The year in context
FY'22 proved to be yet another eventful year. Having started withthe second wave of COVID-19 in India it ended on a note of high geopolitical tension.
On the pandemic front the vaccination programmes undertaken in Indiaand around the world have truly played a stellar role in containing its impact. Given itssize numbers and demographic spread India's vaccination programme was nothing shortof remarkable. Subsequent waves have so far exhibited lower severity in India. Our companycontinued to play its part along with the rest of the pharma industry in the fight againstCOVID-19. We combined our in-house efforts with an open-innovation model of partnershipsto make available a portfolio that included a vaccine and therapeutics for mild moderateand severe COVID-19. Our focus on agility access and affordability helped us reach over 5million patients during the pandemic and we remain ready and vigilant to serve anypresent or future needs.
We join the world in hoping for a resolution to the prolongedgeopolitical hostilities between Russia and Ukraine. We have had a three-decade longpresence in the region. Ensuring the well-being of our staff in Ukraine and Russia was ourfirst and foremost priority along with measures to meet patient needs and businesscontinuity. We acted early to secure our resilience be it employee safety currencyhedging or cash flow.
Performance and business highlights
FY'22 was a year of good financial performance with growth insales and EBITDA and strong cash flow generation from operations. Revenue stood at Rs21439 cr or $2.83 billion a year-on-year growth of 13% based on improvement in our basebusiness volumes and new product launches. The full-year EBITDA of 24% is close to ouraspirational target of 25%. Our North America Generics business recorded a revenue of onebillion dollars driven by high-value launches such as Icosapent Ethyl softgel andVasopressin injection. We were also able to ramp up the market share of many of ourexisting products helping us partially mitigate the impact of price erosion. Our BrandedMarkets (India and Emerging Markets) business registered a strong show and a combinedrevenue of over a billion dollars. Our Europe generics unit performed well bolstered bynew launches and we expect the growth momentum to continue. Overall we saw improvedmarket share in most of our major markets. On the API and services front the yearwitnessed normalisation in channel customer stocking and we expect return to growth in thebusiness in the coming fiscal. In FY'22 we filed 10 Drug Master Files and sevenANDAs in the U.S. and launched 157 products across markets. The number of product filingsin the year was slightly lower than previous years but we remain on track to acceleratethis in FY'23.
Additionally our strong balance sheet allows us to remain open tovalue-accretive inorganic opportunities. We recently acquired the cardiovascular brandCidmus? and in FY'22 also licensed the Voveran? range for pain management theCalcium range and Methergine? in India. We entered the highly-regulated pharmaceuticalcannabis market in Germany through the acquisition of Nimbus Health GmbH to target the CNSsegment. We have taken very early steps in the digital healthcare space through ourwholly-owned subsidiary SVAAS - an integrated outpatient platform offering our firstforay into digital services.
Gearing up to meet the next and the new patient needs
All of the above are an illustration of our strategy in action. Overthe years we have reiterated our three strategy pillars - leadership in chosen spaces(leading to market leadership) continuous improvement and operational excellence (leadingto productivity) and patient-centric product innovation (to meet unmet needs). Ourthree-year compounded annual revenue growth at 12 percent and EBITDA and ROCE close toour target at 25% are evidence of effective implementation and the soundness of ourstrategy.
Our core businesses of API generics branded generics biosimilarsand OTC constitute our near-term growth drivers or what we call our horizon 1 of growth(The Next'). We aim to continue to deliver growth and profitability of thesebusinesses through improved execution on product development and launch improvedproductivity driven by continuous improvement as well as digitalization.
As the pharmaceutical landscape evolves we see intense competition intraditional generics disruption brought on by new players and new business models anddemand for holistic healthcare solutions. As a company with a history of deep science thathas led to several industry firsts we continue to plan ahead and invest in businesses ofthe future. These include deepening our presence in nutraceuticals the discovery anddevelopment of immuno-oncology NCEs at our subsidiary Aurigene Discovery TechnologiesLimited and strengthening our CDMO services. We are also exploring new spaces such asdigital healthcare services clinically differentiated assets biologics and cell &gene therapy and disease management. Together. we see these businesses as our horizon 2of growth i.e. long-term growth prospects (The New').
Sustainability - aiming to touch over 1.5 bn patients by 2030
Even as we work on our growth strategy we realise that embracingsustainability is key to a healthy future for all our stakeholders. The challenges posedby climate change lack of access changing patterns of disease burden and inequity needurgent action from us as a collective. We have always viewed our work in the context ofaddressing societal needs - where we are uniquely positioned to make positive change andimpact. This led us to become an early adopter of
Environment Social Governance (ESG) actions as well as voluntarydisclosures on sustainability. We released our first Sustainability Report in the year2004 and have maintained annual disclosures since then. Subsequently we led the industryin introducing a sustainability by design' approach in our operations in 2013.Over the years our efforts in various aspects of ESG such as waste minimisation andmanagement emissions investment in people development and other areas sawindustry-leading initiatives such as zero liquid discharge zero waste to landfills andSelf-Managed Teams.
In 2020 we became the first pharma company in India and the third inAsia to join the Science-based Targets initiative (SBTi) for reducing our carbonfootprint.
We have been recognised by the S&P Corporate SustainabilityAssessment the Dow Jones Sustainability Index Frost & Sullivan TERI among othersand are the only Indian pharma company to be featured on the Bloomberg Gender-EqualityIndex.
However there is a lot more to be done and such recognitions onlyserve to make our commitment and resolve stronger. This year we refreshed oursustainability and ESG goals for the next decade while making them central to our purposeand integral to our strategy. Propelled by bold targets in affordability and innovationwe aim to triple our existing reach to touch the lives of over 1.5 billion patients by2030. Our goals in renewable energy emissions diversity and inclusion and corporategovernance are equally aggressive. With nearly 20 years of leadership in sustainability inIndian pharma we see it as our responsibility to set the bar high and deliver on theseambitious targets. Details of our refreshed ESG goals for the coming decade are on page17.
As we go further into FY'23 we would like to thank our colleaguesaround the world for their tireless efforts to bring to life our purpose of Good HealthCan't Wait. We are also grateful to our customers suppliers partners healthcareprofessionals and of course our shareholders for their support. We count on yourpartnership as we move to the next and the new.
|K SATISH REDDY ||G V PRASAD |
|Chairman ||Co-Chairman and Managing Director |