US Generic Injectables Market: an Opportunity for Indian ... Injectable.pdf · The injectable generic market value growth during 2008-13 period has been a CAGR of 19.6%, against volume

ICRA LIMITED P a g e | 1

Corporate Ratings

ICRA RESEARCH SERVICES

US Generic Injectables Market: an Opportunity for Indian Generic Majors

Healthy growth prospects driven by upcoming patent expiries; quality manufacturing and development resources hold key

July 2016


I. Executive Summary

II. US Generic Injectable Market: Opportunity & Challenges

a. Large number of drugs expected to go off-patent

b. Drug shortages will continue to support growth for US generic injectable players

c. Sizeable upfront investments and complex manufacturing process

d. Challenging market to make inroads by virtue of established incumbents

e. Quality manufacturing and development capabilities holds key

f. Focus on complex injectables used as an entry strategy by Indian players

III. Annexure

a. US generic injectable market M&A trends

b. Key financial aggregates of US generic injectable players

WHAT’S INSIDE?


Injectables offer steady growth opportunities for generic players; quality manufacturing is the key

US Generic Injectable Market – an Opportunity for Indian Generic Majors

Executive Summary July 2016

US Generic Injectable

Size: USD 8.4 billion (estimated)

Patent expiries 2015-19e: USD 16 billion

CAGR2015-2020e: ~10%

Therapy wise Break-up

Player Concentration

2015: Top 5 Players

Value Share: 52%

Volume Share: 73%

73% 8%

17%

2%

Generic Injectables Beta-Lactam antibiotics Oncology Others

US Generic Injectable market expected to grow at 10% CAGR 2015-2020: As per ICRA research, during the

2015-19 period injectables drugs worth ~US$16 billion are expected to go off-patent in the US alone. Key patent

expiries for the US market would include Alimta (Oncology) in 2016 with CY2015 revenues of above US$1 billion

and Levemir (Anti-diabetic) in 2019 with CY2015 revenues of above US$2 billion. While significant price erosion

is normal once the drugs go off-patent, the injectable segment still holds a sizeable opportunity to gain

meaningful revenue growth for Indian generic companies on account of the upcoming patent expiries. In

addition, increase in manufacturing costs, required as part of complying with USFDA cGMP norms and drug

shortages, have led to price increases in the past and the trend is expected to continue forward - contributing to

the overall market growth. Supported by the patent expiries and favourable pricing environment, ICRA expects

the US generic injectable market to grow at a CAGR of 10% over the next five years.

Challenging market by virtue of high entry barriers and established incumbents: The generic injectable

market is characterised by high capital investments and operational costs coupled with relatively higher

compliance requirement owing to the sterile nature of the products. These factors have resulted in high

barriers to entry and, as a result, a limited number of competitors relative to other segments. These have

further reduced due to M&A activities within the sector over the last few years. For the US Generic Injectable

market 70% of the market by value has three or less than three companies compared to five or more players

for the oral solids generics corroborating high level of entry barriers owing to high upfront capex, compliance

issues and economies of scale requirements. In 2015, the top five generic companies controlled ~52% of the

market share by value and ~73% of the market by volume (source: Industry). Any new entrant needed to have a

relatively large basket of products and cost advantage to gain traction with customers.

Maintaining quality manufacturing facilities remains critical to build sustainable franchise: Over the past few

years, manufacturing units of several large players operating in the US generic injectable space have faced

regulatory interruptions on account of non-compliance to cGMP guidelines. Injectables being sterile products,

require stringent manufacturing processes across development, formulation, packaging, storage and

transportation phases and attract greater scrutiny from regulatory agencies. Approximately 65% of the drug

shortages in the US are on account of quality manufacturing/ delays or capacity constraints – thereby making it

one of the critical success factors to build sustainable franchise.


Injectables offer steady growth opportunities for generic players; quality manufacturing is the key

Indian companies are increasingly focusing on complex generics: Some of the leading Indian companies have

carved a niche for themselves through the launch of differentiated and complex filings. Complex injectables

include lyophilised products, high potent drugs, long-acting suspensions, liposomes which require complex

manufacturing capabilities or use of new drug delivery systems (NDDS). For injectables, NDDS includes drug

delivery systems such as self-injection device like auto and pen injectors, which improve patient compliance and

enable differentiation. Among Indian companies, Dr. Reddy’s has scaled up its complex injectables business over

the last five years to US$280 million in FY2015, equivalent to 25% of its revenues from North American. In order to

support its foray into the injectables business, the company also acquired Netherland-based injectable player in

2013, to gain access to development capabilities for long-acting injectables and liposomal formulations. Lupin

Limited, by virtue of acquisition of Naomi BV in 2014, has a development pipeline of ~38 products targeting market

size of US$12.8 billion of branded and generic injectables.

Trend of M&A in generic injectable space expected to continue: There has been a sizeable number of acquisitions

in the US generic injectable space over the last few years. The acquisitions were driven by the need to acquire

product portfolio, development pipeline and manufacturing capabilities of existing injectable players to

consolidate market share or accelerate entry into the promising US sterile injectable market. Among the key ones

include the acquisition of Hospira Inc. – the world’s largest generic injectable player by Pfizer Inc. for US$17 billion,

acquisition of Agila Specialties Private Limited by Mylan Inc. for US$1.85 billion in 2013. Apart from these there

have been acquisitions done by Hikma Pharmaceuticals Inc. of the US generic injectable assets of Boehringer

Ingelheim in 2014, acquisition of Par Pharma Group by Endo International PLC in 2015. With the upcoming patent

expiries, ICRA expects continuing trend in M&A to acquire development and manufacturing capabilities for

complex injectables / novel drug delivery systems.

Financial performance of US generic injectable players, a proxy for the opportunity in the space, shows healthy

trend: The financial profile of ICRA sample of generic injectable players in the US is characterised by healthy

operating margins, RoCE, working capital intensity and moderate debt-protection metrics. The growth rate in

CY2015 and CY2014 improved to 15.7% and 13.3% respectively, compared to approximately ~7% in CY2012 and

CY2013 each. The EBITDA Margins for our sample companies have improved significantly over the last five years

from 19.8% in CY2011 to 22.4% in CY2014 and 32.3% in CY2015 led by price increase, changes in product mix to

focus on high margin products and cost efficiencies through consolidation of manufacturing facilities. The RoCE

improved from low of 3.9% to 12.6% in CY2014 and 15.1% in CY2015.

Opportunities

US$16 billion worth of drugs going

off-patent 2015-19

Drug shortages: Maximum number

of drug shortages reported for

injectables in the US

Improved pricing trend led by

increased investments in

manufacturing facilities to maintain

cGMP (USFDA) norms

Challenges

Maintaining USFDA-compliant

manufacturing facilities

High barriers to entry led by complex

manufacturing process, high

operational & capital cost and

compliance requirements


US Generic Injectable Market: an Opportunity for Indian Generic Majors


Large number of drugs expected to go off-patent

US generic injectable market expected to grow at CAGR 10%

As per ICRA research, during the 2015-19 period, injectables drugs worth ~USD 16 billion are expected to go-off patent in US.

While significant price erosion is an industry trend once the drugs go off-patent, the injectable segment still represents a

sizeable opportunity. Also, continued drug shortages have created a supportive price environment, though part of the

benefits are offset by increasing manufacturing costs to meet USFDA cGMP norms. ICRA expects the US Generic Injectable

market to grow at a CAGR of 10% over the next five years led by significant number of drugs going off-patent as well as

supportive price environment in the USA.

Exhibit 1: Selective Injectable Drugs Going Off-Patent for USA

Brand Name Innovator Therapeutic Area Earliest US Patent Expiry

CY 2015 US Revenues, US$ Million

Zyvox Pfizer Antibiotic 2015 564 Tygacil Pfizer Antibiotic 2016 110 Norditropin Novo-Nordisk Hormonal 2017 550* Levemir Novo-Nordisk Diabetes 2019 2,016* Alpidra Sanofi Diabetes 2018 163 Zaltrap Sanofi Oncology 2020 24 Alimta Eli Lilly Oncology 2016 1,162 Forteo Eli Lilly Osteoporosis 2018 612 Source: ICRA research. *Represents revenues from North America

Continued injectable drug shortages in US to support pricing environment and growth; albeit at lower pace

Among various factors, the drug shortages for injectables in the US have been fuelled by shifting of old molecules production

to low cost countries such as India and China making high cost US facilities cost-inefficient, reduction in the number of players

owing to M&A and subsequent closure/consolidation among such facilities in addition to phasing out of low value low margin

products. Another key reason for drug shortages has been stringent action by USFDA regarding compliance to GMP led to

several warning letters and supply disruptions for injectable drugs. Further, ongoing investment in maintaining quality

standards not justified by margins offered by various Government-run programmes such as Medicare, also led to

rationalisation of product portfolio for several players. Drug shortages led to improved pricing power for the industry and

reflected in the contrasting volume and value growth during the 2008-2013 period.

US generic injectable market

expected to grow at CAGR of

10% driven by patent expiries of

US$16 billion over 2015-2019

period

Stringent USFDA cGMP

regulations have led to supply

issues for various injectable

players. Maintaining quality

focus remains critical


Drug shortages will continue to support growth for US generic injectable players

The injectable generic market value growth during 2008-13 period has been a CAGR of 19.6%, against volume growth during

the same period of only 1.6% - implying a healthy pricing environment. As can be seen from Exhibit 2, the number of drugs in

shortages in the US swelled to 251 in CY2011, of which 73% were for injectable products. In October 2011, the US President,

through the Executive order, asked the USFDA to address the issue of drug shortages and take steps that will help prevent

and reduce the current and future disruptions in the supply of life-saving medicine. There has been a declining trend in drug

shortages since 2012, led by action taken by the USFDA to proactively work with suppliers, regulatory oversight for short

supply drugs, coupled with the increase in production capacity, taken by various players to meet drug shortages. For the

nine-month period ending September 2015, 22 new drugs (all forms) were reported to be in shortage, excluding 48 drugs,

which continued to be in shortage, taking the total tally to 70. Overall, the injectable space is expected to continue enjoying a

supportive pricing environment; albeit at a lower pace, due to the moderating trends in shortages.

Exhibit 2: US Drug Shortages – New Drugs Reported

Source: USFDA, ICRA research, Year represent Calendar Year

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

All Forms (New), LHS % Injectables, RHS

Drug shortages led by supply

disruptions on account of USFDA

cGMP violations as well as

consolidation of in-house



Quality manufacturing and development capabilities hold key

Maintaining adequate quality manufacturing remains critical to build sustainable franchise

Over the past few years, manufacturing units of several large players operating in the US generic injectable space have faced

regulatory interruptions on account of non-compliance to cGMP guidelines. Injectables being sterile products, require greater

attention and detail from development, formulation, packaging, storage and transportation and has attracted greater scrutiny

from the regulator in the past. The biggest player in the US generic injectable Industry i.e. Hospira (now part of Pfizer)

received USFDA warning letters for its six different facilities during 2013-15 period. Likewise, Hikma also faced warning letters

for its two key injectable facilities at Portugal and New Jersey, USA, over the 2012-2014 period. Similarly, Agila Specialties

Private Limited (Part of Mylan Inc.) faced warning letters for its facilities at Bangalore India. While a large part of these

warning letters have been resolved, coupled with fresh investments on the part of the industry to maintain quality

manufacturing facilities, such incidents have led to disruptions in supply and adversely impacted revenues. Further,

technology/site transfer between sterile manufacturing facilities (post warning letter) can pose a number of process-related

challenges and can be time consuming. There are several considerations that manufacturers take into account such as sterility

(bacterial and fungal contamination), stability issues (crystallisation), extractables and leachables from packaging material,

particulate in vials, time lag between site transfer agreement and USFDA approval. Issues with USFDA cGMP norms have led

to demand for good quality facilities and called for contract manufacturers based out of low cost countries such as India,

China to support large volumes at low cost. Approximately 65% of the 117 drug shortages in 2012 were on account of quality

manufacturing/delays or capacity constraints – thereby making it one of the critical success factors.

Exhibit 3: Selective US Generic Injectable Players: USFDA Warning Letters for cGMP violations

Hospira Inc. Facility Location Issue Date Closeout Date

Hospira Inc.

Victoria, Australia 26-Sep-14 8-Feb-16

Costa Rica 22-Aug-14 7-Jan-16

Sriperumburdur, India 28-May-13 Open

Illinois, USA 9-May-13 Open

Liscate, Italy 31-Mar-15 Open

Rocky Mount, USA 7-Mar-14 Open

Hikma Pharmaceuticals PLC.

Portugal 21-Oct-14 16-Nov-15

New Jersey, USA 3-Feb-12 26-Mar-14

Agila Specialties Private Limited Bangalore, India 9-Sep-13 Open

Mylan Laboratories Limited

Bangalore, India 6-Aug-15 Open

Claris LifeSciences Limited Ahmedabad, India 1-Nov-10 14-Aug-12

Several warning letters issued

by USFDA in the past to generic

injectable players, though

sorted out over period of time.


Sizeable upfront investments and complex manufacturing processes High entry barriers

The generic sterile injectable market is characterised by low volumes, complex manufacturing process with specialised

technical capabilities, high capital costs and the requirement for dedicated operational facilities, which must meet the strict

quality standards imposed by regulatory authorities. Complying with these stringent regulatory requirements, as well as

capital-intensive manufacturing processes, demands significant continuous investment in training and development to

ensure the highest levels of precision implemented throughout the manufacturing process. These factors have created a

market with high barriers to entry.

The entry barriers are manifested from the fact that - 32% of the market by value is catered by a single company while 70% of

the US generic injectable market by value has three or less than three companies compared to five or more than five

generally for the oral solids generics. On the other hand, it also represents opportunities for players with low cost injectable

manufacturing set-up, as it has less competition compared to other generic segments.

US generic injectable market dominated by few players

The complex development and manufacturing process of sterile injectables along with high capital and operational costs

involved coupled with high compliance cost has led to relatively consolidated market. The market has seen further

consolidation due to M&A activities within the sector over the last few years (Exhibit 9). Among the key players which have

been operating in the Generic Sterile Injectables US market include Pfizer, APP (Unit of Fresenius Kabi), Sandoz (Unit of

Novartis), Hikma Pharmaceuticals PLC., Dr. Reddy’s Limited, Grifols, Baxter, Sagent Pharmaceuticals Inc. and Teva. In 2015,

the top five players control 50% of the market share by value and approximately 73% of the market by volume (source:

Industry). In 2012, the top five players controlled approximately 54% by value and 75% by volume – the dominance of the top

players have remained broadly same, despite a shift in top players led by various mergers and acquisitions. Players such as

Pfizer, Hikma and Mylan have grown their US injectable business through acquisitions, which have led to an increase in their

market share.

New entrants such as Dr. Reddy’s Limited carved a niche through launch of differentiated and complex filings. Overall, the

complexities involved in manufacturing of injectables have led to smaller number of players when compared to Oral Solids

Generics Industry. Any new player looking to gain entry into the US generic injectable market needs to have a relatively large

basket of products and low cost advantage to gain traction with customers.

Entry barriers due to complex

manufacturing, high capital &

operational cost and strict

compliance requirements.

Nearly 70% of the generic

market revenues have three or

less companies as suppliers

Top 5 players contribute 50% by

value and 73% by volume in

2015


Challenging market to make inroads by virtue of established incumbents Exhibit 4: Player Market Share Concentration %, US$ Million

Exhibit 5: Player Market Share Concentration %, Million Units

Source: ICRA research

Exhibit 6: US Generic Injectable Market Share %, US$ Million

Exhibit 7: US Generic Injectable Market Share %, Million Units


59 71

52 71

0

20

40

60

80

Top 5 Players Top 10 Players

2012 2015

77

84

73

83

65

70

75

80

85

90

Top 5 Players Top 10 Players

2012 2015

0 5 10 15 20 25

Pfizer (Hospira)

APP

Sandoz

Mylan

Hikma

Dr. Reddys

Grifols

Baxter

Sagent

Teva

2015 2012 0 10 20 30 40

Pfizer (Hospira)

APP

Hikma

Sagent

Henry Schein

Auromedics

Sandoz

Mylan

Teva

Becton Dickinson

2015 2012

The dominance of top players

have remained broadly same

despite shift in top players led by

various mergers and acquisitions

Post acquisition of Hospira in

Sep-2015, Pfizer has emerged as

the leading injectable player in

the US and worldwide


Focus on complex injectables used as an entry strategy by Indian players

Focus on complex injectables by leading Indian players

Complex injectables include lyophilised products, high potent drugs, long-acting suspensions, liposomes, which require

complex manufacturing capabilities or use of new drug delivery systems (NDDS). For injectable, NDDS include drug delivery

systems such as self-injection device such as auto and pen injectors for existing products, which improve patient compliance

and enable differentiation. Dr. Reddy’s Limited (DRL) scaled up its complex injectable business from scratch over the last five

years to US$280 million in FY2015 equivalent to 25% of their North American Generics revenues. In order to support its

foray into injectables, DRL acquired Netherland-based injectable player in 2013, leading player in the development of, long-

acting injectables and liposomal formulations. Similarly, Lupin Limited (Lupin) has acquired Netherland-based Nanomi, a

drug delivery firm with patented technology platforms to develop complex injectable products. Currently, Lupin Limited,

through its acquisition of Naomi BV, has a development pipeline of ~38 products targeting market size of US$12.8 billion of

branded and generic injectables. In July 2014, Sun Pharmaceuticals Industries Limited (Sun Pharma) acquired US-based

Pharmlucence Inc. with sterile injectable manufacturing supported by R&D capabilities to further enhance its presence in

the US injectable business.

Exhibit 8: Selective Large Indian players: Exposure to US Injectables market

Indian Player US Strategy - Generic Injectable Acquisitions/Rationale Revenues/M. Share

DRL Complex products along with new drug delivery systems such as Automatic Injectables. Development pipeline of 17 complex/sterile injectables as on Mar-16

OctoPlus NV (2013) - Proprietary drug delivery technologies and focus on medicine ingredients that are difficult to formulate

US$280 Mio (FY2015). Ranked 6th in US generic injectable market

Lupin Plans to foray into complex injectable products. Development pipeline of 38 sterile injectable as on Mar-16

Naomi BV (2014) - Technology to manufacture complex injectables

NA

Sun Pharma Present in generic injectable market, plans to scale up the business

Pharmalucence Inc. (2014) - Sterile injectable capacity supported by R&D capabilities

NA


Indian players such as Dr.

Reddy’s has focused on complex

and differentiated filings to gain

entry into US generic injectable

markets. It is currently ranked

6th in the generic injectable

space

Indian players have done

several small acquisitions to

acquire technology or



Annexure: US Generic Injectable Market M&A Trends

Sizeable number of acquisition in the US Generic injectable industry

Exhibit 9: Selective Large Size US Generic Injectables Acquisition, 2013-15 period

Year Acquirer Target Location Consideration

(USD, Mio)#

Rationale

2015 Pfizer Inc. Hospira Inc. Global 17,000 Largest player in generic injectables with strong

pipeline for injectable and biosimilars

2014 Pfizer Inc. InnoPharma USA 360 Hard-to-make products such as involving

complex manufacturing capabilities or delivery

forms, such as pens and depot injections

2014 Hikma Pharma.

PLC

Bedford

Laboratories

(Assets)

USA 375 Acquire assets - including 82 products,

manufacturing facilities, R&D pipeline for the US

generic market

2014 Hikma

Pharma. PLC

Ben Venue

Labs.(Assets)

USA NA Acquired four manufacturing facilities, R&D

centre

2014 Par

Pharmaceuticals

Inc.

JHP Group

Holdings

USA 490 Portfolio of 14 specialty injectable products and

pipeline of 34 products; gain foothold in rapidly

growing injectable market

2013 Mylan Inc. Agila Specialties

Private Limited

Global 1,850 1,200 approved injectable products globally and

more than 900 injectable products pending

global approvals

# At the time of deal announcement, includes deferred payouts. Source: ICRA research

Over the last three years, the acquisitions were driven by the need to acquire product portfolio, development pipeline and

manufacturing capabilities of existing injectable players to consolidate market position or accelerate entry into the

promising US sterile injectable market. Among the key ones, Pfizer announced the acquisition of the largest player in the

Generic Injectable space – Hospira for US$17 billion.

The world’s largest generic

injectable player Hospira was

acquired by Pfizer in 2015.

Hikma Pharmaceuticals have

done a series of acquisitions to

build its US Generic Injectable

business

These acquisitions have led to

consolidation of manufacturing

sites as well as number of

players for individual products

on account of overlap of generic

injectable products for acquired

and target entity


Annexure: Key financials aggregate of US generic injectable players

Healthy financial profile of US generic injectable players (ICRA sample)

We have aggregated the financial profile of four pharma companies with significant exposure to generic injectable (50% or

more revenues derived from generic injectables) market in the US. Our Sample Universe includes - Hospira Inc. (till CY 2014),

Hikma Pharmaceuticals PLC, Sagent Inc. and Akorn Inc.

Exhibit 10: ICRA Sample Universe

Company CY2015 Revenues (USD Million)

Injectables % to overall Revenues

US Share - % to overall Revenues

Hospira Inc. 4,463 (CY 2014) 68% 81% Hikma Pharma PLC 1,440 ~50% 48% Sagent Inc. 318 90%+ 90% Akorn Inc. 985 >50% >70%

The financial profile of the ICRA sample of generic injectable players in US is characterised by healthy operating margins,

RoCE, working capital intensity and moderate debt protection metrics. The growth rate in CY2015 and CY2014 improved to

15.7% and 13.3% respectively, compared to approximately ~7% in CY2012 and CY2013 each. On the profitability front, there

has been an improvement in gross margins to compensate for the decline in asset turnover. The EBITDA margins for our

sample companies have improved significantly over the last five years from 19.8% in CY2011 to 22.4% in CY2014 and 32.3%

in CY2015 led by price increases, changes in product mix to focus on high margin products and cost efficiencies through

consolidation of manufacturing facilities. The RoCE improved from low of 3.9% to 12.6% in CY2014 and 15.1% in CY2015.

ICRA sample companies have

recorded improvement in

margins and return Indicators


Financial profile – Key trends

Improvement in growth rates over the last five years

Exhibit 11: Trend in Growth Rate – Sample Companies

Source: ICRA research, CY2015# excludes Hospira Inc. as it was acquired by Pfizer in Sep-2015.

Decline in asset turnover accompanied by improvement in gross margins

Exhibit 12: Trend in Asset Utilisation – Sample Companies


5264 5641 6035 6835 2743

9.5% 7.1% 7.0%

13.3% 15.7%

0.0%

5.0%

10.0%

15.0%

20.0%

0

2000

4000

6000

8000

CY 2011 CY 2012 CY 2013 CY 2014 CY 2015#

LHS - Revenues (USD Million) RHS - YoY Growth (%)

137% 148% 154% 141% 105%

37.6% 36.4% 40.8% 43.5%

54.7%

0%

50%

100%

150%

200%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

CY 2010 CY 2011 CY 2013 CY 2014 CY 2015#

LHS - OI/Net Block RHS - Gross Margins

ICRA sample companies have

recorded improvement in

growth rates over the last few

years contributed by organic as

well as inorganic initiatives

The Gross Margins have

increased over the years

justifying high upfront capital

investments as well as ongoing

maintenance capex to maintain

USFDA cGMP compliant sterile

injectable plants. Several

players have increased

investments in view of warning

letters from USFDA



R&D expenses remain moderate for injectables generic players

Exhibit 13: Trend in R&D expenses – Sample Companies


Return indicators reflect drastic improvement over the last few years

Exhibit 14: Trend in Profitability Indicators – Sample Companies


314 371 373

455

106

6.0% 6.6%

6.2% 6.7%

3.9%

0.0%

2.0%

4.0%

6.0%

8.0%

0

100

200

300

400

500

CY 2010 CY 2011 CY 2013 CY 2014 CY 2015#

LHS - R&D Expense, USD Million RHS - R&D as % to OI

19.8% 16.9%

21.0% 22.4%

32.3%

1.7% 3.0% 4.8%

10.1%

14.0% 3.9% 4.4%

6.2%

12.6% 15.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

CY 2011 CY 2012 CY 2013 CY 2014 CY 2015#

OPBDITA (%) PAT (%) RoCE (%)

In CY 2015, the % has dropped

as Hospira had higher spend on

R&D

ICRA sample players have

experienced improvement in

return indicators. RoCE has

improved to 15.1% in CY2015

compared to 3.9% in CY2011.

Players like Sagent Inc. had

operating losses in earlier years

which led to overall low ROCE

for sample companies



Working capital intensity remains healthy with positive FFO

Exhibit 15: Trend in Working Capital and Operational Liquidity


Capital structure and coverage indicators remain moderate

Exhibit 16: Trend in Debt Protection Metrics


652 1,051 1,194 1,243 745

19.7%

24.3%

19.7% 17.0%

22.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

200

400

600

800

1,000

1,200

1,400

CY 2010 CY 2011 CY 2013 CY 2014 CY 2015#

LHS - FFO, USD Million RHS - NWC/OI (%)

0.6 0.6 0.5 0.7 0.8

2.3 2.6

1.9 2.2

2.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

CY 2011 CY 2012 CY 2013 CY 2014 CY 2015#

Gross Gearing (Total debt/Networth) TD/OPBDITA

Our sample Universe has

displayed consistent positive

funds from operations (FFO)

over the last few years with low

working capital intensity. The

working capital requirements

are primarily driven by higher

inventory days of approximately

four months, necessitated by

business operations

Acquisitions and on-going Capex

has led to the deployment of

internal accruals as well as

incurring additional debt. This

has led to moderate capital

structure over the years, despite

rise in profitability


ICRA Limited

An Associate of Moody's Investors Service CORPORATE OFFICE

Building No. 8, 2nd Floor, Tower A; DLF Cyber City, Phase II; Gurgaon 122 002 Tel: +91 124 4545300; Fax: +91 124 4545350

Email: [email protected], Website: www.icra.in REGISTERED OFFICE

1105, Kailash Building, 11th Floor; 26 Kasturba Gandhi Marg; New Delhi 110001 Tel: +91 11 23357940-50; Fax: +91 11 23357014

Branches: Mumbai: Tel.: + (91 22) 24331046/53/62/74/86/87, Fax: + (91 22) 2433 1390 Chennai: Tel + (91 44) 2434 0043/9659/8080, 2433 0724/ 3293/3294, Fax + (91 44) 2434 3663

Kolkata: Tel + (91 33) 2287 8839 /2287 6617/ 2283 1411/ 2280 0008, Fax + (91 33) 2287 0728 Bangalore: Tel + (91 80) 2559 7401/4049 Fax + (91 80) 559 4065 Ahmedabad: Tel + (91

79) 2658 4924/5049/2008, Fax + (91 79) 2658 4924 Hyderabad: Tel +(91 40) 2373 5061/7251, Fax + (91 40) 2373 5152 Pune: Tel + (91 20) 2556 1194/0195/0196, Fax + (91 20) 553

9231

© Copyright, 2016 ICRA Limited. All Rights Reserved.

All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided 'as is' without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. Also, ICRA or any of its group companies, while publishing or otherwise disseminating other reports may have presented data, analyses and/or opinions that may be inconsistent with the data, analyses and/or opinions presented in this publication. All information contained herein must be construed solely as statements of opinion, and ICRA shall not be liable for any losses incurred by users from any use of this publication or its contents.

Documents

US Generic Injectables Market: an Opportunity for Indian ... Injectable.pdf · The injectable generic market value growth during 2008-13 period has been a CAGR of 19.6%, against volume