pharmaceutical industry analysis of india

8/11/2019 Pharmaceutical Industry Analysis of India

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ABSTRACT

This document contains supporting data for the presentation on Financial Statement Analysis

for GlaxoSmithKline Pharma Ltd and Sanofi India Ltd. (formerly Aventis Pharma) for the period

of five years i.e. Dec’09 to Dec’ 13. The team has obtained publicly available annual financial

data from www.indianinfoline.com website.

INTRODUCTION

About Pharmaceutical Industry in India

Pharmaceutical industry in India has witnessed a resilient growth over the past few years with a

turnover of US $ 1 billion in 1990 to US $ 20 billion. India have exported worth US $ 8 billion

drugs to 200 plus countries around the globe. The industry ranks 3rd

in terms of volume and 14th

in terms of value globally.

Company Profiles

GlaxoSmithKline Pharma Ltd. was incorporated in 1924 in India and is one of the world's

leading research-based pharmaceutical and healthcare companies. Globally, the company has a

£ 26.4 billion, leading, research-based healthcare and pharmaceutical company. In India, they

are one of the market leaders with a turnover of Rs. 3021 crore and a share of 4.2%. The

company's product portfolio includes prescription medicines and vaccines. Their prescription

medicines range across therapeutic areas, such as anti-infective, dermatology, gynaecology,diabetes, oncology, cardiovascular disease and respiratory diseases.

Sanofi India Ltd. was established in May 1956 under the name Hoechst Fedco Pharma Private

Limited. It has aligned itself with India's healthcare needs by building expertise, capability &

capacity, through continued investments, strategic partnerships, and a shared commitment

towards patients. Sanofi dispenses medicines for the nursing of patient in various fields as

cardiology, thrombosis, oncology, diabetes, central nervous system, internal medicine and

consumer healthcare.

Sources: Department of Pharmaceutical Website, GSK Website and Sanofi Website, accessed on

10th Aug’14

http://pharmaceuticals.gov.in/aboutus.pdf

http://www.gsk-india.com/about-company.html

http://www.sanofiindialtd.com/l/pw/en/layout.jsp?scat=9D37C496-6764-4E76-BE39-

20B4C5D6D1A6

http://e/IMT/Term%20I/FRA/www.indianinfoline.com







http://www.sanofiindialtd.com/l/pw/en/layout.jsp?scat=9D37C496-6764-4E76-BE39-20B4C5D6D1A6










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FINANCIAL ANALYSIS OF THE COMAPNIES

Profit and Loss Account Analysis:

Referring to above picture, total income for all three have increased i.e the two companies and the

industry. Over the period of 5 years, for Sanofi it has increased by 63% and for GSK Pharma by 37%

approx. Clearly it states that Sanofi India has performed better in terms of growth than GSK Pharma.

Total Expenditure means spending done by the company in manufacturing the finished goods.

Gathering the analysis from above chart, over the period of 5 years, GSK Pharma raised its

expenditure by 63% and Sanofi India by 56%. Taking total expenditure and total income

increase into account, Sanofi India has outperformed GSK Pharma in P&L Analysis.

0

5000

10000

15000

20000

DEC 09(12) DEC 10(12) DEC 11(12) DEC 12(12) DEC 13(12)

1267.93 1420.54 1972.12 1906.79 2077906.34 1,032.03 1,151.52 1,270.16 1,420.43

8,148.72

14,217.93

9,850.708,905.19

18,321.27

Total Expenditure

Glaxo Sanofi Industry

2057.93 2279.56 2591.92 2771.2 2826.211,165.22 1,364.40 1,467.07 1,623.14 1,901.57

10,001.69

14,180.5812,349.97

11,449.32

18,852.62

0

5000

10000

15000

20000

Dec 09(12) Dec 10(12) Dec 11(12) Dec 12(12) Dec 13(12)

Total Income

Glaxo Sanofi Industry



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Profit before Depreciation and Tax v/s Profit before Tax

Checking the data from above 2 graphs, Sanofi India assets depreciation rate has sharply risen

while on the other hand GSK Pharma shows constant depreciation on their assets. A conclusion

that can be drawn can be that Sanofi India might have bought new assets and also might havechanged their method for evaluating depreciation to WDV Method. This conclusion can be

drawn because the assets for both the companies increases approximately at the same rate. In

2013, the gross profits for GSK Pharma fell sharply against sharp increase in Sanofi India Profit.

Also, Sanofi India have shown constant Gross profit growth as compared to GSK Pharma over

the 5 years period. This shows that Sanofi India is more stable as compared to GSK Pharma.

789.63858.4

619.47

864.4

749.2

258.81329.48 315.13

351.58

480.72

0

200

400

600

800

1000


PBDT

Glaxo Sanofi

773.26840.77

599.06

846.56

729.32

241.47 309.74 283.98 261.71

388.46

0

200

400

600

800

1000


PBT

Glaxo Sanofi



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Liquidity Ratios:

1. Current Ratio:

Current Ratio provide us details how companies have utilized their assets in short run. Decline

in Sanofi India CR over 5 years’ shows they have not utilized their current assets efficiently in

short run. Moreover, GSK pharma has a stable current ratio throughout this period. Also as the

industry CR increases we can say that GSK Pharma have high current assets to cover their short

term liabilities than Sanofi.

2. Debtors Turnover Ratio:

A method used to determine a firm's stability in collecting debts as well as extending credit.

GSK Pharma high ratio suggests that either GSK has lot of free cash or that it’s collection of

accounts receivable and credit extension is very efficient. A low ratio for Sanofi tells us that the

company credit policies are not efficient. It should re-evaluate its policies so that timely

collection of imparted credit can be fulfilled.

3 3 3.1 3.13.3

2.4

1.9 2

0.97

1.57

3.35

0

0.5

1

1.5

2

2.5

3

3.54

2010 2011 2012 2013

Glaxo Sanofi Industry avg.

24.726.8

36.7

42.8

17.1 15.9 16.219.6

11.699.9

8.02

0

5

10

15

20

25

30

35

40

45

2013 2012 2011 2010

Glaxo

Sanofi

Industry avg.



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Profitability Ratio related to Sales

1. Operating Profit Margin

Till 2011, OPM for GSK Pharma have fallen sharply compared to Sanofi. So, Sanofi is

experiencing less expenses compared to GSK Pharma. Moreover showing a rise in 2012, the

OPM again drops in 23013 for GSK. On the other hand, Sanofi India has a consistent OPM with

the industry. In 2013, there operating expenses have also declined.

Profitability ratios f rom Equity Shareholders’ Viewpoint

1. Earnings Per Share(EPS)

The ratio is used by share investor’s to form their portfolio of shares. It provides the money

return on each share. Gathering the data from the chart, Sanofi India’s high EPS concludes that

investors’ will be investing in Sanofi India’s share as compared to GSK. Sanofi India share will

give higher ROE as compared to GSK Pharma.

0.41

0.26

0.330.2940.306

0.2420.224

0.270.306

0.2350.266

0.29

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

2010 2011 2012 2013

Glaxo

Sanofi

Industry avg.

60.343.7

60.650.9

91.1

77.971.4

107.3

0

50

100

150

200

2010 2011 2012 2013

EPS

Glaxo Sanofi



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2. Dividend Yield

The measure of how much money per share shareholders are getting as a dividend return.

From the above chart, we can conclude that it is a mirror image from 2010 to 2013 for the two

companies. As Dividend Yield of Sanofi India is 1.67 times of GSK in 2013, shareholders’ would

invest more in Sanofi as compared to GSK to yield a higher return.

3. Price Earnings ratio(P/E)

P/E tells a future growth of the company. A high P/E ratio tells us company is looking to grow in

future. Looking at the above picture, it brings to our notice that GSK Pharma have a higher P/E.

Also, the EPS for GSK pharma is low due to which P/E is higher. So from an investor point of

view he/she should take other ratios into consideration to invest in a company.

1.7

2.3 2.3

1.7

2.8

1.4 1.4

2.8

0

0.5

1

1.5

2

2.5

3

2010 2011 2012 2013

Divindend Yield

Glaxo Sanofi

38.9

44.3

35.7

58.9

21.4

29.832.1

25.8

0

10

20

30

40

50

60

70

2010 2011 2012 2013

Glaxo Sanofi



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terms of data, Sanofi India have made more profits on their assets as compared to GSK Pharma

in 2013.

Recommendations & Conclusions:

Generally accepted accounting principles (GAAP) were adopted and practiced in both

the firms GSK Pharma and Sanofi India.

GSK Pharma has EPS of 50.9 in 2013 whereas Sanofi has EPS of only 107.3 which

indicates in the higher net profit for Sanofi. From 2012-13, Sanofi has increased its net

sales by 14% whereas GSK Pharma sales declined by 3%. Also, market sentiment have

supported this as P/E ratio for GSK has come down from 32.1 to 25.8 and Sanofi has

increased from by 35.7 to 58.9. Clearly Sanofi India has been very efficient in terms of

performance.

From the analysis we would not conclude that Sanofi India has been more efficient than

GSK Pharma throughout the 5 years. GSK Pharma should change their investing trends

and should innovate more so that come up with new products in market. This would

help them to make more stable profits and returns. Considering all the external factors

like economy of the country both the companies are performing well as compared to

industry performance.



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References:

1. http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-

Loss/Glaxosmithkline-Pharma-Ltd/500660 (10th

August 2014)

2. http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Sanofi-India-

Ltd/500674 (10th

August 2014)

3. http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Sanofi-

India-Ltd/500674 (10th

August 2014)

4. http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-

Sheet/Glaxosmithkline-Pharma-Ltd/500660 (10th

August 2014)

5. http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-

Ratios/Glaxosmithkline-Pharma-Ltd/500660 (11th

August 2014)

6.

http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Sanofi-India-

Ltd/500674 (11th

August 2014)

7. For Industry average: http://www.capitaline.com/user/framepage.asp?id=1 (11th

August

2014)

http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Glaxosmithkline-Pharma-Ltd/500660





http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Sanofi-India-Ltd/500674




http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Sanofi-India-Ltd/500674




http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Glaxosmithkline-Pharma-Ltd/500660




http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Glaxosmithkline-Pharma-Ltd/500660




http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Sanofi-India-Ltd/500674




http://www.capitaline.com/user/framepage.asp?id=1

http://www.capitaline.com/user/framepage.asp?id=1













pharmaceutical industry analysis of india

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