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Parabolic Drugs Limited | Annual Report, 2011-12
Sustaining Growth, Integrating Value
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DisclaimerIn this annual report we have disclosed forward-looking
information to enable investors to comprehend our prospects
and take informed investment decisions. This report and other
statements written and oral that we periodically make
contain forward-looking statements that set out anticipated
results based on the managements plans and assumptions.
We have tried wherever possible to identify such statements
by using words such as anticipates, estimates, expects,
projects, intends, plans, believes and words of similar
substance in connection with any discussion of futureperformance.
We cannot guarantee that these forward-looking statements
will be realised, although we believe we have been prudent in
assumptions. The achievement of results is subject to risks,
uncertainties and even inaccurate assumptions. Should
known or unknown risks or uncertainties materialise, or should
underlying assumptions prove inaccurate, actual results could
vary materially from those anticipated, estimated or projected.
We undertake no obligation to publicly update any forward-
looking statements, whether as a result of new information,future events or otherwise.
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VisionTo become a globally acceptable API
and pharmaceutical manufacturing
company by providing quality
products that exceed customer
expectations and are produced in asafe working environment
MissionTo be the chosen strategic partner of the worlds top ten
pharmaceutical companies
To grow consistently by entering Custom Synthesis and Contract
Manufacturing relationships with large Generic and innovator companies
To leverage our cost efficiencies in manufacturing to penetrate world
markets across therapeutic segments, including oncology,
cardiovascular and anti-hypertensive, among others
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Parabolic Drugs - One of the leading Pharmaceutical Companies
Well positioned to sustain its growth, to build the Value to the stake holders
Growth driven by:
- research capabilities
- robust chemistry skills
- world class facilities with regulatory approvals
- integrated growth - horizontal and vertical- Strong foothold in over 50 countries
Net Worth(Million)
March 31, 2012
3039
Gross Block(Million)
March 31, 2012
4076
Turnover(Million)
5 years CAGR35%
` 10123
PAT(Million)
5 years CAGR30%
` 512
EBIDTA(Million)
` 1614March 31, 2012
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Legacy Facilities
Certifications
1996 by first generationentrepreneurs - Mr. Pranav Gupta &Mr. Vineet Gupta.
In 2012, the Company has facilities,across four locations, two state of theart manufacturing plants at Derabassiand Panchkula for APIs, one CustomSynthesis and R&D centre at Barwalaand one lifestyle drug manufacturingsite at Chachhrauli.
Employs over 1400 multi skilledprofessionals.
Listed with BSE & NSE on July 1,2010.
Parabolic Drugs Ltd was founded in
Derabassi (Punjab):This facility hasseven units manufacturing the oraland sterile range of cephalosporin
APIs and intermediates.
Panchkula (Haryana): This facility hastwo units manufacturing SSPs andAPI intermediates such as 6-APA.
Barwala (Haryana):The research anddevelopment centre develops andscales new APIs and API intermediatesin all therapeutic segments includingnon-antibiotic products. It also providescontract research services to innovatorcompanies.
Chhachrauli (Punjab): Multi block builtin a 27 acre site for drugs formanufacturing non-antibiotic APIs inthe new therapies such as CVS, CNS,
oncology, antithrombotic, anti-diabeticand pain management.
Regulatory strength
As on date, PDL has filed 23 processpatent applications with Indian PatentOffice, New Delhi and 43 Drug MasterFiles across US, EU, Korea, Japan andCanada
ISO 14001-2004
OHSAS 18001-2007
WHO-GMP
European GMP from EDQM,European Union
US FDA (for 6-APA at Panchkula)
Japanese PMDA
Korean FDA
Business ProductsPresence
Headquartered in Chandigarh.
Operational in 50+ countries(including regulated markets).
Listed on the National Stock
Exchange (PARABDRUGS) and theBombay Stock Exchange (533211).
Engaged in the manufacture including contract manufacture of
APIs and API intermediates for salesin India and abroad.
In the FY 12, moved up the value
chain by foraying into theformulations space.
Manufactures over 50 APIs (ActivePharmaceutical Ingredients - sold toformulators to make capsules,tablets, liquids, injections and otherdosage forms).
Diversifying its product basket withover 20 molecules across 10therapies in the FY 13-14.
Parabolic Drugs Limited | Annual Report 2011-12 3
Geographical Spread
Exporting to 50 countries & counting...
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EBIDTA(Rs.Million)
2010
2011
2012
923.24
1,271.45
1,614.31
TotalRevenue(Rs.Million
)
2010
2011
2012
5,590.10
6,752.97
10,123.08
ProfitAfterTax(Rs.Million
)
2010
2011
2012
341.99
528.73
512.12
Networth
(Rs.Million)
2010
2011
2012
1,210.55
2,879.35
3,039.00
43Drug MastersFiled across
US, EUand Canada
till date
23Process
Patents andone PCTfiled with
Indian Patents
Office, New Delhi
49%Sales to
regulatedmarkets
50+Markets
penetratedacross
the globe
120+Scientistsincluding
P.hDs.
1400+Employees
workingtowards the
common vision
SpentonR&D
(InMillion)
2010
2011
2012
412.01
689.68
943.39
CapexSpent(InMillion)
2010
2011
2012
600.30
1,125.36
997.88
Performance
Highlights2011-12
Performance
Highlights2011-12
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The Value Matrix
Spreading to the new
geographies
Attaining the highest
levels of QualityGrowing with R&D
Headway in the CMOand CRO space
The horizontal growthThe vertical integration
for value maximization
Parabolic Drugs Limited | Annual Report 2011-12 5
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Milestones
Commenced commercial operaof PDL I at unit in Derabassi forPenicillin API and API intermed
1997
-98
2000
-02
2003
-05
2005
-06
2007
-08
2008
-09
2009
-10
2010
-11
2011
-12
Commenced contract manufacture
for DSM and Ranbaxy
Commenced commercial operationof PDL II plant at Panchkula
Filed COS for two Penicillin APIs inthe European Union
Diversified into Cephalosporinproduction
Filed three US DMFs
Established a sterile facility
Commissioned a dedicated
R&D wing
Diversified into custom synthesis
for innovator companiesCommissioned two plants foradditional Cephalosporin APIcapacities
Filed eight DMFs in the EU / US
Filed nine patent applications
Received ISO 14001-2004certification for environmentand safety management atDerabassi
Commissioned new R&Dat HSIIDC, Barwala
Cen
Filed six Drug Master Files inthe US and Europe
Certified by WHO-GMP for theDerabassi facility
Listing of company on the stock exchanges
Received accreditation for compliance with European Good Manufacturing
Practices standards
18 regulatory filings
Received 'Certificate of Suitability' (COS) for Cefixime
Received DNV's certificate for OHSAS 18001-2007 standards
Commencements of commercial operations in the Multipurpose block 2 at
Derabassi that added 325 TPA Cephalosporin capacities
Recognized as a Star Export house by the Ministry of Commerce
Filed 7 patents applications in FY 11
Foray into herbal nutraceuticals
Commissioning of multi-purpose block 3 & New SterileFacility
Approval from Korean FDA
Filing of 7 DMFs across US, Korea and JapanEntry into finished dosage space
Diversification into non antibiotics
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Creating a responsible enterprise that delivers "Value"
Managing Director's review
At the outset, I would thank you for being with us and reposing your confidence on the management. The company has consolidated its
position during the last financial year and has set drivers in place for laying a strong foundation for the future. I do believe strongly that the
strategic decisions taken by management over the last couple of years will yield positive results in the coming year.
The year 2011-12 has been a tough one in the face of the tightened liquidity scenario, high interest rates, the euro zone debt crisis and
the depreciation of Indian currency. Despite the fiscal challenges affecting the operating environment, the company has achieved a
gross turnover of INR 10123 million for the year 2011-12. This represents a growth of 50% over the last year. Net Profits came in at INR
512 million, which represents a margin of 6%. The fall in net profit margins by 250 bps was on account of high interest rates and rising
cost of imported raw material.
Amongst the operational achievements and developments, at the Derabassi site, your company has successfully commissioned the
Multi-Purpose Block that augments the amorphous capacities. In the sterile space, with the commissioning of new sterile block, thecompany has doubled its capacity to 20 tons per annum for the manufacturing of the sterile range of products. With the expansion the
stage is set for the company to build on its accomplishments during the coming year. The current fiscal was also significant as the
company diversified horizontally to minimize its dependence on a single segment for growth. From being a standalone antibiotic
manufacturer, your company is becoming a differentiated antibiotic and non-antibiotic API manufacturer. The company has activated
production for the life style drugs from its new facility in Lalru. The company has been working in over 10 different therapies covering
cardiovascular, hypertensive, diabetes, oncology, osteoporosis and central nervous system. The company looks to build revenues and
growth on the new range of products that would not only bolster the top-line, but more importantly, concentrate on expanding margins.
With infrastructural expansions in place, right set of skills and capabilities in research and chemistry, a diversified basket of products,
your company has all the drivers in place for the next level of growth - the growth that drives the value for each of the stakeholders.
Parabolic Drugs Limited | Annual Report 2011-12 7
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Our objective towards creating a responsible enterprise will be led by the following actions:-
Your company has a considerable presence in over 50 countries. Historically, our growth in these markets has come throughthe antibiotics orals. With the expansion of sterile basket, addition of new verticals and products, your company looks to
strengthen its presence across the globe, especially the regulated markets. The Regulated markets will also add a thrust tothe margins and profitability.
Your company hasa distinctive recognition of being one of the few pharmaceutical companies certified by the European GMP.
With the audit approvals of over 40 pharmaceutical companies, your company foresees the regulatory approvals throughother international agencies including the Japanese PMDA and the USFDA
The research team at Parabolic continues to drive the business by creating a grid of niche molecules and working on the next
generation of products. Going forward, the in-house R&D team would continue to drive process research and find innovativeways to reduce cost and build competitiveness.
Leveraging on the world class infrastructure with large capacities, a cost arbitrage in respect to competition, your company isgeared to provide integrated solutions from route selection, process development, and optimization to different innovators
and generic companies of the globe. It will continue to develop the competitive advantage it already possesses in the area ofcontract manufacturing and research to be able to grow and add scale to this segment of business.
Our foray into the non-antibiotic space places us in an unique position to be one of the largest API companies with a multiple
range of products across varied therapies. The transition towards becoming a multi-specialty API manufacturer is going tode-risk the company's sizable reliance on antibiotics, where a couple of products have got commoditized and margins have
been affected by competition. We believe that the new life style drugs will drive margins and hence profitability.
The company moved up the value chain by launching its finished dosage business. The company successfully created abasket of over 150 products across multiple therapeutic classes in different dosage forms. The dosage business will
substantially add to the value of the company in the forthcoming years. The thrust for the formulations business would bethrough two verticals - the domestic formulations through our division 'Nucleus' and the International Formulations division.
Parabolic Drugs will strive to continue the consistent growth that it has displayed over the last couple of years with increasedcommitment and focus on the bottom line. The company will achieve to realize this through operational efficiencies, improvements and
innovation across production, marketing, research and other capabilities. The rationale is just not to create an organization of growthand profits, but to create a responsible organization which drives its business with excellence and sustainability. The key focus areas for
the management in the coming year would be to:
Focus on Regulated Markets of US, European Union, Canada, Japan, and Australia- filing of drug master files, certificate of
suitabili ty, and dossiers.
Product basket- Launch of new molecules in the non-antibiotic space and diversify the product basket for a risk freesustainable growth
Diversification into new business verticals- Integration into Finished Dosage formulations, entering into manufacturingalliances for inorganic growth
Investment in R&D- development of new products , improving efficiencies in the existing range, filing of patents and building
IPR wealthHigh GMP Standards- maintaining high GMP standards for seeking regulatory approvals from USFDA, PMDA, TGA amongstothers.
Safety, Health & Environment- safety of our human resource, our manufacturing facilities and our environment, conservation
of resources and to be a responsible social citizen for a greener tomorrow
Development of Human Resource- foster the skills, talent and efficiency of the human minds
I thank you for the faith and conviction you have placed in us and I do believe that the company is poised for greater laurels in the future
with your continued support, motivation and guidance.
Regards
Pranav Gupta
Achieving highest International quality standards
Growth through developments in research and development
Headway in the Contract manufacturing Space
Horizontal growth through the diversified basket
Vertical integration for value maximization
Business Outlook
Taking your company to newer geographies
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Parabolic Drugs with its operational
experience of over 14 years has scaled
its reach to different parts of the world.The company today has its presence in
over 51 countries across the globe. The
accelerated geographic spread has
been driven by the company's
continuous focus on the regulatory
f i l i n g s , c om p l i a n c e w i t h t he
International quality standards, meeting
the stringent customer specifications
and being competitive with the cost.
The company's key presence across
European Union, Turkey, Latin America,
Middle East, Asia Pacific, North Africa
and SAARCfamiliarizes it as India'sleading antibiotic company. However
going forward, the company with its
strategic shift in the product therapies
and its approach to the new countries is
likely to add value to the business.
Over the next years, by way of its
horizontal growth in the product basket,
with the addition of new products in the
non-antibiotic space, the company
looks to strengthen its presence in the
world with a planned approach by:
Entering the new markets of
South East Asia with the new
products that complement the
disease and life style pattern
of the countries.
Responding to the market
dynamics by exploring new
molecules that are off patent
in different countries
Exploring the high growth
markets of China, Korea,
Turkey, Mexico, Argentina andBrazil. These markets are
likely to add impetus to our
growth.
With regulatory approvals in
place, the company aims to
fortune its growth and market
development in the regulated
space. The company is
buoyant on the opportunities
from the markets of Japan,
European Union and of late
the United States of America.
Spreading to the new geographies
Result :
Parabolic Drugs will become a leading pharmaceutical player with strong presence in all major countries of the world
Parabolic Drugs will add value to its revenues and margins by tapping the high margin regulated space
Parabolic looks to capitalize its revenues by yielding growth from the emerging economies including Korea,
Brazil, Mexico and China.
Parabolic Drugs Limited | Annual Report 2011-12 9
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The Global pharmaceutical market over
these years has undergone a significant
transition from focusing just on GMP to a
complete Quality management System.
The companies in the pharmaceutical
space have a detailed focus on the
customer, their needs and internal
efficiencies. The responsibilities for the
quality systems range across all activities
associated with development and
manufacturing (purchase, storage,
production, quality control, release and
distribution) of APIs.
Quality is just not compliance atParabolic; it is a philosophy, a core belief
of management, its employees and the
processes. As an integrated approach,
the company strives to achieve the
highest level of quality across all functions
and with an objective of continuous
improvement and development. The
dedicated quality control and quality
assurance departments work in line with
the stringent quality guidelines and GMP
framework. The company is committed to
all compliance standards andThe Quality
Function has responsibility for ensuring
that all activities in the system are
conformed with.
Quality Control DepartmentA f u l l y e q u i p p e d Q C
department ensures that all the
inputs are in accordance as per
defined specifications and
standards.
Ensures that every material
entering the premises is
sampled and tested before
use.
Ensures that product is
meeting the required quality
specifications.
Quality Assurance
Quality Assurance Unit is responsible for
fo rmat ion, implementa t ion and
maintenance of the quality system acrossall units of PDL. Quality assurance follows
global guideline of API, ICH Q7A for the
implementation of the system.
Our Quality PolicyTo achieve Customer Satisfaction by
providing High Quality Products through
Continual Improvement in Processes,
Technology Up-gradation, Competent
Employees and Investment in Research &
Development
Result:
cost effectivenessThe company is a preferred supplier to leading generic and innovator companies in India and abroad.
Parabolic classifies itself in the elite list of pharmaceutical companies that focus on the world class quality with
Attaining the highest levels of quality
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For a pharmaceutical company to sustain,
prosper and grow, it must do more than keep upwith its competitors. Moving ahead with
innovation, process research, optimization,
developments, and identifying breakthroughs
are what the researches are about.
Parabolic is aware that tomorrow's growth
depends to a broad extent on the today's
research, and the fact that the investments in
research will generate long term gains for several
years to come.
Development of innovative processes for
latest generation Beta lactam APIs and Non-
Beta Lactam APIs of world class quality
Bring efficiencies in existing products by
optimization and process research
The research activities at Parabolic encompass:
Filing of Drug Master Files and
documents with the regulated markets.
Development of new products and
chemistry for the molecules that areidentified by marketing for supplies across
the globe.
Evaluation of patents, synthetic route study
through non-infringement process before
starting development work
Providing quality documentation to Quality
assurance, Regulatory affairs for filing DMFs
in the regulated space
Process validation activities jointly by Cross
functional teams
Writing of validation protocols as per
regulatory and GMP guidelines
In the longer term, the exports for the company
are likely to be driven by the regulated sales
coming from the markets of Europe, US, Japan,
Korea and Canada. To increase its access to
these markets and to make its productsacceptable, Parabolic Drugs has been filing the
drug master files for its products across these
markets. With the filing of DMFs, the company
spectacles its strong regulatory hold Till date, the
company has filed over 43 Drug master files.
IP Management work is carried by the cell largely
in areas of filing patent applications, patent
prosecution for granting and doing searches like
Novelty, Infringement, Validity & other State of the
Art searches, which support Marketing &Research department to make their strategy on
patents related issues.
As on date, PDL has filed 23 process patent
applications on of its non-infringing processes.
Patents of the non-fringing processes
being developed for Non-antibiotics
and antibiotics
Growing with Research and Development
Result:
The value of the company gets multiplied by the interplay of its intangible assets, filing strengths, broadly its
Intellectual property.
The company , going forward, will be fetching maximum sales from the regulated markets
The domestic foothold of the company will build further with the efficiencies coming in for the existing range of products.
The company has a diversified basket of as many as 20 products to be launched over the next few years.
Parabolic Drugs Limited | Annual Report 2011-12 11
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Headway in the CRO and CMO spaceBacked by a large support ofinfrastructure, easy to access populationand a cost arbitrage of over 30% incomparison to the regulated world, theIndian CRO market is set to more thandouble by 2016. The Clinical researchmarket is likely to be a USD 1 billionmarket in 2016Parabolic offers CRO and CMO servicesin India with complete integrated R&D,Chemistry, technology and engineeringservices.
PDL has the capability to provideintegrated solutions from route selection,process development, and optimization.Its expertise also entails scalabletechnology development which can bescaled up to multi tones scale.
Our Services
Literature search & novel routescoutingSmall scale synthesis of multi-step &complicated chemicalsCharacterization of molecules &impurities
Route selection & optimization
Method development & validationSynthesis of GMP / non GMPmaterialTechnology transfer
Technology transfer
Small Scale Synthesis
Process R&D
Manufacturing & commercialization
Our Strengths
Non GMP &GMP manufacturing ofintermediates & APISubmission of drug master file /support to clientLong term contract manufacturing
Cost Effectiveness in the services andcommercial scale upOne stop destination for all servicesCompliance with international GMP
and regulatory authoritiesIP protection and confidentialitySupport in the regulatory databaseand documentationCommercial scale up in the largescale facilities
Result:
With all drivers set in place, the company aims to maximize its margins from CRO & CMO Business
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The horizontal growthChanging Lifestyle, an evolving disease pattern and the transition of the global world towards the generics gives an opportunity to ourcompany to grow horizontally- that is to expand our basket of products. From just being an antibiotic company, Parabolic has
diversified into non antibiotic therapies. The company has set up a 27 Acre manufacturing facility dedicated to manufacturing of lifestyle drugs. The company is working on over 15 different therapies for the launch of molecules across the changing disease pattern.
Some of the key therapies that the company is working on :
3
4
To combat the effects of the asthma cascade(bronchoconstriction, inflammation, edema)
To treat diabetes mellitus by lowering glucoselevels in the blood.
The global market for asthma was valued at$34.9 billion in 2011. This figure is projectedto reach $38 billion by the end of 2012 and$47.1 billion in 2017, increasing at a five-year compound annual growth rate (CAGR)of 4.4%.
One of the most lucrative markets in theglobe. Expected to grow over USD 100billion by 2019. Significant growth to beseen from the emerging markets owing totheir changing lifestyle
S.No. TherapeuticCategory
Treatment Market Potential
1 Analgesic To relieve pain The global market for Analgesics is forecastto reach US$34.6 billion by the year 2015.Key factors driving market growth includegraying population, surging number ofsurgical procedures, and increasing numberof cancer and AIDS patients.
2 To suppress abnormal rhythms of the heart(cardiac arrhythmias), such as atrial
fibril lation, atrial flutter, ventriculartachycardia, and ventricular fibrillation.
The global antiarrhythmic market will beworth $3.5 billion in the coming three years
Anti-arrhythmic
Anti-asthmatic
Anti-diabetic
Parabolic Drugs Limited | Annual Report 2011-12 13
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The vertical integration for value maximizationIn the year 2011, the company scaled up the value chain to the
finished dosage business. While the inhouse manufacturing
facility getsthe commercial nod, the company's formulation
business in the domestic market market has been set in place.
The strategy to penetrate the global markets with a basket of
niche products backed by the inhouse API will the way forward
for the formulations business. The company shall bring a wide
product range covering Tablets, Capsules, Injectables, Dry
Syrups and Respiratory capsules across high value therapeutic
segments like Antibiotics, Anti-diabetics, Anti-Asthmatics, Anti-
hypertensive, Hormones, Nasal sprays and solutions etc.
1. Nucleus- A division of Parabolic Drugs for the
domestic formulations space
2. International Formulations Division for the sales of
niche molecules where PDL has a backward
integration
The strategic initiatives are driven by two divisions across the
different verticals:
Way Forward :
Nucleus
International Formulations division
Nucleus has been able to attain a minimum monthly sales
base of INR 10 mio with 178 products within 15 months of
its launch
Going forward, with a basket of 500 products in two
divisions and geographical reach all over India, the
division looks to touch a topline of INR 1000 million in the
period of five years.
Submission of over 100 dossiers across different
parts of world
Developing IPR with over 60 brands registered
in the name of company
The company is investing and going forward shall build its
own USFDA approvable facilities.
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Board of Directors Report
(` in million)
Parabolic Drugs Limited | Annual Report 2011-12 15
The Board of Directors of your Company has pleasure in presenting the Sixteenth Annual Report on theaffairs of the Company together with the Audited Accounts of the Company for the year ended 31stMarch, 2012.
The Financial Results for the year under review vis--vis the financial results for the previous year areas under:
1. Financial Results:
2010-2011articulars 2011-2012Gross Sales 10123.08 6752.97Profit before Depreciation, Interest & Tax (PBDIT) 1406.32 1177.03
Financial Expenses 641.37 407.60
Depreciation 100.54 82.61
Profit before Tax (PBT) 664.41 686.82
Provision for Taxation:
- Current Tax 132.88 136.88
- Deferred Tax 19.41 21.21
Less: Taxation Adjustments for earlier years - 8.48
Profit after Tax (PAT) 512.12 520.25
Profits available for equity shareholders 512.12 520.25Appropriation:
Proposed Dividend on Equity Shares 15.47 30.95
Corporate Dividend Tax 2.51 5.14
Surplus carried to Balance Sheet 494.14 484.16
Earnings per Share(Basic) 8.27 9.43
Earnings per Share (Diluted) 8.27 9.43
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Financial Analysis and Review of Operations: 4. Dividend :
5. Subsidiary :
6. Management Discussion and Analysis Report :
7. Corporate Governance Report :
8. Auditors :2. Directors :
3. Share Capital :
Your directors are pleased to report performance of the The Board of Directors of your Company hasbusiness operations as follows:- recommended a dividend of Rs. 0.25 per share on the Fully
Paid-up Equity Share of the Company.
During the year under review, your Company has registered
Gross sales of Rs. 10123.08 million as compared toDuring the year under review, the Company had floated aRs. 6752.97 million in the previous year showing annew subsidiary Company namely M/s. Ziven Lifesciencesincrease of 49.91 percent.Limited to carry on the formulations business. The present
Further, your Company has registered an export of paid-up capital of that Company is Rs. 1,04,00,000/- out ofRs. 1478.17 million as compared to Rs. 2301.99 million in which your Company holds 90.38% share capital of that
the previous year showing a decrease of 35.79 per cent. A Company. Further, your Company holds 98.99% of paid upfall in the exports has been recorded on account of unrest in capital of Rs. 4,95,00,000/- of Parabolic Research Labsthe global markets, the crisis in the Middle East and in Euro Limited, another subsidiary of your Company. A statementzone. under Section 212 of the Companies Act, 1956 of the
subsidiary companies is annexed hereto. Profitability :
The Company earned profit before depreciation, interest
and tax (PBDIT) of Rs.1406.32 million as againstManagement Discussion and Analysis of financialRs. 1177.03 million in the previous year, showing anconditions and result of operations of the Company for theincrease of 19.48 per cent. The Company earned profitfinancial year 2011-12, as required under Clause 49 of thebefore tax (PBT) of Rs. 664.41 million as compared toListing Agreement are annexed hereto as a separateRs. 686.82 million in the previous year, showing a decreasestatement in the Annual Report.
of 3.26 percent. After making provision for tax of Rs. 152.29million (previous year Rs. 158.09 million), net profit worked
out to Rs. 512.12 million as compared to Rs. 520.25 million
in the previous year showing a decrease of 1.56 percentThe Company aimed to conduct its affairs in an ethicalmainly due to increased cost of imported raw material, duemanner. A separate report on Corporate Governance whichto depreciation in rupee value, and higher interest cost.forms a part of the Annual Report is annexed hereto. A
Fixed Assets : certificate from the Statutory Auditors of the Companyregarding the compliance of conditions of Corporate
The net fixed assets (including work-in-progress) as at 31stGovernance as stipulated under Clause 49 of the Listing
March, 2012 were Rs. 3751.81 million as compared toAgreement is annexed to report on corporate governance.
Rs. 2752.07 million in the previous year.
M/s. S.K. Bansal & Company, Chartered Accountants,Dr. Ram Kumar and Mr. Inder Bir Singh Passi, Directors of
Chandigarh, the Statutory Auditors, are retiring at theyour Company, retire by rotation at the forthcoming Annual
conclusion of the forthcoming Annual General Meeting andGeneral Meeting and being eligible, offer themselves for re-
being eligible, offer themselves for re-appointment. Theyappointment.
have also given their eligibility in terms of Section 224 (1B) of
the Companies Act, 1956. The Audit Committee and Board
of Directors have recommended their appointment for the
financial year 2012-2013 to the members for their approvalDuring the year under review, there is no change in the
in the ensuing Annual General Meeting.Share Capital of the Company.
Sales and Export:
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17
9. Auditors' Report :
15. Statement of Particulars of Employees :10. Audit Committee :
16. Group :
11. Cost Auditors :
17. Directors' Responsibility Statement :
12. Internal Control System :
13. Fixed Deposits :
14. Human Resources / Industrial Relations : 18. Conser vation of Energy, Techno logyAbsorption, Foreign Exchange Earnings andOutgo :
proactive policies for industrial relations, the industrial
relations between the employees and the managementThe Auditors' Report on the Accounts of the Company for remained peaceful and cordial throughout the year at allthe year under review is self-explanatory and requires no offices and units of the Company.comments.
A Statement of Particulars of Employees pursuant to theDuring the year under review, the Audit Committee was provisions of Section 217(2A) of the Companies Act, 1956reconstituted. The constituent members of the Audit is annexed hereto and forms part of this report.Committee are Mr. Nikhil Goel, Mr. Inder Bir Singh Passi,
Mr. Arun Mathur and Mr. Pranav Gupta. Mr. Nikhil Goel is
the Chairman of the Audit Committee. The Committee met
The Company, inter-alia with the following entities,five times during the year. The detailed information
constitutes a group as defined under the Monopolistic andpertaining to Audit Committee of the Company is given inthe Corporate Governance report. Restrictive Trade Practices Act, 1969:
a) PNG Trading Private Limited
b) Parabolic Infrastructure Private LimitedThe Board of Directors had re-appointed M/s. Anil Sharma
& Co., Cost Accountants, Chandigarh, as the Cost Auditor
of the Company for the financial year 2011-12. The Cost
Auditor's report for the financial year 2011-12 will be Pursuant to Section 217 (2AA) of the Companies Act, 1956,forwarded to the Central Government as required under the Directors confirm that:-Law.
a. in the preparation of the annual accounts, the
applicable accounting standards have been followed;
The Company has well defined internal control system. The b. appropriate accounting policies have been selected
Company takes abundant care to design, review and and applied consistently, and have made judgmentsmonitor the working of internal control system. Internal and estimates that are reasonable and prudent so as
Audit in the organization is an independent appraisal to give a true and fair view of the state of affairs of theactivity and it measures the efficiency, adequacy and Company as at 31st March, 2012 and of the profit ofeffectiveness of other controls in the organization. All the Company for the year ended on 31st March, 2012;significant issues are brought to the attention of the Audit
c. proper and sufficient care has been taken for theCommittee of the Board.maintenance of adequate accounting records in
accordance with the provisions of the Companies
Act,1956 for safeguarding the assets of the CompanyDuring the year 2011-12, the Company has not
and for preventing and detecting fraud and otherinvited/accepted any deposits from the public in terms of
irregularities; andthe provisions of Sections 58 A and 58 AA of the
Companies Act, 1956. d. the annual accounts have been prepared on a going
concern basis.
Your Company continues to lay emphasis on continued
qualitative growth of its human resources by providing a
congenial and conducive work environment in
consonance with its belief that the real strength of itsEnergy conservation continues to be an area of majororganisation lies in its employees. During the year theemphasis in our Company. The Company has adopted theCompany employed over 1000 employees. As pursuit of
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strategy of bringing about a general awareness amongst Your Directors also express their deep appreciation for the
devoted and sincere services rendered by employees at allall regarding energy conservation.
levels of operations of the Company during the year and weParticulars with respect to conservation of energy and are confident that our Company will continue to receiveother areas as per Section 217 (1)(e) of the Companies Act, such co-operation from them in future also.1956, read with the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules,1988, are annexed
hereto and form part of this report.
19. Acknowledgement :
Your Directors are pleased to place on record their sincere
gratitude to Government, Financial Institutions, Bankers
and Business Constituents for their continued and valuable
co-operation and support to the Company.
For and on behalf of the Board
Pranav GuptaManaging Director
Vineet GuptaWhole Time Director
Place: Chandigarh
Dated: 14th August, 2012
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Annexure to the Board of Directors Report19
INFORMATION AS PER SECTION 217(1) (e) READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF
BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST
MARCH, 2012:
1. Conservation of Energy :
Your Company has always been conscious of the need to conserve energy and also reduce the cost of production. We hold regular
meetings in our units for discussions on the various energy conservation measures and implement them. Various energy conservation
measures taken during the year include use of condensate water in boilers, separation of high and low pressure air lines, change of
cooling tower fills, improvement of refrigeration system, provision of PSA system in Amorphous plants and Power trading etc. The
details regarding the present energy consumption are furnished below as per form A of the annexure to the rules.
Form-A
A. Power & Fuel Consumption:
Particulars Unit 2010-2011
1. Electricity
a) Purchased
Units KWH in million 16.20 11.33
Total Amount ` in million 98.04 60.96
Rate per Unit /KWH 6.05 5.38
b) Own Generation
i) Through diesel generatorUnits KWH in million 1.47 0.97
Units per litre of Diesel KWH 3.00 3.00
Cost per Unit /KWH 13.66 12.03
ii) Through steam turbine/generator
Units - -
Units per litre of fuel oil/gas - -
Cost per Unit - -
2. Coal
Quantity Ton - -
Total Cost ` in million - -
Average Rate ` /ton - -
3. Furnace Oil :
Quantity K. Litres 20.00 59.70
Total Cost ` in million 1.15 2.84
Average Rate / litre 57.36 47.60
4. Others /Internal Generation
Quantity (Timber & Husk) Ton 8258.41 7230.61
Total cost ` in million 40.85 31.20
Rate/Unit /ton 4946.71 4315.58
2011-2012
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adoption of latest technology in its all plants. The. Technology Absorption : Company has also created specific R & D and otherEfforts made in technology absorption are furnished in cells for studying and analyzing the existing processForm B as under: for further improvement.Form -B b) Particulars of Imported Technology in last five years:A. Research and Development(R&D) : i) Technology Imported : NILa. Specific areas in which Research & Development is ii) Year of Import : Not Applicablecarried out by the Company :
iii) Has the Technology : Not Applicable& D has been carried out in areas of improvement on been fully absorbedroduct, Process, Cost Reduction, development ofnew products like Montelukast, Bortezomib and Anti 3. Foreign Exchange Earnings and Outgo :iabetic Compounds like Sitagliptin, Vildagliptin etc.and increase in Productivity. a) Activities relating to Exports, Initiative to increase :b. Benefits derived as a result of above R & D : The Company exported Semi Synthetic Penicillin (oral andThe Company was able to improve the quality of sterile) and Cephalosporin (orals and sterile) and nonexisting products like Cefuroxime Axetil and develop antibiotic products to various overseas customers. Ournew products Strontium Ranelate, Febuxostat and was products are being exported to more than 50 countriesalso able to reduce the cost of Production. across the globe. The Company has several internationalc. Further course of action : regulatory approvals giving it an access to major marketsWe intend to develop new product, to further reduce the like EU, Japan, US etc.. The Company has understood thecost and improve capacity utilization. need of customer relationships and identified potential
customers across the globe and initiated visit to meet them. Expenditure on R & D : in order to know more about them and their requirements.( in million) The Company has also participated in various2011-12 2010-11 international/National Business fairs in order to interact withCustomers.apital 10.01 49.52
Recurring 933.38 640.16 b) Total Foreign Exchange used and earned:--------------- -------------- ( in million)Total 943.39 689.68--------------- -------------- 2011-12 2010-11Total R& D expenditure as a percentage of turnover: - 1. Earnings 1212.46 1736.17.32% (FOB Value of exports)B. Technology Absorption, Adaptation and Innovation :
a) Effort made: 2. Outgo (CIF Value of imports 1872.94 2631.11and Expenditure in foreign currency)he Company is continuously making efforts for
`
`
B. Consumption Per Unit of Production:Production of Different ProductsElectricity KWH/KG 5.65* 5.38*Furnace OilCoal (MT)Furnace Oil (Litres)Others/Internal Generation(*) Variation due to change in product mix
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21
Information required as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars ofEmployees) Rules, 1975 and forming part of Board of Directors' Report for the year ended March 31, 2012A) Persons employed throughout the financial year, who were in receipt of remuneration for the year which, in the aggregate, was not
less than Rs. 60,00,000 per annum.S No. Particulars Details as on 31.03.2012
Name Mr. Pranav Gupta Mr. Vineet Gupta Mr. Malcolm Rosenthal1. Designation of Employee Managing Director Whole Time Director Executive Vice President
(Global Business Development)2. Remuneration Received Rs. 96,00,000/- Rs. 84,00,000/- Rs. 106,24,294/-3. Nature of Employment Contractual Contractual Non Contractual4. Nature of Duties Managerial Managerial Business Development5. Qualifications & Experience B. Tech B. Tech (Mechanical) B.Sc., MBA
(Mechanical), M.B.A.6. Date of commencement of Employment 01.11.1997 01.11.1997 24.01.20117. Experience 22 years 21 years 26 years8. Age 45 years 43 years 53 years9. Last Employment held Ford Motor Company N. A Austin Chemical Company, USA
B) Persons employed for a part of the financial year, who were in receipt of remuneration for any part of the year, at a rate which, inthe aggregate, was not less than Rs. 5,00,000 per month.S No. Particulars Details as on 31.03.2012
Name Dr. P B. Deshpande Mr. Seetaraju Gembali1. Designation of Employee Chief Scientific Officer President-Formulation Business2. Remuneration Received Rs. 26,24,398/- Rs. 24,51,386/-3. Nature of Employment Non Contractual Non Contractual4. Nature of Duties Scientific Research Formulation Business5. Qualifications & Experience M.Sc., Phd M.Pharm( Pharmaceutics) and
Diploma in marketing management6. Date of commencement of Employment 02.08.2010 05.12.20117. Experience 27 years 23 years8. Age 57 years 48 years9. Last Employment held Emcure Limited, Pune Mid Pharma and Promed Research, JordanNotes:1. Remuneration includes salary and other perquisites (in case of Mr. Pranav Gupta and Mr. Vineet Gupta)2. Remuneration includes Salary, Other Allowances and Provident Fund ( in cases of rest of the employees)3. Mr. Pranav Gupta and Mr. Vineet Gupta are related to each other.4. Mr. Pranav Gupta and Mr. Vineet Gupta are holding 824,100 and 701,550 Equity Shares of the Company respectively .5. Dr. P B. Deshpande resigned from the Company w.e.f. 14th September, 2011.
Statement of Particulars of EmployeesParabolic Drugs Limited | Annual Report 2011-12
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1 2 3 4 5 6 7 8Parabolic 31.03.2012 2,950,000 98.33% Nil Nil N.A. N.A.
Research ( Rs. 10 each)
Labs
Limited
Ziven 31.03.2012 399,996 79.99% Nil Nil N.A. N.A.
Lifesciences ( Rs.10 each )
Limited*
Statement Pursuant to Section 212 of the Companies Act, 1956 Relating to Subsidiary Companies:Name ofSubsidiaryCompany
FinancialYear endingof theSubsidiary
Number ofShares held( Face Value)
Extent ofHolding
For Financial Year of the Subsidiary For the Previous Financial Years since itbecame a Subsidiary
Profit/(Losses) so far it
concerns the members
of the Holding Company
and not dealt with the
books of Accounts of the
Holding Company
(Except to the extent
dealt within Col.6)
Profit/(Losses) so far it
concerns the members
of the Holding Company
and dealt within the
books of Accounts of the
Holding Company.
Profit/(Losses) so far it
concerns the members
of the Holding Company
and not dealt within the
books of accounts of the
Holding (Except to the
extent dealt within Col. 8)
Profit/(Losses) so far it
concerns the members
of the Holding Company
and dealt within the
books of accounts of the
HoldingCompany
Place: Chandigarh
Dated: 14th August,2012
Note: *The financial year of the Ziven Lifesciences Limited was from 01.11.2011 to 31.03.2012.
For and on behalf of the Board
Vineet GuptaWhole Time Director
Pranav GuptaManaging Director
Vipin GuptaVice President & Company Secretary
R. C. GoyalSenior Vice President (Finance)
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Management Discussionand AnalysisGlobal economy and Indian ScenarioOver the past couple of years, the economic developmentacross the globe has been volatile; it may have been a result ofnatural disasters, a volatile belief of investors, the crisis with theglobal giants or the changing global environment. The year 2011in particular has really been weak. Despite all these adversities,the economic news during the first half of 2012 has beenpositive. Significant structural , fiscal and monetary steps inEurope during the first half of 2012 have contributed toimprovements in the marketing sentiment. On an assumptionthat the conditions in the European Union will not worse further,as per the world bank, global GDP is projected to increase 2.5percent in 2012, with growth accelerating to 3.0 and 3.3 percentin 2013 and 2014.Output in the Euro Area is projected to contractby 0.3 percent in 2012, GDP in developing countries is projectedto expand 5.3 percent in 2012.However, in the global economy, India is projected to see a fastergrowth of 6-7 per cent this fiscal, on the back of higher savingsand investment rates, even as most of the Asia-Pacificeconomies are likely to expand at a slower pace.In the FY 12, India witnessed a tough time to achieve its growthtargets and control on inflation. The Economic growth slightlydeclined to 6.9% in FY 12, although it remained one of the fastgrowing global economies.The Pharma IndustryThe Indian Pharmaceutical space is gaining its position acrossthe globe, as per a report by PWC, the pharma market in India islikely to cross USD 70 billion in sales by 2020(current size of USD11 billion). The country is is likely to bank on the opportunity of
domestic growth. The domestic pharmaceutical market (IPM)
grew 21.9 per cent to record sales of Rs 5,369 crore (US$ 1.01
billion) in March 2012, as compared to the previous year,
according to an analysis by a market research firm. Amongst the
export markets, India is likely to push Japan for further opening of
the pharmaceutical sector. This would help the domestic
industry to leverage Comprehensive Economic Partnership
Agreement (CEPA) and increase its share in the Japanese
market. Indian pharmaceutical industry would gain significantly
from the pact as Japan, the world's second largest market, had
agreed to cut duties on imports of Indian generic drugs. India
has also looked into joint ventures (JV) with Russian
pharmaceutical companies to manufacture 500 drugs in Russia
and to supply them in markets of Russia, Belarus and
Kazakhstan. The growth will also be driven by the largest number
of merger and acquisitions (M&A) in the pharmaceutical and
healthcare sector. The drugs and pharmaceuticals sector has
attracted foreign direct investments (FDI) worth US$ 9,173.50
million between April 2000 to February 2012, according to the
latest data published by Department of Industrial Policy and
Promotion (DIPP).
India tops the world in exporting generic medicines worth US$ 11billion. The Generics will continue to dominate the market while
patent-protected products are likely to constitute 10 per cent of
the pie till 2015, according to McKinsey report 'India Pharma
2015 - Unlocking the potential of Indian Pharmaceuticals
market'.
Indian generics constitute nearly a fifth of global supplies, as per
a press release dated December 28, 2011. India has world
renowned capacity in producing low cost, high quality bulk and
generic drugs.
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Indian pharma industry in the 1990s, when the rising healthcare
costs in many developed countries forced them to seek the
cheaper generic drug option. Thus, the Indian pharma industry
was able to exploit the enormous generic opportunity that was
spawned.
In the near-term, the generic opportunity will continue to lure
more companies. And, with competition intensifying, generic
drugs will see greater price erosion.
For sustaining growth, Indian drug-makers will look at newer
avenues such as entering niche segments, building
relationships with global pharma for joint research and
development and widening distribution networks through
marketing alliances. Other potential thrust areas include bio-pharmaceuticals, contract research and manufacturing, and
new drug research.
The low cost of manufacturing renders India as an attractive
destination for contract research, and the availability of a
large patents pool makes it appealing for clinical trials, which
contributes the most, in terms of revenue, to the contract
research segment. An increased presence in contract
research will also help them build expertise to move up the
value chain and engage in new drug development.
Indian industry's R&D capabilities currently lie in reverse
engineering drugs and in process chemistry
The high-risk high-return field of new drug research holds
tremendous potential for Indian players.
Company perspective
Established in 1996, Parabolic Drugs started its operations in
1998 as a small manufacturer producing for few of the clients in
the region. From being a pharmaceutical ancillary in the initial
years to a leading pharmaceutical company in 2012,Parabolic
has emerged as a preferred partner and supplier to global
innovators and generic companies in the antibiotic and non-
antibiotic segments.
Over the years, the company has strengthened its competitiveposition in the antibiotics and non-antibiotic APIs, Research and
Development, and CRAMS space. It has registered a five year
CAGR of over 35% while establishing a basket of over 50 APIs
and various intermediates being serviced to about 800
customers. The company has also created a pipeline of 20
generic drugs across the niche therapies.
In the year 2011, the company has stepped up in the value chain
by foraying into the formulations segment. The Company has a
clear vision to be a fully integrated Pharmaceutical Company
The Ministry of Commerce has proposed an ambitious Strategy
Plan to double pharmaceutical exports from US$ 10.4 billion in
2009-10 to US$ 25 billion by 2013-14. The Government has also
planned a 'Pharma India' brand promotion action plan spanning
over a three-year period to give an impetus to generic exports
Key Drivers to Indian Growth
Competent workforce: India has a pool of personnel with high
managerial and technical competence. It has an educated work
force fluent in English. Professional services are easily available.
Cost-effective chemical synthesis: Its track record of
development, particularly in the area of improved cost-beneficial
chemical synthesis for various drug molecules is excellent. It
provides a wide variety of bulk drugs and exports sophisticated
bulk drugs.
Legal & Financial Framework: India has an old democracy and
hence has a solid legal framework and strong financial markets.
There is already an established international industry and
business community.
Consolidation: The international pharmaceutical industry is
finding great opportunities in India. The process of
consolidation, which has become a generalized phenomenon in
the world pharmaceutical industry, has started taking place in
India.
Industry classification
Way forward
The Indian pharmaceutical industry's emergence on the global
landscape as a strong generics player is largely due to the Indian
Patents Act-1970, which allowed only process patents in
pharmaceutical space. The process patent regime has since
then enabled pharmaceutical companies to keep the cost of
medicines at affordable levels, therefore resulting in further cost
reduction by reverse engineering. Although India shifted to the
product patent regime in 2005, the capabilities developed during
the past two decades became a competitive advantage for the
IndianPharmaceuticalIndustry
Market SizeUSD 4.8 Bio Market SizeUSD 2.5 Bio Market SizeUSD 2.3 Bio Market SizeUSD 200 mio
ActivePharmaceuticalIngredients(API)Contract ResearchAndManufacturingService (CRAMS)
Formulations Biosimilars
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2. To develop products and chemistry for the newmolecules
as identified by marketing. This includes the evaluation of
patents, synthetic route study through non-infringement
process before starting development work.
3. To enable the company in sustaining the cost
competitiveness in market by continuous improvement in
the existing processes.
4. To provide quality documentation to Quality assurance,
Regulatory affairs for filing DMFs in the regulated space
5. Process validation activities jointly by Cross functional
teams.
6. Writing of validation protocols as per regulatory and GMPguidelines
Contract research and Manufacturing services at
R&D
PDL offers Contract Research and manufacturing Services
(CRAMS) in India and services to Global science Industry. With
complete integrated R&D infrastructure, Parabolic (PDL)
positions itself as one of the most competitive players.
In CRAMS, PDL has the capability to provide integrated solutions
ranging from route selection, process development, and
optimization to manufacturing. Its expertise also involves
providing Engineering solutions for manufacturing at multi tonscale.
Key achievements in FY 12
- Successful execution of about 35 projects till date
- Alliance with top generic and innovator companies in
Europe, US and Japan.
- Successfully completed the EHS and CGMP audit by
innovator companies from US and Japan.
Intellectual Property Research (IPR)
PDL is fully equipped to encounter the challenges of patent
infringements in Pharmaceutical Industry. PDL has a well-
qualified and experienced team to facilitate the development of
intellectual wealth and support to identify new potential markets
for API & formulations across the globe. So far, the Company has
filed has twenty four Process patents.
IPR Vision of the company
To ensure non-infringing process for the future Grid
molecules in different
providing world class pharmaceutical products and services,
from development of API intermediates to API contract
manufacture to supplying finished formulations, for both generic
and Innovator companies across the globe.
The company is going ahead with the vision of being a fully
integrated pharma company having backward and forward
integration, world class infrastructure, R&D strengths, diversified
product basket across different therapeutic segments and
Intellectual Property Rights in the form of DMFs, and Patents for
novel processes.
Parabolic continues to build on its strengths and is
fundamentally prepared for the challenges from the changing
business and global economics.
Business Model
Research and Development
The Research and development wing performs anessential role
in the sustained growth of the company. Backed by world class
infrastructure and equipped with all modern facilities the R&D
team comprises a strength of around 75 qualified Ph.D and M.Sc
scientists. Their activities range in development of cost efficient
non infringing synthetic process, analytical testing, and
optimization with quality documentation.
Since R&D is considered as the mainstay for the organization,
therefore a significant focus of the management rests on it. In
today's competitive Pharma industry world, the research and
development wing has the following focal points for itsoperation:
1. To bring in efficiencies in the process chemistry by
a. O pt i mi z at i on o f r ea c ti on pa r am ete r s an d
methodologies
b. Optimization by backward integration of the key
intermediates
c. Optimization by recoveries and recycling
d. Down steam processing by products and green
chemistries
25
Active PharmaceuticalIngredients
Finished DosageFormulations
Researchand Development
BusinessModel
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Therapeutic areasIP Generation by filing new process, new
polymorphic form of different molecules
Trace out business potential/market for the Grid molecules
IPR Capabilities
Patent analysis via prior art search
Technology assessment
Patentability assessment
Patent application drafting and filing
Licensing support
IP overlap analysis
Competitor analysis and IP monitoring
Active Pharmaceutical Ingredients
The Active Pharmaceutical Ingredients manufacturing division
for the company plays the fundamental role in the revenues. The
company drives its API business through its large scale
manufacturing facilities dedicated for different verticals and
covering therapeutic segments. Besides, the in-houselocation,
the company also has strategic alliances with different world
class facilities for catering to the demand of its customers.
Over the years, the company has invested in shaping a world
class infrastructure that enables it to produce best in category
products with superior quality and excellence. The company
today operates out of four in-house locations that comply with
international regulatory standards and are duly approved by
International regulatory agencies.
Manufacturing Facilities for APIs
A 27 acre site with nine manufacturing plants that enables it to
produce wide range of latest generation cephalosporin APIs
and intermediates.
A dedicated quality control and quality assurance unit,
Solvent recovery units, three R&D laboratories, a pilot plantfor scale-up of new technologies developed by our in-house
R&D, three boilers and utilities, two warehouses and in house
healthcare centre
Regulated Approvals:EU GMP, WHO GMP, Japanese PMDA,
Korean FDA, OHSAS 18001-2004, ISO 14001-2004
Penicillin Facility at Panchkula(PDL II)
Two dedicated blocks for the manufacturing of wide range of
oral penicillin products including niche penicillin APIs such as
Bacampicillin, Sultamycillin and Pivampicillin
Cephalosporin Facility at Derabassi(PDL I)
Complies with all GMP requirements and has complete utility
support with ETP, an in-house liquid nitrogen tank, and a GMP
compliant water systems and chillers
Regulated Approvals: WHO GMP, USFDA for 6-APA
R&D Centre at Barwala(PDL III)
Equipped with specialized laboratories of International
standard following cGLP
Six chemical research lab, each lab having 12 fuming hood
Dedicated Analytical lab with instruments like HPLC, Prep.
HPLC, XRD, GC with Head space, GC, LC-MS, IR
Spectrophotometer, UV-Visible Spectrophotometer,
Polarimeter, Auto Titrator and Lypholizer
Non- Antibiotic Facility at Chachrauli(PDL IV)
Pilot plant commissioned for manufacturing non-antibiotic
APIs in the new therapies such as CVS, CNS, oncology,
antithrombotic, anti-diabetic and pain management.
Includes QA/QC block, pilot plant, manufacturing plant with
five production streams, separate finished goods processing
section, solvent recovery, utilities, effluent treatment plant,
canteen, stores, warehouses, hazardous reaction block and
engineering and project sections.
SegmentsAntibiotics-Cephalosporin
Parabolic started as a contract manufacturer in the Penicillin
space in 1998 and it has journeyed as a leading antibiotic
manufacturer now. The company in the antibiotic segment has
created a presence in over 50 countries.
In the Antibiotics, the company banks on the following strengths:
Two large scale cGMP compliant API manufacturing facilities
Plants audited and approved by leading MNCs and
regulators including EUGMP, KFDA, Japanese PMDA and
WHO
Strong Quality Management systems with Incoming/
Outgoing quality controls
Presence in over 50 countries including the regulated
markets of Europe, Japan and Korea
In-house research and development capabilities for
sustaining market leadership by means of cost, quality and
optimization
Experience and strength to partner the leading innovator
and generic companies across the globe
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In house sterile manufacturing plant built to International
cGMP specifications and conforming to USFDA standards.
The entire operations are in closed condition without human
intervention using manufacturing line of BADO from OMCA,
Italy.
Filed over 39 Drug Master files across Europe, Japan, USA,
Canada, Japan and Korea
World class EHS management system driving EHS practices
Key Achievements in FY 12
Commissioning of multi-purpose block 3 with 120 TPA
capacity and Spray dryer for augmenting Amorphous in
September 2011 Commissioning of New Sterile facility in March 2012 with fully
automated International BADO machinery for World class
quality and compliance. Adds 120TPA capacity to Sterile
basket
Audit from the Japanese companies for inspection from the
Japanese regulators for PMDA
Successful Approval from Korean Food and Drugs
Authority(KFDA) on Cephalosporin
Audit and visit from the European customers for EUGMP
approval of the new Sterile facility
Supply to Large Indian customers for their Finished Dosage
requirement , thereby enabling a trigger for USFDA
inspectionFiling of 7 drug master files across EU, US and
Japan. The total filings till date are 43
Antibiotics- Penicillins
In the penicillin space, the company has successfully cleared
audit and inspection from the European regulator which has a
potential business in FY 13. The company is in negotiations with
different customers in EU for regulatory business in Penicillin
segment.
Non-Antibiotics (Life Style Drugs)
In December, 2011, the company successfully initiated the
production in its green field project for the life style drugs and
non-antibiotics. With a pipeline of over 17 new drugs in different
therapeutic segments, the company is expecting sales in FY 13.
The Lalru facility is spread across 27 acres and includes QA/QC
block, pilot plant, manufacturing plant with different production
streams, separate finished goods processing section, solvent
recovery, utilities, effluent treatment plant, canteen, stores,
warehouses, hazardous reaction block and engineering and
project sections.
Therapies being worked intoa. Anti-Thromboticb. Anti-Osteoporoticc. Anti-Diabeticd. Anti-Hypertensivee. Neuro-Muscular Blocking Agentf. Antineoplasticg. Analgesich. Treatment of Hyperuricemia & chronic gouti. Muscle Relaxant (Skeletal)j. Chelating Agent (iron)
Herbal NutraceuticalsParabolic has been successful in launching its Herbalnutraceutical molecules across different markets in the globe.PDL has a Long term Strategic Tie up with Herbal APIManufacturer for the sales and marketing of herbalNutraceuticalsKey Herbal APIs offered are:
27
ReserpineUsed in Antihypertension, treatment of insanity
10 DAB IIIIt is a precursor of Paclitaxel and Docetaxel, which is usedfor cancer treatment
RaubasineUsed for treatment of high blood pressure and CerebralHypoxia
YouhmbineUsed as both an over the counter dietary supplement inherbal extract.
ColchicineAn Anticancer natural product
ThiocolchicosideUsed as Anti- inflammatory muscle relaxant
Calcium SennosideUsed in the treatment of constipation, working through astimulation of intestinal peristalsis.
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Quality Control and Quality AssuranceAt Parabolic Drugs, Quality is not just a compliance rather it is ahabit. Quality at Parabolic is an integrative philosophy ofmanagement for continuously improving the quality of productsand processes. It functions on the premise that the quality ofproducts and processes is the responsibility of everyone who isinvolved with the work at Parabolic. It is believed that theinvolvement of management, workforce, suppliers, andcustomers, shall enable the company to meet or exceedcustomer expectations. Quality Unit of Parabolic includesQuality Assurance and Quality Control empowered withindependent decision making authority.A dedicated Quality Control and Quality Assurance departmentexists at PDL for all its facilities. PDL is proud to have itsinfrastructure created in line with the stringent quality guidelinesand GMP framework. It is committed to compliance standardsand is focused to meet the norms set by different pharmacopeia,and stringent specifications of clients. There are over twentydifferent MNCs and large formulators that have approved thefacilities of PDL.Environment Health and SafetyPDL engages & encourages its employees to adopt & complywith safety standards, safe practices and safe procedures on thejob to prevent occupational health & safety related problems.At PDL:We strongly believe that working safely is a way of life All our business decisions have inherent consideration for
safety We believe that all our employees shall have an attitude of
responsibility and be willing to work as a team for the benefitof Safety of self and of their co workers.
Corporate Social ResponsibilityParabolic Drugs considers the interests of society by takingresponsibility for the impact of its activities on customers,employees, shareholders, communities and the environment inall aspects of its operations. Its contribution to the community arein the areas of health, education, improving village infrastructure,environment (effluent treatment, tree plantation, treatment ofhazardous waste), and miscellaneous activities such ascontribution to other social development organisations.The employees and management of Parabolic also participatesin the welfare programmes, both at the personal andprofessional level.
Major initiatives
villages across its different locations. Over the years, this hasbeen a regular practice for the company as an initiativetowards society
Towards the noble cause, the employees of the companytake initiative in the form of blood donation.
Towards the greener environment, employees at PDL havetaken the ownership of creating green belts across differentregions
Sponsoring major initiatives and social events to fosterIndia's rich culture and heritage
Human Resource and Intellectual WealthAt Parabolic, it is believed that the future source of sustainablecompetitive advantage is largely through investment in thepeople, through the investment in building their capabilities.The Company emphasizes on continued qualitative growth of itshuman resources by providing a congenial and conducive workenvironment in consonance with its belief that the real strength ofits organisation lies in its employees.HR VisionTo achieve organizational excellence by implementing HRPractices that align Human Capital with Corporate Vision andimprove their satisfaction level and have positive impact onoverall business performance.HR MissionTo create a value based organization by inculcating a culture oflearning, creativity & team work and aligning the aspirations ofour people with the business priorities which will ultimately leadto the development of an empowered, responsive andcompetent human capital.HR Goals1. To formulate and implement sound HR Practices and
Systems.2. To foster an extremely open, congenial, innovative and
enthusiastic work culture.3. To develop and sustain core values and work ethics4. To re-orient attitude of employees to cope with the changes
required to establish an ethos of Quality and HighPerformance.
The company organized several free health checkups for the
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5. To enhance productivity of human resources by developing
efficient and effective systems of manpower planning,
succession planning, selection, placement, training &
Development and effective performance management
system.
During the period under review, there was no incident of work
stoppage or loss of production due to IR related issues
Formulations
FY 12 marks the presence of Parabolic in the formulations space.
The company has a vision of being a vertically integrated
pharmaceutical company.
The strategic initiatives are driven by two divisions across the
different verticals:
1. Nuclues- A division of Parabolic Drugs for the domestic
formulations space
2. International Formulations Division
Developments in NUCLEUS
FY 12 marks the presence of Parabolic in the formulations space.
The company's under its division NUCLEUS has ensured a PAN
India presence with about 500 Stockiest, 20 distributors and
wide basket of 170 products in different dosage form. The
company clocked a topline of about 8 Cr in FY 12. Going forward,FY 13 will further cement Nucleus's presence in the domestic
market.
Developments in the International Formulations
Meanwhile, the company's own plants get commissioned; it has
identified and finalized different WHO GMP approved
manufacturing sites to initiate the business. The focus is on the
therapeutic segments where PDL has backward integration.
Developments in FY 12:
a) Registration of about 50 brands in India and Internationally
b) Submission of about 80 dossiers for registration (FY 13
target of 150)
c) Contracts finalized with key distributors in APAC
d) Loan License agreements with six WHO GMP approved
manufacturing sites
Business outlook for FY 13The company shall drive its topline and bottom-line thoroughits sustainable business model comprising of the activepharmaceuticals, contract research and finished dosage
business. The company shall continue to build growth
momentum through its partner in the strategic alliances
The commissioning of new sterile and amorphous facility
completes the API expansion that was started some years
back. With over 1000 Tons annual capacity, backed by the
international regulatory approvals, the company looks to
build its turnover on exports, preferably the regulated
exports. FY 13 may also bring some achievements to the
company with the approvals from Japanese PMDA and the
USFDA
With a foothold in over 50 countries, the company looks to
develop its market presence and strengthen its revenues
from the markets of Japan, Korea, China, CIS and the
European markets
With over 20 molecules to be launched in the life style space,
the non-antibiotic facility at Lalru is likely to contribute and
add value to the topline and bottomline. This adds to the
The company would continue its research on identified life
style therapies as to expand its basket of products in the new
segments.
The custom synthesis, contract research activity based on
literature search, novel route scouting, Small scale synthesis,
characterization of molecules to drive the revenues for
CRAMS
Developments in the process R&D projects related to route
selection and optimization, method Development and
Validation and synthesis of GMP /Non GMP material
Catering to innovators needs of large scale contract
manufacturing
PDL shall continue to explore new opportunities in the off-
patent pharmaceutical regime through its ambitious filing
plans.
In the formulations space, the company looks to add
revenues from the formulations out of its three pronged
strategy of domestic formulations, International formulations
and branded generics(Ziven Life Science)
Risk and its Management
The pharmaceutical industry is exposed to various factors that
may risk the normalcy of business operations. The micro and
macro-economic variables bring various operating challenges
that directly or indirectly affect our pharmaceutical industry. To
eliminate a significantimpact of these factors, a proactive
approach to risk identification and management holds the key to
the sustainability.
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Your company is distinctively placed for risk management and
has set in place key risk management policies. The
managementadministers these policies and ensures that the
operations combat the potential threats and the risk is
minimized.
Within the pharmaceutical space, there are certain risks which
are natural and each company is exposed to it. Some of them
are:
Slowdown in the world economy
Risk: Slowdown in the economy
Impact: The world is experiencing an economic slowdown since
the financial crisis of 2008-2009. Furthermore the prevailing debtcrisis across the EuropeanUnion has exposed the world to
another wave of slowdown. Parabolic Drugs, being a
pharmaceutical exporting company is exposed to this risk
Mitigation Strategy: The Companyhas a basket of diversified
products, and after the launch of its non-antibiotic range of
products, the company's product acceptance is wide, and it can
further expand its presence across new territories. Further, the
company has also received regulatory approvals from the Asian
pharmaceutical giants like Japan and Korea, this would derisk
the company's standalone reliance on the European markets
Volatility in the Indian Currency
Risk: The Indian currency against the US Dollar has depreciated
by about 14% in FY 11-12
Impact: The sharp changes in the valuation of the rupee vis-a-vis
the dollar in the recent times, superimposed on an overall
negative trend of depreciation, negatively impacts the earnings
of the company. A year ago the rupee stood at a strong 44.50 to
a dollar, followed by showing signs of weakness and sliding to a
low of 54/US$. The company is a net importer and a further fall in
Indian Currency will affect the margins and profitability
Mitigation Strategy: The Company has a well-structuredpolicy to
review and mitigate the exchange rate risk. Although the
company uses appropriate hedging tools to diminish the impactof currency risk, in the long term the company looks to expand
the size of exports as to build a natural hedge to set off the
impact.
Erosion of the selling prices
Risk:There has been a substantial fall in the prices of antibiotic
range of molecules. With the increasing pressure of
governments across the world to reduce the health care cost, the
world is moving towards economical alternatives to the branded
products. The Genericization, along with an opportunity to
launch new drugs, also adds to the pressure of falling prices in
old APIs
Impact: Parabolic Drugs has larges capacities in the antibiotic
space, and it has the major reliance on the antibiotic APIs
Mitigation Strategy: As a long term strategy to diversify and
mitigate the individual risk of antibiotics, the company has
forayed into non antibiotic range of molecules. These molecules
will not only derisk the reliance of the company on antibiotics, it
will also give an impetus to the margins
Competitive pressure
Risk: Increasing competition in the pharmaceutical Space
Impact: In 2012-13, CRISIL research expects the pharmaceuticalindustry to grow by 16-18 per cent y-o-y to $36- 37 billion. Such
bright industry prospects would encourage huge competition
not only on the domestic front but also from multinational
companies.Competitive pressure in the domestic market is likely
to be sustained as MNCs become more aggressive and
domestic companies leverage on their expanded field force.
Potential regulatory interventions could further put pressure or
hurt pricing.
Mitigation Strategy: PDL has uniquely positioned itself in the
market with introduction of new and improved molecules,
expansion of the production capacity meeting international
standards and improving the existing product range, thereby
having an edge over the competitors.
Human resource management
Risk: High attrition rate in the pharmaceutical space
Impact: Enhancing productivity, quality and reliability is a result
of highly motivated and professional workforce. Since the
attrition rate in this industry is very high, retaining the pool of
talent is a major challenge.
Mitigation Strategy: PDL has always nurtured a policy to promote
a vibrant work culture based on innovation and capability
building and performance measurement. HR has alwaysemphasized on talent attraction, retention and staff welfare. At
PDL, the individual rewards on performance are aligned to the
organization and business unit performance.
Review of Financial Performance
Owing to thevolatile global economic environment, the year
2011-12 has been challenging for the company. The company
has accomplished the gross turnover of INR 10123.08 million (a
growth of 49.91%) for the year 2011-12. However due to the high
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interest rates, the depreciated Indian rupee, the company
recorded the net profits of INR 512.12 million, short by 150 bps
over previous year. The size of the balance sheet has gone up to
INR 13143.77 million
Sales and Revenue
The revenue figures for the FY '12 stands at INR 10,123.08 million
as against INR 6,752.97 million in the FY'11 which accounts for a
robust 49.9% growth over the previous year . The growth has
largely been achieved by the :
Enhanced production capacity in Antibiotic APIs
Introduction of new molecules in the key regulated and non-
regulated markets.
Entering new vertical space- Herbal APIs and the domestic
formulation
Launch of 4th generation molecules in Turkey.
Cost and expenses
The operational cost of business for the FY'12 stands at INR
7,669.9 million, against the INR 5,080.43 million for FY 11,
thereby an increase of 50.96%.
Material cost for FY'12 has been INR 6,963.15 million, whereas
the same for FY'11 was INR 4,513.07 million thereby showing
54.28% increase over the previous year. Due to volatility in theIndian Rupee, the cost of imported raw material has significantly
gone up leading to inflated material cost.
Personnel expenses for the FY'12 has increased to INR 641.37
million from INR 407.60 million in FY'11 showing an overall
increase of 57.35%. With the commissioning of the new plant at
Lalru, in addition to the new sterile and amorphous facility,
investments in Human resource has significantly gone up.
The remaining expenses including Administration expenses,
selling and distribution expenses for the FY'12 stand at INR
481.59 million against INR 398.06 million in FY'11. The reason
owing to the 20.98% increase has been a result of increased
expenses on manufacturing due to increase power cost,
consumables and spares,rise in general administration
expenses resulting from new plant.
The financial cost of the company has risen significantly to INR
641.37 million in FY'12 from INR 407.60 million in FY'11, showing
a 57% increase. The increase in base rate by the respective
banks has raised the financial cost of the company.
The EBIDTA margins for the company stand at INR 1,614.32
million in the FY'12 as compared to INR 1,271.45 million in the
FY'11 thereby showing an increase of 26.9%.
Profit after tax (PAT) stood at Rs. 512.11 million, which is
marginally (1.5%) less than the previous year of Rs 520.24
million.
Balance Sheet
The size of the balance sheet has grown to INR 13,143.77 million
in FY'12 from INR 10,672.51 million in FY'11 recording a 23.15%
growth. The capital employed in the business is Rs. 8,018.32
million in FY'12
Reserves and surplus have registered a growth of 15.5% from
Rs.3,171.08 million in FY'11 to Rs.3,665.21 million in FY'12.
The long term and short term borrowings of the company has
increased from Rs. 4,513.64 million to Rs. 5,223.88 million in
FY'12 which accounts for a 16% increase.
Gross block of the company increased to Rs. 3,787.46 million in
FY'12 from Rs. 2,808.8 million in FY'11 registering a 34%
increase.
Investments registered a decrease of 37% from Rs. 56.73 million
in FY'11 to Rs. 35.66 million in FY'12.
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Report onCorporate Governance
1. Company's Philosophy on Code of Corporate Governance:This report on Corporate Governance forms part of the Annual Report. Corporate Governance refers to a combination of laws,regulation, procedures, implicit rule and good corporate practices that ensure that a Company meets its obligations to optimizeshareholders' value and fulfill its responsibilities to the community, customers, employees, Government and other segments ofsociety. Parabolic Drugs Limited (Parabolic) is committed on adopting the best practices of Corporate Governance as manifestedin the Company's functioning to achieve the business excellence by enhancing long-term shareholders' value. Parabolic iscommitted to achieve the best standard of Corporate Governance through complete transparency in its dealings with thema