Presentation on Pharma Cue Ti Cal Industry
Transcript of Presentation on Pharma Cue Ti Cal Industry
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Indian Pharmaceutical Industry
FINANCIAL ANANLYSES
PREPARED BY:
ASHA PATELROLL NO. 28
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INTRODUCTION
A pharmaceutical company, or drug company, is acommercial business whose focus is to research,develop, market and/or distribute drugs, most commonly
in the context of healthcare. They can deal in genericand/or brand medications. They are subject to a varietyof laws and regulations regarding the patenting, testingand marketing of drugs. From its beginnings at the startof the 19th Century, the pharmaceutical industry is now
one of the most successful and influential, attracting bothpraise and controversy.
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Presentation Structure
Indian Pharmaceutical Evolution
India Advantage
Financial analyses
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Indian Pharmaceutical Evolution
Phase IIGovernment Control
Indian Patent Act 1970
Drug prices capped
Local companies beginto make an impact
Phase III
Development Phase
Process
development
Production
infrastructure
creation
Export initiatives
Phase IV
Growth Phase
Rapid expansion of
domestic market
International marketdevelopment
Research orientation
Phase V
Innovation and Research
New IP law
Discovery Research
Convergence
1970 1980 1990 2000 2010
Phase I
Early Years
Market sharedomination byforeign companies
Relative absenceof organizedIndian companies
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India Advantage
Large skill base Experts in process chemistry
Long history of reverse engineering
Unmatched cost competitiveness Lower cost of infrastructure and skilled manpower
Vertical integration
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India Advantage
Strong local industry Growing expertise with international regulatory compliance
High quality manufacturing with abundant capacities
Speed Very strong entrepreneurial spirit
Hungry for growth and recognition
Quick learners and fast movers
Availability of capital Stock market has seen unprecedented growth in the last decade
Continues to be bullish on the pharma industry
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Financial analyses
BALANCE SHEET
SOURCESDec 2004
Rs in crore
Dec 2005
In crore
Dec 2006
In crore
Capital 1,858.91 1,862.21 1,863.43
Reserves 23,218.49 23,405.03 23,986.48
Deferred Tax Liability 1,908.47 1,899.27 1,636.03
Minority Interest 208.77 168.69 343.22
LTL 8,527.30 20,042.62 39,556.19
CL 18,389.06 15,007.92 17,596.57
Total 54111 62,385.74 84,981.92
Fixed Assets 15,294.13 20,591.41 38,953.34
Investments 183.77 171.72 362.35
Deferred Tax Asset 836.66 2,698.34 981.16
Capital(WIP) 2,875.54 5,595.49 3,580.98
CA 34,920.90 33,328.78 41,104.09
Total 54111 62385.74 84981.92
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Ratio analyses Liquidity Ratios:
Liquidity refers to ability of firm to meet it shortterm requirements. Here, short term meansrequirements which are to be meet in a period of 1year. Liquidity is generally dependent on twothings current assets and current liabilities.
Working capital ratio:
Working capital refers to the cash a business requires
for day-to-day operations
2004 2005 2006
CA (in Rs mn) 18283.77 23529 37045.39
CL 4410.227 6103.3 7363.989
Working Capital 13873.54 17425.7 29681.4
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Current ratio
An indication of a industry's ability to meet short-term debt
obligations; the higher the ratio, the more liquid the company is.Current ratio is equal to current assets divided by currentliabilities. If the current assets of a company are more than twicethe current liabilities, then that company is generally consideredto have good short-term financial strength.
Current ratio = Current assets / current liabilities
liquidity ratio
As current ratio includes some items which are not veryliquid, so liquid ratio is more accurate measure of liquidity
of firm
Liquid ratio = Current assets inventory/
Current liabilities
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Cash ratio
As liquid ratio contains debtors, so it does not gives a clear
picture of cash and near cash items. So we calculate cash ratio
to know about the liquidity of firm for very short terms.
Years 2004 2005 2006
CA (in Rscrore) 34,920.90 33,328.78 41,104.09
Inventory 14350.94 13624.02 16115.52
Debtors 11356.67 11403.52 15716.33
CL 18,389.06 15,007.92 17,596.57
Current ratio 1.899004 2.220746 2.335915
Liquid Ratio 1.118598 1.312957 1.420082
Cash Ratio 0.50102 0.553124 0.526935
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Comparison
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Interpretation The industrys current ratio for period of three years is somewhat
equal to 2 for 2005 it is less than 2 but it can be almost equivalent totwo). So industry has very sound liquidity position. It signifies thatindustry can easily meet its short term obligations. Also the liquidratio is equal to one that is a equivalent to its ideal value.
The cash ratio is 0.5 it implies that companies has cash or near cashitems which is equivalent to 50% of current liabilities.
As current ratio is double of Liquid ratio, and four times of cashratio, it shows that debtors, inventory and cash forms significant part ofthe current assets. And industry has properly distributed its current
assets.
The company is also able to maintain the liquidity of companythroughout the period of three years. As the values for ratios remainsame for the industry even value of current assets has over the period.
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EPS(Earnings Per Share):
EPS = PAT/ No. Of Shares
It denotes the profit earned by the money of each share
holders.
Particulars Dec 2004 Dec 2005 Dec 2006
EPS 35.23 4.42 8.62
From the above table it is quite cleat that EPS is decreasing
for industry. But the reason for low EPS is not low profit earned
by the industry but it is due the fact the industry raised more
equity capital in this year.
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Interest Coverage ratio: A ratio used to determine how easily a industry can
pay interest on outstanding debt.
The lower the ratio, the more the industry is
burdened by debt expense
Particulars Dec 2004 Dec 2005 Dec 2006
PBIT 9599 2282.86 7546.66
Interest 334.88 671.16 1036.32
industry is covering its interest expenses very well.
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Closing Comment
India is an acquired taste
Give it some time & it will grow on you
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Thank you!