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4
5 = Company overview =
6
7 Headquartered in Mumbai, Alkem Laboratories (NSE:ALKEM) is one of India’s foremost global pharmaceutical company. The Company is engaged in the development, manufacture and marketing of pharmaceuticals with operational footprints across 40+ countries. In India, it has a formidable presence in several therapy segments and consistently features amongst the top ten pharmaceutical companies.
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9 Steered by its industry experience of over four decades, Alkem offers high-quality branded generics, generic drugs, active pharmaceutical ingredients and nutraceuticals. The Company’s product portfolio features over 800 brands encompassing all major therapeutic segments.
10
11 32% of its revenue is generated via offshore sales. As well as Alkem Laboratories has consistently been ranked amongst the top ten pharmaceutical companies in India. The company's portfolio includes illustrious brands like Clavam, Pan, Pan-D and Taxim-O, which feature amongst top 50 pharmaceutical brands in India. For over a decade, its dominance in anti-infective segment has remained unchallenged.{{footnote}}https://www.alkemlabs.com/about-us.php{{/footnote}}
12
13 == Global Presence ==
14
15 It started with a small step! A step, originating from the idea of increasing Alkem’s global footprint, which eventually became a giant leap for us! For it, United States is the focal point of international operations. In this stride, Alkem Laboratories has cumulatively filed more than 125 ANDAs with the US FDA. Alkem markets and sells products in the United States under its wholly owned subsidiary – Ascend.{{footnote}}https://www.alkemlabs.com/overview.php{{/footnote}}
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17 Other international operations include markets like Australia, Europe, Southeast Asia, Latin America, Africa and CIS. The company's products are marketed in about 50 international markets directly through its subsidiaries and indirectly through active engagements with other organizations. Currently, its key markets include Australia, Chile, Philippines and Kazakhstan.
18
19 Alkem Laboratories has its own sales and commercial infrastructure in these markets. Alkem Laboratories is constantly looking forward to product in-licensing and out-licensing opportunities in several emerging markets. This helps it leverage its product portfolio, and sales and marketing infrastructure.
20
21
22 [[image:ALKEM.jpg]]
23
24
25 == Manufacturing Facilities ==
26
27 Alkem Laboratories is a high quality focused organization. Alkem’s vision and culture of high quality obsession reflects in its operations. The company's manufacturing operations are focused on producing generics, branded generics, over-the-counter (OTC) products, Active Pharmaceutical Ingredients (APIs) and nutraceuticals. These are available in full range of dosage forms, which include, capsules, injectable and liquids. This helps in furnishing quality formulations in India as well as 50 other countries.{{footnote}}https://www.alkemlabs.com/manufacturing-facilities.php{{/footnote}}
28
29 Alkem Laboratories has state-of-the-art facilities that employ cutting-edge manufacturing techniques for producing best-in-class products. Alkem has an extensive manufacturing footprint which has a total of 21 manufacturing facilities, out of which 19 are in India and 2 are in the United States.
30
31 Alkem Laboratories has various manufacturing facilities at Daman, Baddi, Indore and Sikkim. These possess regulatory approvals from agencies such as USFDA, MHRA - UK, SAHPRA-South Africa, TGA - Australia, ANVISA - Brazil, WHO - Geneva, TPD - Health Canada, PPB - Kenya, NDA - Uganda, MOH - Sudan, INVIMA - Colombia, TFDA - Tanzania, ZimbabAlkem Laboratories ,BfArM-Germany & Other Africa, Asian & CIS Countries. They are routinely audited to ensure compliance with Current Good Manufacturing Practices (cGMP).
32
33 The company's Production Team has over 3,000 capable individuals, who work in tandem with the Quality Team to deliver top-quality products. The company's management furnishes adequate resources to ensure quality deliverance. All manufacturing units are equipped with Quality Control Units that assure quality at each stage.
34
35 **Manufacturing Facilities & Capabilities in India**
36
37 (% style="width:654px" %)
38 |(% style="width:137px" %)**Facilities**|(% style="width:124px" %)**No. of Facilities**|(% style="width:390px" %)**Manufacturing Capabilities**
39 |(% style="width:137px" %)Baddi|(% style="width:124px" %)4|(% style="width:390px" %)Formulations - Tablets, Injectables, Dry Syrup
40 |(% style="width:137px" %)Sikkim|(% style="width:124px" %)8|(% style="width:390px" %)Formulations - Tablets, Injectables, Dry Syrup
41 |(% style="width:137px" %)Daman|(% style="width:124px" %)5|(% style="width:390px" %)Formulations - Capsules, Tablets, Injectables, Dry Syrup
42 |(% style="width:137px" %)Mandva|(% style="width:124px" %)1|(% style="width:390px" %)Active Pharmaceutical Ingredients (APIs)
43 |(% style="width:137px" %)Ankleshwar|(% style="width:124px" %)1|(% style="width:390px" %)Active Pharmaceutical Ingredients (APIs)
44
45 **Manufacturing Facilities & Capabilities in the US**
46
47 (% style="width:657px" %)
48 |(% style="width:136px" %)**Facilities**|(% style="width:122px" %)**No. of Facilities**|(% style="width:396px" %)**Manufacturing Capabilities**
49 |(% style="width:136px" %)California|(% style="width:122px" %)1|(% style="width:396px" %)Active Pharmaceutical Ingredients (APIs)
50 |(% style="width:136px" %)St. Louis (Missouri)|(% style="width:122px" %)1|(% style="width:396px" %)Formulations - Liquids, Nasal Sprays, Semi-solids, Solids
51
52 = Industry Overview =
53
54 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}}
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56 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.
57
58 **Branded and Generic Medicines**
59
60 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.
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62 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.
63
64 == Key Trends Driving Growth ==
65
66 **Ageing and Rising Population**
67
68 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.
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70 **Prevalence of Lifestyle Diseases**
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72 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.
73
74 **Growing Middle-Class**
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76 Global middle-class population is on the rise. The increasing income of the population is leading to improved affordability for better healthcare solutions.
77
78 **Low-Priced Generics**
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80 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.
81
82 **Improved Access**
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84 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.
85
86 **Innovation**
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88 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.
89
90 == Review of Markets ==
91
92 === Developed Markets ===
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94 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$354 billion on specialty products in 2019, with 30% of that on oncology products.
95
96 **The United States**
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98 The US currently holds the top spot globally for spends on pharmaceuticals. It is also the largest importer of drugs and therefore plays a key role in the global industry’s growth. Growing at a CAGR of 3-6% over 2020-2024, the US market is estimated to reach US$ 605-635 billion and continue to retain its leadership position at the end of this period.
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100 Growth will be driven by growing and ageing population of the country. Another important factor which is propelling the growth of this market is the rising focus of pharmaceutical companies on rare and specialty diseases. Innovations in newer areas such as advanced biologics, nucleic acid therapeutics and cell therapies is attracting investments. At the same time, the market is not without its share of challenges. The government’s plan to implement cost control policies along with price erosion in US generics market may put pressure on the growth prospects of the US pharmaceuticals industry.
101
102 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.
103
104 **Pharmerging Markets**
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106 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.
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108 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$165-195 billion by 2024, growing at a CAGR of 5-8% over the five-year period. India and Brazil are other key players within pharmerging markets, making valuable contributions to the global industry growth. Also as per report by IQVIA, India is expected to be one of the fastest growing pharmaceutical markets in the world with expected CAGR of 8-11% through 2019-24.
109
110 == Indian Pharmaceutical Industry ==
111
112 **Domestic Market**
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114 Over the past five years through 2014-19, Indian Pharmaceutical Market (IPM) has been one of the fastest growing markets in the world. As per IQVIA, the turnover of IPM reached ₹ 1.50 trillion (about US$ 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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116 Growth in domestic pharmaceutical market is also expected to be supported by the government’s focus on enhancing access to healthcare to economically weaker sections of the society. The Ayushman Bharat-Pradhan Mantri Jan Aarogya Yojana (AB - PMJAY) is the biggest healthcare programme in the world and is aimed at providing affordable treatment for 500 million people, or 40% of India’s population, including 100 million vulnerable families. Deeper penetration of private health insurance also offers considerable potential for the growth of the IPM. As per the report titled ‘Indian Life and Health Insurance Sectors’ from consulting firm Milliman, only 44% of the total population in the country have a health insurance policy as of 2017.
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118 The announcements made in the 2020-21 Union Budget are also expected to provide a stimulus to the Indian healthcare sector. This includes:
119
120 * An allocation of ₹ 690 billion for the healthcare sector, up from ₹ 627 billion in the previous year
121 * Of the total allocation, around ₹ 64 billion would be for ABPMJAY, similar to last year
122 * 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
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124
125 [[image:ALKEM1.jpg]]
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127
128 = Business Overview =
129
130 == Indian Business ==
131
132 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.
133
134 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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136 During FY 2019-20, the Company’s domestic business registered operating revenue of ` 56,062 million compared to ` 49,642 million in the previous financial year, recording a growth of 12.9%. A significant portion of the Company’s domestic sales comes from the acute therapy segments of anti-infective, gastro-intestinal, pain & analgesic and vitamins / minerals / nutrients where it is an established player with large brands and over four decades of presence. In the chronic segments of neurology, dermatology, antidiabetes and cardiology, the Company is an emerging player with growing product portfolio and rising market share. The Company launched 37 new products including line extensions during the year.
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138 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.
139
140 == US Business ==
141
142 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.
143
144 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.
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146 All the six manufacturing facilities for the US market has received an EIR.
147
148 = Financial Highlights =
149
150 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 %.
151
152 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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154 During the financial year ended 31st March, 2020, the Company and its subsidiaries achieved total revenue including other income of Rs 84,485.8 Million on consolidated basis, as against a turnover of Rs 74,448.9 Million achieved in the previous year, registering a growth of 13%.
155
156 During the financial year ended 31st March, 2020, Standalone Profit before interest, depreciation and tax increased by 40% at Rs 15,636.3 Million as against Rs 11,132.9 Million in the previous year, whereas Consolidated Profit before interest, depreciation and tax increased by 31% at Rs 15,776.2 Million as against Rs 12,024.7 Million in the previous year. As a result, Standalone Profit before tax grew by 42% over the previous year to Rs 13,380.8 Million and Consolidated Profit before tax was Rs 12,597.9 Million, which grew by 32% over the previous year.
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158 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.
159
160 = Recent developments =
161
162 **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}}
163
164 **Key financial highlights of Q1FY21**
165
166 * Revenue from Operations was ₹ 20,035 million, year-on-year growth of 8.3%
167 * India sales were ₹ 11,550 million, year-on-year decline of 5.5%
168 * International sales were ₹ 7,853 million, year-on-year growth of 32.8%
169 * 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
170 * 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
171 * Profit before tax (PBT) was ₹ 4,928 million, a growth of 134.6% compared to Q1FY20
172 * Net Profit (after Minority Interest) was ₹ 4,220 million, year-on-year growth of 127.5%
173
174 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.”
175
176 == Operational Highlights ==
177
178 **India Business**
179
180 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.
181
182 COVID-19 led lockdown significantly impacted the new prescription generation during the quarter on account of shutdown of clinics, hospital OPDs and deferment of surgeries. As a result, Indian Pharmaceutical Market (IPM) registered a YoY decline of 4.9% during the quarter (Source: IQVIA data). The decline was sharper in the acute therapy areas of anti-infectives, gastro-intestinal, pain / analgesics and vitamins / minerals / nutrients compared to chronic therapy areas like neuro / CNS, cardiac and anti-diabetes which registered a YoY growth during the quarter.
183
184 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.
185
186 **International Business**
187
188 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.
189
190 US sales for the quarter was ₹ 6,664 million, recording a year-on-year growth of 38.3%.
191
192 Other International Markets sales for the quarter was ₹ 1,189 million, recording a year-onyear growth of 8.6%.
193
194 **R&D Investments**
195
196 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.
197
198
199 **Launch of Brivaracetam in India under the brand name 'Brivasure'** {{footnote}}https://www.alkemlabs.com/pdf/press-release/2021/Launch-of-Brivaracetam-in-India-under-the-brand-name-Brivasure.pdf{{/footnote}}
200
201 **March 15, 2021**; Alkem Laboratories Ltd. (Alkem), one of the India’s leading pharmaceutical formulation development, manufacturing, and marketing companies, announce the launch of Brivasure, an affordable anti-epileptic drug for the treatment of Epilepsy in India.
202
203 Brivasure, Alkem’s anti-epileptic drug (AED) is a generic version of the parent molecule. Alkem has launched the drug in the market at price, Brivasure 25mg - Rs.79.50/strip, Brivasure 50mg - Rs. 148.50/strip, Brivasure 75mg - Rs. 230/strip, Brivasure 100mg - Rs. 295/strip, post patent expiry of innovator product, of Brivaracetam as on February 21, 2021. The drug has been approved by the Drugs Controller General of India (DCGI) in the adjunctive management of partial onset seizure with or without secondary generalization. The drug has exhibited faster onset of action, efficacy with favorable safety profile.
204
205
206 = References =
207
208 {{putFootnotes/}}
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