The global pharmaceutical industry offers significant opportunities to service thehealthcare needs of a growing and ageing global population. The industry has witnessedmajor investments in developing innovative medicines like monoclonal anti-bodiesimmunotherapy drugs and gene therapies. Many of these medicines have seen significantsuccess as they are serving the unmet medical needs of patients resulting in improvedmedical outcomes and thus changing the lives of patients.
The industry will have to adapt to this changed scenario although it also offerssignificant learning opportunities. These changing dynamics are also likely to have animpact on competition since return ratios on investments in the European and emerginggenerics business are growing up and down and not every generics company will be able toremain economically viable at the current rate of price .
As a result companies will have to optimize their future R&D investments. TheEuropean and emerging generics market has been an important driver of growth andprofitability for Indian pharmaceutical companies between a decade. However now with thechanged dynamics the importance of other markets has increased. It has also becomeimperative for companies to identify new engines of growth and invest more in innovation.
It is in this context that Bafna Pharma has been investing in building its globalspecialty business since the last few years. Through this initiative we are trying togradually move up in the pharmaceutical value chain. The other key focus area for us willbe cost control and product rationalisation with these efforts spread across R&Dprojects manufacturing footprint and other areas. These steps will ensure that wecontinue to earn reasonable returns on our investments.
Highlights of FY19
As guided at the start of the fiscal FY19 was a tough year. While we witnessed adecline in our financial performance for the year the challenges also offer us anopportunity to improve our processes and hence emerge as a much stronger company.
Our FY19 revenues has increased by 46% from Rs. 29.70 Crs to Rs. 43.35 Crs on sale ofManufactured goods which mainly due to the increase in the UK and emerging market sales.We have recorded steady growth in all other markets except the Emerging market.
Also the operational performance was also hindered as one of the Operational Creditorsa case under IBC 2016 and subsequently the case was admitted on 16.07.2018. The entiredetails have been broadly explained in the Directors' Report vide Page No: 7 to 10 underthe heading details of significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and company's operations in future.
Your management decided to go slow on the domestic and institutional sales due to lowmargins.
R&D is the backbone of our business and a key determinant of our future growth andprofitability. Our efforts to move up the pharmaceutical value chain mandate that we keepinvesting in R&D. Our R&D targeted mainly at developing complex generics andspecialty products.
We continue to be disciplined in identifying future R&D projects for the genericsmarket while simultaneously investing in developing a global specialty portfolio. We arealso investing in enhancing our product pipeline for emerging markets and other regulatedmarkets.
Nurturing specialty growth
Our journey of building a global specialty business commenced a few years ago and overthe years we have nurtured this evolving business through increased focus andinvestments. We have allocated significant resources in building the specialty business.Our specialty initiatives are directed at achieving two main objectives to build anadditional engine of future growth and secondly to move up the pharmaceutical value chainthrough development and commercialization of branded patented products. While we intend totarget the global market with Some specialty products developed markets are likely to bekey contributors to this strategy.
Our specialty portfolio targets Potent Drugs oncology and Lifestyles segments. We aredeveloping our specialty products pipeline with a focus on improving patient outcomeseither by addressing unmet medical needs or by enhancing patient convenience throughdifferentiated dosage forms. Over the past two years we have also focused on establishingthe requisite front-end capabilities for our specialty business.
Commercialization of key specialty products FY19 was a busy year for our specialtybusiness and we crossed many important milestones. The Audit of UK- MHRA was successfuland With this clearance new approvals from this facility for the regulated and emergingMarkets are likely to start coming through gradually.
Restructuring and rationalization
Given the tough pricing conditions in the generics market we continue to make effortstowards optimising our costs. It mandates an unwavering focus on cost control across theorganisation. We are trying to achieve better results with lower resources as we try tomake the organisation more efficient. Our efforts in this direction will cover multipleoperational aspects. The focus will be on optimising our manufacturing footprint as wellas generics R&D investments to ensure a reasonable return on investment as well asoverall cost management.
We are gradually ramping up our global generic specialty business. We plan to increaseits contribution to our consolidated revenues in the long term. This will entailsignificant front-ended investments with commensurate revenue streams accruing only overa period of time. We are also expecting reasonable growth in our emerging markets businesshowever as always currency fluctuations continue to be a risk. Given these factors weexpect a low double-digit top line growth in our consolidated revenues for FY19 over FY18.
We are also grateful to our Board of Directors for their guidance and support. We arethankful for your support as a shareholder.
You have continuously supported our endeavors over the past many years and we hope thatyou will continue to repose your confidence in us.
Mahaveer Chand Bafna
Chairman & Managing Director DIN: 01458211