ANNUAL REPORT 2008-2009
The financial storm that swept across one side of our world impacted
businesses across the globe. The pharmaceutical sector, though a relative
out-performer in comparison to the overall economy, saw buoyant forecasts
of global pharma sales being moderated. Growth of the Indian pharma market
too was a shade rationalised.
It was also a checkered year for Alembic. While some of the strategies
adopted and paths charted in previous years started yielding handsome
results, others needed course correction. An impressive 44% growth in our
International Business was dampened by a 7.3% de-growth in our domestic
We recorded a total of Rs. 1,133.7 Crores in revenues, a 10.4% growth over
previous year's revenue of Rs. 1,027 Crores. A result we are not too
delighted about, but are aware that it is a short term consequence for the
long term benefit that will accrue from the restructuring exercise
undertaken in our domestic formulations business.
Also responsible for this poor performance were uncharacteristic forex
losses due to the unprecedented international currency imbalances which
manifested in the aftermath of the global financial crisis. Forex losses
were a bane of many an Indian company and Alembic too was saddled with its
A strong proponent of transparency and good corporate governance, Alembic
decided to adhere to fair value accounting and report on a mark-to-market
basis even though the National Advisory Committee on Accounting Standard
(NACAS), postponed the implementation of Accounting Standard 11 (AS 11) to
2011 allowing organisations to report as per historic costs.
We have fully provided for mark-to-market exchange losses on long term
foreign currency loans and on forward sale of US Dollars. We have also made
provisions for diminution in investment to the tune of Rs. 7.52 Crores with
respect to a US company namely Xechem Corporation.
The forex losses and the initial negative impact of restructuring are both
extraneous events and we at Alembic have implemented corrective action on
both fronts to keep them such.
In the coming fiscal 2009-2010 the benefits of the restructuring will begin
to kick in. We are on course to capitalise on the significant opportunity
that exists for our newly focused product portfolio in the domestic
formulations market, drive more costs out of the business and secure
New products provide additional momentum to growth and during this fiscal
Alembic launched 34 new products across various therapeutic segments.
Acute therapy products market contributes over 75% to the Indian pharma
market by revenue. However there has been a perceptible increase in
revenues from the chronic ailments segment and it is growing at almost
double the rate of the acute segment. Amongst the largest therapeutic
segments, anti-diabetic and CV drugs have demonstrated the most aggressive
growth. The 24 lifestyle therapeutic brands which we included last year in
the cardiovascular, diabetological and gynaecological segments have
handsomely enhanced their contributions to the total sales. Diabetology,
cardiology and gynaecology chalked up a 64%, 43% and 48% growth in
percentage contribution to this revenue stream, respectively. Chronic
therapy will continue to be a key growth segment for Alembic's domestic
formulations business in the coming years.
Our International Business posted significant gains in every market in
which we participate. Powered by our collaborative approach, sales in
regulated markets escalated 71%. Partnerships with international generics
players provided us deeper access to markets and helped sharpen our
competitive position in regulated markets. As regulated markets look to
increase generics usage in their healthcare system as a means to counter
massive healthcare budget deficits, Alembic is advantageously poised to
grow its footprint in these markets.
R&D is where we seed and nurture new growth platforms and this year too we
continued to invest in it.
Alembic is fast evolving towards a business model that is focused on deep-
rooting our domestic presence and simultaneously leveraging high-value
mature regulated markets along with high growth emerging markets.
Our record of delivering consistent results to our shareholders for over a
century speaks of our ability to adapt, execute and optimise the many
opportunities that our business mix provides.
Alembic today is a well balanced, tightly managed, globally competitive
organisation and will continue to profitably serve all stakeholders
including patients, healthcare professionals, employees, business
associates and shareholders.
Chirayu R. Amin
Vadodara: 8th May, 2009.