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Pharmacia Healthcare
BSE: 506817|NSE: PHARMACIA|ISIN: INE252B01025|SECTOR: Pharmaceuticals
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Pharmacia Healthcare is not traded in the last 30 days
Pharmacia Healthcare is not traded in the last 30 days
Directors Report Year End : Nov '03   
The Directors have pleasure in presenting the fifty eight Annual Report
 and Audited Accounts for the eleven months ended November 30, 2003.
 
 FINANCIAL RESULTS
 
                                                            Rs. in Lakhs
 
 Particulars                     Eleven Months ended   Nine Months ended
                                        Nov 30, 2003        Dec 31, 2005
 
 Sales net of Excise Duty                       3042                4229
 [Loss] before Taxation and Exceptional Item   (875)               (169)
 Less: Taxation                                (103)                  31
 [Loss] after Tax (before exceptional Item)    (772)               (200)
 Exceptional Item                                399                  51
 Net Profit/(Loss)                            (1171)               (251)
 Add: Balance brought forward from 
      the previous year                          218                 469
 
 Amount Available for Disposal                 (953)                 218
 
 Appropriation:
 
 Equity dividend                                 NIL                 NIL
 Distribution Tax on Dividend                    NIL                 NIL
 General Reserve                                 873                 NIL
 Profit/(Loss) Carried Forward                 (280)                 218
 
 CHANGE IN ACCOUNTING YEAR
 
 The Company's Accounting Year has been changed to end on November 30.
 The prior year's figures in the financial statements have been
 regrouped/rearranged where necessary and are not strictly comparable
 with those of the current period which are for eleven months ended
 November 30, 2003.
 
 DIVIDEND
 
 The directors do not recommend the payment of any dividend for the
 period under review in view of the operating losses and due to
 exceptional costs incurred on account of implementation of voluntary
 retirement scheme.
 
 THE PHARMACEUTICAL INDUSTRY
 
 The pharmaceutical market posted single digit growth for the third
 successive year, growing by 5.1% in 2003 to end at Rs.19,229 crores
 (Source: ORG Retail Audit). Growth continued to be driven primarily by
 volume (3.5%) and new launches (2.3%), while price declined by 0.7%.
 Trade issues such as implementation of VAT and the trucker's strike
 during the first half of the year contributed to the low growth. IMS
 Market Prognosis predicts growth at a CAGR of 10.5% during the
 five-year period 2003-2007.
 
 Therapeutic segments like Cardiovasculars, Anti-diabetics,
 Neuro-Psychiatry, Respiratory and NSAIDs grew at 13% compared to acute
 therapeutic segments like Anti-Infectives, Cough-Cold,
 Gastro-Intestinals, Pain and Fever, which grew by 1%. Market is
 gradually shifting towards the life-style related segment due to
 increasing awareness, detection and treatment of these ailments. Higher
 growth was observed in urban markets as compared to rural markets, and
 an increase in prescriptions from specialists segment compared to
 general practitioners was also seen.
 
 Announcement of the much awaited new Drug (Prices Control) Order (DPCO)
 continued to be delayed on account of legal issues. The new DPCO and
 National Health Policy is expected to encourage more domestic and
 foreign investment in new drug research. The clamp down on
 manufacturers of spurious drugs, by imposing stringent penalties for
 offenders, is expected to result in patients getting legitimate and
 high quality pharmaceutical products in the future.
 
 FINANCIAL AND OPERATIONAL PERFORMANCE
 
 Following the merger of your Company's overseas parent Pharmacia
 Corporation with Pfizer Inc., USA, the operational alignment of your
 Company with Pfizer Limited (Pfizer) has been successfully completed.
 This has necessitated significant changes in your Company's operations.
 
 (i) As per the new agreement with Abbott USA, SurbexT, Pentothal Bulk
 and Pentothal Sodium have been transferred to Abbott India Limited and
 Abbott Healthcare Private Limited along with transfer of the
 inventories of these products at cost.
 
 (ii) Rationalisation of the company's product portfolio in favour of
 products in attractive markets, with the aim of sustaining long term
 growth of the portfolio.
 
 (iii) Redeployment of the company's products through appropriate
 marketing arms of Pfizer Limited.
 
 (a) Selsun, Citrosoda, Rashfree and Pedialyte, which have potential
 opportunity in OTC segment are promoted by specialized Consumer Health
 Products Division of Pfizer.
 
 (b) Key brands like Erythrocin, and others are promoted through Pfizer
 field force.
 
 (c) To provide increased focus to Claribid, the brand is promoted by
 Innovex, a globally reputed contract Sales Force organization. We
 expect this initiative to help sustain the growth and leadership of
 this brand.
 
 2003 revenues of your Company have been impacted by this organizational
 restructuring, together with several external factors like trade
 apprehension of VAT implementation, transporters strike and sluggish
 market growth.
 
 Three key products Selsun, Claribid and Rashfree have out performed
 their respective market segments, in terms of growth.
 
 RISKS AND CONCERNS
 
 The amendment to the Drugs and Cosmetics Act, 1940 was also introduced
 in Parliament in December, 2003 and since no vote was taken on the
 same, it has now lapsed. The bill proposes to introduce the death
 penalty for spurious drug manufacturers and a central drug regulatory
 authority to administer the introduction of new drugs. The bill has the
 strong support of the health ministry and the industry.
 
 The pharmaceutical policy, 2002, was warmly welcomed by the entire
 industry as it sought to reduce the number of drugs under price
 control. However the introduction of public interest litigation has
 stalled the implementation of the same. The matter is currently pending
 before the Supreme Court.
 
 BMP compliance, which was mandated for all players in the industry, too
 has received a set back. Owing to the strong lobbying of small-scale
 manufacturers, adherence to the same has been postponed till January
 2005
 
 OPPORTUNITIES AND FUTURE DEVELOPMENTS
 
 The government's expenditure on healthcare infrastructure, has actually
 shrunk over the past few years as a percentage of GDP. This failure of
 the government has led to their continued dependence on price controls
 of drugs as a means to demonstrate their intervention to the public.
 
 The potential for the private sector to expand healthcare access is
 vast. Indeed, in recent times hospital chains, like Apollo group, have
 made significant contribution to the establishment of new capacity with
 highly specialized treatment capabilities. This coupled with an
 emerging health insurance sector, is well poised to significantly
 improve the healthcare scenario in India, and thereby increase the
 demand for quality medicines
 
 Several of the company's key products are now being promoted by Pfizer
 field-force and stand to benefit from its larger reach and presence in
 the market.
 
 INTERNAL CONTROL SYSTEMS
 
 The Company has a sound system of internal controls that ensures that
 all assets are protected against loss from unauthorized use or
 disposition and all transactions are recorded and reported in
 conformity with generally accepted accounting principles.
 
 The internal control systems and the guidelines for compliance with
 stated policies of the Company for conducting business and
 communication with the stakeholders, customers and other third parties
 are well documented and rigidly implemented.
 
 Clearly defined authority limits and systems have been put in place to
 ensure accuracy and reliability of all accounting data, operational
 efficiency and adherence to a pragmatic and efficient management
 policy.
 
 There is periodic review of these systems and policies, which are
 scrutinized, by external auditors and other agencies.
 
 HUMAN RESOURCES/INDUSTRIAL RELATIONS
 
 The operational integration of your Company with Pfizer was smoothly
 accomplished during the year. The Pharmacia colleagues were inducted
 into the new organization through a series of communication exercises
 including orientation program on the Culture, practice of Core Values
 and Leader Behaviors at Pfizer. Matters related to the administrative
 absorption including role clarity, compensation, benefit fitment and
 relocation issues were taken care. The number of employees who migrated
 to Pfizer was 89.
 
 The entire field force was provided with appropriate training to
 familiarize with the product reallocation between the teams.
 
 The Management Team invested significant time and resources to ensure a
 seamless integration.
 
 A comprehensive plan was developed to handle the non-migration aspects
 of colleagues from Pharmacia. Each of the colleagues was met by a team
 of Senior Managers and aspects of separation were transparently
 communicated and dealt with. The feedback from exit interviews
 indicated that despite the difficult circumstances, mutual goodwill was
 retained.
 
 Closure of Ankleshwar Plant: The Ankleshwar Plant ceased operations
 from October 31, 2003. A total of 45 number of colleagues from the
 plant availed of the Voluntary Retirement Scheme Package. The Plant
 closure was achieved in a smooth manner. The Gurgaon Office facilities
 were wound up and migrating colleagues were appropriately relocated.
 
 The total number of employees who availed of the voluntary retirement
 scheme was 188. After completion of operational integration with Pfizer
 the Company has at present 3 employees on its rolls.
 
 The Industrial Relations Climate continues to be healthy and without
 any Industrial disturbances.  Core Values and Leader Behaviors:
 
 Significant emphasis is being continuously placed to enhance the
 understanding and practice of Core Values and Leader Behaviors amongst
 colleagues across the organization through several initiatives. These
 include :
 
 - Special sessions and workshops for all migrating colleagues and new
 recruits.
 
 - Wide dissemination of the Guidelines on Ethical Business Conduct
 
 - Sessions on `Open Door Policy' to encourage an inclusive environment
 and two way communication processes.
 
 - Holding `Open Forums' where the Management Team addresses concerns,
 issues and suggestions raised by the colleagues.
 
 DIRECTORS' RESPONSIBILITY STATEMENT
 
 Your Directors confirm:
 
 (i) that in the preparation of the annual accounts, the applicable
 accounting standards have been followed;
 
 (ii) that the Directors have selected such accounting policies and
 applied them consistently and made judgments and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company as on November 30, 2003 and of the loss of
 the Company for that period ;
 
 (iii) that the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 (iv) that the Directors have prepared the annual accounts on a going
 concern basis.
 
 CORPORATE GOVERNANCE
 
 A Report on Corporate Governance along with a certificate from the
 Auditors of the Company regarding compliance of the conditions of
 Corporate Governance Code is annexed hereto.
 
 DIRECTORS
 
 Your Directors wish to record their appreciation for the valuable
 services rendered by Mr. Rodney Unsworth, Dr. V. S. Sohoni,
 Mr. Chandrahas Kutty during their tenure.
 
 The Board of Directors appointed Mr. R. A. Shah as a Director, with
 effect from April 29, 2003, to fill the casual vacancy caused by the
 resignation of Mr. Rodney Unsworth. Mr. Hocine Sidi and Mr. Harold
 Walder have been appointed as non-retiring Directors with effect from
 April 29, 2003 in terms of Article 117(a) of the Articles of
 Association of the Company. Mr. Hocini Sidi Said was appointed as
 Managing Director with effect from April 29, 2003.
 
 Mr. Upendra Mehta retires by rotation and being eligible, offers
 himself for re-appointment.
 
 AUDITORS
 
 The Auditors Messrs Price Waterhouse, retire at the conclusion of the
 forthcoming Annual General Meeting and offer themselves for
 reappointment.
 
 The Auditors have made a comment in para 4.1 of their Report on
 individual customer account balances. The same has been dealt
 adequately in Note no 26 of Schedule 23 of the Notes forming part of
 the Statement of Accounts, and is self-explanatory.
 
 COST AUDITORS
 
 Pursuant to the provisions of section 233B of the Companies Act, 1956,
 necessary application is being submitted to the Department of Company
 Affairs for the appointment of Messrs. S. S. Mani & Company as Cost
 Auditors to audit the cost accounts maintained by the Company as Cost
 Auditors to audit the cost accounts maintained by the Company in
 respect of formulations for the year ending November 30, 2004.
 
 SAFETY AND ENVIRONMENT PROTECTION
 
 The Company's commitment to environment protection is an ongoing
 process and high priority is accorded to the health and safety of its
 employees. The Company has been following strict standards of
 environment protection. There was no loss of time or accident in
 Ankleshwar factory during the eleven-month period ended November 30,
 2003.
 
 FIXED DEPOSITS
 
 During the period under review the company has not accepted any
 deposits from the public nor any amount is lying as unclaimed or unpaid
 deposit.
 
 GENERAL
 
 1. Conservation of Energy/Technology Absorption and Foreign Exchange
 Earnings/Outgo:
 
 The information required under Section 217(1)(E) of the Companies Act,
 1956 (Disclosure of Particulars in the Report of the Board of
 Directors] Rules, 1988 in respect of conservation of energy and other
 matters is annexed hereto and marked as Annexure I.
 
 2. Particulars of Employees:
 
 The information as per Section 217(2A) of the Companies Act 1956,read
 with the Companies (Particulars of Employees) Rules 1975, forms part of
 this Act and is marked as Annexure II.
 
 ACKNOWLEDGEMENT
 
 The Board acknowledges the efforts put in by its employees during the
 past year. The Company is grateful to the customers and bankers for
 their support and understanding and the shareholders for their faith
 and confidence.  The Board is also grateful to Abbott Laboratories,
 North Chicago, Illinois, USA and Pharmacia Corporation USA and Pfizer
 Inc, USA for their support provided to the Company during the year.
 
                            For and on behalf of the Board of Directors
 
                                                               R A Shah
                                                               Chairman
 Mumbai, March 18, 2004
 
 ANNEXURE TO DIRECTORS' REPORT
 
 ANNEXURE 1
 
 Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988 and forming part of the Directors' Report for
 the financial period ended November 30, 2003.
 
 I. (i) CONSERVATION OF ENERGY
 
 (a) Energy Conservation measures taken:
 
 Various measures taken to improve the efficiency of equipments to
 reduce process time.
 
 [b] Additional investments and proposals, if any: NIL
 
 (c) Impact of Measures:
 
 The above measures and tighter control has resulted in lower energy
 consumption.
 
 (d) Total energy consumption and energy consumption per unit of
 production
 
 (ii) TECHNOLOGY ABSORPTION
 
 1. Research & Development (R & D)
 
 Research and Development is an ongoing process and is concentrated in
 the improvement of the existing products.
 
 2. The Company has been able to reduce manufacturing cost.
 
 3. Introduce more new line extension products for example
 Clarithromycin in Tablet form and improving the presentation and get up
 of our products is going on activity of R&D.
 
 4. Expenditure on R & D:
 
                                                             Rs. `000s
 
 a) Capital                                                      NIL
 b) Recurring                                                    390
    Total                                                        390
 c) Total R & D expenditure as a percentage of total turnover   0.13
    Technology Absorption, Adaptation and Innovation:
 
 1. Efforts made:
 
 Continuous efforts being made in developing line extension of new
 products and improving existing products.
 
 2. Benefits:
 
 Reduction in manufacturing costs and improvement in the existing
 products and yield
 
 3. Imported technology:
 
 No technology has been imported during last 5 years.
 
 (iii) FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 i) Activities:
 
 Export turnover amounted to Rs.Nil during the period as compared to
 Rs.101.91 lacs during the previous accounting period.
 
 ii) Total foreign exchange earning and outgo:
 
 The information required under the Companies (Disclosure of Particulars
 in the Report of the Board of Directors] Rules, 1988, with regard to
 foreign exchange earnings and outgo is contained in the notes to the
 accounts, Schedule 23 Note No. 22.
 
                            For and on behalf of the Board of Directors
 
                                                               R A Shah
                                                               Chairman
 Mumbai, March 18, 2004
Source : Dion Global Solutions Limited
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