1

PERFORMANCE ANALYSIS OF
PHARMACEUTICAL COMPANIES
BEFORE AND AFTER THE ONSET OF
COVID - 19
Bachelor of Business Administration

G Jedidiah Manoah

URK18BBA018

Under the guidance of Dr. AUGUSTUS IMMANUEL PAULDURAI M.Com.,CAIIB

Department of Commerce and International Trade

Karunya Institute of Technology and Sciences

[Declared as a Deemed University under sec.3 of the UGC Act, 1956]

April 2021

Project Report submitted to the

Department of Commerce and International Trade

in partial fulfillment of the requirements for the award of the degree

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CERTIFICATE

This is to certify that the Mini project report entitled Performance analysis of
Pharmaceutical Companies Before and After the Onset of COVID-19 is a bonafide
record of work done by G Jedidiah Manoah (URK18BBA018) under my supervision
and submitted in partial fulfillment for the award of the degree of Bachelor of
Commerce/ Business Administration of Karunya Institute of Technology and Sciences.

Place:

Date: Research Supervisor

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External Examiner Internal Examiner

Head of the Department

DECLARATION

G.Jedidiah hereby declare that the Mini project report entitled PERFORMANCE
ANALYSIS OF PHARMACEUTICAL COMPANIES BEFORE AND AFTER THE
ONSET OF COVID - 19 is a bonafide record of the original research work carried out by
me in the Department of Commerce and International Trade, Karunya Institute of
Technology and Sciences and that it has not been submitted earlier elsewhere for the
award of any Degree, Diploma or Fellowship.
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· I understand that KITS shall hold the copyrights of all these projects /
dissertations submitted to the University.

· I will republish the entire thesis / extracts of the report only with the permission
of LITS and I am liable to pay 40% of royalty to KITS.

· If I engage in documenting any research findings with an intention of publishing

it for commercial purpose, I shall obtain a NOC from the office of the registrar
prior to engaging in such activities.

Place: Vizag

Date: 20/4/21 Signature of the Candidate

ACKNOWLEDGEMENT (One page)

All endeavors over a long period can be successful only with the advice and support of many
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well wishers. I take this opportunity to express my gratitude and appreciation to all of them.

I acknowledge my gratitude to Dr. Joseph Kennedy, Dean of the Department of Commerce,

Karunya Institute of technology and sciences, Coimbatore.

I express my thanks to Dr. Samuel Joseph Head of the Department of Commerce, Karunya
Institute of technology and sciences, Coimbatore. For the moral support extended to me in this
endeavor.

Patience is the mother of confidence. Such patience with my Guide

Dr. Augustus Immanuel,

Department of Commerce, Karunya Institute of technology and sciences, Coimbatore for

encouragement and guidance. I wish my deep sense of gratitude and profound thanks to him.

Jedidiah Manoah G

URK18BBA018

CONTENTS

CHAPTER TITLE PAGE No.

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I Performance Analysis and Statements 11

II Literature Review 17

III Financial Analysis 22

IV Impact, Research and development, BS6 48

Norms

V Ratio Analysis 50

VI Common Size Statement 66

Findings, Suggestions, Conclusion

VII 72

Annexure

List of Tables

Sl. No Title Page

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No.

1 Annual Report - sun pharmaceutical industry 24

2 Annual Report – Cipla 28

3 Annual Report - Dr. Reddy’s lab 33

Annual Report - Cadila Healthcare

4 38

Annual Report - Aurobindo Pharma

5 43

Ratio Analysis - sun pharmaceutical industry

6 51

Ratio Analysis - Cipla

7 54

Ratio Analysis - Aurobindo Pharma

8 57

Ratio Analysis - Cadila Healthcare

9 60

Ratio Analysis – Dr. Reddy’s lab

10 63

COMMON SIZE STATEMENT - Dr. Reddy’s lab

11 67

COMMON SIZE STATEMENT - sun pharmaceutical industry

12 68

COMMON SIZE STATEMENT – Cipla

13 69
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COMMON SIZE STATEMENT - Cadila Healthcare

14 70

COMMON SIZE STATEMENT – Aurobindo Pharma

15 71

List of Charts

Sl.No Title Page.

No

1 performance of pharmaceutical companies before covid 75

lockdown

2 performance of pharmaceutical companies during covid 76

lockdown

3 performance of pharmaceutical companies after covid lockdown 76

4 expected growth rate during the covid period 77

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Executive summary
The project was conducted on “Performance analysis of Pharmaceutical manufacturing Company
Before and After COVID-19. It encompasses detailed analysis on the performance of the
Pharmaceutical market.

In Indian markets like Pharmaceutical manufacturing industries are the important sector, but due
to this pandemic the whole Pharmaceutical industries are engaged in creating the vaccine and

drugs for the patients in the beginning and this whole project is about the companies financial
analysis and the research and development towards their threat happened during this pandemic.

The mushrooming coronavirus outbreak in the central Chinese city of Wuhan prompted the
World Health Organization (WHO) to declare a global health emergency in late January. The
coronavirus outbreak isn't just a massive health crisis; it's an economic one as well. If the
pandemic is not contained to a large extent by April, the drop in consumer demands and
industrial production could potentially push the global economy into a recession in 2020.

Many Pharmaceutical Companies are stepping up to the challenges to create vaccines for the
coronavirus outbreak. They are supporting governments in developing and supplying various
health and wellness solutions, which has been covered in the study as well. This massive crisis is
going to change the outlook for auto manufactures in the near future as the focus is likely to shift
towards health and wellness solutions in vehicles.

The study includes a comprehensive scenario-based analysis centered on the current world
scenario on key industries like Automotive across various markets to enable clients to survive the
present to thrive in the future. At the same time, we recognize it is important for our followers to
remain on top of their strategic initiatives.

The industry can be broadly classified into organised and unorganised sectors. The organised
sector caters to original equipment manufacturers (OEMs) and consist of high-value precision
instruments while the unorganised sector comprises low-valued products and caters mostly to the
aftermarket category.

As the effects of the pandemic start to wane and the industry begins to recover, OEMs will
explore various options to drawback consumers and offset the drop in sales. The study deals with
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the impact across different regions and the top global OEMs. OEM wise impact analysis across
different regions based on sales and production dependency along with forecasts in various post-
COVID-19 scenarios have been covered in the study.

INTRODUCTION
The study is held to understand how the pharmaceutical industry is affected by the pandemic.
This study finds out analysis of Top 5 pharma companies their performance and financial
analysis before and after covid 19 and also their detailed view on common size statement
analysis
It helps in understanding how the situation changes over the time
As economies around the world are suffering from the impact of Covid-19, businesses are
experiencing losses, workers are without jobs, and many face the challenge of a complete
upheaval of lifestyle. However, pharmaceutical companies taking centre stage in the Covid-19
fight
During these unprecedented times, pharmaceutical companies are responding to the rapid
challenges arising from disruption in supply chains and the need to change business processes. If
the current COVID-19 pandemic lasts for a medium/long span of time, it may impact the supply
of active material and ingredients (mainly from China), as well as the import and export of
pharmaceuticals.

There is also the potential for negative impacts of both a medium- and longer-term nature on
R&D and manufacturing activities, as well as delay on projects/programmes not related to the
core supply chain/data management operations. While the full impact of the global pandemic is
still unknown, pharma companies need to respond, recover and thrive.

The affordability of drugs will rise due to sustained growth in incomes and
increases in insurance coverage. With real GDP growing at nearly 8 per cent over
the next decade3
income levels will rise steadily. Rising incomes will drive 73 million
households into the middle and upper income segments

In addition to income
growth, health insurance coverage will augment affordability. By 2020, nearly
650 million people will enjoy health insurance coverage. Private insurance coverage
will grow by nearly 15 per cent annually till 2020. However, the largest impact will
be seen through government sponsored programmes that are largely focused on
the ‘below poverty line’ (BPL) segment5
, and are expected to provide coverage to
nearly 380 million people by 2020 (Exhibit 3).
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Accessibility to drugs will expand due to growth in medical infrastructure,

Government sponsored programmes for BPL segments, including the Rashtriya Swasthya Bima
Yojana
(RSBY) and state-specific programmes (e.g., Aarogyasri in Andhra Pradesh and Kalaignar in
Tamil Nadu), are expected to provide coverage to nearly 380 million people by 2020.

OBJECTIVES:

To Identify the performance of the Top 5 Pharmaceutical Companies before and after
COVID-19.

To study the Research and Development techniques of these companies during pandemic.

To study the difficulties that these pharmaceutical companies faced during the Lockdown.

To Calculate the Ratio Analysis and Cost statement Analysis of the top 5 Indian
pharmaceutical companies.

CHAPTER -1
PERFORMANCE ANALYSIS

PERFORMANCE ANALYSIS:

Performance analysis is a specialist discipline involving systematic observations to enhance

performance and improve decision making, primarily delivered through the provision of
objective statistical and visual feedback which is data and video analysis.

Performance analysis includes analysis and interpretation of financial statements in such a way
that it undertakes full diagnosis of the profitability and financial soundness of the business. The
financial analyst program provides vital methodologies of financial analysis.

Financial analysis is the process evaluating businesses, projects, budgets, and other finance
related transactions to determine their performance and sustainability. Typically financial
analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to
warrant a monetary investment.And it refers to the process of analyzing and assessing a
company’s financial statements to gain an understanding on its business model, financial
performance, risk and profitability of the business.
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The role of financial statement analysis is to utilize the information available in a company’s
financial statements (Balance sheet, Income Statement, Cash flow statement) along with other
relevant information, to make economic decisions. External stakeholders use it to understand the
overall health of an organization as well as to evaluate financial performance and business value.
Internal constituents use it as a monitoring tool for managing the finances. The financial
statements of a company record important financial data on every aspect of a business’s
activities. As such they can be evaluated on the basis of past, current, and projected performance.

In general, financial statements are centered around generally accepted accounting principles.
These principles require a company to create and maintain three main financial statements: the
balance sheet, the income statement, and the cash flow statement. Public companies have stricter
standards for financial statement reporting. Public companies must follow GAAP standards
which requires accrual accounting. Private companies have greater flexibility in their financial
statement preparation and also have the option to use either accrual or cash accounting.

Several techniques are commonly used as part of financial statement analysis. Three of the most
important techniques include horizontal analysis, vertical analysis, and ratio analysis. Horizontal
analysis compares data horizontally, by analyzing values of line items across two or more years.
Vertical analysis looks at the vertical affects line items have on other parts of the business and
also the business’s proportions. Ratio analysis uses important ratio metrics to calculate statistical
relationships.

BALANCE SHEET:

A balance sheet is a financial statement that reports a company's assets, liabilities and
shareholders' equity at a specific point in time, and provides a basis for computing rates of return
and evaluating its capital structure It is a financial statement that provides a snapshot of what a
company owns and owes, as well as the amount invested by shareholders.
The balance sheet is used alongside other important financial statements such as the income
statement and statement of cash flows in conducting fundamental analysis or calculating
financial ratios.
·A balance sheet is a financial statement that reports a company's assets, liabilities and
shareholders' equity.
· The balance sheet is one of the three (income statement and statement of cash flows
being the other two) core financial statements used to evaluate a business.
· The balance sheet is a snapshot, representing the state of a company's finances (what it
owns and owes) as of the date of publication.
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· Fundamental analysts use balance sheets, in conjunction with other financial statements,
to calculate financial ratios.

Assets=Liabilities+Shareholders’ Equity

Assets
● Within the assets segment, accounts are listed from top to bottom in order of their
liquidity – that is, the ease with which they can be converted into cash. They are divided
into current assets, which can be converted to cash in one year or less; and non-current or
long-term assets, which cannot.
Liabilities
Liabilities are the money that a company owes to outside parties, from bills it has to pay to
suppliers to interest on bonds it has issued to creditors to rent, utilities and salaries. Current
liabilities are those that are due within one year and are listed in order of their due date. Long-
term liabilities are due at any point after one year.
Shareholders' Equity
Shareholders' equity is the money attributable to a business' owners, meaning its shareholders. It
is also known as "net assets," since it is equivalent to the total assets of a company minus its
liabilities, that is, the debt it owes to non-shareholders.

INCOME STATEMENT:
An income statement is one of the three important financial statements used for reporting a
company's financial performance over a specific accounting period, with the other two key
statements being the balance sheet and the statement of cash flows.
Also known as the profit and loss statement or the statement of revenue and expense, the income
statement primarily focuses on the company’s expenses and revenues during a particular period.
· An income statement is one of the three (along with balance sheet and statement of cash
flows) major financial statements that reports a company's financial performance over
a specific accounting period.
· Totalrevenue is the sum of both operating and non-operating revenues while total
expenses include those incurred by primary and secondary activities.
· Revenues are not receipts. Revenue is earned and reported on the income statement.
Receipts (cash received or paid out) are not.
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· An income statement provides valuable insights into a company’s operations, the

efficiency of its management, under-performing sectors and its performance relative
to industry peers.
Net Income = (Total Revenue + Gains) – (Total Expenses + Losses)
The income statement is an important part of a company’s performance reports that must be
submitted to the securities and exchange. While a balance sheet provides the snapshot of a
company’s financial as of a particular date, the income statement reports income through a
particular time period and its heading indicates the duration, which may read as “For the
(fiscal) year/quarter ended September 30, 2018.”
The income statement focuses on four key items—revenue, expenses, gains, and losses. It
does not differentiate between cash and non-cash receipts (sales in cash versus sales on
credit) or the cash versus non-cash payments/disbursements (purchases in cash versus
purchases on credit). It starts with the details of sales, and then works down to compute the
net income and eventually the earnings per share (EPS). Essentially, it gives an account of
how the net revenue realized by the company gets transformed into net earnings (profit or
loss).

CASH FLOW STATEMENT:

A cash flow statement is a financial statement that provides aggregate data regarding all cash
inflows a company receives from its ongoing operations and external investment sources. It also
includes all cash outflows that pay for business activities and investments during a given period.
A company's financial statements offer investors and analysts a portrait of all the transactions
that go through the business, where every transaction contributes to its success. The cash flow
statement is believed to be the most intuitive of all the financial statements because it follows the
cash made by the business in three main ways—through operations, investment, and financing.
The sum of these three segments is called net cash flow.
·A cash flow statement provides data regarding all cash inflows a company receives from
its ongoing operations and external investment sources.
· The cash flow statement includes cash made by the business through operations,
investment, and financing—the sum of which is called net cash flow.
· The first section of the cash flow statement is cash flow from operations, which includes
transactions from all operational business activities.
· Cash flow from investment is the second section of the cash flow statement, and is the
result of investment gains and losses.
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· Cash flow from financing is the final section, which provides an overview of cash used
from debt and equity.
every company that sells and offers its stock to the public must file financial reports and
statements with the Securities and Exchange Commission (SEC). The three main financial
statements are the balance sheet and income statement. The cash flow statement is an important
document that helps open a wind interested parties insight into all the transactions that go
through a company.
There are two different branches of accounting—accrual and cash. Most public companies use
accrual accounting, which means the income statement is not the same as the company's cash
position. The cash flow statement, though, is focused on cash accounting.

Financial Statements:
“Analyzing financial statements,” according to Metcalf and Titard, “is a process of evaluating
the relationship between component parts of a financial statement to obtain a better
understanding of a firm’s position and performance.”
Key objectives of financial statement analysis include assessing decisions such as whether to
invest in the company's securities or recommend them to investors and whether to extend trade
or bank credit to the company. Analysts use financial statement data to evaluate past
performance and current financial position of a company in order to form opinions about the
company's ability to earn profits and generate cash flow in the future.
In the words of Myers, “Financial statement analysis is largely a study of relationship among the
various financial factors in a business as disclosed by a single set-of statements and a study of
the trend of these factors as shown in a series of statements.”
The purpose of financial analysis is to diagnose the information contained in financial statements
so as to judge the profitability and financial soundness of the firm. Just like a doctor examines
his patient by recording his body temperature, blood pressure, etc. before making his conclusion
regarding the illness and before giving his treatment, a financial analyst analyzes the financial
statements with various tools of analysis before commenting upon the financial health or
weaknesses of an enterprise.
The term ‘financial statement analysis’ includes both ‘analysis’, and ‘interpretation’. A
distinction should, therefore, be made between the two terms. While the term ‘analysis’ is used
to mean the simplification of financial data by methodical classification of the data given in the
financial statements, ‘interpretation’ means, ‘explaining the meaning and significance of the data
so simplified.’
The primary objective of financial statement analysis is to understand and diagnose the
information contained in financial statements with a view to judge the profitability and financial
soundness of the firm, and to make forecasts about future prospects of the firm. The purpose of
analysis depends upon the person interested in such analysis and his object.
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● To assess the earning capacity or profitability of the firm

● To assess the operational efficiency and managerial effectiveness.
● To assess the short term as well as long term solvency position of the firm.
● To identify the reasons for change in profitability and financial position of the firm.
● To make an inter firm comparison.
● To make forecasts about future prospects of the firm.
● To assess the progress of the firm over a period of time.
● To help in decision making and control.
● To guide or determine the dividend action.
● To provide important information for granting credit.

Limitations of financial analysis :

❖ It is only a study of interim reports.

❖ Financial analysis is based upon only monetary information and non-monetary factors
are ignored.
❖ It does not consider changes in price levels.
❖ As the financial statements are prepared on the basis of a going concern, it does not give
an exact position. Thus accounting concepts and conventions cause a serious limitation to
financial analysis.
❖ Changes in accounting procedure by a firm may often make financial analysis
misleading.
❖ Analysis is only a means and not an end in itself. The analyst has to make an
interpretation and draw his own conclusions. Different people may interpret the same
analysis in different ways.

CHAPTER-2
LITERATURE REVIEW
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India to play vital role in equitable distribution of COVID-19 vaccines around the world:
Pharma industry

"India contributes 60% of the vaccine production to the world.” With vaccine rollout beginning
in some countries, the world ravaged by the COVID-19 pandemic is looking to India for the
large-scale production and supply of coronavirus vaccines as it enters 2021. As the pandemic hit
the world in 2020, Indian pharma industry rose to the occasion and was able to manufacture and
maintain supply chains even during the lockout period, and exported medicines such as HCQ and
paracetamol to more than 150 countries, keeping its image of ''Reliable Pharmacy of the World''.
The world is again looking at India as a beacon of hope to manufacture and supply the huge
number of vaccines needed to tackle the pandemic. "India contributes 60% of the vaccine
production to the world. India is going to play a vital role in equitable distribution of vaccines
around the world," Indian Pharmaceutical Alliance (IPA) Secretary General Sudarshan Jain told
PTI.
"India contributes 60% of the vaccine production to the world.” With vaccine rollout beginning
in some countries, the world ravaged by the COVID-19 pandemic is looking to India for the
large-scale production and supply of coronavirus vaccines as it enters 2021.
As the pandemic hit the world in 2020, Indian pharma industry rose to the occasion and was able
to manufacture and maintain supply chains even during the lockout period, and exported
medicines such as HCQ and paracetamol to more than 150 countries, keeping its image of
''Reliable Pharmacy of the World''. The world is again looking at India as a beacon of hope to
manufacture and supply the huge number of vaccines needed to tackle the pandemic. "India
contributes 60% of the vaccine production to the world. India is going to play a vital role in
equitable distribution of vaccines around the world," Indian Pharmaceutical Alliance (IPA)
Secretary General Sudarshan Jain told PTI.

While Indian companies such as Zydus, Bharat Biotech and Gennova are developing indigenous
vaccines, other domestic companies are collaborating with global companies such as Serum
Institute with AstraZeneca, Dr Reddys with Sputnik and Biological E with J&J, he added.
"India will also be a benchmark in vaccine distribution and will be using technology to ensure
targeted and phased distribution. India has always believed that global cooperation and
coordination is fundamental to meet the COVID situation," Jain said. Currently, three COVID-19
vaccines candidates of Bharat Biotech, Serum Institute of India and Pfizer are under active
consideration of India''s drug regulator and there is hope that early licensure is possible for all or
any of them, according to the Union health ministry.
Indian Drug Manufacturers' Association (IDMA) Executive Director Ashok Kumar Madan said,
"We are sure with all the attention given by the government, vaccines will too be available for
use from January 2021 onwards. These vaccines are being approved by our Drugs Controller as
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per the stringent international norms. We take pride that almost 70% of the WHO vaccine
procurements are from India".
Indian firms have used different platforms to produce the vaccines. Scientists in these firms have
the capability to produce the vaccine to counter the mutated forms in a short time, he added.

Reference: The Hindu

newspaper

Up Is Down — Pharmaceutical Industry Caution vs. Federal Acceleration of Covid-19

Vaccine Approval

would refuse to apply for approval of a Covid-19 vaccine until adequate trial data are available.1
This announcement reflected an unusual role reversal at a time of unexpected regulatory
anomalies. For decades, manufacturers have criticized the Food and Drug Administration (FDA)
for being too slow and demanding too much evidence before approving new products. But in the
face of growing public concern that the federal government might push forward release of a
Covid-19 vaccine despite inadequate evidence, these roles seem to have reversed.
The industry leaders who signed the pledge understood that in a country already suspicious of
both vaccines and drug makers, rushed vaccine approval followed by unanticipated
consequences could severely damage both their credibility and the population’s faith in
immunization — not to mention sales of a Covid-19 and other vaccines. (Pneumococcal 13-
valent conjugate vaccine [Prevnar 13] was Pfizer’s largest revenue-generating product
worldwide in 2019, at $5.8 billion.2) For the companies as for the public, a careful, data-driven
decision in 2021 would be far better than a few months’ more sales after a premature approval in
October.
The drug makers’ statement comes amid ominous regulatory events: two FDA emergency use
authorizations (EUAs) that went badly wrong, for hydroxychloroquine and convalescent plastic
increasingly direct statements by President Donald Trump suggesting that a vaccine would be
ready before the November 3 election; and growing public uneasiness about the credibility of the
unfolding approval process. Most experts have said that a data-driven vaccine approval by the
end of October would be extraordinarily unlikely,3 but on the day before the CEOs’
announcement the president stated, “We’ll have the vaccine soon, maybe before a special date.
You know what date I’m talking about.” The more Trump suggests the possibility of an “October
surprise” approval, the more concerned the public becomes about the soundness of the vaccine
development and evaluation process.
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Do the back-to-back statements of the president and industry leaders represent an irresistible
force meets an immovable object? The resolution will be the result of conflicting currents of
clinical trial design, immunology, statistics, regulatory policy, economics, public health, and
politics.

Reference: NEJM Organization

Coronavirus | Indian pharma industry capable of producing vaccines for

entire world: Bill Gates

India’s pharmaceutical industry will be able to produce COVID-19 vaccines not just for
the country but also for the entire world, according to Microsoft co-founder and
philanthropist Bill Gates.

A lot of “very important things have been done” in India and its pharma industry is
doing work “to help make the coronavirus vaccine building on other great capacities
that they have used for other diseases”, said the Co-Chair and Trustee of Bill and
Melinda Gates Foundation.

Speaking in a documentary — COVID-19: India’s War Against The Virus —

to be premiered on Discovery Plus this (Thursday) evening, Mr. Gates said
India also faces a huge challenge due to the health crisis because of its
gigantic size and urban centres with a lot of population density.

Commenting on the strength of India’s pharma industry, he said, “India has a

lot of capacity there — with the drug and vaccine companies that are huge
suppliers to the entire world. You know, more vaccines are made in India
than anywhere— starting with Serum Institute, that’s the largest.”

He further said, “But (there are) also Bio E, Bharat (Biotech), many others.
They are doing work to help make the coronavirus vaccine, building on other
great capacities that they have used for other diseases.”
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Stating that India joined Coalition for Epidemic Preparedness Innovations

(CEPI), which is a group working on a global basis to build vaccines
platforms, Mr. Gates said, “I am excited that the pharmaceutical industry
there will be able to produce not just for India but also for the entire world.
(This is) What we need to reduce the deaths and make sure we are immune,
which is how we end the epidemic.”

Mr. Gates said Bill and Melinda Gates Foundation is also a “partner with the
government, particularly with the department of biotechnology, the Indian
Council of Medical Research (ICMR) and the office of the principal scientific
advisor provide advice and help about getting these tools going“.

Commenting on the deadly virus breaching India’s borders in the

documentary which was shot extensively during the period of lockdown, he
said, “India is still at the beginning of this, but there’s a lot of very important
things have been done.

It’s a huge challenge with India because you’ve got a gigantic country.
You’ve got your urban centers with a lot of density— and so that— drives the
spread. You have people moving around.”

He, however, added: “Yet people are stepping up... Looking at how we
reduce the spread while trying not to reduce food availability, equipment that
people need.”

Highlighting Gates foundation’s role, he said it has “worked for the Indian
government on health issues like introducing new vaccines over the last
decade; and so when COVID-19 came along, we stepped in and said you
know where are the gaps, we have been funding work on detection and
isolation.
21

We have been particularly active in Uttar Pradesh and Bihar where we have
done health delivery in the past.”

The foundation is also working with the department of personnel and training
to take their online training platforms and “are now using that guidance to
help their frontline health workers”, Mr. Gates said.

CHAPTER-3
Financial Analysis
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FINANCIAL ANALYSIS:
Objective And Context:
The objective of the project is to exactly determine the sales of the Pharmaceutical companies in
India before and after Covid 19. Financial statements like balance sheet, income statement and
cash flow statement will also be evaluated. The main objective is to define a clear decision
whether to invest in the company’s securities or recommend them to investors and to extend
trade or bank credit to the company.

LIST OF TOP 5 PHARMACEUTICAL COMPANIES:

● Cadila Healthcare
● Dr. Reddy's Laboratories
● Cipla
● Sun Pharmaceutical Industries Ltd.
● Aurobindo Pharma
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Sun Pharmaceutical Industries Ltd.

Slogan: Humility, Integrity, Passion & Innovation together form Sunology. It is a way of life at
Sun.
● Sun Pharmaceutical Industries Limited (NSE: SUNPHARMA, BSE: 524715)
Is An Indian multinational pharmaceutical company headquartered in Mumbai.
● Manufactures and sells pharmaceutical formulations and active pharmaceutical
ingredients (APIs) primarily in India and the United States.
OVERVIEW
● Started as a partnership firm by Mr. Dilip Shanghavi in 1983 in Vapi with just five
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.

● The 2015 acquisition of Ranbaxy has made the company the largest pharma company in
India

● It has more than >150 Market Served

Across six continents it has >48 Manufacturing Facilities
It has more than >30,000 Employees World Wide
More than >2,000 Products Marketed
In India it is considered as the >Largest Pharmaceutical company
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In the World it has been the >5th Largest

Performance of Sun Pharmaceutical Industries Ltd

FY 2015-16 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 28,766.86

Raw material expenses 6,724.15

Power, fuel & water charges 545.44

Employees Cost 4,772.31

Selling & distribution expenses 2,262.35

Miscellaneous expenditure 1,824.56

Operating Profit 8,816.57

General & Administrative 2,956.85

Expenses

Profit after Tax 5,656.86

FY 2016-17 ANNUAL REPORT:

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PARTICULARS AMOUNT( in Cr)

Net sales 32,338.34

Raw material expenses 8,402.37

Power, fuel & water charges 525.09

Employees Cost 4,902.30

Selling & distribution expenses 2,520.64

Miscellaneous expenditure 1,106.04

Operating Profit 10,712.42

General & Administrative 3,113.67

Expenses

Profit after Tax 7,836.30

FY 2017-18 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 27,327.62

Raw material expenses 7,193.98

Power, fuel & water charges 559.97

Employees Cost 5,367.05

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Selling & distribution expenses 1,864.55

Miscellaneous expenditure 1,047.60

Operating Profit 6,446.89

General & Administrative 2,862.45

Expenses

Profit after Tax 2,567.94

FY 2018-19 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 30,125.35

Raw material expenses 8,302.08

Power, fuel & water charges 613.60

Employees Cost 5,967.09

Selling & distribution expenses 2,621.13

Miscellaneous expenditure 1,107.57

Operating Profit 7,333.08

General & Administrative 2,729.20

Expenses
27

Profit after Tax 3,209.32

FY 2019-20 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 33,489.09

Raw material expenses 8,929

Power, fuel & water charges 621.89

Employees Cost 6,362.35

Selling & distribution expenses 3,654.48

Miscellaneous expenditure 963.29

Operating Profit 7,625.74

General & Administrative 3,340.89

Expenses

Profit after Tax 4,186.79

28

Cipla Ltd

Slogan: Caring for life

● Cipla Ltd (NSE: CIPL, BSE: 500087) is an Indian multinational pharmaceutical

company, headquartered in Mumbai, India
● Cipla primarily develops medicines to treat respiratory, cardiovascular disease, arthritis,
diabetes, weight control and depression; other medical conditions.

OVERVIEW

● Cipla Ltd was incorporated in the year 1935 with the name Chemical Industrial &
Pharmaceutical Laboratories Ltd
● In the year 1960 they started operations at a second plant at Vikhroli Mumbai producing
fine chemicals with special emphasis on natural products.
● In 1995, Cipla launched Deferiprone, the world's first oral iron chelator. In 2001, Cipla
offered medicines (antiretrovirals) for HIV treatment at a fractional cost (less than $350
per year per patient).

● It has more than >120 Market Served

Across six continents it has >34 Manufacturing Facilities
It has more than >22,000 Employees World Wide
More than >1,500 Products Marketed
In India it is considered as the >4th Largest Pharmaceutical company
In the World it has been the >10th Largest
29

CIPLA Ltd

FY 2015-16 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 13,803.10

Raw material expenses 5,026.31

Power, fuel & water charges 245.92

Employees Cost 2,434.01

Selling & distribution expenses 818.76

Miscellaneous expenditure 83.99

Operating Profit 2,687.88

General & Administrative 845.89

Expenses

Profit after Tax 1,395.44

FY 2016-17 ANNUAL REPORT:

30

PARTICULARS AMOUNT( in Cr)

Net sales 14,622.98

Raw material expenses 5,206.16

Power, fuel & water charges 251.73

Employees Cost 2,633.82

Selling & distribution expenses 1,009.21

Miscellaneous expenditure 645.54

Operating Profit 2,704.48

General & Administrative 868.31

Expenses

Profit after Tax 1,042.41

FY 2017-18 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 15,513.36

Raw material expenses 5,671.36

Power, fuel & water charges 298.82

Employees Cost 2,690.10

31

Selling & distribution expenses 1,082.90

Miscellaneous expenditure 968.98

Operating Profit 2,811.04

General & Administrative 1,002.43

Expenses

Profit after Tax 1,419.35

FY 2018-19 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 16,838.98

Raw material expenses 5,737.45

Power, fuel & water charges 335.11

Employees Cost 2,856.53

Selling & distribution expenses 1,281.29

Miscellaneous expenditure 855.40

Operating Profit 3,344.72

General & Administrative 1,096.50

Expenses
32

Profit after Tax 1,509.61

FY 2019-20 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 17,501.37

Raw material expenses 6,236.18

Power, fuel & water charges 327.43

Employees Cost 3,027.01

Selling & distribution expenses 1,252.04

Miscellaneous expenditure 766.82

Operating Profit 3,475.49

General & Administrative 1,289.13

Expenses

Profit after Tax 1,546.98

33

Dr. Reddy's Laboratories

Slogan: Good Health Can't Wait

● Dr. Reddy's Laboratories (NSE: DRREDDY, BSE: 500124) is an Indian

multinational pharmaceutical company located in Hyderabad, Telangana, India
● Manufactures and sells active pharmaceutical ingredients (APIs) for diagnostic
kits, critical care, and biotechnology products.

OVERVIEW

● Dr. Reddy's originally launched in 1984 producing active pharmaceutical ingredients. In 1986,
Reddy's started operations on branded formulations.

● Within a year Reddy's had launched Norilet, the company's first recognized brand in India and
Reddy's became the first Indian company to export the active ingredients for pharmaceuticals to
Europe

● In 1987, Reddy's started to transform itself from a supplier of pharmaceutical ingredients to

other manufacturers into a manufacturer of pharmaceutical products.

● It has more than >100 Market Served

Across six continents it has >25 Manufacturing Facilities
It has more than >21,000 Employees World Wide
More than >300 Products Marketed
In India it is considered as the >3th Largest Pharmaceutical company
34

In the World it has been the >40 Largest

Dr. Reddy's Laboratories

FY 2015-16 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 15,863.30

Raw material expenses 3,854.20

Power, fuel & water charges 315.20

Employees Cost 3,117.40

Selling & distribution expenses 1,181.10

Miscellaneous expenditure 483.00

Operating Profit 3,880.30

General & Administrative 1,271.40

Expenses

Profit after Tax 2,107.70

FY 2016-17 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

35

Net sales 14,367.60

Raw material expenses 3,819.80

Power, fuel & water charges 330.10

Employees Cost 3,106.80

Selling & distribution expenses 1,293.40

Miscellaneous expenditure 70.60

Operating Profit 2,643.70

General & Administrative 1,339.90

Expenses

Profit after Tax 1,257.50

FY 2017-18 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 14,436.20

Raw material expenses 4,081.00

Power, fuel & water charges 329.30

Employees Cost 3,214.90

Selling & distribution expenses 1,330.20

36

Miscellaneous expenditure 76.00

Operating Profit 2,506.40

General & Administrative 1,193.40

Expenses

Profit after Tax 912.40

FY 2018-19 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 15,785.70

Raw material expenses 4,770.20

Power, fuel & water charges 329.10

Employees Cost 3,356.20

Selling & distribution expenses 1,423.50

Miscellaneous expenditure 99.50

Operating Profit 3,515.70

General & Administrative 1,132.10

Expenses

Profit after Tax 1,906.20

37

FY 2019-20 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 18,137.60

Raw material expenses 5,530.70

Power, fuel & water charges 314.80

Employees Cost 3,380.20

Selling & distribution expenses 1,408.30

Miscellaneous expenditure 1,748.30

Operating Profit 3,091.00

General & Administrative 1,195.20

Expenses

Profit after Tax 1,969.90

38

Cadila Healthcare

Slogan: The care continues

● Cadila Healthcare (NSE: CADILAHC, BSE: 532321) is an Indian multinational

pharmaceutical company headquartered in Ahmedabad, Gujarat.
● India primarily engaged in the manufacture of generic drugs. It ranked 100th in the
Fortune India 500 list in 2020.

OVERVIEW

● Cadila was founded in 1952 by Ramanbhai Patel (1925–2001), formerly a lecturer in the
L.M. College of Pharmacy, and his business partner Indravadan Modi.
● In 1995 the Patel and Modi families split; the Modi family's share was moved into a new
company called Cadila Pharmaceuticals Ltd.
● In 2015 the company acquired another Indian pharmaceutical company called German
Remedies.

● It has more than >70 Market Served

Across six continents it has >15 Manufacturing Facilities
It has more than >8,000 Employees World Wide
More than >600 Products Marketed
In India it is considered as the >5th Largest Pharmaceutical company
In the World it has been the >60 Largest

Cadila Healthcare:

FY 2015-16 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

39

Net sales 9,543.40

Raw material expenses 2,684.30

Power, fuel & water charges 168.80

Employees Cost 1,261.60

Selling & distribution expenses 979.60

Miscellaneous expenditure 561.80

Operating Profit 2,446.10

General & Administrative 432.70

Expenses

Profit after Tax 1,921.30

FY 2016-17 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 9,523.60

Raw material expenses 3,203.80

Power, fuel & water charges 174.50

Employees Cost 1,485.20

Selling & distribution expenses 826.40

40

Miscellaneous expenditure 502.60

Operating Profit 2,048.60

General & Administrative 466.00

Expenses

Profit after Tax 1,483.00

FY 2017-18 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 12,067.80

Raw material expenses 3,972.30

Power, fuel & water charges 226.30

Employees Cost 1,825.20

Selling & distribution expenses 1,014.50

Miscellaneous expenditure 687.00

Operating Profit 2,941.90

General & Administrative 504.60

Expenses

Profit after Tax 1,747.60

41

FY 2018-19 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 13,374.10

Raw material expenses 4,251.00

Power, fuel & water charges 247.20

Employees Cost 2,099.40

Selling & distribution expenses 914.60

Miscellaneous expenditure 748.50

Operating Profit 3,186.90

General & Administrative 701.50

Expenses

Profit after Tax 1,851.80

FY 2019-20 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 14,370.20

Raw material expenses 4,337.10

42

Power, fuel & water charges 268.80

Employees Cost 2,389.80

Selling & distribution expenses 1,209.50

Miscellaneous expenditure 984.30

Operating Profit 2,897.30

General & Administrative 909.20

Expenses

Profit after Tax 1,175.60

AUROBINDO PHARMACEUTICAL

slogan: Committed to healthier life

● Aurobindo Pharma Limited (NSE: AUROPHARMA, BSE:524804)is a pharmaceutical

manufacturing company headquartered in HITECH City, Hyderabad, India.
43

● The company’s area of activity includes six major therapeutic/product areas: antibiotics,
antiretrovirals, cardiovascular products, central nervous system products,
gastroenterological, and anti-allergics.

OVERVIEW

● The company commenced operations in 1988–89 with a single unit manufacturing semi-
synthetic penicillin (SSP) in Puducherry
● Aurobindo Pharma became a public company in 1992 and listed its shares in the Indian
stock exchanges in 1995.

● It has more than >110 Market Served

Across six continents it has >14 Manufacturing Facilities
It has more than >23,000 Employees World Wide
More than >1000 Products Marketed
In India it is considered as the >4th Largest Pharmaceutical company
In the World it has been the >30 Largest

Aurobindo Pharma Limited:

FY 2015-16 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 13,998.45

Raw material expenses 5,703.97

Power, fuel & water charges 419.26

Employees Cost 1,542.62

44

Selling & distribution expenses 901.87

Miscellaneous expenditure 187.92

Operating Profit 3,391.92

General & Administrative 686.38

Expenses

Profit after Tax 2,022.14

FY 2016-17 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 15,025.43

Raw material expenses 6,219.67

Power, fuel & water charges 437.14

Employees Cost 1,767.76

Selling & distribution expenses 848.43

Miscellaneous expenditure 203.97

Operating Profit 3,550.17

General & Administrative 997.32

Expenses

Profit after Tax 2,296.17

45

FY 2017-18 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 16,565.01

Raw material expenses 6,571.21

Power, fuel & water charges 470.95

Employees Cost 2,130.84

Selling & distribution expenses 1,025.85

Miscellaneous expenditure 298.75

Operating Profit 3,873.73

General & Administrative 1,068.22

Expenses

Profit after Tax 2,419.77

FY 2018-19 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 19,718.87

Raw material expenses 8,561.87

46

Power, fuel & water charges 556.79

Employees Cost 2,584.87

Selling & distribution expenses 1,125.76

Miscellaneous expenditure 413.24

Operating Profit 4,107.26

General & Administrative 1,006.68

Expenses

Profit after Tax 2,361.80

FY 2019-20 ANNUAL REPORT:

PARTICULARS AMOUNT( in Cr)

Net sales 23,290.38

Raw material expenses 8,822.60

Power, fuel & water charges 587.68

Employees Cost 3,219.18

Selling & distribution expenses 1,524.75

Miscellaneous expenditure 529.75

47

Operating Profit 5,056.18

General & Administrative 1,320.69

Expenses

Profit after Tax 2,844.69

CHAPTER - 4
Impact, Research and development

Impact Of COVID-19 on Industry:

Due to 21-day nationwide lockdown in the wake of the coronavirus outbreak, the domestic
pharmaceutical industry is suffering a loss of around Rs 1,000 crore per day, the industry body
Pharmaceutical Manufacturers' Association.

During this crisis, what are the key pointers that pharmaceutical companies should focus on to
respond, recover, and thrive. During these unprecedented times, pharmaceutical companies are
responding to the rapid challenges arising from disruption in supply chains and the need to
change business processes. If the current COVID-19 pandemic lasts for a medium/long span of
time, it may impact the supply of active material and ingredients (mainly from China), as well as
the import and export of pharmaceuticals. There is also the potential for negative impacts of both
a medium- and longer-term nature on R&D and manufacturing activities, as well as delay on
projects/programmes not related to the core supply chain/data management operations. While the
48

full impact of the global pandemic is still unknown, pharma companies need to respond, recover
and thrive.

RESEARCH AND DEVELOPMENT(R&D):

The Pharmaceutical Research and Manufacturers of America (PhRMA) trade group represents
the leading biopharmaceutical research companies in the United States. In 2019, the research and
development (R&D) expenditure of its member companies reached 83 billion U.S. dollars
worldwide. The development of a new drug costs around 2.6 billion U.S. dollars and can take up
to 15 years. In relation to sales, the pharmaceutical sector invests more money in R&D than
many other industries: PhRMA members spent 22 percent of their combined global revenues on
R&D in 2019 – this share increased to more than 23 percent when only considering the sales and
R&D expenditure from the domestic market of the United States.

R&D productivity is continuously declining, and it is said that the conventional model of
pharmaceutical business is being broken up. Thus, individual pharmaceutical companies are
required to understand the right growth strategies. We examined how R&D expenditures affected
the number of approved drugs in 30 large pharmaceutical companies. According to our results,
higher R&D expenditures yielded more approved drugs. Our results are consistent with a prior
study focusing on 13 pharmaceutical companies. However, our results surprisingly show that
approved drugs do not always contribute to growth in terms of total sales. Rather, large R&D
expenditures negatively affect growth in terms of total sales. Although increasing R&D
expenditure seems to be a straightforward strategy to increase the number of approved drugs, our
results suggest that this strategy is not sustainable. More recently, pharmaceutical companies
have been leveraging external R&D innovation through M&A and R&D in-licensing. Our results
show that 30 large pharmaceutical companies have consistently made strategic transactions (e.g.,
M&A and R&D in-licensing); however, there is no evidence to suggest that these strategic
transactions have increased the number of approved drugs. Surprisingly, we found that the
number of strategic transactions negatively affected growth in terms of total sales for home-
region-oriented companies. One of the possible reasons for this finding is the problem of
absorptive capacity. According to Lubatkin et al. when two companies with similar knowledge
bases enter an M&A, they tend to exchange knowledge. According to Lange et al. a large
difference in the knowledge bases reduces the power of influence on the generation of innovation
output. According to Sampson et al. when technological diversity is high in R&D alliances,
barriers to effective knowledge transfer arise. According to Leeuw et al. diversity in the alliance
portfolio negatively affects radical innovative performance as defined by the percentage of
turnover due to new or significantly improved products and services. According to Choi et al.
international R&D alliances tend to have a smaller technological distance than international
manufacturing and marketing alliances. These findings explain the absorptive capacity model, in
that companies cannot absorb knowledge and technologies from new domains if they do not
49

improve their absorptive capacity. The absorptive capacity perspective suggests that home-
region-oriented companies made many strategic transactions, which increased the diversity of
their external knowledge and technologies, resulting in a lack of absorptive capacity.

PhRMA members invested $83 billion in R&D in 2019, establishing the biopharmaceutical
sector as the most R&D-intensive industry in the U.S. economy. In fact, the biopharmaceutical
industry invests on average six times more in R&D as a percentage of sales than all other
manufacturing industries. Over the past two decades, PhRMA member companies have invested
a grand total of nearly $1 trillion in the search for and development of new and better treatments
and cures. The progress we see today is revolutionizing how we treat disease, saving patients’
lives and improving quality of life and public health across a broad range of chronic and rare
conditions. In this new era of medicine, many diseases previously regarded as deadly are now
manageable and potentially curable. Today, there are more than 8,000 medicines in clinical
development around the world. Across the medicines in the pipeline, 74% in clinical
development have the potential to be first-in-class treatments, representing entirely new
approaches to treating a disease. The future has never been brighter as researchers explore new

frontiers that just a few years ago may have been regarded as science fiction, but now transform
patients’ lives.

Chapter 5
Ratio Analysis

RATIO ANALYSIS:
Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational
efficiency, and profitability by studying its financial statements such as the balance sheet and
income statement. Ratio analysis is a cornerstone of fundamental equity analysis.
· Ratio analysis compares line-item data from a company's financial statements to reveal
insights regarding profitability, liquidity, operational efficiency, and solvency.
· Ratioanalysis can mark how a company is performing over time, while comparing a
company to another within the same industry or sector.
· Whileratios offer useful insight into a company, they should be paired with other
metrics, to obtain a broader picture of a company's financial health.

1.Liquidity Ratios
50

Liquidity Ratios measure a company's ability to pay off its short-term debts as they become due,
using the company's current or quick assets. Liquidity ratios include the current ratio, quick ratio,
and working capital ratio.
2. Solvency Ratios
Also called financial leverage ratios, solvency ratios compare a company's debt levels with its
assets, equity, and earnings, to evaluate the likelihood of a company staying afloat over the long
haul, by paying off its long-term debt as well as the interest on its debt. Examples of solvency
ratios include: debt-equity ratios, debt-assets ratios, and interest coverage ratios.
3. Profitability Ratios
These ratios convey how well a company can generate profits from its operations. Profit margin,
return on assets, return on equity, return on capital employed, and gross margin ratios are all
examples of profitability ratios.
4. Efficiency Ratios
Also called activity ratios, efficiency Ratios evaluate how efficiently a company uses its assets
and liabilities to generate sales and maximize profits. Key efficiency ratios include: turnover
ratio, inventory turnover, and days' sales in inventory.
5. Coverage Ratios
Coverage ratios measure a company's ability to make the interest payments and other
obligations associated with its debts. Examples include the times interest earned ratio and the
debt-service coverage ratio.
6. Market Prospect Ratios
These are the most commonly used ratios in fundamental analysis. They include dividend yield,
P/E Ratio, earnings per share (EPS), and dividend payout ratio. Investors use these metrics to
predict earnings and future performance.
For example, if the average P/E ratio of all companies in the S&P 500 index is 20, and the
majority of companies have P/Es between 15 and 25, a stock with a P/E ratio of seven would be
considered undervalued. In contrast, one with a P/E ratio of 50 would be considered overvalued.
The former may trend upwards in the future, while the latter may trend downwards until each
aligns with its intrinsic value.
Ratios are typically only comparable across companies within the same sector. For example, a
debt-equity ratio that might be normal for a utility company might be deemed unsustainably high
for a technology play.
Ratio analysis can predict a company's future performance—for better or worse. Successful
companies generally boast solid ratios in all areas, where any sudden hint of weakness in one
area may spark a significant stock sell-off. Let's look at a few simple examples
Net profit margin, often referred to simply as profit margin or the bottom line, is a ratio that
investors use to compare the profitability of companies within the same sector. It's calculated by
dividing a company's net income by its revenues. Instead of dissecting financial statements to
51

compare how profitable companies are, an investor can use this ratio instead. For example,
suppose company ABC and company DEF are in the same sector with profit margins of 50% and
10%, respectively. An investor can easily compare the two companies and conclude that ABC
converted 50% of its revenues into profits, while DEF only converted 10%.

Sun pharmaceutical Ltd:

Key Financial MAR 20 MAR 19 MAR 18 MAR 17 MAR 16

Ratios of
Motherson
Sumi
Systems

PER SHARE
RATIOS

Basic EPS 2.85 2.58 4.18 4.04 5.43

Diluted EPS 2.85 2.58 4.18 4.04 5.43

Cash EPS 3.76 3.27 5.21 7.30 6.95

19.77 20.39 29.36 41.33 18.55

Book
Value(ExclRe
val/Share)

Book 19.77 20.39 29.36 41.33 18.55

Value(InclRe
val/Share)

Dividend 1.50 1.50 2.25 2.00 2.50

/Share

Revenue 21.77 24.01 35.42 44.78 40.01

from
Operations

PBDIT 4.69 4.62 6.99 9.85 9.08

PBIT 3.77 3.93 5.96 8.44 7.56

PBT 3.68 3.87 5.75 8.35 7.20

Net Profit 2.85 2.58 4.18 5.89 5.43

52

Profitability
Ratios

PBDIT 21.53 19.24 19.74 21.99 22.69

Margin

PBIT Margin 17.34 16.35 16.81 18.85 18.90

PBT Margin 16.89 16.12 16.23 18.65 18.00

Net Profit 13.07 10.73 11.79 13.15 13.57

Margin

Return on 15.65 16.23 11.95 11.98 26.55

Networth
Equity

Return on 14.39 12.64 14.22 14.25 29.28

Capital
Employment

Return on 9.97 9.99 18.45 9.76 8.99

Assets

Total 0.23 0.18 0.18 0.20 0.14

debt/Equity

Asset 74.69 83.83 84.63 75.94 135.92

Turnover
Ratio

Valuation
Ratios

Enterprise 622.28 53340.12 35627.27 48128.85 20462.39

value

EV/Net 2.98 6.35 8.94 8.48 6.73

operating
Revenue

EV/EBITDA 13.82 32.98 45.25 38.55 29.65

MarketCap/ 2.80 6.22 8.80 8.33 6.67

Net
53

Operating
Revenue

Retention -5.40 41.79 52.11 0.00 17.15

Ratios

Price/BV 3.09 7.32 10.62 9.02 14.39

Earnings 0.05 0.02 0.01 0.02 0.02

Yields

LIQUIDITY
RATIOS

Current Ratio 1.46 1.72 1.60 1.72 1.32

(X)

Quick Ratio 0.84 0.97 0.97 1.17 0.78

(X)

Inventory 6.92 7.19 8.07 9.09 8.25

Turnover
Ratio (X)

Dividend 105.40 58.20 47.88 0.00 82.84

Payout Ratio
(NP) (%)

Dividend 79.80 45.85 38.36 0.00 64.74

Payout Ratio
(CP) (%)

Earnings -5.40 41.80 52.12 0.00 17.16

Retention
Ratio (%)

Cash 20.20 54.15 61.64 0.00 35.26

Earnings
Retention
Ratio (%)

Cipla Ltd:
54

Key Financial MAR 20 MAR 19 MAR 18 MAR 17 MAR 16

Ratios of
Motherson
Sumi
Systems

PER SHARE
RATIOS

Basic EPS 33.96 59.14 27.14 52.19 71.39

Diluted EPS 33.96 59.14 27.14 52.19 71.39

Cash EPS 79.72 104.67 63.24 82.13 98.51

293.70 340.27 328.06 302.18 248.57

Book
Value(ExclRe
val/Share)

Book 293.70 340.27 328.06 302.18 248.57

Value(InclRe
val/Share)

Dividend 15.00 31.50 41.00 36.00 31.00

/Share

Revenue 654.32 905.67 811.74 68901 700.46

from
Operations

PBDIT 117.40 137.27 53.17 102.06 120.40

PBIT 71.63 91.72 17.07 72.10 93.25

PBT 34.17 64.47 0.42 59.13 80.30

Net Profit 33.94 59.12 27.13 52.17 711.36

Profitability
Ratios

PBDIT 17.94 15.15 6.55 14.81 17.18

Margin
55

PBIT Margin 10.94 10.12 2.10 10.46 13.31

PBT Margin 5.22 7.11 0.05 8.58 11.46

Net Profit 5.18 6.52 3.34 7.57 10.18

Margin

Return on 11.55 17.37 8.27 17.26 28.70

Networth
Equity

Return on 15.87 16.81 3.57 13.27 22.70

Capital
Employment

Return on 4.28 6.90 3.06 8.38 12.74

Assets

Total 0.85 0.99 0.88 0.44 0.56

debt/Equity

Asset 82.68 105.79 91.59 110.75 125.05

Turnover
Ratio

Valuation
Ratios

Enterprise 3439.63 6540.81 10451.82 7654.71 4526.55

value

EV/Net 6.36 5.49 3.19 2.60 3.57

operating
Revenue

EV/EBITDA 14.48 23.54 97.12 37.06 18.58

MarketCap/ 2.26 3.20 6.01 5.30 3.00

Net
Operating
Revenue

Retention 8.70 39.13 44.73 39.64 34.16

Ratios

Price/BV 5.03 8.52 14.86 12.07 8.45

56

Earnings 0.02 0.02 0.01 0.01 0.03

Yields0.02

LIQUIDITY
RATIOS

Current Ratio 0.80 0.98 0.92 1.05 1.04

(X)

Quick Ratio 0.41 0.45 0.48 0.55 0.55

(X)

Inventory 4.88 5.53 4.55 5.93 6.00

Turnover
Ratio (X)

Dividend 91.29 60.86 55.26 60.35 65.83

Payout Ratio
(NP) (%)

Dividend 38.87 34.37 23.71 38.33 47.69

Payout Ratio
(CP) (%)

Earnings 8.71 39.14 44.74 39.65 34.17

Retention
Ratio (%)

Cash 61.13 65.63 76.29 61.67 52.31

Earnings
Retention
Ratio (%)

Aurobindo Pharma:

Key Financial MAR 20 MAR 19 MAR 18 MAR 17 MAR 16

57

Ratios of
Motherson
Sumi
Systems

PER SHARE
RATIOS

Basic EPS 220.00 525.00 449.00 561.00 488.00

Diluted EPS 220.00 525.00 449.00 561.00 488.00

Cash EPS 350.20 678.03 602.62 720.43 610.76

3142.17 3093.63 3272.560 2885.11 3036.59

Book
Value(ExclRe
val/Share)

Book 3142.17 3093.63 3272.560 2885.11 3036.59

Value(InclRe
val/Share)

Dividend 105.00 105.00 100.00 165.00 85.00

/Share

Revenue 3336.14 4096.61 3832.82 3421.38 3089.62

from
Operations

PBDIT 688.10 932.03 854.10 854.18 790.35

PBIT 558.017 795.69 700.92 669.05 667.29

PBT 311.76 791.19 669.05 686.69 663.18

Net Profit 220.27 541.69 449.44 570.85 487.71

Profitability
Ratios

PBDIT 9.34 19.31 17.45 20.07 21.46

Margin

PBIT Margin 20.62 22.75 22.28 24.70 25.58

58

PBT Margin 16.73 19.42 18.28 20.33 21.59

Net Profit 6.60 13.22 11.72 16.68 15.78

Margin

Return on 7.01 17.51 13.73 19.78 16.06

Networth
Equity

Return on 17.06 24.76 13.17 18.98 15.41

Capital
Employment

Return on 4.87 12.57 9.84 14.75 12.31

Assets

Total 0.00 0.00 0.00 0.00 0.00

debt/Equity

Asset 73.88 95.08 83.93 88.43 78..03

Turnover
Ratio

Valuation
Ratios

Enterprise 25502.76 52335.67 53428.98 67757.13 63454.89

value

EV/Net 2.59 4.33 4.57 6.49 6.54

operating
Revenue

EV/EBITDA 12.56 19.03 20.51 26.28 25.57

MarketCap/ 2.82 4.43 4.73 6.66 6.73

Net
Operating
Revenue

Retention 52.33 80.90 79.96 71.52 82.57

Ratios

Price/BV 2.99 5.87 5.54 7.90 6.58

Earnings 0.02 0.03 0.02 0.03 0.02

59

Yields

LIQUIDITY
RATIOS

Current Ratio 1.91 1.99 2.08 2.24 2.33

(X)

Quick Ratio 1.61 1.55 1.74 1.79 1.86

(X)

Inventory 8.82 8.37 9.54 8.84 8.14

Turnover
Ratio (X)

Dividend 47.66 19.09 20.03 28.47 17.42

Payout Ratio
(NP) (%)

Dividend 29.97 15.25 14.94 22.56 13.91

Payout Ratio
(CP) (%)

Earnings 52.34 80.91 79.97 71.53 82.58

Retention
Ratio (%)

Cash 70.03 84.75 85.06 77.44 86.09

Earnings
Retention
Ratio (%)

Cadila Healthcare:

Key Financial MAR 20 MAR 19 MAR 18 MAR 17 MAR 16

Ratios of
Motherson
Sumi
60

Systems

PER SHARE
RATIOS

Basic EPS 4.08 7.17 15.67 11.77 49.96

Diluted EPS 4.08 7.17 15.67 11.77 49.96

Cash EPS 9.32 11.06 21.64 18.28 83.30

49.71 47.13 111.42 66.58 274.24

Book
Value(ExclRe
val/Share)

Book 49.71 47.13 111.42 66.58 274.24

Value(InclRe
val/Share)

Dividend 2.80 2.20 7.00 1.10 0.40

/Share

Revenue 121.09 133.22 213.33 206.59 925.75

from
Operations

PBDIT 13.21 14.63 26.36 23.11 102.01

PBIT 7.97 10.73 20.32 16.67 68.75

PBT 5.36 9.61 20.17 14.90 61.30

Net Profit 4.08 7.16 15.60 11.84 50.04

Profitability
Ratios

PBDIT 10.90 10.98 12.35 11.18 11.01

Margin

PBIT Margin 6.57 8.05 9.52 8.06 7.42

PBT Margin 4.42 7.21 9.45 7.21 6.73

Net Profit 3.37 5.37 7.31 5.73 5.40

Margin
61

Return on 8.18 15.19 14.00 17.78 18.24

Networth
Equity

Return on 10.97 17.09 13.07 10.41 16.46

Capital
Employment

Return on 3.73 7.49 9.07 7.00 9.21

Assets

Total 0.46 0.43 0.08 0.32 0.23

debt/Equity

Asset 110.77 139.47 124.12 122.18 170.44

Turnover
Ratio

Valuation
Ratios

Enterprise 9435.26 3365.81 1672.71 67280 9054.72

value

EV/Net 2.12 2.59 5.08 2.05 1.14

operating
Revenue

EV/EBITDA 19.43 23.60 41.12 18.35 10.34

MarketCap/ 1.97 2.45 5.05 2.14 1.08

Net
Operating
Revenue

Retention 90.20 93.71 86.00 83.10 86.01

Ratios

Price/BV 4.79 6.93 9.66 6.65 3.65

Earnings 0.02 0.02 0.01 0.03 0.05

Yields
62

LIQUIDITY
RATIOS

Current Ratio 1.01 1.06 1.09 1.56 1.02

(X)

Quick Ratio 0.75 0.76 0.85 1.36 0.79

(X)

Inventory 12.35 13.87 16.71 18.71 16.48

Turnover
Ratio (X)

Dividend 9.79 6.28 13.99 16.89 13.98

Payout Ratio
(NP) (%)

Dividend 4.29 4.06 10.09 10.93 8.40

Payout Ratio
(CP) (%)

Earnings 90.21 93.72 86.01 83.11 86.02

Retention
Ratio (%)

Cash 95.71 95.94 89.91 89.07 91.60

Earnings
Retention
Ratio (%)

Dr. Reddy’s Laboratories :

Key Financial MAR 20 MAR 19 MAR 18 MAR 17 MAR 16

Ratios of
Motherson
Sumi
Systems

PER SHARE
RATIOS

Basic EPS 83.73 148.76 143.84 112.55 107.22

63

Diluted EPS 83.73 148.76 143.84 112.55 107.22

Cash EPS 131.24 186.43 176.39 145.04 136.85

998.83 938.43 804.47 667.68 562.95

Book
Value(ExclRe
val/Share)

Book 998.83 938.43 804.47 667.68 562.95

Value(InclRe
val/Share)

Dividend 10.00 9.00 8.00 7.00 6.00

/Share

Revenue 1017.29 1517.15 1361.38 1098.07 973.52

from
Operations

PBDIT 166.27 254.30 234.68 191.14 172.24

PBIT 118.76 216.64 202.14 158.65 142.61

PBT 117.75 216.64 201.28 158.40 142.53

Net Profit 83.73 148.76 143.84 112.55 107.22

Profitability
Ratios

PBDIT 16.34 16.76 17.23 17.40 17.69

Margin

PBIT Margin 11.67 14.27 14.84 14.44 14.64

PBT Margin 11.57 14.27 14.78 14.42 14.64

Net Profit 8.23 9.80 10.56 10.24 11.01

Margin

Return on 8.38 15.85 17.87 16.85 19.04

Networth
Equity

Return on 11.74 22.63 24.63 23.29 18.63

64

Capital
Employment

Return on 7.23 12.08 12.57 12.25 13.35

Assets

Total 0.00 0.00 0.00 0.00 0.00

debt/Equity

Asset 88.48 123.27 119.05 119.90 121.22

Turnover
Ratio

Valuation
Ratios

Enterprise 11175.53 12091.97 14623.77 10830.17 11640.29

value

EV/Net 5.79 4.20 5.66 5.20 6.30

operating
Revenue

EV/EBITDA 35.44 25.07 32.85 29.87 35.63

MarketCap/ 6.03 4.39 5.80 5.33 6.42

Net
Operating
Revenue

Retention 0.00 94.62 95.13 94.66 95.33

Ratios

Price/BV 6.14 7.70 9.82 8.76 11.10

Earnings 0.01 0.02 0.02 0.02 0.02

Yields

LIQUIDITY
RATIOS

Current Ratio 5.93 3.39 2.74 2.92 2.58

65

(X)

Quick Ratio 5.51 3.10 2.52 2.60 2.18

(X)

Inventory 17.14 19.05 19.51 14.33 10.51

Turnover
Ratio (X)

Dividend 0.00 5.37 4.86 5.33 4.66

Payout Ratio
(NP) (%)

Dividend 0.00 4.29 3.96 4.13 3.65

Payout Ratio
(CP) (%)

Earnings 0.00 94.63 95.14 94.67 95.34

Retention
Ratio (%)

Cash 0.00 95.71 96.04 95.87 96.35

Earnings
Retention
Ratio (%)

CHAPTER-6
Common Size Statement

COMMON SIZE STATEMENT:

A common size income statement is an income statement in which each line item is expressed as
a percentage of the value of revenue or sales. It is used for vertical analysis, in which each line
item in a financial statement is represented as a percentage of a base figure within the statement.
Common size financial statements help to analyze and compare a company's performance over
several periods with varying sales figures. The common size percentages can be subsequently
compared to those of competitors to determine how the company is performing relative to the
industry.
·A common size income statement is an income statement whereby each line item is
expressed as a percentage of revenue or sales.
66

· The common size percentages help to show how each line item or component affects the
financial position of the company.
· Common size financial statements help to compare a company's performance over
several periods as well as against a competitor's.
A common size income statement makes it easier to see what's driving a company’s profits. The
common size percentages also help to show how each line item or component affects the
financial position of the company. As a result, the financial statement user can more easily
compare the financial performance to the company's peers.
By analyzing how a company's financial results have changed over time, common size financial
statements help investors spot trends that a standard financial statement may not uncover. The
common size percentages help to highlight any consistency in the numbers over time–whether
those trends are positive or negative. Large changes in the percentage of revenue as compared to
the various expense categories over a given period could be a sign that the business model, sales
performance, or manufacturing costs are changing.Common size financial statement analysis can
also be applied to the balance sheet and the statement of cash flows.

Dr.Reddy Laboratories
67

Sun Pharmaceutical industry

68

Cipla Ltd
69

Cadila Healthcare
70

Aurobindo Pharmy
71

Chapter 7
72

Findings, Suggestions, Conclusion

FINDINGS:

India's national and state-level lockdowns imposed severe restrictions on the mobility of people,
suspending all commercial and social activities that require people to come together, except for
those defined as 'essential services'.

The ambit of essential services and supplies, which included food and grocery, pharmaceutical
and medical goods, and healthcare services, among others, continued operations to maintain
public well-being. Since the government and businesses had limited time to prepare for the
lockdown, the challenges faced by supply chains in general and essential services, in particular,
were compounded.

Additionally, non-exempted businesses, which were connected to upstream and downstream

activities of essential services, caused bottlenecks. Some of the challenges to the four key aspects
of Supply Chain include:

● Plan: Demand surge and limited visibility of supply trends (due to stock-ups, increased
healthcare needs, etc.)
● Source: Import freight unavailability and disrupted domestic supply
● Make: Unavailability of raw material and limited workforce (due to social distancing,
labour migration, etc.)
● Deliver: Limited availability of logistics facilities, constrained intra- and inter-state
movement

SUGGESTIONS:

At the onset of lockdown, pharma companies came together quickly to identify key priorities and
tasks required to keep the supply chain functioning. Industry and other stakeholders' associations
collaborate to collate and represent issues with the government/civic agencies and seek required
support and interventions. The Government, in turn, worked with agility and transparency with
industry to find quick and practical solutions.

Some of the relevant takeaways from the integrated action undertaken in this case include:

● Adopting a system view, to evolve a management plan that is comprehensive and

effective. Piecemeal interventions merely shift bottlenecks, resulting in the loss of
precious time and resources.
73

● Building a good understanding of the various authorities/agencies involved and the

hierarchy and communication flow within the government.
● Creating effective war rooms at the company and industry association level, to track real-
time progress and issues and to enable prompt escalation.

CONCLUSION:

The COVID-19 global pandemic can be associated with numerous short- and long-term impacts
on the health market, mainly the pharmaceutical sector; which can be seen from both global and
local perspectives. Identifying these impacts may guide policy-makers in evidence-informed
planning and decision-making to combat associated challenges. For proper planning to prevent
long-term complications, short-term impacts should be identified and further be measured with
appropriate data-analysis. Identification of these effects is essential for policy-maker guidance
towards more evidence-informed planning to overcome accompanying challenges; and this may
be more important in the context of developing countries with more scarce health-care resources
and pharmerging markets

BIBLIOGRAPHY

Balance sheet - Romancing the Balance sheet by Anil Lamba

Cash Flow Statement - How to read a cash flow statement by Ramachandran N

Financial Statement - Basics of financial statement by Thomas R. Ittelson

Financial Analysis
Referred each company’s annual report and the output is the collected data

Research and Development

I gathered the information from the company’s website
74

Hindu Newspaper and Economic times Newspapers

QUESTIONNAIRE

What do you think about the performance of pharmaceutical companies before covid
lockdown?

Very good [ ]

Good [ ]

Average [ ]

Poor [ ]
75

What do you think about the performance of pharmaceutical companies during covid
lockdown?

Very good [ ]

Good [ ]

Average [ ]

Poor [ ]

What do you think about the performance of pharmaceutical companies after covid
lockdown?

Very good [ ]
76

Good [ ]

Average [ ]

Poor [ ]

Did the pharmaceutical company achieve their expected growth rate during the covid
period?

Yes [ ]

No [ ]

What do you think about the sales of the pharmaceutical companies after covid lockdown?

Very good [ ]

Good [ ]

Average [ ]
77

Poor [ ]

What do you think about the sales of the pharmaceutical companies before covid
lockdown?

Very good [ ]

Good [ ]

Average [ ]

Poor [ ]

What do you think about the sales of the pharmaceutical companies during covid
lockdown?

Very good [ ]
78

Good [ ]

Average [ ]

Poor [ ]

How was the availability of raw materials for pharmaceutical companies after covid
lockdown?

Very good [ ]

Good [ ]

Average [ ]

Poor [ ]

How was the availability of raw materials for pharmaceutical companies before covid
lockdown?
79

Very good [ ]

Good [ ]

Average [ ]

Poor [ ]

Was there any demand for the raw materials for the manufacturing of pharmaceutical
medicines ?

Yes [ ]

No [ ]

What do you think about the export of pharmaceutical companies after covid lockdown
when compared to the normal days?

Very good [ ]

Good [ ]
80

Average [ ]

Poor [ ]

Did the supply chain management pharmaceutical was affected during covid period ?

Yes [ ]

No [ ]