganic synergies
Turnarounds
We work closely with companies to help devise and implement a turnaround strategy by plugging the deficiencies of management, technology, capital or partnerships
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