Pharmaceuticals Industry

Market Size

Rs. 84,520 Crores in 2012

Expected Annual Growth Rate

13.3% for 2012-13

Units

20,000 registered units

Industry Median EV/EBITDA

9.7x (ttm)

Industry Median EV/Sales

1.1x (ttm)

Indian Pharmaceuticals Industry 2013

Pharmaceutical industry seems to be entering a growth phase after a muted growth over the last few quarters. Valuations of pharmaceutical companies fairly high as they are expected to perform in the future.

Indian Pharmaceuticals industry is the world’s third largest in terms of volume and in terms of value it forms 5-6% share of the global pharmaceutical industry. Indian Pharmaceuticals industry is expected to grow by 13.3% from Rs.84,520 Cr in CY12 to Rs.95,770 Cr in CY13. (Source:BMI) The industry is highly fragmented with around 20,000 registered units (250 large units and 8000 small scale units). The pharmaceutical sector, one of the two famous defensive sectors, is expected to enter a growth phase after a muted growth over the last few quarters.

Valuation of Pharmaceutical Companies

Company Name

EV/EBITDA (ttm)

EV/Sales
(ttm)

Ranbaxy Laboratories

8.4x

2.0x

Dr. Reddy's Laboratories

12.9x

3.3x

Sun Pharmaceutical Industries

21.5x

8.8x

Lupin

17.6x

3.7x

Cipla

18.1x

4.4x

Cadila Healthcare

17.0x

3.6x

Industry Median

9.7x

1.1x

Industry median includes Aurobindo, Wockhardt, Jubilant Life Sciences, Glenmark, Torrent, Strides Arcolab, Ipca Laboratories, Piramal Enterprises, GlaxoSmithkline, Orchid Chemicals, Surya, Plethico, Abbott India, Elder, Nectar Lifesciences, Sanofi India, Ind-Swift, Shasun, Pfizer, Parabolic Drugs, Unichem Laboratories, Novartis India, J. B. Chemicals, Sharon Bio Medicine, Twilight Litaka, FDC, Claris Lifesciences, Hikal, Ajanta, Aarti Drugs, Granules India, Wyeth, Indoco Remedies, Merck, AstraZeneca, Fresenius Kabi Oncology, Natco, Aanjaneya Lifecare, Arvind Remedies, Neuland Laboratories, Venus Remedies, Wanbury, Marksans, TTK Healthcare, Sequent Scientific, Parenteral Drug, Shilpa Medicare amongst others

End Notes

Source: Analyst Reports, Company Press Releases, Yahoo Finance

CY: Calendar Year ending December

All multiples are as on Dec 31st 2012

Conversion Rate: 1 USD = 50 INR

ttm: trailing twelve months, or last twelve months

EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization - a measure of company’s profitability

EV: Enterprise Value - a measure of company’s worth