The financial year 2017-18 was a year of consolidation. After divesting non-focussed businesses and strengthening our balance sheet, we are now on track to grow with full vigour and zeal. Before I discuss our performance for the year, it is important to analyse the broad macro landscape in which we operated.
Encouraging macro environment
Global economic growth delivered a positive surprise in 2017. At 3.8%, global output grew at the fastest pace since 2011. While emerging market economies continued to be at the forefront of growth, developed economies too witnessed a sharp GDP upswing during the year
Revival in investments, stable corporate earnings and accommodative monetary policies were the engines driving this growth. According to the International Monetary Fund (IMF), global economy is projected to expand by 3.9% in 2018 but may face headwinds from possible escalation of trade wars. Overall, I believe the macro conditions are now conducive for economies and businesses to flourish.
India continued to be among the fastest-growing economy of the world and grew by 6.7% during FY 2017-18. The economy demonstrated significant resilience to the teething issues caused by the implementation of the Goods and Services Tax (GST). This structural reform was a major leap forward for the formalisation of the Indian economy and to increase transparency. As estimated by the Reserve Bank of India (RBI), the Indian economy is likely to grow by 7.4% during the FY 2018-19.
Strong prospects for industry
Global spending on medicines is estimated to increase at an annual rate of 4.1% between 2017-2021 (according to the 2018 Global Healthcare Outlook by Deloitte). This trend, accompanied by continued momentum in the global economy, will rub off favourably on the spending on medicines.
A year of consolidation
This financial year was the first full year after we hived off certain sections of our specialty chemicals and FDF businesses. The results are thus not strictly comparable with the previous year On a like-to-like basis however our businesses grew at a healthy pace. Our strong track record on regulatory compliance has been the prime enabler in growing our pharmaceutical business. Our remaining specialty chemicals business was driven by healthy momentum in the hair dyes and photochromics segments. We derive high revenue visibility from our thriving order book and robust pipeline of generics products. During the year, we reduced the debt on our books by 23% to ''777 crore. The cash thus freed-up will be re-invested for future growth.
We intend to maintain our debt/EBITDA below three times and continuously improve our return ratios.
On track for a promising future
We have weathered difficult times over the past three years and have taken the requisite corrective measures to re-align our business. We are on track to reap the benefits of these efforts and take our Company to the next level. Going forward, we will be focussing on strengthening our pharmaceuticals business and gradually exiting the specialty chemicals business. Within pharmaceuticals, the CDMO segment is likely to grow faster compared to APIs and both will contribute equally to UQUIFA''s revenues. Our recent acquisition of Hungary-based CDMO company, Soneas, will empower us to provide end-to-end solutions to our customers from the pre-clinic to product launch stage. It will also provide us access to new markets and customers.
Similarly the FDF business will witness superior growth as revenues from our JV with Strides Shasun start flowing in. This JV will fortify our position in the US generics business in the future. We have a thriving product pipeline from the JV and are confident of stepping up our new filings. While there is enough potential to grow in our existing markets, we are also looking to scale up our offerings in the non-US formulations markets of Russia, Philippines and the RoW (rest of the world).
Moving up the value chain
During the year, we stepped up our R&D activities, which now form about 4% of our sales. We have increased the capacity of our research team in India and have also added pilot plant capacity in Mexico and Barcelona.
We will file more products annually and are focussed on ramping up our investments on development of superior quality products. We aspire to add more products in the complex generic and complex chemicals areas too in future.
I want to use this opportunity to extend my heartfelt gratitude to our people who have worked relentlessly to fulfill the Company''s aspirations and goals.
In conclusion, I would like to thank all our stakeholders including our customers, employees, business partners and investors for their faith and support to us.