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  The global pharmaceutical industry is one of the largest and the oldest industries in the world. As per a research report by the IQVIA Institute for Human Data Science, the global pharmaceutical industry is estimated to be US$ 1.25 trillion (at invoice level) in 2019 and is expected to grow at a compounded annual growth rate (CAGR) of 3-6% over 2020-2024 to touch US$ 1.6 trillion in 2024. This growth would primarily be driven by ageing and rising population, improvements in purchasing power, access to quality healthcare by poor and middle-class families worldwide and innovation and advancement in rare and specialty diseases including biologics, nucleic acid therapies and cell therapies. However, adoption of price control policies, tightening of regulations by governments in key markets and loss of exclusivity of large brands would offset some part of this growth.{{footnote}}https://www.alkemlabs.com/pdf/annual-report/Annual_Report_2019-20-2.pdf{{/footnote}}
--
  The  major developed markets, comprising the United States (US), top five European markets (Germany, France, Italy, United Kingdom and Spain), Japan, Canada, South Korea and Australia,  will remain the dominant contributor to the global pharmaceutical sales. However, at the same time, the contribution of the  Pharmerging markets (comprising China, Brazil, India, Russia and many others) to global spending is expected to rise over the five-year period to 2024.
--Branded and Generic Medicines
++**Branded and Generic Medicines**
  Branded, patented medicines by far make up the largest share of the global pharmaceutical sales. Specialty drugs – high-cost prescription medications to treat chronic or complex conditions like cancer, rheumatoid arthritis and multiple sclerosis - is the fastest growing and most expensive segment of pharmacy care. These products currently account for 36% of spending globally (at invoice level). Specialty share is estimated to account for 40% of global spending in 2024. In developed markets, specialty share is projected to be even higher at 52% in 2024.
  Meanwhile, governments worldwide are looking to boost patient access to affordable medicines through the supply of generics – the bioequivalent of branded medications. Between 2020 and 2024, branded medicines worth US$139 billion (at invoice level) are expected to go off-patent, compared to the US$107 billion impact seen from 2014–2019, opening pipeline opportunities for generics companies.
--Key Trends Driving Growth
++== Key Trends Driving Growth ==
--Ageing and Rising Population
++**Ageing and Rising Population**
  Global population is expected to exceed 9.3 billion by 2050 and around 21% of this population will be aged 60 and above. The increased size of the global population will fuel the demand for pharmaceutical products. In addition, the demographic trend towards an older population means higher incidence of age-related diseases, thereby boosting demand for long-term treatments.
--Prevalence of Lifestyle Diseases
++**Prevalence of Lifestyle Diseases**
  Changing lifestyles, rapid urbanisation, and unhealthy diets have been resulting in increased incidences of chronic and noncommunicable ailments. Demand for quality and specialised healthcare solutions has been rising with growing incidence of lifestyle disorders.
--Growing Middle-Class
++**Growing Middle-Class**
  Global middle-class population is on the rise. The increasing income of the population is leading to improved affordability for better healthcare solutions.
--Low-Priced Generics
++**Low-Priced Generics**
  Improving standards of living and purchasing power, especially in pharmerging markets, will drive demand for better healthcare. The launch of low-priced generics in several markets across the world will also boost the growth of the pharmaceutical industry.
--Improved Access
++**Improved Access**
  Rapid urbanisation has resulted in growing number of people having improved access to quality healthcare and pharmaceuticals. This includes expansion of national health insurance schemes and government programmes to support healthcare.
--Innovation
++**Innovation**
  Innovative and emerging pipeline products will continue to drive the size and growth of the industry, especially in major developed pharmaceutical markets, with positive implications for the health of the global population. Oncology and autoimmune therapies will constitute an increasing proportion of these specialty drugs in both developed and pharmerging markets.
--Review of Markets
++== Review of Markets ==
--Developed Markets
++=== Developed Markets ===
  In the developed markets, medicine spending reached US$ 821.6 billion (at invoice level) in 2019. The developed markets are expected to see an average CAGR between 2-5% through 2024 to reach total spending of US$ 985-1,015 billion. Despite increases in specialty medicine spending, the markets are expected to witness slower growth than the past five years due to greater brand losses of exclusivity. Price and volume growth of specialty drugs are also likely to be slow, impacting brand growth. Developed markets spent a combined US$354 billion on specialty products in 2019, with 30% of that on oncology products.
--The United States
++**The United States**
  The US currently holds the top spot globally for spends on pharmaceuticals. It is also the largest importer of drugs and therefore plays a key role in the global industry’s growth. Growing at a CAGR of 3-6% over 2020-2024, the US market is estimated to reach US$ 605-635 billion and continue to retain its leadership position at the end of this period.
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  The US generics market continues to attract a large number of Abbreviated New Drug Application (ANDA) filings and approvals, as also evidenced in the calendar year 2019. As against 813 final ANDA approvals in 2018, 833 final ANDA approvals were granted in 2019. Additionally, 146 tentative approvals were also granted during 2019.
--Pharmerging Markets
++**Pharmerging Markets**
  In 2019, pharmerging markets comprised 26% of global spending at net market price. This is expected to rise to 28– 30% of spending in 2024. The bulk share of medicine use is in pharmerging markets driven by the large population in these countries. However, the per capita rate of use is considerably lower than in high income countries. The pharmerging markets are expected to register the highest growth among global regions with a 5-8% CAGR over 2020-2024 driven by improved access to healthcare, better affordability along with wider coverage of medical insurance, change in lifestyle and food habits and launch of newer drugs.
  China is the world’s second largest pharmaceutical market and the largest amongst the pharmerging markets, valued at US$ 141 billion in 2019. Pharmaceutical spending in this market is projected to increase to US$165-195 billion by 2024, growing at a CAGR of 5-8% over the five-year period. India and Brazil are other key players within pharmerging markets, making valuable contributions to the global industry growth. Also as per report by IQVIA, India is expected to be one of the fastest growing pharmaceutical markets in the world with expected CAGR of 8-11% through 2019-24.
--Indian Pharmaceutical Industry
++== Indian Pharmaceutical Industry ==
--Domestic Market
++**Domestic Market**
  Over the past five years through 2014-19, Indian Pharmaceutical Market (IPM) has been one of the fastest growing markets in the world. As per IQVIA, the turnover of IPM reached ₹ 1.50 trillion (about US$ 22 billion) in FY 2019-20, a growth of 10.8% from the previous year. Going forward, IQVIA projects IPM to grow at a CAGR of 8-11% over 2020-24 to reach US$ 31-35 billion in 2024 which is double the rate of growth when compared to its global peers. This growth will be driven by a combination of factors such as rising income levels with steady economic growth, rise in chronic diseases due to sedentary lifestyles, improvements in healthcare infrastructure, higher life expectancy, new launches by innovator companies and increasing acceptance of online sales of pharmaceutical products.
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+114,14 @@
  The announcements made in the 2020-21 Union Budget are also expected to provide a stimulus to the Indian healthcare sector. This includes:
--.
++* An allocation of ₹ 690 billion for the healthcare sector, up from ₹ 627 billion in the previous year
++* Of the total allocation, around ₹ 64 billion would be for ABPMJAY, similar to last year
++* The AB-PMJAY scheme will be expanded by setting up more hospitals in the tier-II and III cities under the publicprivate-partnership (PPP) route
--An allocation of ₹ 690 billion for the healthcare sector, up from ₹ 627 billion in the previous year
++= Business Overview =
--Of the total allocation, around ₹ 64 billion would be for ABPMJAY, similar to last year
++== Indian Business ==
--The AB-PMJAY scheme will be expanded by setting up more hospitals in the tier-II and III cities under the publicprivate-partnership (PPP) route
--
--
--Business Overview
--
--Indian Business
--
  Indian pharmaceutical market is the largest market for the Company contributing 67.2% to its total revenue during the FY 2019-20. With more than 800 brands across all the major therapy areas, a large field force and pan-India supply chain and distribution network of over 7,000 stockists, the Company is amongst the leading pharmaceutical companies in India.
  In terms of secondary sales performance reported by IQVIA (MAT March 2020), the Company registered a growth of 16.9% YoY in FY 2019-20, which was more than 1.5x the IPM growth of 10.8% YoY. As a result, the Company gained one rank during the year and now features amongst the top 5 pharmaceutical companies in India in terms of market share. This outperformance was broad-based with the Company growing faster than the market growth rate in most of the major therapy areas of its presence. In its established therapy segments of anti-infectives, gastro intestinal and vitamins / minerals / nutrients, the Company grew significantly ahead of the market growth, thereby consolidating its position amongst the top companies in these therapeutic segments. The Company continues to rank as the number one anti-infectives Company in India for over 15 years and also features amongst the top 5 pharma companies in the therapy areas of gastro intestinal, pain & analgesic and VMS. This performance has been driven by Company’s market leading brands, large field force, robust supply chain and distribution network, comprehensive product portfolio, introduction of new products to fill portfolio gaps and an experienced management. Company’s top 10 brands feature amongst the top 2 selling brands in their respective molecule category and have been growing at a steady pace.
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  In the fast-growing chronic therapy areas of neurology, dermatology, anti-diabetes and cardiology, the Company grew at 1.5x – 2x the market growth rate and continued to build upon its growing presence. During the year, the Company not only gained market share in these therapy areas but also improved its rank in segments like anti-diabetes and dermatology. As per IQVIA data, the Company now features amongst the top 7 Neuro/CNS companies in India and ranks amongst the leading companies in the Alzheimer’s segment. This has been achieved through well-planned marketing and promotion initiatives, healthy growth in key brands, expansion in field force and new product launches.
++== US Business ==
--US Business
--
  The US pharmaceutical market is the second largest market for the Company, contributing around 26.4% to its total revenue. During FY 2019-20, the US business registered revenue of `21,999 million compared to `18,979 million in the previous financial year, recording growth of 15.9%. In US dollar terms, revenues from the US market crossed US$300 million during the financial year. The strong growth during the financial year was mainly on account of market share gains in the existing products as well as contributions from the new product launches. Favourable exchange rate movement also helped the reported year-on-year growth during the year.
--
  During FY 2019-20, the Company filed 18 ANDAs with the US FDA and received 22 approvals (including 6 tentative approval). With this, the Company has cumulatively filed 144 ANDAs including 2 new drug applications (NDA) with the US FDA. Of these, it has received approvals for 87 ANDAs (including 13 tentative approvals) and 2 NDA. The approved NDAs include brand Marinol (Dronabinol) which the Company acquired from AbbVie Inc, USA in December 2019.
  All the six manufacturing facilities for the US market has received an EIR.
++= Financial Highlights =
--
--Financial Highlights
--
  During the financial year ended 31st March, 2020, the Company’s total revenue including other income was Rs 67,730.6 Million on standalone basis as against Rs 57,816.7 Million achieved in the previous year, registering a growth of 17 %.
  The export turnover of the Company during the financial year 2019-20 was Rs 15,917.1 Million as against Rs 12,159.5 Million achieved in the previous year registering a growth of 31%.
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+159,25 @@
  The Standalone net profit after tax for the financial year ended 31st March, 2020 increased by 58% to Rs 12,644.2 Million over the previous year while the Consolidated net profit after tax increased by 48 % over the previous year to Rs 11,270.7 Million.
++= Recent developments =
--August 7, 2020; Alkem Laboratories Ltd (Alkem) announced its standalone and consolidated financial results for the first quarter ended June 30, 2020.{{footnote}}http://www.aiaengineering.com{{/footnote}}
++**August 7, 2020**; Alkem Laboratories Ltd (Alkem) announced its standalone and consolidated financial results for the first quarter ended June 30, 2020.{{footnote}}https://www.alkemlabs.com/pdf/quaterly-result/Q1FY21_Press_Release.pdf{{/footnote}}
--[[https:~~/~~/www.alkemlabs.com/pdf/quaterly-result/Q1FY21_Press_Release.pdf>>url:https://www.alkemlabs.com/pdf/quaterly-result/Q1FY21_Press_Release.pdf]]
++**Key financial highlights of Q1FY21**
--Key financial highlights of Q1FY21
++* Revenue from Operations was ₹ 20,035 million, year-on-year growth of 8.3%
++* India sales were ₹ 11,550 million, year-on-year decline of 5.5%
++* International sales were ₹ 7,853 million, year-on-year growth of 32.8%
++* Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) was ₹ 5,332 million, resulting in EBITDA margin of 26.6% vs. 14.3% in Q1FY20. EBITDA grew by 101.6% YoY
++* R&D expenses for the quarter was ₹ 1,186 million, or 5.9% of Revenue from Operations compared to ₹ 1,034 million in Q1FY20 at 5.6% of Revenue from Operations
++* Profit before tax (PBT) was ₹ 4,928 million, a growth of 134.6% compared to Q1FY20
++* Net Profit (after Minority Interest) was ₹ 4,220 million, year-on-year growth of 127.5%
--
--Revenue from Operations was ₹ 20,035 million, year-on-year growth of 8.3%
--
--India sales were ₹ 11,550 million, year-on-year decline of 5.5%
--
--International sales were ₹ 7,853 million, year-on-year growth of 32.8%
--
--Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) was ₹ 5,332 million, resulting in EBITDA margin of 26.6% vs. 14.3% in Q1FY20. EBITDA grew by 101.6% YoY
--
--R&D expenses for the quarter was ₹ 1,186 million, or 5.9% of Revenue from Operations compared to ₹ 1,034 million in Q1FY20 at 5.6% of Revenue from Operations
--
--Profit before tax (PBT) was ₹ 4,928 million, a growth of 134.6% compared to Q1FY20
--
--Net Profit (after Minority Interest) was ₹ 4,220 million, year-on-year growth of 127.5%
--
--
  Commenting on the results, Sandeep Singh, Managing Director, Alkem said, “In these unprecedented times, I am pleased to share that the Company responded well to various challenges that came up mainly in the areas of manufacturing and supply chain to ensure that there were no shortages of essential medicines. The Company delivered a resilient performance led by strong growth in its US business. While the India business was impacted by lockdown, the Company maintained its outperformance in its key established therapies of anti-infectives and gastro-intestinal. Superior revenue mix and savings on marketing activities helped Company register strong EBITDA margins. Going forward, while it’s difficult to predict how the situation will unfold, the Company is taking all the necessary steps to ensure minimal impact on its operations.”
--Operational Highlights
++== Operational Highlights ==
--India Business
++**India Business**
  In Q1FY21, the Company’s India sales declined by 5.5% YoY, recording a sales of ₹ 11,550 million as compared to ₹ 12,222 million in Q1FY20.
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+194,7 @@
  With a significant part of the Company’s domestic sales coming from the acute therapy segments, the Company’s secondary sales during the quarter recorded a decline of 11.8% YoY. However the Company continued its outperformance in therapy areas of anti-infectives, gastro-intestinal, vitamins / minerals / nutrients, cardiac and anti-diabetes. This was driven by the Company’s strong brands, effective sales and marketing strategies, robust supply chain and distribution network and contribution from new product launches.
--International Business
++**International Business**
  In Q1FY21, the Company’s International sales grew by 32.8% YoY, recording sales of ₹ 7,853 million as compared to ₹ 5,912 million in Q1FY20.
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+202,10 @@
  Other International Markets sales for the quarter was ₹ 1,189 million, recording a year-onyear growth of 8.6%.
--R&D Investments
++**R&D Investments**
  During the quarter, the Company filed 4 abbreviated new drug applications (ANDAs) with the US FDA and received 2 approvals (including 1 tentative approval). As on June 30, 2020, the Company filed a total of 146 ANDAs and 2 new drug applications (NDA) with the US FDA. Of these, it has received approvals for 88 ANDAs (including 13 tentative approvals) and 2 NDAs.
++= References =
--
--References
--
  {{putFootnotes/}}