Indian Pharmaceutical Industry is undergoing rapid transformation in
terms of customers needs, regulatory standards and growth drivers.
Among these changes, one of the most important has been the increasing
pressure from customers, governments and society to deliver greater
Ill summarize our performance in last financial year and talk about
the four imperatives that are driving the actions we are taking to
address the challenges we face:
. Making API business profitable
. Growing domestic business higher than the
. Turning around of subsidiary companies
. Improving operational efficiencies
I am optimistic about Unichems future because I believe we will create
value in the medium to long
term by leveraging products that are innovative and science-driven,
making the right capital allocation decisions, continuing to promote a
culture of confidence and trust, and earning respect from society.
The financial results of last financial year is somewhat mixed in terms
of turnover and net profit. The Company earned PBIDTA of Rs. 161.50
Crores as against Rs. 179.45 Crores earned in the previous financial
year. Though the turnover grew by 10.8%, at Rs. 757.81 Crores, the
Company earned lower profits due to higher spending on Sales &
Marketing expenses, commissioning of new plants at Baddi and Sikkim and
adverse product mix. Despite lower profits, the Board has recommended
final dividend of 140% and taken together with interim dividend of 60%,
the total dividend for the year works out to Rs. 4/- per equity share of
Rs. 2/- [200%].
Indias Domestic Pharma Market offers immense potential, which is
currently, valued at approximately Rs. 48,239 crores, reflecting strong
growth of 15.3% for the twelve months ending March, 2011 (IMS MAT
March, 2011). As per the latest report of Pricewaterhouse Coopers (PwC)
- Indias Pharma Inc: Capitalising on Indias growth potential,
estimates that over the next 10 years, the domestic market will grow to
US$ 49 billion @ CAGR of 15%, with the potential to reach US$ 74
billion @ CAGR of 20%, if aggressive growth drivers kick in.
One of the drivers behind this potential growth expectation is that
Indias pharmaceutical industry has a favorable macro environment to
grow in. The Indian economy has rebounded from the global economic
downturn, with real gross domestic product (GDP) growth reaching 10.4%
in 2010 (IMF World Economic Outlook April, 2011).
Over 76% of our turnover is contributed by the Domestic formulation
market where Unichem enjoys an enviable reputation built over six
decades. Therefore, our focus is to consolidate our
presence by expanding our product basket covering more therapeutic
segments, by deeper market penetration and expanding our reach to
larger number of customers. The growth potential for Unichem is
enormous considering the opportunity that exists in unrepresented
As communicated to you last year, the Company continued its
transformation initiatives to restore momentum to its core business of
domestic formulations. These included portfolio prioritization and
sales force alignment to improve the coverage of the existing
portfolio, and strengthening a second tier of power brands. A new
division Unifem (Gynecology) was launched and we will be hiring
around 150 field personnel during this year to support this division.
We had launched 22 new products during last Financial Year and our
efforts are on to launch more in the current Financial Year to expand
our product portfolio covering various therapies.
I am happy to inform that in cardiac market, Unichem jumped to 4th
position this year from 6th position last year, thus adding the highest
incremental value as per IMS. Unichem is the undisputed leader in ARB
segment of cardiac market.
We have been investing continuously in upgrading and expanding our
manufacturing and research facilities at multiple locations. Our Sikkim
plant, which was commissioned during the year, is now fully
operational. Betalactum plant at Baddi, which underwent modernization
is now functional and has been recertified by MHRA. Cephalosporin plant
at Baddi is also fully ready for commercial exploitation. It is our
endeavor to have this plant certified by USFDA. We have recently
acquired additional land adjacent to our existing Goa Factory and
planning a major expansion to enhance tablet / capsulation capacity
from present 900 million to 2400 million units. The construction
activities at SEZ, Pithampur is expected to get over by the end of this
financial year and immediately thereafter, we will trigger for USFDA
We have made significant investments in manufacturing and research
facilities over the last few years catering to both domestic and
international market which makes Unichem the ideal partner for
collaborative business. Contractual supplies will become one of the
growth areas for the Company to sweat manufacturing assets more in the
With regard to our global operations, Niche Generics, our UK
Subsidiary, had a difficult year and continued to make losses. There
are strategies in place to turn around the operations during the
current financial year. In US market we launched 5 products and the
same have been received well. During last financial year, we clocked
total revenues of US$ 5.3 million. With more product filings and
approvals in the pipeline, the foundation for substantial ramp up in
sales has been laid.
Our current focus on the API business is to make reasonable profits.
With US business slated for a take off, the API business support to the
international business is expected to deliver desired results. In
addition, new initiatives to expand customer base in new geographies
should drive growth in the coming years.
Our customers, business associates and shareholders have reposed their
faith in us. I am grateful to them for their continued confidence in
the management. I would also like to record my sincere appreciation for
the commitment of our employees for their contribution.
I fully recognize the complexity of the challenges we face over the
next several years and are prepared to address them by focusing on four
imperatives that will allow us to distinguish ourselves from others,
and we will continue to create superior value for all our stakeholders.
Dr. Prakash A. Mody
Chairman & Managing Director