Ipca Laboratories Ltd

Last modified by Asif Farooqui on 2020/12/08 03:14

Overview

Ipca Laboratories Ltd (NSE:IPCALAB) a consumer-led global pharmaceutical company, creating healthy doses of life since 1949.¹

When you operate in an industry like pharmaceuticals, your work goes way beyond creating ‘products for customers’. It is different from any other domain – there lies a higher sense of responsibiliti and a need for utmost integriti in everything you do. As you serve millions of lives, high qualiti standards become a pre-requisite, and safeti of your people and consumers always comes first. All this, while ensuring that each life you touch is treated with respect and digniti.

This, is how Ipca works.

For more than 60 years, Ipca has been a crucial healthcare partner in over 120 countries across the 6 continents. Ipca Laboratories is a fully-integrated pharmaceutical company that manufactures over 350 formulations and 80 APIs for various therapeutic segments.

Today, Ipca Laboratories is one of the world’s largest manufacturers and suppliers of over a dozen APIs. These are produced from scratch at fully-automated manufacturing facilities, approved by the world’s most discerning drug regulatory authorities like UK-MHRA, EDQM-Europe, and WHO-Geneva, among others.

Taking the industry forward

One of the largest suppliers of these APIs worldwide with manufacturing leadership in over 12 APIs globally

15 APIs & 11 Formulations manufacturing facility across the globe

Leading brands in Pain, Rheumatology, Antimalarials and Hair care therapy in India

4 formulations rank amongst the top 300 brands of Indian Pharmaceutical Market as per IQVIA May 2020

Research & Development

Chemical & Biotechnological R&D

Over the past few decades, Research and Development of path-breaking products has been a key focus at Ipca. The company see tremendous value in its growing R&D investments, and its focused teams at Mumbai and Baroda, are well supported by state of the art equipments and high-end analytical instruments making them self-reliant on in-house product development from simple to complex small molecule drugs as well as biologics. All of its R&D centres are also recognised by the Department of Science and Industrial Research, Government of India, and are supported by facilities required to scale up the processes from grams to kilo as well as to Pilot-Plant level. They have the capabilities to deliver quality solutions within strict timelines, at low costs.²

The company's product development teams work closely with its marketing teams to produce inventive concepts and ideas, tapping both market needs and synergies across therapeutic domains. To that end, the major activities and expertise of this division includes:

Chemical Research
Analytical Research
Biosimilar Development
Bio-processing & Metabolic Engineering
New Drug Discovery and Development
Intellectual Property Management

Formulation Development

The company's Formulation Development Laboratory located in Mumbai (in line with the US-FDA requirements) is well-equipped with the technology required to conduct high-quality research activities and prototype development.³

R&D Capabilities:
- Formulations
- Analyticals
Key R&D Activities:
- Novel Drug Delivery System (NDDS)
- Abbreviated New Drug Application (ANDA)
- Manufacturing of generics for registration in UK/EU/South Africa/Brazil and other countries
- Formulation R&D Capabilities

Plant and Infrastructure

Global API & Intermediates Facilities

The company's consumer-centric growth story has been both inspiring and humbling. Since 1949, Ipca’s wide network of manufacturing units has expanded to 15 locations across the globe, including its API manufacturing facility in North Carolina, USA. These fully automated production units make it one of the world’s leading API manufacturer, and help it serve millions of lives across the globe – one dose of life at a time.⁴

Ratlam, Madhya Pradesh
Tarapur, Maharashtra
Ankleshwar, Gujarat
Aurangabad, Maharashtra
Ranu (Baroda), Gujarat
Indore, Madhya Pradesh
Mahad, Maharashtra
Nandesari, Gujarat
Nellore, Andhra Pradesh
Vizag, Andhra Pradesh

Overseas

Sunderland, United Kingdom
North Carolina, United States of America

Formulations Facilities

Ipca’s global footprint is reflected in its wide array of formulations offered across the world. Despite producing over 350 formulations covering every dosage form, the company ensure high quality standards at its Formulation manufacturing facilities across India.⁵

These fully-automated plants have the capacity to produce solutions from start to finish – right from raw material processing to bottling and packaging. This expertise makes it a trusted name both in the pharma industry, as well as in millions of homes around the world.

Athal, Silvassa
Piparia, Silvassa
Ratlam, Madhya Pradesh
Tarapur, Maharashtra
Dehradun, Uttaranchal
Jorethang, Sikkim
Kandla, Gujarat
Pithampur, Madhya Pradesh
SEZ Indore, Madhya Pradesh

Business Segments

APIs

With over 30 years of manufacturing expertise, Ipca produces over 80 APIs at 12 production facilities, accounting for nearly 25% of its turnover. The company's core strategic focus has been on backward integration, resulting in superior supply chain reliability and cost competitiveness in a dynamic market. Ipca has also emerged as one of India’s top exporters of APIs, serving over 70 countries around the globe.⁶

The company's manufacturing leadership extends across Atenolol (anti-hypertensive), Chloroquine Phosphate (anti-malarial), Chlorthalidone (diuretic), Furosemide (diuretic), Hydroxychloroquine Sulphate (DMARD), Losartan (anti-hypertensive), Metoprolol Succinate (anti-hypertensive), Metoprolol Tartrate (anti-hypertensive), Pyrantel Salts (anthelmintic), and Propranolol (anti-hypertensive) – besides being one of the largest suppliers of these APIs worldwide.

Formulations

Branded Formulations India

Ipca manufactures over 350 formulations in almost every dosage form with 4 of its branded formulations being ranked amongst the top 300 brands of Indian Pharma Market as per IQVIA May 2020. Ipca Laboratories is also leaders in Pain, Rheumatology, Antimalarials and Haircare therapies with a steadily growing portfolio.⁷

Ipca Laboratories has a strong team of 6000+ sales & marketing professionals and serve these formulations to more than 2,00,000 doctors across India. With 25 depots and 3200 stockists across the country Ipca Laboratories is present in every corner of India. The company's finished formulations is available at over 5,00,000 retail shops across India.

Branded Formulations International

Ipca has a strong presence in the Rest of the World (ROW) market, where the company market its Branded Generics with a work force of around 900 employees in around 40 countries across various geographies like East and West Africa, South East Asia, the CIS, Latin & Central America.⁸

The marketing and distribution of its products in these countries is supported by front end operations through marketing offices, its own subsidiaries and through a strong local distribution network.

Ipca Laboratories has overseas offices in Russia, Ukraine, Belarus, Kazakhstan, Philippines, Sri Lanka, Vietnam, Kenya, Myanmar, and wholly owned foreign subsidiaries in Colombia & Nigeria.

The company's ROW product basket includes around 75 brands spanning various therapeutic categories like Cardiovascular, Diabetes, CNS, Gastroenterology, Pain management & Arthritis, Anti-infectives, Anthelmintics, Ophthalmic, Nutritional supplements etc.

Generic Formulation

Ipca’s formulation business has emerged as most competitive in the evolving generic space with core focus on vertical integration.⁹

Ipca Laboratories has a diverse product portfolio catering to major therapeutic segments in virtually every dosage form – Oral solids, Powder for suspension and Small volume injections (dry & liquid).

Having established the essence and resolve to compete in the growing generic arena Ipca Laboratories has fortified its capabilities in terms of infrastructure with 4 dedicated manufacturing facilities catering to regulated markets, having accreditation from Health Canada, Government of Oberfranken-Germany, Halmed-Croatia, MHRA-UK, TGA-Australia, SAHPRA-South Africa, and WHO-Geneva. The company's state of the art facilities are designed with an eye on addressing the economies of scale offering a competitive edge.

Sound scientific developments, team of experienced scientist and regulatory expertise has aided development of a steadily growing portfolio of over 100 product dossiers.

The company's Business Development team collaborates with potential business partners across continents establishing presence of its products in multiple geographies such as North America, Europe, UK, Australia, New Zealand and South Africa, through various business models – Dossier out-licensing, Contract manufacturing & supply and CRAMs.

Ipca Laboratories has now embarked on a new journey in the developed nations, taking nascent steps in front end marketing with the acquisition of Bayshore Pharmaceuticals in USA and launch of its UK operations under Ipca label.

Global Businesses

United Kingdom

Ipca Laboratories UK

Onyx Scientific UK

United States of America

Bayshore Pharmaceuticals LLC

Russia

With a presence in Russia for more than 25 years, Ipca has built a strong equity of its brands making it one of the leading companies from India in the market. The company's products span across various therapeutic segments like Cardiovascular, Anti-infectives, Anthelmintics, Gastroenterology, Ophthalmology and more. Products like Nemozole, Tenoric, and Normax are top brands in their respective categories.¹⁰

To support its Russian operations, Ipca’s marketing office in Moscow employs around 20 employees in various job functions like HR, Accounts & Finance, IT & MIS, Client management, and its own regulatory team to manage product registrations.

A field force of around 200 employees including line managers, enables it to have strong brand building capabilities making it one of the most recognised companies in the Russian pharmaceutical industry at the level of doctors, hospitals, and various pharmacy chains across the country.

Imports are done through an exclusive importer with its own warehousing facilities while distribution is effectively carried out through a well-established network of national and local distributors, making its products available across the length and breadth of this vast country.

Industry Overview

Industry Structure and Development

The global pharmaceutical market is estimated to be about US$ 1.3 trillion and was hitherto comfortably growing at a CAGR of about 4%. However, it is to be seen how the Covid -19 pandemic, which has caused unprecedented economic disruption and has put tremendous pressure on healthcare system globally, will impact this industry going forward.¹¹

Though, the pharmaceutical industry is developing at a rapid pace, this growth won’t come easily for the industry that is heavily influenced by healthcare reforms, cost pressure, economic and political fluidity, public demand for lower cost treatment, economic consolidation, increased competition and changing regulatory landscape with increased scrutiny.

The market growth for pharmaceuticals globally was led by 1% plus annual global increase in the population and ageing at the same time. The increasing urbanization and growing middle income population making drugs available and affordable for more people has also lead to this market growth. As population ages due to increasing life expectancy, people require pharmaceuticals to treat their chronic illness, spurring demand for industry products in future.

Thanks to advances in science and technology, the research based pharmaceutical industry is entering an exciting new era in medicine development. The research methods are evolving and the innovative pharmaceutical industry aims to turn fundamental research into innovative treatments that are widely available and accessible to patients.

Outlook, Risks and Concerns

The Indian pharmaceuticals industry is globally respected and is one of the most successful industries in the country. It has contributed significantly to the global healthcare by ensuring quality, accessible and affordable generic medicines around the globe. It has also immensely contributed to India’s economic growth.

Although economic woes of certain geographies are impending the pharmaceutical market growth, the long term outlook for the industry remains positive. The industry growth is driven by ageing population and ever growing middle income group in emerging economies boosting demand for the pharmaceuticals. Additionally, the emergence of new viruses, the latest being SARS-CoV-2 and drug resistant infections, biological agents, immune therapies, etc. will spur research and development activities providing the industry with more products in their drug pipeline with revenue and growth streams.

The Indian pharmaceuticals market is the third largest in terms of volume. India is the biggest provider of generic medications internationally and enjoys a significant position in the world pharmaceuticals sector. The country also has a huge talent pool and scientists having the capability to steer this industry forward to a much greater degree. The cost efficiency also continues to create opportunities for Indian pharmaceutical companies in the emerging global economies. The Indian pharmaceutical industry is expected to outperform the global pharmaceutical industry and grow in the next couple of years and thereby emerge as one of the top 10 pharmaceutical market globally by absolute size. India is also the largest provider of vaccines and generic drugs in the global market.

Indian pharmaceutical companies are focusing on global generic and API business, R&D activities, contract research and manufacturing alliances. India is also fast emerging as a preferred pharmaceuticals manufacturing location. Increasing use of pharmaceutical generics in developed markets to reduce healthcare cost will also provide attractive growth opportunities to Indian generic formulations manufacturers and thus Indian pharmaceutical industry is poised for an accelerated growth in the coming years.

However, poor public healthcare funding and infrastructure, low per capita consumption of medicines in developing and under developed countries including India, currency fluctuations, regulatory issues, government mandated price controls, inflation and resultant all round increase in input costs are few causes of concern.

Financial Overview

During the financial year ended 31 March 2020, the Company registered on a standalone basis a total income of Rs 4432.12 crores as against Rs 3687.74 crores in the previous year, a growth of 20%. On a consolidated basis, the total income of the Company has increased by 23% to Rs 4715.71 crores as against Rs 3830.86 crores in the previous financial year.

During the financial year under report, the Earnings before interest, depreciation and taxation on a standalone basis amounted to Rs 979.45 crores as against Rs 747.76 crores in the previous financial year. The operations have resulted in a net profit of Rs 652.46 crores during the financial year under report as against Rs 454.91 crores in the previous financial year, a growth of 43%.

On a consolidated basis, the Earnings before interest, depreciation and taxation amounted to Rs 965.89 crores as against Rs 747.75 crores in the previous financial year. The consolidated operations have resulted in a net profit of Rs 603.56 crores during the financial year under report as against Rs 442.22 crores in the previous financial year, a growth of 36%.

The Company’s formulations manufacturing sites at Silvassa and SEZ Indore and APIs manufacturing site at Ratlam continue to be under US FDA import alert. However, the US FDA has recently given exemption from import alert to APIs Chloroquine Phosphate and Hydroxycholoroquine Sulphate manufactured at the Company’s Ratlam APIs manufacturing site and formulations of Hydroxychloroquine Sulphate manufactured at Company’s SEZ Indore and Piparia (Silvassa) manufacturing sites.

The US FDA recently inspected the Company’s formulations manufacturing unit situated at Piparia (Silvassa). This inspection resulted into issue of 3 observations in Form 483 by US FDA. The company has submitted comprehensive response to these observations to the US FDA. The Company is awaiting re-inspection by US FDA of its other two manufacturing facilities which are under import alert.

Break-up of Sales (standalone)			2019-20	(Rs Crores)
	Domestic	Exports	Total	Growth
Formulations	1912.61	121.55	3134.16	16%
APIs & Intermediates	250.93	922.2	1173.13	33%
Total Sales	2163.54	2143.75	4307.29	20%
Growth	17%	24%	20%

International Business

The products of the Company are now exported to over 100 countries across the globe. During the financial year under report, the international business amounted to Rs 2143.75 crores as against Rs 1730.84 crores in the previous year, a growth of 24%. Formulation exports of the Company increased by 17% to Rs 1221.55 crores and exports of APIs and Drug Intermediates increased by 35% to Rs 922.20 crores.

Continent-wise Exports			2019-20	(Rs Crores)
Continent	Formulations	APIs and Intermediates	Total	% to exports
Europe	390.95	244.53	635.48	30%
Africa	308.93	34	342.93	16%
Americas	119.56	312.2	431.76	20%
Asia	76.87	309.64	386.51	18%
CIS	167.33	17.16	184.49	9%
Australasia	157.91	4.67	162.58	7%
Total	1221.55	922.2	2143.75	100%

Recent developments

Ipca Laboratories q2 Profit Up 38% At Rs 267 Crore. ¹²

Drug maker Ipca Laboratories on Saturday reported 38 percent rise in consolidated net profit at Rs 266.7 crore for the second quarter ended September 30, 2020.

The company had posted a net profit of Rs 193.5 crore for the year-ago period.

Revenue from operations rose to Rs 1,361.1 crore in the quarter as against Rs 1,283.9 crore in the same period a year ago, Ipca Labs said in a regulatory filing.

On a standalone basis, the company posted a net profit of Rs 275.68 crore, up 41 percent from Rs 196.02 crore in July-September 2019-20.

The company’s board has declared an interim dividend of Rs 8 per share (400 percent) for 2020-21, Ipca Labs said.