Innova Captab is an integrated pharmaceutical company in India with a presence across the pharmaceuticals value chain including research and development, manufacturing, drug distribution and marketing and exports. The business includes (i) a contract development and manufacturing organization (CDMO) business providing manufacturing services to Indian pharmaceutical companies, (ii) a domestic branded generics business and (iii) an international branded generics business.
The foundation of the company is in-house R&D, they have a dedicated R&D laboratory and pilot equipment located at their manufacturing facility in Baddi, Himachal Pradesh, which is recognized by Department of Scientific and Industrial Research (DSIR) Government of India.
ABOUT THE INDUSTRY
The global pharmaceuticals market clocked a 5% CAGR between calendar years 2017 and 2022. The industry is expected to sustain this growth over the next five years to reach approximately US$1,750 to 1,800 billion in 2027, clocking a 4.5% to 5% CAGR. Indian domestic formulations market (consumption) grew at a healthy rate at a CAGR of 9% from fiscal 2018 to fiscal 2023. The segment is expected to grow at a CAGR of 9-10% CAGR over the next five years to reach approximately Rs. 2.8-3.0 trillion in fiscal 2028, aided by strong demand because of rising incidence of chronic diseases, increased awareness and access to quality healthcare.
Strengths And Risks
+ Leading Market Presence: In Fiscal 2022, among Indian formulation CDMO players, Innova Captab recorded the third highest operating revenue and net profit margin. The number of CDMO products sold by the company has grown by 131.43% from 1,066 in FY '21 to 2,467 in FY '23.
+ Client Relationships: In CDMO business, Innova Captab has developed strong relationships across the Indian pharmaceutical industry. In Fiscal 2023, they had 182 CDMO customers. Some of our key customers include Cipla, Glenmark, Wockhardt, Emcure Pharmaceuticals Limited, Lupin Limited, Intas, Ajanta etc.
+ Efficient Operations: In Fiscal 2022, among Indian formulation CDMO players considered in the CRISIL Report, Innova Captab recorded second highest fixed asset turnover ratio and returns on capital employed.
+ Strong R&D Focus: R&D is critical to maintaining competitive position, addressing changing consumer trends and industry
developments. Innova is an R&D centric organization, and our R&D operations help them attract CDMO customers and grow our branded generic portfolio. They have a dedicated R&D laboratory in Baddi, Himachal Pradesh.
+ Consistent Financial Performance: Company has demonstrated strong growth in terms of revenues and profitability. In Fiscal 2022, among Indian formulation CDMO players, Innova Captab recorded the third highest operating revenue, the
second highest operating profit margin and the third highest net profit margin.
- High Competition: Company operates in a highly competitive market. The domestic formulations industry is highly fragmented in terms of both, number of manufacturers and products, with 300 to 400 organised players and about 15,000 unorganised players. As a result, the bargaining power of contract manufacturing players is lowered owing to high competition.
- Dependence on Key Customers: Business depends on a limited number of CDMO customers. Any reduction in the number of CDMO customers or inability to maintain relationships can impact revenues.
- Healthcare Reforms: Reforms in the healthcare industry and the uncertainty associated with pharmaceutical pricing,
reimbursement and related matters could adversely affect the pricing and demand for products as
well as the end consumer demand for the products,
- Stringent Statutory Norms: The pharmaceutical market is subject to extensive regulation, and failures to comply with the existing
and future regulatory requirements in any pharmaceutical market could adversely affect the business.
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