Inter-firm comparison of Cipla and Torrent

PharmaceuticalsPresentation by:

Varun Nigam

Varun Balakrishnan

Soumya Mukherjee

Saurabh Mhase

Indian Pharmaceutical Market

India is the 14th largest Pharma Market in the

world!

Valued at

Rs. 600 bn

15-17%

Growth Rate

Dominated by Branded

Generics

FY2007FY2008FY2009FY2010FY2011FY2012FY20130

100

200

300

400

500

600

Indian Pharma Market

INR in billion

Growth Drivers

Growing

Population

Increase in Drug Penetration Level

Income level Increase

Growing incidence of

Chronic Ailments

Improving Medical

Infrastruture

Increased Government spending on Healthcare

Availability of new forms of Treatment

Swot Analysis: Cipla

S W

O T

Support to cancer patients

P. falciparum malaria‘No Touch Breast

Scan’Foremost player in anti-infective

and anti-asthmatic formulations

Strong employee force

Limited market share

Negative Campaign of AHF

Venture into Alzheimer’s

disease medicationCan use Viramune generic to achieve

higher growthIncreased

investment in the budding markets

Constant price rises in the Indian The Indian

Rupee depreciated

Fluctuations in currency exchange

rates

Swot Analysis: Torrent

S W

O T

High market Share

High Growth Rate

Strong Innovation

Global Presence

Low Employee Strength

High Debts

AquisationsProduct Expansion

Emerging Markets

Constant price rise

The Indian Rupee

depreciatedFluctuations

in currency exchange

rates

Cipla overview• Cipla Limited is a pharmaceutical company based

in Mumbai

• Cipla makes drugs to treat cardiovascular disease, arthritis etc.

• Market capitalization is US$ 5.6 billion (2013)

• Cipla has 34 manufacturing units in 8 locations across India and has presence in 170 countries

• It has over 2000 products in 65 therapeutic categories

History of Cipla• 1935- Founded in by Dr. K. A. Hamied

• Vision: To make India self-sufficient in healthcare

• 1939- Encouraged by Mahatma Gandhi by visiting the company

• 1960- API manufacturing technology

• 1996- World’s first transparent dry powder inhaler

• 2001- HIV medicines

• 2005- Anti bird-Flu drug invented within 2-3months

• 2012- Reached 20000 employees level

Overview of Torrent Pharma

• Torrent Pharmaceuticals Ltd. is the flagship company of the Torrent Group

• Initially was named as Trinity Laboratories Ltd

• Operates in more than 50 countries with over 1000 product

• It has 7 fully owned subsidiaries

History of Torrent Pharma

• 1970 – Founded by Mr. U N Mehta

• 1992- President's award for highest pharmaceuticals exports of Rs. 1570 million

• 1994- Almost doubled its manufacturing capacity

• 2001- India's ninth best company among capital intensive companies in terms of ROCE in a study by ETIG-BCG

Current Market Price

Rs. 423.5 Rs. 526.3

As of 23-01-2014

Some of the ProductsCipla Drugs Purpose

Cost (in Rs.)

Escitalopram Anti-depressant 840

Isotroin Acne Treatment 108

Entavir Chronic Hep-B 1400

Triomune HIV/AIDS 662

Oseltamivir Swine Flu 5022

Asthalin Asthma 67

Levoflox chemotherapeutic antibiotic 46

Cefoprox anti-bacterial 91.22

Montair anti-allergic 120

Vanlid anti-bacterial 900

Tachyra Cardiac 48

Some of the ProductsTorrent Pharma Drugs

Purpose Cost (in Rs.)

Enselin Cardiac 85Azukon Pregnancy,Lactation 43Calcigard Hypertension 12.39Domstal Acute Nausea, Vomiting 35

Symbal Diabetes 112Dilzem Calcium Channel

blockers23.84

Hexidol schizophrenia 38Diclomax Arthritis 15Promotil Cardiovascular 30.25Zaplon Insomnia 60.14Macrotor Respiratory 72

Key financials of the Companies (Year-to-Year)Cipla

Item Mar ‘13 Mar ‘ 12 Mar ‘11 Mar ‘10 Mar ‘09

Total Income (Rs. In crores)

8,722.30 7,114.56 6,561.49

5,915.49

5,208.33

Percentage change in income from previous year

22.6% 8.42% 10.92% 13.6% -

Total expenses (Rs. In crores)

6,374.03 5,384.4 5,149.1 4,408.85

4,103.0

Net Profit (Rs. In crores) 1,507.11 1,123.96 960.39 1,081.49

776.81

Percentage change in Net Profit

34.08% 17.03% -11.2% 39.22% -

Total Equity Dividend (Rs. In crores)

160.58 160.58 224.81 160.58 155.46

Shares in issue (in Lacs) 8,029.21 8,029.21 8,029.21

8,029.21

7,772.91

Earnings Per Share (Rs.) 18.77 14 11.96 13.47 9.99

Book value (Rs.) 110.47 94.04 82.36 73.55 55.86

Total Assets (Rs. In crores)

9,835.33 7,562.48 7,053.43

5,919.16

5,290.99

Key financials of the Companies (Year-to-Year)Torrent Pharmaceuticals

Item Mar ‘13 Mar ‘ 12 Mar ‘11 Mar ‘10 Mar ‘09

Total Income (Rs. In crores)

2,970.84 2,162.69 1,873.17

1,429.14

1,196.22

Percentage change in income from previous year

37.4% 15.5% 31.06% 19.5% -

Total expenses (Rs. In crores)

2,197.51 1,698.06 1,418.23

1,032.11

929.16

Net Profit (Rs. In crores) 546.42 311.25 290.86 207.37 186.73

Percentage change in Net Profit

75.6% 7.01% 40.3% 11.05% -

Total Equity Dividend (Rs. In crores)

194.61 71.92 67.69 50.77 33.84

Shares in issue (in Lacs) 846.11 846.11 846.11 846.11 846.11

Earnings Per Share (Rs.) 64.58 36.79 34.38 24.51 22.07

Book value (Rs.) 195.14 154.17 129.18 104.11 86.59

Total Assets (Rs. In crores)

2,230.25 1,764.65 1,665.09

1,403.26

1,214.75

Key financials of the Companies (Q to Q)Cipla

Item Sept ‘13 June ‘ 13 Mar ‘13 Dec ‘12 Sept ‘12

Net Profit for the period (Rs. Crores) 376.03 474.9 267.56 338.78 500.01

Percentage change in Net profit -20.81% 77.5% -21.02% -32.24% -

Torrent Pharmaceuticals

Item Sept ‘13 June ‘ 13 Mar ‘13 Dec ‘12 Sept ‘12

Net Profit for the period (Rs. Crores) 114 182 214 153 83.84

Percentage change in Net profit -37.36% -14.95% 39.86% 82.5% -

Cash Flow Comparison

Item CiplaTorrent

Pharmaceuticals

Net Cash From Operating Activities (Rs. In crores)

1,381.34 -68.69

Net Cash (used in)/from investing Activities (Rs. In crores)

-2,064.16 -89.48

Net Cash (used in)/from Financing Activities (Rs. In crores)

732.83 25.49

Net (decrease)/increase In Cash and Cash Equivalents (Rs. In crores)

50.01 -132.68

Financial Ratios Comparison

Ratios Cipla Torrent Pharma

Inventory Turnover Ratio 3.5 3.98

Debtors Turnover Ratio 5.18 4.46

Investments Turnover Ratio 3.5 3.98

Fixed Assets Turnover Ratio 1.65 2.35

Total Assets Turnover Ratio 0.83 1.25

Asset Turnover Ratio 0.94 1.38

Ratio Analysis-FY2013Face value

2 5

Comment: The Interest rates are lower than the Bond’s Coupon Rate for Torrent- Bonds are sold

at a premium.

The nominal value or rupee value of a security stated by the issuer. 

Ratio Analysis-FY2013Current Ratio

1.95

1.59

Comment: Cipla can better meet its liabilities which are due over the next 12 months and

save more money.

=Current Assets/ Current Liabilities 

Ratio Analysis-FY2013Quick Ratio

1.68

1.24

Comment: The position of Cipla is better.

=Quick Assets/ Current Liabilities

Ratio Analysis-FY2013Debt Equity Ratio

0.11

0.35

Comment: Torrent has a high debt load than Cipla

=Total Debt/ Shareholder Equity

Ratio Analysis-FY2013Net Profit Margin

17.87%

18.85%

Comment: Torrent more efficient in converting Sales into actual Profit

=PAT/ Revenue

Ratio Analysis-FY2013Return on Capital Employed (ROCE)

20.79%

33.14%

Comment: The Rate at which Torrent borrows is good

=EBIT/ (Total Assets-Current Liabilities)

The Better One – In terms of growth rate

Year to Year highest

39.22%

75.6%

Quarter to Quarter highest

77.5% 82.5%

The Better One – In terms of ratios

More Liquidity

Better Net Profit Margin

Less Debt Better ROCE

Thank You