ANNEXURE G
GLOBAL PHARMACEUTICAL SCENARIO
The global pharmaceutical and biotech industry is expected to have a supportive
operating environment in 2023, despite inflationary pressures and the higher interest rate
environment. The demand is expected to normalise following some dislocation in the
industry and on the strength of the growing and ageing population, increasing prevalence
of chronic diseases, and greater access to healthcare globally.
The total spending and global demand for medicines will increase over the next five
years to approximately $1.9 trillion by 2027, according to a latest report on global use
of Medicines.
The underlying growth rate of 3-6% in spending will be driven by new drug launches and
wider use of recently launched brands despite efforts by payers to constrain their
budgets, and the impact of lower cost options.
Medicine use grew by 36% over the past decade, driven by increased access to medicines.
However, growth is projected to slow through 2027 and expected to be about 8% from the
2022 levels. The highest volume growth is expected in Latin America, Asia and Africa,
driven by a mix of population growth and expanded access, while North America and Europe
will see very low growth. Per capita medicine varies by region with Japan and Western
Europe having more than double the use of most other regions.
The global medicine market growth will be marked by divergent trends by the regions.
Growth in developed economies continues at relatively steady rates with new products
offset by patent expiries; Latin America, Eastern Europe and parts of Asia are expected to
grow strongly in volume and greater adoption of novel medicines. The U.S. market growth,
on a net price basis, is forecast to adjust up to 2% CAGR through 2027, down from 4% CAGR
for the past five years. The impact of exclusivity losses will increase over the next five
years, including significant biosimilar introductions in 2023 and 2024. New brand spending
in the U.S. is projected to be higher than the last five years but will be a smaller share
of total spending.
COVID-19 continues to have an impact on pharmaceutical markets globally and is
estimated to expand the net cumulative pharmaceutical market by $500 billion from 2020
through 2027, mostly linked to vaccines. All regions around the world have exceeded
previously projected first-wave vaccination rates while booster utilization is lagging.
This creates substantial uncertainty about the future of the pandemic and the potential
risks of re-emergence of infections, especially in regions of the world with the lowest
immunization and booster rates.
Disruptions in demand for many other medicines, due to delayed diagnoses, continue to
play out although global market growth is forecast to return to pre-pandemic projected
levels by 2024.
Specialty medicines are expected to represent about 43% of global spending in 2027 and
56% of total spending in developed markets. Global spending on cancer drugs is expected to
reach $370 billion by 2027, with growth accelerating from the launch and use of novel
drugs and limited new biosimilar impact. Immunology spending growth will slow to 3-6%
through 2027 from price reductions associated with biosimilar competition as volume growth
continues at 12% annually. New therapies for rare neurological disorders, Alzheimers and
migraines are expected to drive spending growth in neurology.
Biotech expects to represent 35% of spending globally in the coming years and will
include both breakthrough cell and gene therapies, as well as a maturing biosimilar
segment. Major advances are expected to continue, especially in oncology and immunology.
The outlook for next generation biotherapeutics includes a definitively uncertain range of
clinical and commercial successes.
With the use of cutting-edge digital platforms, big data analytics, cloud computing,
and artificial intelligence (AI), the sector is undergoing a transition. Digital
technologies are developing in the pharmaceutical sector to streamline important,
labor-intensive procedures. They are widely applied in the pharmaceutical value chain in
several areas, including drug discovery and development, drug production, smart process
automation, maximizing predictive maintenance, and supply chain management.
DOMESTIC PHARMACEUTICAL MARKET
Over the past year, the pharma industry has witnessed greater collaboration, adapted
quickly, and adopted innovative approaches to deliver high quality medicines continuously
during the pandemic and beyond. The industry has shown unwavering commitment to support
the countrys healthcare needs as well as enhance its footprint across the world.
With a rising consensus on offering new breakthrough cures to patients, the Indian
pharmaceutical market is expected to reach US$ 65 billion by 2024 and touch $130 billion
in value by the end of 2030. The Indian pharmaceutical industry is worth approximately US$
50 billion with over US$ 25 billion of the value coming from exports. About 20% of the
global exports in generic drugs are met by India.
India is among the top 12 destinations for biotechnology worldwide and 3rd largest
destination for biotechnology in Asia Pacific. The biosimilars market in India is
estimated to grow at a compounded annual growth rate (CAGR) of 22% to become US$ 12
billion by 2025. This would represent almost 20% of the total pharmaceutical market in
India.
A bright future lies ahead for Indias pharmaceutical business in 2023, with a greater
emphasis on quality manufacturing, medicine affordability, and the use of innovation and
technology. However, to combat certain challenges like low R&D spending, scarcity of
skilled labour, intellectual property (IP) regulations and rights, and potential export
contraction, a sustained agility and robustness in the processes is required.
As the countrys footprint grows, pharmaceutical companies are progressively adopting
technology to upgrade their manufacturing capacities while also harmonizing regulatory
requirements to meet global standards.
Besides this, the development of the single-window system to streamline the drug
development process and facilitate fast approvals of commercially viable projects is
catalyzing the demand for pharmaceuticals in the country. Additionally, increasing
investments in long-term and high-risk projects by various funding avenues in India is
offering lucrative growth opportunities to industry investors. Furthermore, inflating
income levels and improving medical infrastructure is propelling the sales of
pharmaceuticals. Some of the other factors stimulating the growth of the market in the
country are lower manufacturing costs, a highly skilled workforce, technological
advancements, and enhanced marketing and distribution system.
Indian pharma companies have a substantial share in the prescription market in the US
and EU. The largest number of FDA-approved plants outside the US is in India. Pharma
businesses in India are going beyond overall operations of pharmaceutical manufacturing
and leveraging digital technologies to communicate with key stakeholders including the
healthcare professionals and patients in addition to drug research. Through data analysis,
companies can now have entire visibility into a patients path, from diagnosis to disease
care. This data-driven knowledge is, aiding in drug development and, as a result, has the
potential to improve patient outcomes in future.
Precision medicine i.e., offering real-time insights into how a specific patients body
is responding, is increasingly becoming an area of focus in the Indian pharmaceutical
industry, which arose from the concept of personalization and customization of medical
care. This knowledge is proposed to improve advanced clinical manufacturing procedures,
such as establishing drug exposure models to predict pharmacokinetic and pharmacodynamic
features to prepare the needed dosage depending on age, comorbidities, and other clinical
parameters.
With the flattening of growth in pharma sales in developed countries, drug makers are
increasingly looking to emerging markets for new sources of growth and revenue. This means
pharmaceutical companies will focus on global competencies with strategies tailored for
local markets to stay competitive. The pharmerging markets, i.e., countries with low
consumption but rapidly growing, will experience a compound annual growth rate of 10.4%
till 2026.
Aging populations facing issues such as cardiac failure and hypertension followed by
the prevalence of other chronic diseases and an increase in consumer awareness about
treatment backed by Government actions aimed at lowering the cost of treating chronic
diseases and the growth in health insurance in pharmerging countries have fast paced the
growth in the pharmerging market.
MOREPENS STRATEGY ACTIVE PHARMACEUTICAL INGREDIENDTS (API)
The company is world leader in Loratadine produced at its USFDA approved facilities
situated at Masulkhana, Himachal Pradesh and Baddi, Himachal Pradesh. The company has
achieved leadership position of being one of the largest suppliers of anti-asthmatic drug,
Montelukast Sodium produced at its USFDA approved Masulkhana facility along with
Desloratadine, another anti-histaminic drug. Both the facilities have been re-approved by
the USFDA for various products such as Loratadine, Desloratadine, Fexofenadine in 2022.
The Masulkhana plant also got approval from prestigious PMDA of Japan in 2023.
The company continues to be a prominent player in commercial production of block buster
drugs Atorvastatin calcium, Rosuvastatin calcium of anti-hypercholesterolemic series,
Fexofenadine Hydrochloride of anti-histaminic series, Olmesartan of anti-hypertensive
series & their intermediates produced in its USFDA approved facility at Baddi. Another
prominent drugs Sitagliptin, Saxagliptin, Linagliptin, Vildagliptin ofGliptin series and
Empagliflozin, Ertugliflozin L-pyroglutamic acid, Dapagliflozin Propanediol, Amorphous
Dapagliflozin, of Gliflozin series are also produced in the Baddi facility to cater the
requirement of various customers for formulation development and for the patent free
countries. After the recent approval of Fexofenadine by USFDA, Morepen will be exporting
huge quantities of Fexofenadine to the US market from this year onwards.
Morepen has also commercialized various new products such as Vortioxetine Hydrobromide
(Anti-depressant), Vonoprazan Fumarate (Anti-ulcerative). In new drugs, Morepen is in
advanced stages of development of Brexpiprazole (Anti-Depressant), Paliperidone Palmitate
(Anti-Psychotic), Tafamidis Meglumine (Transthyretin stabilizer), Baricitinib &
Tofacitinib citrate (Anti-arthritis), Nintedanib Esylate (for Chronic fibrosis) and
Trelagliptin succinate (Anti-diabetic).
Morepen has filed USDMF for Ertugliflozin L-pyroglutamic acid & Vonoprazan fumarate
in the current year. Other than these USDMF filing, regulatory filings were made for
Loratadine Baddi route CADIFA Filing, Linagliptin (Health Canada), Dapagliflozin Amorphous
(Health Canada), Apixaban-ASMF-France, Linagliptin-ASMF-Hungary and Malta,
Apixaban-ASMF-Denmark and (AT, DE, EL, ES, HU, MT, PL & PT), Linagliptin-ASMF- Denmark
and (AT, EL, ES, MT & PT) Saxagliptin H2-1 HCl salt -ASMF (Hungary, Malta),
Sitagliptin Phosphate Anhydrous ASMF-(Greece).
The company was granted four process/ polymorph patents for Candesartan Cilexetil,
Canagliflozin, Apixaban & Rosuvastatin Calcium during the year and another patent was
granted for Crystalline Rosuvastatin calcium in Europe. The company has filed Five new
patent applications for Novel processes/ New Polymorphs for Tafamidis, Tafamidis
Meglumine, Telmisartan Sodium, Tofacitinib citrate & Bempedoic acid.
FORMULATIONS AND HOME HEALTH DIAGNOSTICS
The home health devices business has recorded a contraction of 22 percent during the
year under review. We expect the devices business to regain its lost ground in the coming
financial year. On the other hand, the formulation business has been up by 10 percent
during the year and steadily gaining the momentum after many years. The formulation
business is expected to maintain its growth trajectory in the coming years as well. Both
the Blood sugar measuring business as well the Blood pressure monitoring devices business
registered a de-growth of 12 percent during the year. During the four years ending March
31, 2022, the Blood sugar as well Blood pressure monitoring devices business have recorded
a compounded annual growth rate (CAGR) of 44.21% and 46.91% respectively. On overall
basis, during these 4 years, the devices business has recorded a compounded annual growth
rate (CAGR) of 44.81%. The company has cumulatively sold 1.20 billion Gluco Strips as on
close of the year under review, whereas Gluco monitors installations have crossed 9.50
million. The Formulations business has recorded consecutive growth in current year as
well preceding year. It has recovered the ground which was lost during the COVID-19
pandemic period.
The Diagnostics Devices business on the strength of rapid growth over last many years
looks promising. The company expects to remain in leadership position for Blood Glucose
and Blood Pressure Monitoring business. With greater emphasis on Make in India approach
and huge progress have already made, it expects to reduce cost of its products offerings,
which will benefit the end consumers.
The customers continue to display their confidence in the quality product offerings of
the branded business, and we hope to grow consistently and profitability in the coming
years as well.
BRAND SHARING AND PRODUCT CONTRACT MANUFACTURING (PCM)
Brand sharing has registered a growth of around 12 percent during the year, whereas
contract manufacturing business did record a small de-growth during the year. Under the
brand sharing business, the company has been able to serve the patients across many
therapeutic areas, making them connect with brandMorepen.
The company is working hard for the growth and expansion of its Diagnostics,
Formulation and OTC business.
OPPORTUNITIES AHEAD
It is important for pharmaceutical companies to stay updated on the evolving healthcare
landscape, regulatory changes, and market dynamics to effectively seize these
opportunities. Adapting to trends and investing in areas of growth and innovation can
drive success in the pharmaceutical industry. The pharmaceutical industry also presents
several opportunities for growth and development, key opportunities include -
In the areas of advanced therapies, the advancement of biotechnology, gene editing,
cell therapies, and regenerative medicine offers opportunities to develop innovative
treatments for various diseases. Investing in research and development in these areas can
lead to breakthrough therapies and personalized medicine.
The growing understanding of genetics and biomarkers allows for targeted and
personalized treatment approaches. Developing diagnostics, companion diagnostics, and
therapies tailored to specific patient populations can provide significant opportunities
in precision medicine.
Integrating digital health solutions into healthcare can improve patient care,
medication adherence, remote monitoring, and telemedicine services. Pharmaceutical
companies can explore partnerships and collaborations to leverage digital tools and
platforms for better patient outcome.
The focus on rare diseases and orphan drugs presents opportunities for pharmaceutical
companies. Developing therapies for rare diseases can benefit from regulatory incentives
and address unmet medical needs in niche markets.
As patents for biologics expire, there are opportunities for the development of
biosimilars, which can offer cost-effective alternatives to expensive biologic drugs.
Investing in biosimilar development and manufacturing can provide market advantages.
Expanding into emerging markets, such as those in Asia, Latin America, and Africa, can
offer significant growth opportunities. Increasing access to healthcare, rising
middle-class populations, and changing demographics create new markets for pharmaceutical
products.
Collaborating with research institutions, academic organizations, and other
pharmaceutical companies can facilitate knowledge sharing, access to technology platforms,
and joint development of drugs or therapies. Strategic partnerships can help accelerate
innovation and market entry.
Leveraging data analytics and artificial intelligence (AI) can optimize drug discovery,
clinical trials, and supply chain management. AI can enhance predictive analytics, drug
repurposing, and adverse event monitoring, leading to more efficient processes and
improved outcomes.
Focusing on patient-centric approaches and enhancing patient engagement can lead to
better treatment outcomes. Providing educational resources, support programs, and digital
tools that empower patients to manage their health can drive loyalty and satisfaction.
Participating in global health initiatives, such as vaccine development, infectious
disease management, and addressing public health challenges, can contribute to societal
impact while creating business opportunities.
OUTLOOK ON THREATS, RISKS AND CONCERNS
Many new challenges like COVID-19 pandemic, inflation, geopolitics, new therapeutic
modalities, and new ways of working have made it vital for pharmaceutical companies to
carefully reconsider their long-term choices in sourcing, manufacturing, and supply chain.
The Covid-19 pandemic has weakened the publics trust in the pharmaceutical industry and
its products. The supply chains have witnessed an unprecedented disruption all around the
world, and this represents one of the major challenges facing the pharmaceutical industry.
Covid-19 has exposed significant weaknesses in the pharma supply chain. Many pharma
companies are looking to supply chain innovations and circular supply chain models to
tackle these challenges and build business resilience.
Further, the financial effects of the pandemic, Ukraine war and the subsequent global
disruptions in essentials like grain and oil have led to significantly reduced customer
purchasing power. Inflation has risen in recent months to levels not seen for decades,
leading to increasing costs for labor, raw materials, and transportation. This is over and
above the persistent price pressures pharma is already facing, particularly in generics.
Since pharma customers are not expected to fully absorb these cost increases, profit
margins are under pressure.
Meanwhile, increased state interventions and protectionist trade policies are creating
new pressures on manufacturing networks and could drive increased regionalization.
The product landscape also is changing swiftly. New modalities, such as cell and gene
therapy and mRNA vaccine technology, have increased from 11 to 21 percent of the drug
development pipeline the fastest growth ever seen in the sector. This change is likely to
bring more fragmentation of technology, new supply chains, and unique product life cycles.
The pharmaceutical industries need to plan for longer-term trends including rapid
adoption of “personal diagnostic” tools in the form of wearables like the Apple
Watch. Such technologies have the potential to dramatically reduce the number of
individuals afflicted by chronic illnesses like diabetes, cardiovascular disease and
chronic respiratory disease, and lead to earlier diagnosis of diseases like cancer. At a
time when the above illnesses make up a significant portion of pharmas activity
worldwide, evolutions here are likely to have a big impact on the pharma industry.
A number of important patents are reaching their end, which means generics will start
eating into the sale of proprietary molecules. Not only will these mean lost profits for
large companies, but it may also have a destabilising effect on the industry as a whole.
Only powerful entities and those who have planned well beforehand, will reap benefit from
it.
The entrance of big technology players into the health space are also likely to
radically change the pharma industry dynamics. The tech giants have deep pockets and
control of the most sophisticated artificial intelligence and machine learning on the
market, which we know from Covid-19 are capable of developing new molecules in weeks,
rather than months or years. The Pharmaceutical industry has been slow to move on
personalisation, but customers have come to expect personalised, immediate interactions
and information in all aspects of life. Future technologies will have a significant impact
on how we treat disease, and lead to a greater number of cures. The Pharma companies need
to tap into this growing demand and expectation for immediate, personalised customer
experiences.
The negative impacts of counterfeit medications are hard to quantify, but theres no
doubt that it has a serious and significant impact on the companies bottom line and, most
importantly, on patients.
In the backdrop of increasing data breaches and cybersecurity threats, the companies
will also need to implement better cybersecurity policies in the office and for remote
workers or run the risk of a costly data breach.
The focus for operational leaders may need to shift from the prevailing emphasis on
continuous improvement comprising of cost savings, quality assurance, and constant
readiness to deliver to longer-term external challenges. These include high inflation and
an increase in complexity and risk.
The Pharma industry leaders now have an opportunity to deliver even greater value to
their organizations by achieving this shift in focus, by acting quickly, to keep abreast
of the challenges confronting the industry.
FIXED ASSETS
Fixed Assets of the Company are generally well maintained and are in good condition.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Companys internal systems are adequate and commensurate with the size of
operations. These controls ensure that transactions are authorized, recorded, and reported
on time. They ensure that assets are safe guarded and protected against loss or
unauthorized disposal.
The Internal Audit is carried out in different areas of your companys operations.
Post-audit reviews were carried out to ensure that audit recommendations were implemented.
Discrepancies and weaknesses, if any, found at various levels are timely and suitably
addressed with a view to efficiently manage the companys valuable resources.
HUMAN RESOURCES
A strong belief in the value of human capital and promoting equal opportunity is
crucial for the success and growth of a company. Withthe adoption of fair practices and
rewarding the workforce judiciously, a positive work environment is being created which
encourages employees to contribute their best efforts.
The company maintains pleasant and peaceful interpersonal relationships among workers,
staff, and officers for fostering collaboration and teamwork. The individuals work
together harmoniously, leading to improved productivity and a stronger sense of solidarity
within the company.
With 1649 permanent employees on the companys rolls as st of 31 March 2023, your
company has a substantial workforce. This provides a solid foundation for collective
efforts and collaboration, enabling the company to achieve its goals and enhance its value
chain.
By continuing to uphold traditions of fair play, equal opportunity, and value chain
enhancement, your company is positioning itself for continued progress and success.
KEY FINANCIAL RATIOS
Key financial parameters as on 31st March 2023 on the basis of Standalone Financials
for the year ending st st 31 March 2023 & 31 March 2022 respectively are as follows;
| Particulars |
FY 2023 |
FY 2022 |
| Debtors Turnover (No. of days) |
65 |
47 |
| Inventory Turnover |
3.85 |
4.63 |
| Current Ratio |
2.51 |
2.35 |
| Debt Equity Ratio |
0.03 |
0.03 |
| Operating Profit Margin |
6.17% |
9.55% |
| Net Profit Margin |
3.44% |
6.92% |
| Net capital turnover ratio |
1.68 |
2.05 |
| Return on Capital employed |
5.92% |
12.57% |
| Return on investment |
4.18% |
9.78% |
CAUTIONARY STATEMENT
It is important to acknowledge that the market data and information provided in reports
are based on various sources, both published and unpublished. The company recognizes that
the authenticity of such information cannot be guaranteed. It is prudent to consider this
aspect when relying on the data for decision-making purposes. The management of the
company reserves the right to reassess any analytical statements and take appropriate
actions to maximize shareholders value while fulfilling social and corporate obligations.
In the Management Discussions and Analysis Report, certain statements may be
forward-looking statements, encompassing the companys objectives, strategies, estimates,
expectations, predictions, future plans, and projections. These statements are made in
good faith, but its important to note that actual results may differ due to various
factors that may not align with the anticipated future performance and outlook presented
in the report.
It is advisable to exercise caution and consider the inherent uncertainties when
interpreting and acting upon forward-looking statements. Factors such as market
conditions, regulatory changes, economic shifts, and other unforeseen events can impact
the actual results of the company. Therefore, it is necessary to regularly reassess the
situation and adjust strategies accordingly.
For and on behalf of Board of Directors
|
Sushil Suri |
| Place: Gurugram, Haryana |
(Chairman & Managing Director) |
| Date: 05th August 2023 |
DIN: 00012028 |
+91-9892691696
