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Zim Laboratories Ltd.

BSE: 541400 Sector: Health care
NSE: N.A. ISIN Code: INE518E01015
BSE 00:00 | 07 Dec 114.80 5.55
(5.08%)
OPEN

114.25

HIGH

117.95

LOW

114.25

NSE 05:30 | 01 Jan Zim Laboratories Ltd
OPEN 114.25
PREVIOUS CLOSE 109.25
VOLUME 1301
52-Week high 189.45
52-Week low 68.60
P/E 36.56
Mkt Cap.(Rs cr) 186
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 114.25
CLOSE 109.25
VOLUME 1301
52-Week high 189.45
52-Week low 68.60
P/E 36.56
Mkt Cap.(Rs cr) 186
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Zim Laboratories Ltd. (ZIMLABORATORIES) - Chairman Speech

Company chairman speech

DEAR SHAREHOLDERS

In recent years we have undertaken a mission to radically transformour company into becoming a significant provider of healthcare solutions globally. Thisrequires rapidly adapting to disruptive changes taking place in the healthcare deliverychanging patient requirements digitalisation strengthening of regulatory oversightaffordability enforcement and localisation efforts by all governments.The world isparadoxically racing towards increasing globalisation where partnerships and sharing ofskills and knowledge are needed more than ever for success across regional boundaries.Atthe same time there is a strong trend towards localisation and isolation to restrict overdependence and loss of livelihoods and sovereignty. We believe the pharmaceuticalorganisation of the future will be very different from what is seen today and are in theprocess of creating one.

In the midst of the great disruptive changes occurring all around usone thing which remains constant is our single-minded endeavor to serve the healthcareneeds of our patient. Supporting patient health means more to us than merely deliveringproducts to the market especially during this time as we confront one of the greatestchallenges to humanity in the form of the Coronavirus causing COVID-19 following aprolonged weakening of the domestic and global economy. Our Patient First focus drives ourteam to create solutions which provide convenience and treatment adherence at the sametime ensuring affordability. The ultimate goal of all the transformative changes at Zim isto create and deliver New Age Medicines to the New Age Citizen!

UNIQUE POSITIONING

We have leveraged our competence in process innovation to create aversatile portfolio of enabling platform technologies for creating differentiated genericproducts which provide unique healthcare solutions for our patients. They enablemanufacturing and supply of affordable complex generics in the domestic and internationalmarkets and position us as the partner of choice to pharmaceutical manufacturers anddistributors aiming for continued relevance. An additional area of emerging strength isour ability to partner with Global Pharma for Co-development and Manufacturing. While ourexisting business is primarily in Pharmerging markets we continue to pursue our ambitionto enter the developed and regulated markets going forward and are confident of a muchlarger presence in the next few years. The CoDevelopment and manufacturing agreementswhich are in place and under discussion have a full spectrum of partners including BigPharma as well as mid-sized therapy specialised players in the regulated as well emergingmarkets. The projects undertaken largely involve use of Zim's existing unique technologyplatforms to develop differentiated products dosage transformation as well as ComplexGenerics.

BUSINESS PERFORMANCE

During the year the export revenue from Pre-Formulation Intermediate(PFI) Products reduced to ' 1319 million during the year from ' 1900 million in FY2019as a result of non-receipts of certain high-volume orders due to political instability insome markets. Key contributions came from the Finished Formulations business which hasbeen showing good growth since we focused on making it a part of our core strategy in2014-15. The business grew at a fast clip on the back of rapidly growing productregistrations in various markets at a CAGR of 41% showing that the initial investments indevelopment and registration of various formulations is poised for consistent growth andreturns in the coming years.

We have added more than 170 new product registrations over the previousyear and entered into new partnerships and company product launches in 6 new markets. Thisbusiness will be a key growth driver for our business in FY2021 and going forward.

The Government business has been scaled back to cover products where webelieve we bring some value to the patient - essentially differentiated products and foodsupplements. We are focussing on higher margin products and with significant pricefluctuation risks in API and other intermediaries avoiding products with lower margins.The Pradhan Mantri Bhartiya Janaushadhi campaign of the Government of India is findinggood traction and we are proud to participate in this program with over ' 30 millionorders in hand to execute.

The Deemed export business has been maintained at a revenue run rate ofover 17% and is expected to continue at this range depending on the margins that yourcompany can make from this business line.

COST CONTAINMENT:

Affordability of the generic products consumed in volumes by commonpeople is likely to be an important political mission of presiding governments across allglobal markets in the coming years. We intend to achieve the same by introducing newparadigms in operational excellence by using the latest tools such as remote monitoring ofcritical manufacturing process parameters and optimal utilisation of various inputs.Ensuring that we develop robust manufacturing processes for all of our products reductionof process time and steps and product yields has been an important part of our mission toensure product affordability for our patients without affecting quality or our margins.

Several initiatives were undertaken during the year to ensure thatcosts were continuously controlled. Existing equipment was replaced with more efficientalternatives to increase productivity yield process time as well as reduced man-powerthrough automation.

Notably we also undertook several measures as above ultimately leadingto utility cut back reduced manufacturing shifts optimiation of the work force. As aresult we have been able to increase the quantity manufactured of almost all the units ofoutputs along with 17 % decrease in other expenses (except commission and freight) fromthe previous year.

RESEARCH AND DEVELOPMENT:

As you are already aware R&D is the heart of your company. Wecontinuously strive to come up with new ideas for product delivery. This covers broadtechnology platforms (like Orally Disintegrating Strips (ODS)) as well as specificsolutions for our clients and patients. We are happy to inform that the momentum tocontinue to strengthen the R&D division continues.

During the year over 5 experienced professionals were added to theteam which comprised of members that have worked in leading multinational organisation inIndia as well as overseas. They bring with them a wide range of experience in developingformulation ideas and deep experience in developing products along with comprehensivedossiers for filing across global markets including the most developed markets in theworld like USA and Europe.

SURVIVING AND THRIVING IN THE TIMES OF THE COVID-19 PANDEMIC:

As a company with several business initiatives derived from leveragingour unique process innovation skills and presence in diverse markets we are relativelywell placed to absorb the shocks of the disruptions in economic activity and supply chainfailures bound to occur at the vendor as well as customers end. The loyalty and supportfrom our valuable clients is expected to continue specially because of the value we add totheir business through the product differentiation inherent in our offerings.

The efforts towards pharmaceutical localisation and affordability byvarious governments are expected to help in the company's growth because of its multiplepartnerships in markets which will now intensify efforts to localise using Zim'sintermediates. The on-going regulatory tightening is advantageous to Zim because ofextensive investments already made in upgradation of facilities systems and skills of ourteam due to which we presently operate in a highly compliant environment and have severalsuccessful accreditations and audits such as a continuing EU GMP certified status.

Although these are early days and a clearer understanding of the extentof changes in business and lifestyles this epidemic is likely to cause we can be certainthat its effects will be felt for next few years and some of the changes will remain longafter the virus is conquered.

As has been famously stated the Corona virus is a threat not only tolife but to livelihood as well! We have taken rapid steps to ensure uninterruptedcontinuation of all our operations in the coming days and months. These steps have beenformalised throughout the organisation in the form of a Standard Operating Procedure andcovers well- documented transportation and movement of personnel inside the company campusand various practices such as sanitisation working areas isolation the methods ofprotecting highly vulnerable and high contact personnel as well as work from homepractices. We are hopeful of being able to continue to achieve our business goals as wellas all our customers and patients during the coming days.

TOWARDS AN EXCITING FUTURE

Going forward we aim to focus on co-development particularly in theareas of oral solid complex generics dosage transformation (OTF platform) anddifferentiated products for ourselves and our valued partners spread across all markets.On the back of our unique technology platform assets we aim to develop unique proprietarynoninfringing first to file products which will provide long-term advantages for esteemedpartners. By entering into supply partnerships with original product manufacturers andmarketing companies globally across delivery platforms our portfolio of deliveryplatforms for extending product lifecycle and specific customer targeting consists ofunique offerings such as Multi-layer film technology Electrospun nanofibers incorporatedoral films drug printed oral films liquid in pellets technology.

As we look to the future we feel confident that we are well-positionedto continue to grow our business by expanding the products and services we provide tocustomers while operating with greater efficiency and embracing technology and digitaladvances. All of this will result in our ability to more effectively and sustainablyfulfil our mission to improve patient lives and continue to reward your steadfast supportto the company as we confidently face the challenges ahead.

On behalf of the Board I would like to thank all ZIMIANS for livingthe Company's values and their contributions and commitment during the year.

Regards
Dr. Anwar Daud
Chairman & Managing Director

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