A Research Project on
Fundamental Analysis of PHARMA SECTOR
For the partial fulfilment of the requirements for the degree of
MASTER OF BUSINESS ADMINISTRATION
Under the GUIDENCE of
Mr. R. Seetharaman
Asst. Prof. (O.G)
Faculty of Engineering and Technology
School of Management
This is to certify that the project report entitled “Fundamental Analysis of Phrarma
Sector ”, Submitted by Rajesh Narayanan (Reg. No: 3511210125) in partial fulfilment for
the final project in awards of Master of Business Administration of SRM University-
Kattankulathur, is a bonafide research work carried out under my supervision and guidance
and no part of this project has been submitted for any other degree / diploma.
The assistance and help received during the course of the investigation has been fully
Dr.(Mrs). Jayshree Suresh Mr. R. Seetharaman
B.A, M.B.A., Ph.D. B.SC PDGM M.B.A
Dean Asst. Professor & Project Guide
Submitted to the Department of Management Studies, SRM UNIVERSITY
(Kattankulathur Campus) for the examination held on __________________.
Internal Examiner External Examiner
I, Rajesh Narayanan, Reg. No: 3511210125, hereby declare that the project report titled
“Fundamental Analysis of Phrarma Sector ” under the supervision and the guidance of
Mr. R. Seetharaman, Asst. Professor, Department of Management Studies, SRM
UNIVERSITY (Kattankulathur Campus- Chennai), is the result of the original work done by
me and to the best of my knowledge, a similar work has not been submitted earlier to any
University or any other Institution.
Place : Rajesh Narayanan
In the course of this project, I have received help from a number of people. I would like to
take this opportunity to thank them all. I am grateful to our College Administration for giving
me an opportunity to do this Project.
It is my great pride and privilege to appreciate our respected Dean Dr.Jayashree Suresh and
my beloved project guide Mr. R. Seetharaman, Dept. of Business Administration, S.R.M.
School of Management, who have motivated and encouraged me with their tireless guidance
and support for the successful completion of this project.
I would also extend my heartfelt gratitude to the Manager Mr.Ashish Jaiswal of Relaince
Securities– Banglore and my Industrial project guide Mr.Harsh Melhothra of Relaince
Securities, for their support and valuable time spent to make this project a reality. I am also
thankful to the Regional Co-Ordinator of Relaince Money– Banglore especially Malini
Kashyap for his motivation and care throughout the course of this said project.
Last but not the least; I would like to thank the almighty and all our faculty members, friends
and family for their support and inspiration.
Chapter Topics Page No
Chapter 1: Introduction
1.1 Introduction to Fundamental Analysis 2
1.2 Industry Profile 3
1.3 Company Profile 7
1.4 Objective of the study 9
1.5 Concept of Fundamental Analysis 9
1.6 Methodology of Fundamental Analysis 12
1.7 Research Methodology 21
1.8 Limitation of the study 21
Chapter 2: Integrated perspective of all functional areas in
2.1 Human Resources and Development Department Function 22
2.2 Finance Department Function 22
2.3 Marketing Department Function 22
Chapter 3: Analysis of Data
3.1 Economic Analysis 28
3.2 Industry Analysis 40
3.3 Company Analysis 48
3.4 Ratio Analysis 59
Chapter 4: Findings & Suggestions
4.1 Findings of the project 128
4.2 Suggestions to Investors 129
Chapter5: Summary & Bibliography
5.1 Summary 131
5.2 Bibliography 132
LIST OF TABLES & CHARTS
LIST OF TABLE
1. 12*5 RATIO ANALYSIS SUB-TABLES
2. RATIO ANALYSIS TABLE FOR SUN PHARAMA.
3. RATIO ANALYSIS TABLE FOR DR.REEDY’S.
4. RATIO ANALYSIS TABLE FOR LUPIN
5. RATIO ANALYSIS TABLE FOR CIPLA
6. RATIO ANLAYSIS TABLE FOR RANBAXY
LIST OF CHARTS
1. COLUMN CHART FOR GROSS DOMESTIC PRODUCT
2. LINE CHART FOR GDP GROWTH
3. COLUMN CHART FOR INFLATION RATE
4. LINE CHART FOR INFLATION RATE
5. COLUMN CHART FOR FDI
6. LINE CHART FOR INDIAN IMPORT
7. LINE CHART FOR INDIAN EXPORT
1.1 Introduction to Fundamental Analysis
What is analysis?
The examination and evaluation of the relevant information to select the best
course of action from among various alternatives. The methods used to analyze securities and
make investment decisions fall into two very broad categories: fundamental analysis and
technical analysis. Fundamental analysis involves analyzing the characteristics of a company
in order to estimate its value. Technical analysis takes a completely different approach; it
doesn't care one bit about the "value" of a company or a commodity. Technicians (sometimes
called chartists) are only interested in the price movement in the market.
What is technical analysis?
Technical analysis is a method of evaluating securities by analyzing
the statistics generated by market activity, such as past prices and volume. Technical analysts
do not attempt to measure a security's intrinsic value, but instead use charts and other tools to
identify patterns that can suggest future activity.
What is fundamental analysis?
Fundamental Analysis involves examining the economic, financial
and other qualitative and quantitative factors related to a security in order to determine its
intrinsic value. It attempts to study everything that can affect the security's value, including
macroeconomic factors (like the overall economy and industry conditions) and individually
specific factors (like the financial condition and management of companies). Fundamental
analysis, which is also known as quantitative analysis, involves delving into a company’s
financial statements (such as profit and loss account and balance sheet) in order to study
various financial indicators (such as revenues, earnings, liabilities, expenses and assets). Such
analysis is usually carried out by analysts, brokers and savvy investors. Many analysts and
investors focus on a single number--net income (or earnings)--to evaluate performance. When
investors attempt to forecast the market value of a firm, they frequently rely on earnings.
Many institutional investors, analysts and regulators believe earnings are not as relevant as
they once were. Due to nonrecurring events, disparities in measuring risk and management's
ability to disguise fundamental earnings problems, other measures beyond net income can
assist in predicting future firm earnings.
1.2 Industry Profile:
Indian Pharmaceutical Industry
The Indian Pharmaceutical Industry today is in the front rank of India’s science-based
industries with wide ranging capabilities in the complex field of drug manufacture and
technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $
4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in
terms of technology, quality and range of medicines manufactured from simple headache
pills to sophisticated antibiotics and complex cardiac compounds, almost every type of
medicine is now made indigenously.
Playing a key role in promoting and sustaining development in the vital field of medicines,
Indian Pharma Industry boasts of quality producers and many units approved by regulatory
authorities in USA and UK. International companies associated with this sector have
stimulated, assisted and spearheaded this dynamic development in the past 53 years and
helped to put India on the pharmaceutical map of the world. The Indian Pharmaceutical
sector is highly fragmented with more than 20,000 registered units. It has expanded
drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of
the market with market leader holding nearly 7% of the market share. It is an extremely
fragmented market with severe price competition and government price control.
India is now among the top five pharmaceutical emerging markets. The Indian pharma
industry has been growing at a compounded annual growth rate (CAGR) of more than 15 per
cent over the last five years and has significant growth opportunities.
The Indian pharmaceutical sector is expected to grow five-fold to reach Rs 5 lakh crore (US$
91.45 billion) by 2020, as per Dr A J V Prasad, Joint Secretary, Department of
Pharmaceuticals (DoP). The industry, particularly, has been the front runner in a wide range
of specialties involving complex drugs' manufacture, development, and technology. With the
advantage of being a highly organized sector, the number of pharmaceutical companies are
increasing their operations in India.
The pharmaceutical industry in India is an extremely fragmented market with severe price
competition and government price control. The industry meets around 70 per cent of the
country's demand for bulk drugs, drug intermediates, pharmaceutical formulations,
chemicals, tablets, capsules, orals, and injectables.
Sector Structure/ Market Size
The domestic pharmaceutical market is expected to register a strong double-digit growth of
13-14 per cent in 2013 on back of increasing sales of generic medicines, continued growth in
chronic therapies and a greater penetration in rural markets.
The cumulative drugs and pharmaceuticals sector has attracted foreign direct investments
(FDI) worth US$ 10,308.75 million during April 2000 to February 2013, according to the
latest data published by Department of Industrial Policy and Promotion (DIPP).
Drug sales to retailers in India registered a growth of 7.7 per cent in February 2013,
according to a data compiled by market research firm AIOCD AWACS. This was probably
due to a high base given the strong performance last year and higher substitution of branded
drugs with their unbranded equivalents.
Among the listed companies, ZydusCadila topped the list, recording 25.3 per cent growth in
February. Other companies that managed to grow faster than the industry include Sun Pharma
(14.8 per cent), JB Chemicals (13.7 per cent), IPCA Labs (13 per cent), Lupin (11.6 per cent),
Glenmark (10.3 per cent) and Cipla (9 per cent).
The Ministry of Commerce has targeted Indian pharma sector exports at US$ 25 billion by
2014 at an annual growth rate of 25 per cent.
Last year, the industry registered exports of US$ 13 billion at a growth rate of 30 per cent, as
per Dr P V Appaji, Director-General, Pharmaceutical Exports Council of India (Pharmexcil).
The Government has also planned a ‘Pharma India’ brand promotion action plan spanning
over a three-year period to give an impetus to generic exports.
“Of the export markets, Indian pharma will focus on the US market which presents
significant opportunities for the next two years for generics, due to patent cliffs and recent
changes in healthcare policies,” said the India Ratings report on outlook for Indian
pharmaceuticals for 2013.
Generics will continue to dominate the market while patent-protected products are likely to
constitute 10 per cent of the pie till 2015, according to McKinsey report 'India Pharma 2015-
Unlocking the potential of Indian Pharmaceuticals market'.
Dr Reddy's Laboratories Ltd has launched Finasteride tablets, a bio-equivalent generic
version of Propecia (Finasteride) tablets, in the US market. The tablets are used for treating
male pattern hair loss.
Diagnostics Outsourcing/ Clinical Trials
Indian diagnostics and labs test services, in view of its growth potential, is expected to reach
Rs 159.89 billion (US$ 2.93 billion) by 2013. The Indian market for both therapeutic and
diagnostic antibodies is expected to grow exponentially in the coming years. Findings from
the report by “Corporate Catalyst India” suggest that more than 60 per cent of the total
antibodies market is currently dominated by diagnostic antibodies.
According to new RNCOs report, “Booming Clinical Trials Market in India”, the number of
clinical studies by domestic and global players has sharply risen. Besides, availability of
skilled manpower and good medical infrastructure will augment the number of clinical trials
from 1300 in 2009 to more than 1900 by 2013. Further, the report also indicates that, India,
over the last decade, has developed significant capabilities in clinical trials, along with certain
capabilities in project management and data management. The country is able to provide
significant cost savings of 50-60 per cent for clinical trials.
Some of the investments in the sector are:
Orchid Chemicals and Pharmaceuticals has entered into a partnership with Europe-
based Allecra Therapeutics to develop antibiotics to treat multi-drug resistant bacterial
Ranbaxy Pharmaceuticals Inc has entered into an in-licensing agreement with
Alembic Pharmaceuticals to exclusively market desvenlafaxine base extended release
tablets in the US. The drug is used for treatment of major depressive disorder
Biocon has entered into an agreement with Mylan for the global development and
commercialisation of Biocon's generic insulin analog products (long lasting insulins),
which has a global addressable market of US$ 11.5 billion
ZydusCadila has received tentative approval for Doxepin Hcl tablets from the US
drug authorities. Cadila will launch the drug in 2020 after original drug maker's patent
Aurobindo Pharma Ltd has received US Food and Drug Administration (USFDA)
approval to manufacture and market Tamsulosin Hydrochloride Capsules and
Clindamycin Palmitate Hydrochloride for oral solution
Sun Pharma has received a tentative approval from the US Food and Drug
Administration (USFDA) for a generic version of Januvia. Sun Pharma is expected to
launch the drug in 2022
FDI, up to 100 per cent, under the automatic route, would continue to be permitted for
Greenfield investments in the Pharmaceuticals sector. 100 Per cent FDI is also permitted for
Brownfield investment (i.e. investments in existing companies), under the Government
According to the Union Budget 2013-14, investment allowance of 15 per cent on new plant
and machinery has been allowed. The allowance is expected to increase investments in new
projects while simultaneously providing tax benefit to the industry.
The Department of Pharmaceuticals has prepared a 'Pharma Vision 2020' document for
making India one of the leading destinations for end-to-end drug discovery and innovation
and for that purpose, the department provides requisite support by way of world class
infrastructure, internationally competitive scientific manpower for pharma research and
development (R&D), venture fund for research in the public and private domain and such
In order to encourage production of drugs by indigenous industries, the 12th
Five Year Plan
(2012-17) has recommended capacity building of private sector to meet WHO-GMP
standards and other international manufacturing standards.
The pharmaceutical companies such as Cipla, Ranbaxy, Dr Reddy's Labs and Lupin might
soon be part of the government's ambitious 'Jan Aushadhi' project. In an attempt to
commercialise the project, the Government is likely to rope in the private sector to bulk-
procure generic drugs from them. There are 117 Jan Aushadhi stores across the country and
the plan is to expand to at least 600 in the next two years and 3,000 by 2016.
Further, India will see the largest number of merger and acquisitions (M&A) in the
pharmaceutical and healthcare sector, according to consulting firm Grant Thornton. A survey
conducted across 100 companies has revealed that one-fourth of the respondents were
optimistic about acquisitions in the pharmaceutical sector.
1.3 Company Profile:
The Reliance Group is among India’s top three private sector business houses on all major financial
parameters, with assets in excess of Rs.180,000 crore, and net worth to the tune of Rs.89,000 crore.
Across different companies, the group has a customer base of over 100 million, the largest in
India, and a shareholder base of over 12 million, among the largest in the world.
Through its products and services, the Reliance Group touches the life of 1 in 10 Indians
every single day. It has a business presence that extends to over 20000 towns and 4.5 lakhs
villages in India, and 5 continents across the world.
The interests of the Group range from communications (Reliance Communications) and
financial services (Reliance Capital Ltd), to generation, transmission and distribution of
power (Reliance Energy), infrastructure and entertainment.
Reliance Capital Ltd.
Reliance Capital Limited is a financial services company and part of a Reliance Anil
Dhirubhai Ambani Group. It is registered with the Reserve Bank of India under section 45-IA
of the Reserve Bank of India Act, 1934. as a public limited company in 1986 and is now
listed on the Bombay Stock Exchange and the National Stock Exchange (India). Reliance
Capital has a net worth of over 33 billion (US$570 million) and over 165,000 shareholders.
On conversion of outstanding equity instruments, the net worth of the company will increase
to about 41 billion (US$710 million).It is headed by Anil Ambani and is a part of the
Reliance ADA Group.
Reliance Capital ranks among the top 3 private sector financial services and banking
companies, in terms of net worth.
Reliance Capital has interests in:
Life and general insurance.
Private equity and proprietary investments.
Depository services and financial products.
Consumer finance and other activities in financial services.
Reliance Mutual Fund is amongst top two Mutual Funds in India with over six million
investor folios. Reliance Life Insurance and Reliance General Insurance are amongst the
leading private sector insurers in India. Reliance Securities is one of India’s leading retail
broking houses. Reliance Money is one of India’s leading distributors of financial products
Reliance Securities & Reliance Money Ltd.
Reliance Securities Ltd.
Reliance Securities, the broking arm of Reliance Capital is the one of the India’s leading
retail broking houses in India, providing customers with access to equities, equity options and
commodities futures, wealth management, wealth management services, mutual funds, IPOs
and investment banking.
Reliance Securities has over 7 lac retail broking accounts through its pan India presence with
over 6,200 outlets.
Reliance Money Ltd.
The third party distribution business of Reliance Capital, branded as ‘Reliance Money’ is a
comprehensive financial services and solutions provider, providing customers with access to
life and general Insurance products, money transfer, currency exchange, loans and gold coins.
Reliance Money Infrastructure Ltd. provides financial products and services including mutual
fund money transfer and money changing services. The company also offers gold coin
distribution services. It was formerly known as Reliance Money Limited. The company is
based in Mumbai, India. Reliance Money Infrastructure Ltd. operates as a subsidiary of
Reliance Capital Limited
1.4 OBJECTIVE OF STUDY
The main objective of project is to do fundamental analysis of a pharmaceutical of
Secondly to study the present scenario of a pharmaceutical industry.
Analyze the information collected on sales, profit, earning per share, market price etc.
To do Ratio Analysis for the selected companies and make necessary comments on it
so as to provide complete idea and core ideology of the company. So that investors
can easily get idea about the fundamental analysis of pharmaceutical companies.
To carry out financial and non-financial analysis of Pharma Sector as a whole for the
1.5 Concept of Fundamental Analysis
Two Approaches of Fundamental Analysis
While carrying out fundamental analysis, investors can use either of the following
1 .Top-down approach: In this approach, an analyst investigates both international and
national economic indicators, such as GDP growth rates, energy prices, inflation and interest
rates. The search for the best security then trickles down to the analysis of total sales, price
levels and foreign competition in a sector in order to identify the best business in the sector.
2. Bottom-up approach: In this approach, an analyst starts the search with specific businesses,
irrespective of their industry/region.
How does fundamental analysis works?
Fundamental analysis is carried out with the aim of predicting the future performance of a
company. It is based on the theory that the market price of a security tends to move towards
its 'real value' or 'intrinsic value.' Thus, the intrinsic value of a security being higher than the
security’s market value represents a time to buy. If the value of the security is lower than its
market price, investors should sell it.
The steps involved in fundamental analysis are:
1. Macroeconomic analysis, which involves considering currencies, commodities and indices.
2. Industry sector analysis, which involves the analysis of companies that are a part of the
sector. (Industry Analysis)
3. Situational analysis of a company. (Company Analysis)
4. Financial analysis of the company.
The valuation of any security is done through the discounted cash flow (DCF) model, which
takes into consideration:
1. Dividends received by investors
2. Earnings or cash flows of a company
3. Debt, which is calculated by using the debt to equity ratio and the current ratio (current
Fundamental Analysis Tools
These are the most popular tools of fundamental analysis.
Earnings per Share – EPS
Price to Earnings Ratio – P/E
Projected Earnings Growth – PEG
Price to Sales – P/S
Price to Book – P/B
Dividend Payout Ratio
Return on Equity
Financial ratios are tools for interpreting financial statements to provide a basis for valuing
securities and appraising financial and management performance.
A good financial analyst will build in financial ratio calculations extensively in a financial
modelling exercise to enable robust analysis.
Financial ratios allow a financial analyst to:
Standardize information from financial statements across multiple financial years to
allow comparison of a firm’s performance over time in a financial model.
Standardize information from financial statements from different companies to allow
apples to apples comparison between firms of differing size in a financial model.
Measure key relationships by relating inputs (costs) with outputs (benefits) and
facilitates comparison of these relationships over time and across firms in a financial
In general, there are 4 kinds of financial ratios that a financial analyst will use most
frequently, these are:
Working capital ratios
These 4 financial ratios allow a good financial analyst to quickly and efficiently address the
following questions or concerns:
What return is the company making on its capital investment? What are its profit margins?
Working capital ratios
How quickly are debts paid? How many times is inventory turned?
Can the company continue to pay its liabilities and debts?
Solvency ratios (Longer term)
What is the level of debt in relation to other assets and to equity? Is the level of interest
payable out of profits?
WHY ONLY FUNDAMENTAL ANALYSIS
Fundamental analysis is good for long-term investments based on long-term trends, very
long-term. The ability to identify and predict long-term economic, demographic,
technological or consumer trends can benefit patient investors who pick the right industry
groups or companies.
Sound fundamental analysis will help identify companies that represent a good value. Some
of the most legendary investors think long-term and value. Graham and Dodd, Warren
Buffett and John Neff are seen as the champions of value investing. Fundamental analysis
can help uncover companies with valuable assets, a strong balance sheet, stable earnings, and
One of the most obvious, but less tangible, rewards of fundamental analysis is the
development of a thorough understanding of the business. After such pains taking research
and analysis, an investor will be familiar with the key revenue and profit drivers behind a
company. Earnings and earnings expectations can be potent drivers of equity prices. Even
some technicians will agree to that.
A good understanding can help investors avoid companies that are prone to shortfalls and
identify those that continue to deliver. In addition to understanding the business, fundamental
analysis allows investors to develop an understanding of the key value drivers and companies
within an industry. A stock's price is heavily influenced by its industry group. By studying
these groups, investors can better position themselves to identify opportunities that are high-
risk (tech), low-risk (utilities), growth oriented (computer), value driven (oil), non-cyclical
(consumer staples), cyclical (transportation) or income-oriented (high yield).
1.6 Methodology of FUNDAMENTAL ANALYSIS
The economic analysis aims at determining if the economic climate is conclusive and
is capable of encouraging the growth of business sector, especially the capital
market. When the economy expands, most industry groups and companies are
expected to benefit and grow. When the economy declines, most sectors and
companies usually face survival problems. Hence, to predict share prices, an investor
has to spend time exploring the forces operating in overall economy. Exploring the
global economy is essential in an international investment setting. The selection of
country for investment has to focus itself to examination of a national economic
scenario. It is important to predict the direction of the national economy because
economic activity affects corporate profits, not necessarily through tax policies but
also through foreign policies and administrative procedures.
Tools for Economy Analysis
The most used tools for performing economic analysis are:
Gross Domestic Product (GDP)
Monetary policy and Liquidity
Inflation Interest rates
Influences on long term expectations
Influences on short term expectations
1) Gross Domestic product
GDP is one measure of economic activity. This is the total amount of goods and
services produced in a country in a year. It is calculated by adding the market values
of all the final goods and services produced in a year.
It is a gross measurement because it includes the total amount of goods and services
produced, of which some merely replace goods that have depreciated or have worn
It is domestic production because it includes only goods and services produced
within the country.
Inflation can be defined as a trend of rising prices caused by demand exceeding
supply. Over time, even a small annual increase in prices of say 1 % will tend to
influence the purchasing power of the nation. In others word, if prices rise steadily,
after a number of years, consumers will be able to buy only fewer goods and services
assuming income level does not change with inflation.
3) Interest rate
Interest rate is the price of credit. It is the percentage fee received or paid by
individual or organization when they lend and borrow money. In general, increases in
interest rate, whether caused by inflation, government policy, rising risk premium, or
other factors, will lead to reduced borrowing and economic slowdown.
4) International influences
Rapid growth in overseas market can create surges in demand for exports, leading to
growth in export sensitive industries and overall GDP. In contrast, the erection of
trade barriers, quotas, currency restrictions can hinder the free flow of currency,
goods, and services, and harm the export sector of an economy.
5) Fiscal policy
The fiscal policy of the government involves the collection and spending of revenue.
In particular, fiscal policy refers to the efforts by the government to stimulate the
economic directly, through spending.
An industry analysis helps inform business managers about the viability of their
current strategy and on where to focus a business among its competitors in an
industry. The analysis examines factors such as competition and the external business
environment, substitute products, management preferences, buyers and suppliers.
Industry analysis involves reviewing the economic, political and market factors that
influence the way the industry develops. Major factors can include the power wielded
by suppliers and buyers, the condition of competitors. And the likelihood of new
Data needs for industry analysis
Industry analysis requires a variety of quantitative and qualitative data. Though one
single source for all the data needs might not found, industry associates, business
publications and the department of economic analysis perform a comprehensive
industry analysis. A suggestive list of data categories that are utilized for performing
industry analysis is listed below.
Economics of scale
Buyers and their behaviour
Product pattern (cyclical, seasonal)
Tools for industry analysis
Industry performance over time
Differences in industry risk
Prediction about market behaviour
Competitors over the industry life cycle
Analysis of the company consists of measuring its performance and ascertaining the
cause of this performance. When some companies have done well irrespective of
economic or industry failure, this implies that there are certain unique characteristics
for this particular company that had made it a success. The identification of these
characteristics, whether quantitative or qualitative, is referred to as company analysis.
Quantitative indicators of company analysis are the financial indicators and
operational efficiency indicators. Financial indicators are the profitability indicators
and financial position indicators analyzed through the income and balance sheet
statements, respectively, of the company. Operational indicators are capacity
utilization and cost versus sales efficiency of the company, which includes the
marketing edge of the company.
Besides the quantitative factors, qualitative factors of a company also influence
investment decision process of an institutional investor. The focus of the qualitative
data, as revealed in the annual report- as in the director’s speech. Rather than on
Tools for company analysis
Company analysis involves choice of investment opportunities within a specific
industry that comprises of several individual companies. The choice of an investible
company broadly depends on the expectations about its future performance in
general. Here, the business cycle that a company is undergoing is a very useful tool
to assess the future performance from the company.
Company analysis ought to examine the levels of competition, demand, and other
forces that affect the company’s ability to be profitable. Of these factors,
understanding the competitive environment is most important.
A business faces five forces of competition (porter’s model) namely, seller’s
competition, buyer’s competition, competition from new entrants, exit competition.
Competitive forces include the power of those who sell the business, those who buy
the business; those who buy from the business, how easily new businesses can enter
the industry, how costly it is to exit, and finally, the competition from those who
already in the industry. How well a company deals with each of these forces will
determine whether the company earns above or below average profit. Each of these
forces is discussed below.
1. Porter model
Porter's Five Forces is a framework for industry analysis and business strategy
development formed by Michael E. Porter of Harvard Business School in 1979. It
draws upon Industrial Organization (IO) economics to derive five forces that
determine the competitive intensity and therefore attractiveness of a market.
Attractiveness in this context refers to the overall industry profitability. An
"unattractive" industry is one in which the combination of these five forces acts to
drive down overall profitability. A very unattractive industry would be one
approaching "pure competition", in which available profits for all firms are driven
down to zero.
Three of Porter's five forces refer to competition from external sources. The
remainder are internal threats.
Porter referred to these forces as the micro environment, to contrast it with the more
general term macro environment. They consist of those forces close to a company
that affect its ability to serve its customers and make a profit. A change in any of the
forces normally, requires a business unit to re-assess the marketplace given the
overall change in industry information. The overall industry attractiveness does not
imply that every firm in the industry will return the same profitability. Firms are able
to apply their core competencies, business model or network to achieve a profit
above the industry average. A clear example of this is the airline industry. As an
industry, profitability is low and yet individual companies, by applying unique
business models, have been able to make a return in excess of the industry average.
Porter's five forces include - three forces from 'horizontal' competition: threat of
substitute products, the threat of established rivals, and the threat of new entrants;
and two forces from 'vertical' competition: the bargaining power of suppliers and the
bargaining power of customers.
This five forces analysis is just one part of the complete Porter strategic models. The
other elements are the value chain and the generic strategies
(a) The threat of the entry of new competitors
Profitable markets that yield high returns will attract new firms. This results in many
new entrants, which eventually will decrease profitability for all firms in the industry.
Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate
will fall towards zero (perfect competition).
The existence of barriers to entry (patents, rights, etc.) The most attractive segment is
one in which entry barriers are high and exit barriers are low. Few new firms can
enter and non-performing firms can exit easily.
Economies of product differences
Switching costs or sunk costs
Access to distribution
Customer loyalty to established brands
Industry profitability; the more profitable the industry the more attractive it will be to
(b) The threat of substitute products or services
The existence of products outside of the realm of the common product boundaries
increases the propensity of customers to switch to alternatives:
Buyer propensity to substitute
Relative price performance of substitute
Buyer switching costs
Perceived level of product differentiation
Number of substitute products available in the market
Ease of substitution. Information-based products are more prone to substitution, as
online product can easily replace material product.
(c) The bargaining power of customers (buyers)
The bargaining power of customers is also described as the market of outputs: the
ability of customers to put the firm under pressure, which also affects the customer's
sensitivity to price changes.
Buyer concentration to firm concentration ratio
Degree of dependency upon existing channels of distribution
Bargaining leverage, particularly in industries with high fixed costs
Buyer switching costs relative to firm switching costs
Buyer information availability
Ability to backward integrate
Availability of existing substitute products
Buyer price sensitivity
Differential advantage (uniqueness) of industry products
(d) The bargaining power of suppliers
The bargaining power of suppliers is also described as the market of inputs. Suppliers
of raw materials, components, labor, and services (such as expertise) to the firm can
be a source of power over the firm, when there are few substitutes. Suppliers may
refuse to work with the firm, or, e.g., charge excessively high prices for unique
Supplier switching costs relative to firm switching costs
Degree of differentiation of inputs
Impact of inputs on cost or differentiation
Presence of substitute inputs
Strength of distribution channel
Supplier concentration to firm concentration ratio
Employee solidarity (e.g. labor unions)
Supplier competition - ability to forward vertically integrate and cut out the BUYER
(e) The intensity of competitive rivalry
For most industries, the intensity of competitive rivalry is the major determinant of
the competitiveness of the industry.
Sustainable competitive advantage through innovation
Competition between online and offline companies; click-and-mortar -v- slags on a
Level of advertising expense
Powerful competitive strategy
The visibility of proprietary items on the Web used by a company which can
intensify competitive pressures on their rivals.
2. The financial statements of the company:
Records that outline the financial activities of a business, an individual or any other
entity. Financial statements are meant to present the financial information of the
entity in question as clearly and concisely as possible for both the entity and for
readers. Financial statements for businesses usually include: income statements,
balance sheet, statements of retained earnings and cash flows, as well as other
3. Ratio analysis:
A tool used by individuals to conduct a quantitative analysis of information in a
company's financial statements. Ratios are calculated from current year numbers and
are then compared to previous years, other companies, the industry, or even the
economy to judge the performance of the company. Ratio analysis is predominately
used by proponents of fundamental analysis. There are many ratios that can be
calculated from the financial statements pertaining to a company's performance, activity,
financing and liquidity. Some common ratios include the price-earnings ratio, debt-
equity ratio, earnings per share, asset turnover and working capital.
4. ROA: Return on assets, which, offering a different take on management's
effectiveness reveals how much profit a company earns for every dollar of its assets.
Assets include things like cash in the bank, accounts receivable, property, equipment,
inventory and furniture. ROA is calculated like this:
Annual Net Income
5. ROI: Return on Investment is one of several commonly used approaches for
evaluating the financial consequences of business investments, decisions, or actions. ROI
analysis compares the magnitude and timing of investment gains directly with the
magnitude and timing of investment costs. A high ROI means that investment gains
compare favorably to investment costs.
6. ROE: Of all the fundamental ratios that investors look at, one of the most
important is return on equity. It's a basic test of how effectively a company's
management uses investors' money - ROE shows whether management is growing
the company's value at an acceptable rate. ROE is calculated as:
GAINS - INVESTMENT COSTS
Annual Net Income
Average Shareholders' Equity
7. EPS: The portion of a company's profit allocated to each outstanding share of
common stock. Earnings per share serve as an indicator of a company's profitability.
8. DPS: The the sum of declared dividends for every ordinary share issued. Dividend
per share (DPS) is the total dividends paid out over an entire year (including interim
dividends but not including special dividends) divided by the number of outstanding
ordinary shares issued.
DPS can be calculated by using the following formula:
D - Sum of dividends over a period (usually 1 year)
SD - Special, one time dividends
S - Shares outstanding for the period
Net Income-Dividends on Preferred Stock
Average Outstanding shares
9. P/O RATIO: The amount of earnings paid out in dividends to shareholders.
Investors can use the payout ratio to determine what companies are doing with their
Dividends per share
Pay Out Ratio= ---------------------------
Earnings per Share
1.5 Research methodology
Research methodology is a way to systematically solve the research problem. The
research methodology using for find out the solution of the research problem is
analytical research methodology and some extend descriptive research methodology
Secondary Data The sources of secondary data for solve the problems are:-
Company Annual Report
1.6 LIMITATION OF THE STUDY
As the data available to me has been taken from the secondary sources (like internet).
It is not sure that collected data are accurate and complete.
The data which are very useful for the fundamental analysis are lacking in this Project
or contract that are still in negotiation or any kind of deal which is in-process. Here
that is ignored.
Due to lack of experience and knowledge of the pharmaceutical industry it can’t be
said that the projection has been made totally correct and accurate.
Today’s stock market is totally running on the investor’s perception so the conclusion
derived on the basis if fundamental analysis would not viable in long run.
INTEGRATED PERSPECTIVE OF ALL FUNCTIONAL
AREAS IN ORGANIZATION
2. INTEGRATED PERSPECTIVE OF ALL FUNCTIONAL
AREAS IN ORGANIZATION
There are three main functional areas prevails in Reliance Securities. They are :
Human Resources and Development department.
2.1 HR DEPARTMENT Function
Human Resources Department is involved in arranging staff training activities and
supporting the continuous professional development of all staffs. The main function is to
recruit the right employees at the right time for right job. Experienced peoples cope up with
HR’s and train the new employees about the organization’s culture and mainly about the
reliance securities products. Mostly they prefer students with MBA in the Specialization
Marketing and Finance. They train them to acts as a sales force to reach their products in the
market and to maintain the accounts of the organization. They also prefer HR students but
limited candidates only. They train the employees to stain the organization’s goal. HR person
handles job satisfaction among employees and also satisfies their needs. They periodically
measure their employee performance and train them accordingly.
2.2 FINANCE DEPARTMENT Function
Finance Department will be expected to monitor and support aims and objectives
linked to keeping costs low to improve profitability of the organization. Finance staff record
all the money earned and spent so that the senior managers always know how much profit (or
loss) is being made by each product or each part of the business and how much money is
currently held by the business. This enables critical decisions to be made rapidly and
accurately because they are based on accurate information. There are management
accountants, financial accountants to manage the cash flow in the organization they maintain
the records of the expenses daily and report the senior manager on the monthly basis through
2.3 MARKETING DEPARTMENT Function
Marketing department mainly focus on sales and distribution of the Reliance
Securities Products. They satisfy the needs of customers. This department follows the
marketing mix i.e. four P’s. The organization sets target to every employee to sale their
products. Marketing involves promoting their products in the market. It concentrates also the
competitors and their products. They mainly concentrate to create uniqueness of their
products among competitors. The Main functions of Marketing Department are Carrying out
market research to obtain feedback on potential and existing products and/or services.
Analyzing market research responses and advising senior managers of the results and
implications. It also includes Promoting products and services through a variety of
advertising and promotional methods, e.g. press, TV, online, direct mail, sponsorship and
trade shows or exhibitions. Obtaining and updating a profile of existing customers to target
advertising and promotions appropriately. Producing and distributing publicity materials,
such as catalogues or Brochures, Designing, updating and promoting the company website.
The process of evaluating data using analytical and logical reasoning to examine each
component of the data provided. This form of analysis is just one of the many steps that must
be completed when conducting a research experiment. Data from various sources is gathered,
reviewed, and then analyzed to form some sort of finding or conclusion. There are a variety
of specific data analysis method, some of which include data mining, text analytics, business
intelligence, and data visualizations Data can be of several types
Quantitative data is a number
Qualitative data is a pass/fail or the presence of a characteristic
Quantitative data is data measured or identified on a numerical scale. Numerical data can be
analyzed using statistical methods, and results can be displayed using tables, charts,
histograms and graphs. The term qualitative data is used to describe certain types of
information. This is almost the converse of quantitative data, in which items are more
precisely described as data in terms of quantity and in which numerical values are used.
However, data originally obtained as qualitative information about individual items may give
rise to quantitative data if they are summarized by means of counts. Qualitative data
described items in terms of some quality or categorization that may be 'informal' or may use
relatively ill-defined characteristics such as warmth and flavor. However, qualitative data can
include well-defined aspects such as gender, nationality or commodity type.
3.1 ECONOMIC ANALYSIS
Analysis of Indian Economy
The Indian economy after reporting fairly robust growth of over 9 per cent during 2005-08,
moderated to a growth of 6.7 percent in 2008-09 because of the global financial crisis.
Because there was fiscal and monetary space, timely stimulus allowed the economy to
recover fairly quickly to a growth of 8.4 per cent in 2009-10 and 2010-11. Since then,
however, the fragile global economic recovery and a number of domestic factors have led to a
slowdown once again.
The slowdown in the Indian economy that began in the second quarter of 2011-12, when the
growth rate declined to 6.7 percent from a level of 8.0 per cent in the first quarter, continued
in subsequent quarters. Growth has been in the range of 5.3-5.5 percent in the last three
quarters (Q4 of 2011-12 to Q2 of 2012-13). The slowdown is not just confined to India.
There has been a general slowdown in the global economy which has been passing through a
rather prolonged phase of uncertainty. The recovery from the global crisis of 2008-09 in the
advanced economies has been uneven, with a decisive resolution yet to emerge to the
sovereign debt problem in the Euro zone. Having achieved a GDP growth of 5.1 percent in
2010, the rate of growth in the global economy declined to 3.8 per cent in 2011 and is
expected to decline further to 3.3 per cent in 2012, as per the World Economic Outlook
released by the IMF in October 2012. The rate of growth of advanced economies declined
from 3.0 per cent in 2010 to 1.6 percent in 2011 and is expected to decline further to 1.3
percent in 2012. Even the emerging economies have slowed down during this period, partly
as a result of the slowdown in their export markets. China’s growth declined from 10.4
percent in 2010 to 9.2 per cent in 2011 and is expected to be 7.8 per cent in 2012. Brazil’s
growth dipped from 7.5 per cent in 2010 to 2.7 per cent in 2011 and is expected to be
1.5 percent in 2012.
The growth rate of the Indian economy (measured in terms of GDP at factor cost at 2004-05
prices) was 5.4 per cent in the first half (H1) of year 2012-13 as against 7.3 per cent in the
corresponding time period of the previous year. The growth for the full year of 2011-12 was
6.5 per cent vis-à-vis the growth rate of 8.4 per cent achieved in each of the previous two
years i.e. 2009-10 and 2010-11. The slowdown has been all pervasive and almost all the
sectors have been affected. The growth rate has been 2.1 percent for agriculture and allied
sectors, 3.2percent for industry sector and 7.0 percent for the services sector in the first half
of 2012-13. The growth rates were 3.4 per cent, 4.7 per cent and 9.5 percent, for agriculture,
industry and services, respectively in H1 of 2011-12. The growth of GDP in the first and
second quarters of 2012-13 was 5.5 percent and 5.3 per cent respectively
SWOT Analysis of Indian Economy
India is the ninth largest economy in the world in terms of GDP. The Indian Economy due to
its peculiar trends has been a subject of interest for the world. After independence, the Indian
economy was more like a socialist economy: democratic, large public sectors and heavy
regulations on private sectors. Around the 1990s the economy reached a point of stagnation.
Then, in 1991, India saw the largest economic reforms pioneered by Dr Manmohan Singh,
the then finance minister. These changes improve the rate of economic growth and social
development. Economists predict that the Indian economy will be the third largest by 2025,
after the USA and China.
The strength of the Indian economy lies in its robust nature, which is evident from its
constant growth even during times of recession (2008-09). The banking and credit system has
been able to survive the downturn due to heavy regulations imposed by the RBI. This brought
more transparency to the system.
Another important factor that forms the spine of the Indian economy is agriculture, because it
employs nearly 50% of the total population. Although agriculture shares only 18.5% of GDP,
it makes India self-reliant in terms of food supply. Today, India is a leading producer of a
number of agricultural products that give a boost to the export value. The youth of India,
which makes a large part of the population is an advantage as it constitutes a huge work
Primary weakness of the Indian economy is its excessive dependence on agriculture. Since
agriculture is monsoon dependent trade, production can vary by large margins and cause
turbulence in the economy. India also lags behind in social development. A large part of the
population is still living below the poverty line. Another weakness is the literacy rate.
Although we have achieved high progress rates in terms of GDP, more than a third of the
population remains illiterate, thus, easily exploitable.
India has ample opportunities for growth. The agriculture sector and SMEs need to be
encouraged and assisted as they have high potential. Indian government should focus on
defining and properly implementing the policies for rural development, as most of the
population resides in rural India. Also, there is a scope for large-scale infrastructure
development and a need to properly carry out the MNREGA, JNNURM and other schemes,
so that the benefits penetrate to the lower level of the population. Tourism is a thriving
industry in India and we need to harness its potential. It will help raise our foreign reserves
and create employment opportunities.
Terrorism and corruption are the greatest threats that India faces. It is because both hamper
the growth of people and trade, which is a must for overall economic growth. The rising
inflation, hording and black-marketing, also pose a threat to economic development.
Economic growth, mainly the exports, has seen a downward trend due to the worldwide
economic downturn and has become a cause of concern. The Indian government needs to
redefine its policies and bring more stringent reforms to steer out of this turbulence.
India’s Economic Survey 2013
A government study is optimistic that the pace of India’s economic growth – now at its
slowest in a decade –will speed up. But while it expects gross domestic product to expand up
to 6.7% next year, it warned that inflation and a high current account deficit are major
The document, prepared by India’s finance ministry, looks back at the economic performance
of the country over the past year, reviews the government’s recent policy initiatives, and
gives recommendations for the coming year.
Under the leadership of Chief Economic Advisor Raghuram Rajan, the report provides clues
on the priorities of the finance ministry a day before Finance Minister P. Chidambaram
presents the annual budget. The study is released on a yearly basis, a day before the budget is
Here are a few highlights from this year’s economic survey:
In the year starting April 1, the study expects India’s gross domestic product do expand
between 6.1% and 6.7% – higher than the 5% growth rate estimated for this year. The study
cites the positive impact of a partial recovery in the global economy and recent government
policies, including steps to open up foreign investment in sectors like retail and aviation and
to deregulate the price of subsidized fuel. But challenges remain. Key obstacles to growth,
the survey notes, are poor infrastructure, low growth in agriculture and industrial activities,
and the gap between energy supply and demand.
The study says India is on track to meet its fiscal deficit target of 5.3% of GDP this fiscal
year, and to narrow it down to 4.8% of GDP next year. The gap between revenue and
expenditure surged to 5.8% last year, largely because of slowing economic growth and high
subsidy payments on fuel, food and fertilizers. The government has this year curtailed
expenditure, and with the increase in diesel prices, expects to bring down the budget gap
steadily to 3% of GDP by March 2017
The Indian government expects inflation to ease. The study expects the monthly inflation rate
to be between 6.2%-6.6% by the end of March from a year earlier, from 6.62% in January. A
lower inflation rate may encourage the Reserve Bank of India to reduce key interest rates.
The survey described fighting inflation as a “priority,” calling for an increase in food
production and for better infrastructure to reduce agricultural waste.
The study recommended curbing imports, mainly of gold, in a bid to reduce India’s current
account deficit, which stood at 4.2% of GDP last year and is projected to be at similar levels
this year. Steps to raise diesel prices and increase import duties on goods like gold will help
bring down the current account deficit next year, the study said.
The study expected agricultural production to decline. The study said allowing more foreign
direct investment in retail could help the country’s agricultural sectors through the
introduction of new technology and improved infrastructure. The study expects food grain
production to slip 3.5% to 250.1 million tons this year from a year earlier. Although the study
revealed that agriculture accounted for only 14.1% of GDP in 2011-12, the sector employs
over half of the nation’s population.
The study had a special focus on job creation, saying it expects over half of the people joining
the labour force from 2011 to 2030 to be in the 30-49 year age group. It said a priority was to
create jobs in manufacturing and services, rather than in construction.
The study said a priority should be to reduce waste in social spending through projects like
direct-cash transfers to the poor. India’s spending on social welfare increased from 5.9% of
GDP in the year that ended March 31, 2008 to an estimated 7.1% of GDP in the current year.
Gross Domestic Product (GDP)
The Gross Domestic Product (GDP) in India was worth 1841.70 billion US dollars in
2012. The GDP value of India represents 2.97 percent of the world economy. GDP in India is
reported by the World Bank Group. India GDP averaged 485.65 USD Billion from 1970 until
2012, reaching an all time high of 1872.90 USD Billion in December of 2011 and a record
low of 63.50 USD Billion in December of 1970. The gross domestic product (GDP) measures
of national income and output for a given country's economy. The gross domestic product
(GDP) is equal to the total expenditures for all final goods and services produced within the
country in a stipulated period of time.
India's Q4 GDP at 4.8%; FY 2013 GDP is worst in a decade
India's GDP or economic growth rates for the 4th quarter ending March 31, 2013 has come in
line with estimates at a hugely disappointing 4.8 per cent. The whole year GDP for FY 2013
at 5 per cent is the worst seen in almost a decade and is way below the 9 per cent recorded a
few years back. Poor growth rates in electricity and mining were largely responsible for tepid
GDP growth rates.
Stock markets failed to recover after the GDP data was announced with the Sensex down 220
points and the Indian rupee trading at a 1-year low of Rs 55.51 to the dollar.
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation,
released the provisional estimates of national income for the financial year 2012-13 and the
quarterly estimates of Gross Domestic Product (GDP) for the fourth quarter (January-March)
According to the figures released by the CSO, farm sector output for the 4th quarter has seen
a growth of 1.4 per cent quarter on quarter, while manufacturing has seen a growth rate of 2.6
The growth rates in various sectors were as follows: ‘agriculture, forestry and fishing' (1.4
percent), ‘mining and quarrying' (-3.1 percent), ‘manufacturing' (2.6 percent), ‘electricity, gas
and water supply' (2.8 percent) ‘construction' (4.4 percent), 'trade, hotels, transport and
communication' (6.2 percent), 'financing, insurance, real estate and business services' (9.1
percent), and 'community, social and personal services' (4.0 percent).
For the full year 2012-2013, the key indicators of construction sector, namely, cement and
consumption of finished steel registered growth of 5.6 percent and 3.3 percent, respectively in
2012-13 as against 6.1 percent and 3.9 percent, respectively during April-December 2012.
Consequently, the growth of the sector is revised downward to 4.3 percent as against 5.9
percent in the Advance Estimates.
India GDP Growth Rate
The Gross Domestic Product (GDP) in India expanded 1.30 percent in the fourth quarter of
2012 over the previous quarter. GDP Growth Rate in India is reported by the OECD. India
GDP Growth Rate averaged 1.63 Percent from 1996 until 2012, reaching an all time high of
5.80 Percent in December of 2003 and a record low of -1.70 Percent in March of 2009. In
India, the growth rate in GDP measures the change in the seasonally adjusted value of the
goods and services produced by the Indian economy during the quarter. India is the world’s
tenth largest economy and the second most populous. The most important and the fastest
growing sector of Indian economy are services. Trade, hotels, transport and communication;
financing, insurance, real estate and business services and community, social and personal
services account for more than 60 percent of GDP. Agriculture, forestry and fishing
constitute around 12 percent of the output, but employs more than 50 percent of the labor
force. Manufacturing accounts for 15 percent of GDP, construction for another 8 percent and
mining, quarrying, electricity, gas and water supply for the remaining 5 percent.
India Inflation Rate
The inflation rate in India was recorded at 4.70 percent in May of 2013. Inflation Rate in
India is reported by the Ministry of Commerce and Industry. India Inflation Rate averaged
7.73 Percent from 1969 until 2013, reaching an all time high of 34.68 Percent in September
of 1974 and a record low of -11.31 Percent in May of 1976. In India, the wholesale price
index (WPI) is the main measure of inflation. The WPI measures the price of a representative
basket of wholesale goods. In India, wholesale price index is divided into three groups:
Primary Articles (20.1 percent of total weight), Fuel and Power (14.9 percent) and
Manufactured Products (65 percent). Food Articles from the Primary Articles Group account
for 14.3 percent of the total weight. The most important components of the Manufactured
Products Group are Chemicals and Chemical products (12 percent of the total weight); Basic
Metals, Alloys and Metal Products (10.8 percent); Machinery and Machine Tools (8.9
percent); Textiles (7.3 percent) and Transport, Equipment and Parts (5.2 percent).
India's Inflation Slows to 4.7% in May
India's annual rate of inflation, based on the Wholesale Price Index, stood at 4.70 percent
(provisional) for the month of May as compared to 4.9 percent in the previous month, the
lowest level in more than three years.
The index for 'Fuel and Power' declined by 1.3 percent despite higher price of electricity (+13
percent) as the price of other items such as coal (-10 percent), aviation turbine fuel (-6
percent) and petrol (-5 percent) declined.
The index for ‘Food Articles’ group rose by 1.5 percent due to higher price of poultry
chicken and ragi (+5 percent each), fruits and vegetables (+4 percent), fish-marine (+3
percent) and rice (+2 percent). However, the price of tea (-5 percent) and coffee and maize (-
2 percent each) declined.
The prices of 'Manufactured Goods' rose 0.3 percent and the index for ‘Beverages, Tobacco
and Tobacco Products’ group increased by 0.4 percent due to higher price of soft drinks and
carbonated water, bidi and beer (+1 percent each). The index for ‘Transport, Equipment and
Parts’ group declined 0.2 percent due to lower price of bicycles (-3 percent) and motor
vehicles (-1 percent).
The price index of ‘Basic Metals, Alloys and Metal Products’ declined 0.3 percent due to
lower price of silver (-5 percent), gold and gold ornaments (-3 percent) and aluminium (-2
India Foreign Direct Investment
Foreign Direct Investment in India increased to 2596 USD Million in April of 2013 from
1344 USD Million in March of 2013. Foreign Direct Investment in India is reported by the
Reserve Bank of India. India Foreign Direct Investment averaged 913.12 USD Million from
1995 until 2013, reaching an all time high of 5670.00 USD Million in February of 2008 and a
record low of 58.00 USD Million in April of 2003.
'Indian economy is capable of absorbing US$ 50 billion in foreign direct investment (FDI)
per year', said Mr P Chidambaram, the Finance Minister, India. FDI is an economic segment
that enjoys intense focus and attention from policy makers of the highest rank in the
The Government relaxed FDI regime in sectors including multi-brand retail, single-brand
retail, commodity exchanges, power exchanges, broadcasting, non-banking financial
institutions (NBFCs) and asset reconstruction companies (ARCs) in 2012.
There were several big-bang reforms and the Government allowed 51 per cent FDI in multi-
brand retail and 49 per cent in the aviation sector. FDI cap was also raised from 49 per cent to
74 per cent in broadcasting and ARCs, with an aim to bring foreign expertise in the segments.
Foreign investment has also been allowed in power exchanges while foreign institutional
investors (FIIs) have been allowed to invest up to 23 per cent in commodity exchanges
without seeking prior approval from the Government.
Thus, reforms and policies at such a massive level indicate that Indian FDI landscape offers a
plethora of opportunities to foreign investors as the economy is booming and vibrant as
compared to its global peers.
Furthermore, favourable demographics and growth opportunities keep India an 'attractive'
destination for merger and acquisition (M&A) activities across diverse sectors including
consumer goods and pharmaceuticals, according to global consultancy Ernst & Young.
Imports in India decreased to 2166 INR Billion in June of 2013 from 2456.19 INR Billion in
May of 2013. Imports in India are reported by the Directorate General of Commerce. India
Imports averaged 364.23 INR Billion from 1978 until 2013, reaching an all time high of
2475.94 INR Billion in January of 2013 and a record low of 4.98 INR Billion in April of
1978. India is heavily dependent on coal and foreign oil imports for its energy needs. Other
imported products include: machinery, gems, fertilizers and chemicals. India’s main import
partners are China (12 percent of total imports), United Arab Emirates, Switzerland, Saudi
Arabia, United States, Iraq and Kuwait.
Exports in India increased to 1430 INR Billion in June of 2013 from 1348.08 INR Billion in
May of 2013. Exports in India are reported by the Directorate General of Commerce. India
Exports averaged 243.74 INR Billion from 1978 until 2013, reaching an all time high of
1678.36 INR Billion in March of 2013 and a record low of 3.75 INR Billion in May of 1978.
India’s main exports are engineering goods (19 percent of total exports), gems and jewelry
(15 percent), chemicals (13 percent), agricultural products (9 percent) and textiles (9 percent).
India is also one of Asia’s largest refined product exporters with petroleum accounting for
around 18 percent of total exports. India’s main export partners are United Arab Emirates (12
percent of total exports) and United States (11 percent). Others include: China, Singapore,
Hong Kong and Netherlands.
3.2 INDUSTRY ANALYSIS
INDIAN PHARMACEUTICAL INDUSTRY REVIEW
The history of Indian pharmaceutical market in 1970's was almost non-existent.
Today, India has gained immense importance and carved a niche for itself in the
pharmaceutical domain. In fact, it has emerged as a big mart for the pharmaceutical
industry. In today's world, Indian pharmaceutical industry ranks 4th in terms of
volume and 13th in terms of value. For example it might be anything like
formulations, bulk drugs, generics, Novel Drug Delivery Systems, New Chemical
Entities, or Biotechnology, etc. Indian companies are dominating in the marketplace
which was traditionally manned by MNC's. In 1930, in Calcutta the first
pharmaceutical company called Bengal Chemicals and Pharmaceutical Works, which
still is today as one of 5 government-owned drug manufacturers was started.
The Indian Pharmaceutical Industry today is in the front rank of India’s science-
based industries with wide ranging capabilities in the complex field of drug
manufacture and technology. A highly organized sector, the Indian Pharma Industry
is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It
ranks very high in the third world, in terms of technology, quality and range of
medicines manufactured. From simple headache pills to sophisticated antibiotics and
complex cardiac compounds, almost every type of medicine is now made
Playing a key role in promoting and sustaining development in the vital field of
medicines, Indian Pharma Industry boasts of quality producers and many units
approved by regulatory authorities in USA and UK. International companies
associated with this sector have stimulated, assisted and spearheaded this dynamic
development in the past 53 years and helped to put India on the pharmaceutical map
of the world.
The Indian Pharmaceutical sector is highly fragmented with more than 20,000
registered units. It has expanded drastically in the last two decades. The leading 250
pharmaceutical companies control 70% of the market with market leader holding
nearly 7% of the market share. It is an extremely fragmented market with severe
price competition and government price control.
The pharmaceutical industry in India meets around 70% of the country's demand for
bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets,
capsules, orals and injectables. There are about 250 large units and about 8000 Small
Scale Units, which form the core of the pharmaceutical industry in India (including 5
Central Public Sector Units). These units produce the complete range of
pharmaceutical formulations i.e., medicines ready for consumption by patients and
about 350 bulk drugs i.e, chemicals having therapeutic value and used for production
of pharmaceutical formulations.
Following the de-licensing of the pharmaceutical industry, industrial licensing for
most of the drugs and pharmaceutical products has been done away with.
Manufacturers are free to produce any drug duly approved by the Drug Control
Authority. Technologically strong and totally self-reliant, the pharmaceutical
industry in India has low costs of production, low R&D costs, innovative scientific
manpower, strength of national laboratories and an increasing balance of trade. The
Pharmaceutical Industry, with its rich scientific talents and research capabilities,
supported by Intellectual Property Protection regime is well set to take on the
The Indian Pharmaceutical industry consists of more than 20,000 registered units
which are highly fragmented. It has been expanding in a tremendous manner in the
last two decades and includes 250 pharmaceutical companies which control 70% of
Size of the industry
The Indian Pharma Industry has around 70% of the country's demand for bulk drugs,
drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals
and injectibles. 250 large units and about 8000 Small Scale Units, form the core of
the pharmaceutical industry in India. The units produced have the complete range of
medicines which are ready for consumption by patients.
India's pharmaceutical market grew at 15.7 per cent during December 2011.
Globally, India ranks third in terms of manufacturing pharma products by volume.
According to McKinsey, the Pharmaceutical Market is ranked 14th in the world. By
2015 it is expected to reach top 10 in the world beating Brazil, Mexico, South Korea
and Turkey. More importantly, the incremental market growth of US$ 14billion over
the next decade is likely to be the third largest among all markets. The US and China
are expected to add US$ 200bn and US$ 23bn respectively.
McKinsey & Company’s report, “India Pharma 2020: Propelling access and
acceptance, realizing true potential,” predicted that the Indian pharmaceuticals
market will grow to US$55 billion in 2020; and if aggressive growth strategies are
implemented, it has further potential to reach US$70 billion by 2020. While, Market
Research firm Cygnus’ report forecasts that the Indian bulk drug industry will
expand at an annual growth rate of 21 percent to reach $16.91 billion by 2014. The
report also noted that India ranks third in terms of volume among the top 15 drug
Further, McKinsey reports Healthcare grew from 4 per cent of average household
income in 1995 to 7 per cent in 2005 and is expected to grow to 13 per cent by 2025.
Top leading Companies
GlaxoSmithKline (GSK), India
Novartis India Limited
Wyeth India Limited
AVENTIS PHARMA INDIA
PFIZER INDIA LIMITED
JOHNSON & JOHNSON (ETHNOR DIVISION)
Ranbaxy India Limited
Nicholas Piramal India Limited
SUN PHARMA LIMITED
UCB Pharma Ltd
E Merck India Ltd
ELI Lilly and Company (India)
Aurobindo Pharma Ltd
Aventis Pharma Ltd
Cadila Pharmaceuticals Ltd
Dabur Pharma Ltd
Dr. Reddy's Laboratories Ltd
Elder Pharmaceuticals Ltd
Glenmark Pharmaceuticals Ltd
Demand: The demand for pharmaceutical products in India is significant and is driven by
many factors like low drug penetration, rising middle-class & disposable income, increased
government & private spending on healthcare infrastructure, increasing medical insurance
penetration, changing demographic pattern and rise in chronic lifestyle-related diseases;
adoption of product patents, and aggressive market penetration driven by the relatively
According to CARE research demand triggers for the growth are:
Between 2010 and 2015 patent drugs worth US$171 are estimated to go off-patent
leading to a huge surge in generic products.
High margin pharma export business is expected to grow at a higher rate than
domestic market given increased in outsourcing activities.
Increased M&A activities is set to consolidate the market which widens geographic
reach, strengthens distribution network and venture into new therapeutic segments.
Indian companies files the highest number of ANDA’s with USFDA leading to
greater chances of approvals and thereby increasing export to regulated markets
especially the US.
There are currently approximately 175 USFDA and nearly 90 UK-MHRA approved
pharma manufacturing plants in India which can supply high quality pharma products
Growth from rural markets will outstrip overall pharma market growth, albeit at lower
margins, given lower penetration of 18-19% coupled with rising income level and
Biopharmaceuticals is another potential high growth segment for Indian pharma
growing at double digit driven by the vaccines market.
INDIAN PHARMACEUTICAL industry at a glance in 2012 - 2013 Indian
On the back of increasing sales of generic medicines, continued with the growth in chronic
therapies and a greater penetration in rural markets, the Indian domestic pharmaceutical
market is expected to register a strong double-digit growth of 13-14 per cent in 2013. The
year 2012 closed with a growth of 12 per cent, according to data from a research firm. The
Indian pharmaceuticals sector attracted foreign direct investments (FDI) worth US$ 9,776
million between April 2000 to November 2012, according to the latest data published by the
Department of Industrial Policy and Promotion (DIPP). India's exports of drugs and
pharmaceuticals grew by 27 per cent to Rs 60,000 crore (US$ 11.19 billion) for the year
ended March 2012, according to data compiled by Pharmaceutical Exports Council of India
Indian pharmaceutical industry is projected to show double-digit growth in the near future
owing to a rise in pharmaceutical outsourcing and rising investments by multinational
companies. Emerging sectors, such as bio-generics and pharma packaging will also pave way
for the pharmaceutical market to continue its upward trend during the FY 2012- FY 2014.
All companies, including MNCs, have increased their field force in the last one year.
Indian companies are entering into strategic tie-ups with MNCs to strengthen their
Companies are expanding their presence in rural markets.
Acquisitions by MNCs to gain quick foothold in the fastest growing Indian pharma
Most of the Pharma companies have shown considerable decline in growth in the first half of
2011. The slowdown is widely visible in the Chronic and Acute categories. Anti-invective,
pain and gastro together contribute 1/3rd of the total pharma market. The pharma companies
have started facing challenges in domestic market due to increase in competition from
unlisted MNCs in this segment. They are rapidly expanding their field force to extend their
geographical reach. Companies like Cipla, Torrent and IPCA which are mainly focused on
Indian market are already feeling the heat. Growth rates of companies such as Cadila, Dr.
Reddy and Ranbaxy have already come down. On the other hand Lupin and Sun are showing
growth due to the shift of focus towards specialty therapies, where competition is relatively
Basing on the changing macro factors and economic growth Emkay Research has expected
the growth estimates of the pharma companies to decrease. It cut down the domestic growth
estimates for Cadila, Cipla, Dr. Reddy, IPCA, Torrent and Unichem for FY12 and FY 13 by
2% to 5% and retained the growth estimates for Lupin, Ranbaxy, Sun, GSK and Pfitzer.
Indian Pharma – Domestic Growth Expectations
Company FY12 Domestic
Cadila 12% 15%
Cipla 10% 15%
Dr. Reddy’s 10% 15%
Glenmark 16% 16%
IPCA 10% 17%
Lupin 19% 19%
Ranbaxy 12% 12%
Sun Pharma 15% 18%
Torrent 12% 12%
Unichem 5% 9%
GSK 13% 13%
Pfizer 14% 14%
ADVANTAGE TO INDIA:-
Competent workforce: India has a pool of personnel with high managerial and technical
competence as also skilled workforce. It has an educated work force and English is
commonly used. Professional services are easily available.
Cost-effective chemical synthesis: Its track record of development, particularly in the area
of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It
provides a wide variety of bulk drugs and exports sophisticated bulk drugs.
Legal & Financial Framework: India has a 53 year old democracy and hence has a solid
legal framework and strong financial markets. There is already an established international
industry and business community.
Information & Technology: It has a good network of world-class educational institutions
and established strengths in Information Technology.
Globalization: The country is committed to a free market economy and globalization. Above
all, it has a 70 million middle class market, which is continuously growing.
Consolidation: For the first time in many years, the international pharmaceutical industry is
finding great opportunities in India. The process of consolidation, which has become a
generalized phenomenon in the world pharmaceutical industry, has started taking place in
Government initiatives in the public health sector have recorded some noteworthy successes
over time with focus on investments related to better medical infrastructure, rural health
100 per cent FDI is permitted for health and medical services under the automatic
The National Rural Health Mission (NHRM) had allocated US$ 10.15 billion for the
up gradation and capacity enhancement of healthcare facilities.
Moreover, in order to meet revised cost of construction, in March 2010 the
Government allocated an additional US$ 1.23 billion for six upcoming AIIMS-like
institutes and up gradation of 13 existing Government Medical Colleges.
As a result, FDI inflow in hospital and diagnostic centres was US$ 1.1 billion during April
2000 and November 2011, according to st Department of Industrial Policy & Promotion
(DIPP) data. FDI inflow in medical and surgical appliances stood at US$ 472.6 million
during the same period. And the drugs and pharmaceuticals sector has attracted FDI worth
US$ 5.0 billion between April 2000 and November 2011
SWOT ANALYSIS OF PHARMA INDUSTRY:
1. Low cost of production.
2. Large pool of installed capacities
3. Efficient technology
s for large number of Generics.
4. Large pool of skilled technical manpower.
5. Increasing liberalization of government policies.
1. Aging of the world population.
2. Growing incomes.
3. Growing attention for health.
4. New diagnoses and new social diseases.
5. Spreading prophylactic approaches.
6. Saturation point of market is far away.
7. New therapy approaches.
8. New delivery systems.
9. Spreading attitude for soft medication (OTC drugs).
10. Spreading use of Generic Drugs.
12. Easier international trading.
13. New markets are opening.
1. Fragmentation of installed capacities.
2. Low technology level of Capital Goods of this section.
3. Non-availability of major intermediaries for bulk drugs.
4. Lack of experience to exploit efficiently the new patent regime.
5. Very low key R&D.
6. Low share of India in World Pharmaceutical Production (1.2% of world production but
having 16.1% of world’s population).
7. Very low level of Biotechnology in India and also for New Drug Discovery Systems.
8. Lack of experience in International Trade.
9. Low level of strategic planning for future and also for technology forecasting.
1. Containment of rising health-care cost.
2. High Cost of discovering new products and fewer discoveries.
3. Stricter registration procedures.
4. High entry cost in newer markets.
5. High cost of sales and marketing.
6. Competition, particularly from generic products.
7. More potential new drugs and more efficient therapies.
8. Switching over form process patent to product patent.
3.3 COMPANY ANALYSIS
Sun Pharmaceutical Industries Limited
Headquarters Mumbai, Maharashtra, India
Revenue $1.4 Billion (2012)
Net income $216 Million (2012)
Employees 11,200 (2012)
Sun Pharma was established by Mr. Dilip Shanghvi in 1983 in Kolkata with 5 products to
treat psychiatry ailments. Cardiology products were introduced in 1987 followed by
gastroenterology products in 1989. Today it is the largest chronic prescription company in
India and a market leader in psychiatry, neurology, cardiology, orthopaedics, ophthalmology,
gastroenterology and nephrology. Some of the top brands of the company include pantocid,
susten, aztor, gemer, repace, glucored, strocit, clopilet and cardivas. Over 57% of Sun
Pharma sales are from markets outside India, primarily in the US. Manufacturing is across 23
locations, including the US, Canada, Brazil, Mexico and Israel. In the US, the company
markets over 200 generics, with another 150 awaiting approval from the USFDA.
Sun Pharma was listed on the stock exchange in 1994 in an issue oversubscribed 55 times.
The founding family continues to hold a majority stake in the company. Today Sun Pharma is
the third largest and the most profitable pharmaceutical company in India as well as the
largest pharmaceutical company by market capitalisation on the Indian exchanges.The Indian
pharmaceutical industry has become the third largest producer in the world in terms of
volumes and is poised to grow into an industry of $ 20 billion in 2015 from the current
turnover of $ 12 billion. In terms of value India still stands at number 14 in the world.
Recent Achievements of the Company
Sun Pharmaceutical Industries Ltd on January 30, 2008 announced that it has
commercially launched generic Pantoprazole Sodium Delayed Release (DR) Tablets,
40 mg, which is AB-rated to Wyeth's Protonix DRTablets. Sun's product is being sold
in the United States by its marketing partner Caraco Pharmaceutical Laboratories.
In November 2008, we along with our subsidiaries, acquired 100% ownership of
Chattem Chemicals, Inc., a narcotic raw material importer and manufacturer of
controlled substances with a approved facility in Tennessee. This will offer vertical
integration for our controlled substance dosage form business in the US.
Sun Pharmaceutical Industries (Sun) has completed the acquisition of a controlling
stake in Taro Pharmaceutical Industries (Taro) following the Option Agreement
entered into in 2007 with Taro's controlling shareholders led by Taro's Chairman
Sun Pharmaceutical on Sept 8 won a significant victory in its three-year-old battle to
acquire Taro Pharmaceuticals.
Sun Pharma - Sun Pharma announced launch of generic Exelon in US
Sun Pharma - Supreme Court of Israel Rules in Favor of Sun Pharma
Company has splits its Face value of Shares from Rs 5 to Re 1
SunPharma - Merck & Co., Inc., and Sun Pharma Establish Joint Venture to Develop
and Commercialize Novel Formulations and Combinations of Medicines in Emerging
SunPharma - MSD in India and Sun Pharmaceutical Industries Ltd entered Strategic
Partnership to Co-market MSD's diabetes drug.
Merck & Co., Inc., and Sun Pharma Establish Joint Ventured toDevelop and
Commercialize Novel Formulations and Combinations of Medicines in Emerging
Sun Pharma - MSD in India and Sun Pharmaceutical Industries Ltd Enter Strategic
Partnership to Co-market MSD's diabetes drug.
Sun Pharma bagged USFDA approval for its AND Application for generic Zyprexa
Israel Makov appointed Chairman of Sun Pharma Board
Sun Pharma acquired URL generic business from Takeda
The Norwegian firm Telenor conduct its operations in India, promoters of Sun
Pharma emerged as the new JV partner of the company.
Dr. Reddy’s Laboratories Ltd.
Headquarters Hyderabad, Andhra Pradesh, India
Revenue $2.1 Billion (2012)
Net income $300Million (2012)
Employees 16,300 (2012)
Dr. Reddy's Laboratories Ltd is a pharmaceutical company based in Hyderabad, Andhra
Pradesh, India. The company was founded by Anji Reddy, who had previously worked in the
publicly owned Indian Drugs and Pharmaceuticals Limited, of Hyderabad, India. Dr. Reddy's
manufactures and markets a wide range of pharmaceuticals in India and overseas. The
company has over 190 medications, 60 active pharmaceutical ingredients (APIs) for drug
manufacture, diagnostic kits, critical care, and biotechnology products.
Dr. Reddy's began as a supplier to Indian drug manufacturers, but it soon started exporting to
other less-regulated markets that had the advantage of not having to spend time and money
on a manufacturing plant that would gain approval from a drug licensing body such as the
U.S. Food and Drug Administration (FDA). By the early 1990s, the expanded scale and
profitability from these unregulated markets enabled the company to begin focusing on
getting approval from drug regulators for their formulations and bulk drug manufacturing
plants in more-developed economies. This allowed their movement into regulated markets
such as the US and Europe
Recent Achievements of the Company
Dr Reddys Laboratories Ltd has acquired Jet Generici Sri, a Company engaged in the
sale of generic finished dosages in Italy.
Dr Reddy's Laboratories Ltd has signed a definitive agreement to acquire BASF's
pharmaceutical contract manufacturing business and related facility in Shreveport,
Hyderabad: Dr Reddy's Laboratories Ltd unveiled Omez Insta for patients suffering
from severe gastritis and those on Ryle's tube feeding in India.
Dr Reddys Laboratories Ltd has appointed Dr. Bruce L A Carter as an Additional
Director on the Board of the Company.
Dr Reddys Laboratories Ltd has has appointed Dr. Ashok S Ganguly as an Additional
Director on the Board of Directors of the Company with effect from October 23,
Dr. Reddy's launches Strea C10 and Strea A15 in India
Dr. Reddy's launches Bispec in India
Dr. Reddy's joins American Chemical Society Green Chemistry Institute
Dr Reddy's Laboratories announced the launch of Cresp. It is a darbepoetin alfa that is
approved for the treatment of anemia. It is due to chronic kidney disease or
Dr. Reddy's announces the launch of Pantoprazole Sodium delayed-released tablets.
Dr Reddy's launches Levocetirizine tablets in US
Dr Reddy's launches generic allergy drug in US
Dr. Reddy's announces completion of the acquisition of US penicillin facility and
products from GlaxoSmithKline
Dr. Reddy's announces the launch of Over-the-Counter Fexofenadine HCI tablets.
Dr. Reddy's launches pegfilgrastim in India under the brand name 'Peg-grafeel
Registered Office of the Company has been shifted To 8-2-337, Road No. 3, Banjara
Hills, Hyderabad - 500034, Andhra Pradesh, India.
Dr. Reddy's announces the Launch of Ziprasidone Hydrochloride Capsules.
Dr. Reddy's launches of Quetiapine Fumarate Tablets.
Dr. Reddy's announces the launch of Olanzapine tablets.
Dr. Reddy's announces the Launch of Clopidogrel Tablets, USP.
Dr. Reddy’s announces the Launch of SILDENAFIL TABLETS.
Headquarters Mumbai, Maharashtra, India
Revenue $1.6 Billion (2012)
Employees 11,355 (2012)
Lupin Limited is a transnational pharmaceutical company based in Mumbai. It is the 2nd
largest Indian pharma company by market capitalization; the 14th largest generic
pharmaceutical company globally and; the 5th largest generic pharmaceutical company in the
US by prescription-led market share. It has the distinction of being the fastest growing
generic pharmaceutical player in the two largest pharmaceutical markets of the world – the
US and Japan; and is the 5th largest and the fastest growing generic pharmaceutical player in
Recent Achievements of the Company
Lupin Limited has appointed Mr. R.V. Satam as Secretary & Compliance Officer of
the Company w.e.f. May 01, 2008.
Lupin enters into agreement for Suprax 400 mg tablets
Lupin Launches SUPRAX ®400 mg Tablets in the US
Lupin expands its product basket in JapanKyowa receives Ten product approvals
Lupin receives USFDA approval for Levetiracetam Tablets
Lupin ties up with leading Institutes for PhD Program
Lupin in Equity Partnership with Multicare Pharmaceuticals Philippines, Inc.
Lupin Expands Branded Play; Announces Acquisition of Worldwide Rights for its
first NDA - AllerNaze
Lupin Limited has launched Ilyalgan® (sodium hyaluronate), an osteoarthritis drug,
available in the form of an injectable through leading orthopaedics and
physiotherapists across the country. Hyalgan40 is the original research molecule of
the Italian pharma giant I 'IDIA and is the world leader in HA therapy, marketed in
over 60 countries globally.
Lupin Limited's U.S subsidiary, Lupin Pharmaceuticalss Inc. (LPT) has received the
final approval for the company's Abbreviated New Drug Application (ANDA) for its
Imipramine Pamoate capsules, 75mg, 100 mg, 125 mg and 150 mg from the U.S.
Food and Drug Administration (FDA). Commercial shipments of the product have
Company has splits its Face value of Shares from Rs 10 to Rs 2
Lupin acquires Worldwide Rights for the Goanna® Brand.
Lupin and Medicis Enter into Joint Development Agreement.
Lupin Acquires I'rom Pharmaceuticals through its Japanese Subsidiary.
Lupin receives Tentative Approval for Generic Glumetza Extended-Release Tablets
LUPIN announces settlement with SANTARUS and DEPOMED for GLUMETZA
Lupin launches Generic Geodon Capsules.
Lupin launches Generic SEROQUEL Tablets.
Headquarters Mumbai, Maharashtra, India
Revenue $1.2 Billion (2012)
Net income $190 Million (2012)
Employees 16,000 (2012)
Cipla Limited is pharmaceutical company based in Mumbai, India. Founded by nationalist
Indian scientist Khwaja Abdul Hamied as The Chemical, Industrial & Pharmaceutical
Laboratories in 1935, Cipla makes drugs to treat cardiovascular disease, arthritis, diabetes,
weight control, depression and many other health conditions
Founded prior to Indian independence by Khwaja Abdul Hamied and Yaqub on the principle
that India needed to become self-sufficient in supplying medicine to its people, Cipla has
emphasized self-reliance and the right of all people to health and access to medicine,
regardless of their economic circumstances or where in the world they happen to live. Cipla
cooperates with other enterprises in areas such as consulting, commissioning, engineering,
project appraisal, quality control, know-how transfer, support, and plant supply
Recent Achievements of the Company
Cipla Ltd has appointed Mr. Pankaj Patel as a Director in casual vacancy with effect
from March 05, 2008.
Cipla launched Roche's generic version of anti-infection drug
Cipla wins Erlotinib case against Roche
Pharmaceuticals Export Promotion Council Awards
Cipla launches drug to treat Swine flu virus
Cipla wins patent fight against Gilead Sciences
Cipla Ltd acquired Meditab Specialities Pvt. Ltd. (Meditab) for an aggregate
consideration of Rs. 133.35 crores.
Cipla Medpro has signed a deal with Biomab, a division of Chinese company Desano
Cipla sold the marketing rights of i-Pill to Piramal Healthcare for Rs 95 crore in cash.
Cipla has tied up with the Manipal Group-promoted 'Stempeutics Research'.
Drug Maker Cipla has launched the generic Version of Pirfenidone, used to treat
Idiopathic Pulmonary Fibrosis, a progressive Lung disease.India is the 2nd market to
have this drug after Japan.
Cipla Cancer Palliative Care Centre launched 24 hour helpline to offer counselling to
ensure more people use of the free services available.
Cipla India's second largest drug firm, has agreed to acquire South African
Drugmaker Cipla Medpro with 51% stake amounts
Cipla bags tentative approval for HIV treatment tablets
Drug giant Cipla Ltd has announced price reduction on 3 major anti-cancer drugs
including Erlotinib (ERLOCIP), Docetaxel (DOCETAX) and Capecitabine
Cipla bags award in the Field of Export of Pharmaceuticals during the year conferred
the Highest Award 'Platinum'.
Ranbaxy Laboratories Limited
Headquarters Gurgaon, Haryana, India
Revenue $1.7 Billion (2012)
Net income $310 Million (2012)
Employees 10,435 (2012)
Ranbaxy Laboratories Limited is an Indian multinational pharmaceutical company that was
incorporated in India in 1961. The company went public in 1973 and Japanese
pharmaceutical company Daiichi Sankyo acquired a controlling share in 2008. Ranbaxy
exports its products to 125 countries with ground operations in 43 and manufacturing
facilities in eight countries. In 2011, Ranbaxy Global Consumer Health Care received the
OTC Company of the year award.
Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a
Japanese company Shionogi. The name Ranbaxy is a portmanteau of the names of its first
owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his
cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh joined the
company in 1967, the company saw an increase in scale.
Recent Achievements of the Company
Ranbaxy arm bags Rs 605 cr order in South Africa
Ranbaxy Laboratories Limited (Ranbaxy) signed the Agreements with Biovcl
Lifesciences Private Limited (Biovel), Bangalore, India, providing for the acquisition
of product rights and a manufacturing facility, from Biovcl.
Ranbaxy and Pfenex Announce Collaboration for the Development of a Biosimilar
Ranbaxy Lab - Ranbaxy Launches Antiplatelet Agent Prasugrel in India
Ranbaxy Laboratories has entered into an in-licensing agreement with Gilead
Sciences, Inc. for three new HIV/AIDS drugs which are currently in late-stage clinical
Daiichi Sankyo & Ranbaxy Announce a New Social Contribution Initiative
Encompassing India, Cameroon and Tanzania
Ranbaxy and The Government of Yaroslavl Region, Russia, sign MOU for
cooperation in the field of Healthcare and Medical Science.
Ranbaxy Announces Launch of Atorvastatin, Generic Lipitor®, the US
Ranbaxy honored with NJBIA award for excellence in New Jersey Business
Ranbaxy Launched Absoricatm (Isotretinoin) Capsules In The U.S. Healthcare
Ranbaxy Delivered Strong Overall Business Performance; Improvement In Base
Business Sales And Margins
Ranbaxy Launched Authorized Generic Of Evoxac In The U.S. Healthcare Market
Ranbaxy received Approval To Set Up Greenfield Manufacturing Facility In Malaysia
Ranbaxy Launched Authorized Generic Of Pioglitazone In The U.S.
Daiichi Sankyo And Ranbaxy Launched Hybrid Business In Venezuela
Daiichi Sankyo Company, Limited (Daiichi Sankyo) and Ranbaxy Laboratories
Limited (Ranbaxy) announced their intention to integrat their business operations in
Thailand, to leverage and maximize the synergies of the Hybrid Business Model,
which is expected to commence business on April 1, 2013.
3.4 FINANCIAL ANALYSIS
INTRODUCTION TO THE RATIO ANANLYSIS:-
The relationship of these two figure expressed mathematically is called a ratio. The ratio
refers to the numerical or quantities relationship between two variables or times. A ratio is
calculated by dividing one item of the relationship with the other. The ratio analysis is one of
the most useful and common methods of analyzing financial statement. Ratio enables the
mass of data to be summarized and simplified. Ratio analysis is an instrument for diagnosis
of the financial health of an enterprise.
MEANING OF RATIO:-
A ratio is only a comparison of the numerator with the denominator. The tern ratio refers to
the numerical or quantitative relationship between two figures and obtained by dividing the
former by the latter. Ratio analysis is an important and age old technique of financial
analysis. The data given in financial statements ratio are relative form of financial data and
very useful techniques to cheek upon the efficiency of a firm. Some ratio indicates the trend
or progress or downfall of the firm.
IMPORTANCE OF RATIO:
Ratio analysis of firm’s financial statement is of interest to a number of parties mainly.
Shareholders, creditor, financial executives etc. shareholders are interested with earning
capacity of the firm: creditors are interested in knowing the ability of firm to meet financial
obligation and financial executives are concerned with evolving analytical tools that will
measures and compare costs, efficiency liquidity and profitability with a view to making