About Accretion Pharmaceuticals Limited

Business Overview

Accretion Pharmaceuticals is engaged in the manufacturing and marketing of pharmaceutical formulations, including Tablets, Capsules, Oral Liquids, External Preparations (such as Ointments, Creams, Gels, Lotions, Medicated Shampoos, Mouthwash, Dusting Powder) and Oral Powders (Sachets and Dry Syrups). Operations are carried out from a manufacturing facility located at Xcelon Industrial Park, Sanand, Ahmedabad, Gujarat.

The business operates across three key verticals:

1. Domestic sales

2. Direct exports

3. Sales to merchant exporters on a loan license basis

A significant portion of sales is made to merchant exporters, who further export products to countries across Africa, South-East Asia, and Latin America. This indicates a strong presence in international markets, both directly and indirectly.

In addition to direct sales, Accretion Pharmaceuticals is actively involved in loan license and contract manufacturing for various corporate clients. The business is predominantly conducted on a principal-to-principal basis. As on December 31, 2024, the Company have 83 employees on its payroll. The Banker to the Company is Indian Bank, Paldi Branch

Industry Analysis

India's Pharmaceutical Industry: Expanding Scale, Global Footprint & Innovation Drive

India's pharmaceutical sector, currently valued at $50 billion, is the third-largest globally by volume and is projected to grow to $65 billion by 2024 and $130 billion by 2030. The industry serves as a global hub for generic medicine production and is often referred to as the “Pharmacy of the World”.

Strong Global Presence and Export Leadership

India exports pharmaceuticals to over 200 countries, meeting:

• 50% of Africa’s generic drug needs

• 40% of the generic demand in the US

• 25% of the medicine supply in the UK

The country also contributes approximately 60% of global vaccine demand, especially for DPT, BCG, and Measles vaccines. Around 70% of WHO’s vaccines, listed in the essential immunization schedule, are sourced from India.

India offers 60,000 generic brands across 60 therapeutic categories, accounting for 20% of global generic drug exports by volume. Eight of the top 20 global generic pharmaceutical companies are Indian.

Robust Regulatory and Manufacturing Infrastructure

India has:

• 70,311 US FDA-approved facilities (as of April 2023)

• 38,612 EU-GMP compliant plants (as of Nov 2022)

• 2,41,813 WHO-GMP certified plants

In December 2023, revised manufacturing guidelines under Schedule-M were implemented to align with global Good Manufacturing Practices (GMP).

Bulk Drug Resilience and PLI Scheme Success

Historically reliant on bulk drug imports, India is now emerging as a net exporter, supported by PLI schemes that improved local manufacturing of key antibiotics like Penicillin G and Clavulanic Acid. In FY24, exports of bulk drugs were valued at ₹39,632 crore, surpassing imports at ₹37,722 crore. While the CAGR of bulk drug imports was 2.3% (FY22–FY24), exports grew at 5.9%, highlighting improved self-reliance and supply chain stability.

The Innovation Imperative in Pharma R&D

Globally, pharmaceutical firms are either innovators (focused on new drug discovery) or generic producers. Indian companies primarily operate in the generic space, offering cost-effective alternatives post-patent expiry. However, increased R&D investment is essential for moving up the value chain.

Between 2021 and 2023, $54 billion was invested globally by large pharma companies into smaller, research-focused biotech firms, underlining the growing value of agile innovation.

India’s pharma R&D expenditure has averaged around 5% of sales turnover in FY20 and FY21. Strengthening innovation would enhance healthcare access and improve investment returns, particularly through drug development targeting unmet medical needs.

Policy Support and Collaborative Innovation Ecosystem

To promote innovation, strategic recommendations include:

• Fostering joint research across industry stakeholders

• Enhancing industry-academic partnerships

• Increasing engagement from Tier 2 & 3 institutions

• Promoting secondments and human capital exchange between academia and industry

• Improving communication channels among research institutions and associations

• Expanding venture capital and angel funding for R&D

• Adopting an integrated government approach to strategic pharmaceutical innovation

The government has introduced several initiatives such as:

Centres of Excellence for collaborative R&D

AI-driven research in health and pharma

The Promotion of Research and Innovation in Pharma MedTech Sector (PRIP) scheme to drive innovation-centric transformation

Business Strengths

1. Experienced Promoters and Management
Led by seasoned promoters, the management team brings deep industry expertise, driving operational growth and strategic execution. The team effectively handles both strategic direction and daily operations, contributing to the company's overall success.

2. Diverse Product Portfolio
Offers a broad range of pharmaceutical formulations with a focus on quality, affordability, and global standards, enabling strong positioning in both domestic and international markets.

3. Strong Client and Supplier Relationships
Maintains long-standing relationships with clients and suppliers, supported by the leadership of Mr. Hardik Mukundbhai Prajapati and Mr. Vivek Ashok Kumar Patel, who bring extensive experience in sales and marketing.

4. Commitment to Quality Standards
Emphasizes quality at every stage of production, backed by ISO 9001:2015 (quality management) and ISO 14001:2015 (environmental standards) certifications, ensuring global compliance.

5. Established Business Processes
Operates with a robust supply chain, strong customer base, and a foundation of trust and goodwill, built through consistent performance and reliable service

Business Strategies

1. Enhancing Global Presence
Currently active across India and multiple countries in Africa, South Asia, Latin America, and Southeast Asia, with licenses to manufacture and sell 1,198 products globally. Plans are in place to transition from merchant exporter-based sales to direct exports, expanding reach in existing and new international markets.

2. Leveraging Market Relationships
Focused on strengthening ties with marketers and customers by utilizing proven manufacturing, marketing skills, and industry relationships to drive customer-centric growth and satisfaction.

3. Maintaining Competitive Edge
Aims to expand scale in existing offerings and introduce new products in high-end and mid segments, supported by a diverse product portfolio that ensures a sustainable advantage over competitors.

4. Ensuring Customer Satisfaction
Prioritizes corporate customer engagement through regular feedback and follow-ups, enabling product improvements and delivering consistent quality to maintain high satisfaction levels.

Business Risk Factors and Concerns

1. Regulatory Compliance Risk
Operating in a highly regulated industry, non-compliance with existing or future pharmaceutical regulations, including safety, labour, and environmental norms, may adversely impact operations and financial performance.

2. Environmental Law Adherence
Manufacturing activities are subject to strict environmental regulations such as the Environment Protection Act, Air and Water Pollution Acts, and Hazardous Waste Rules. Violations could result in legal liabilities, penalties, and operational disruptions.

3. Geographical Concentration
A significant portion of revenue (over 89%) is generated from Gujarat. Any regional disruptions—economic, political, or environmental—could materially impact revenues and profitability.

4. Counterfeit Product Risk
The threat of counterfeit products imitating the company’s offerings can damage brand reputation, reduce market share, and lead to potential legal and financial liabilities.

5. Segment-Specific Risk Exposure
Revenue dependency on three segments—Direct Export Sales, Domestic Sales, and Contract Manufacturing—exposes the business to distinct operational and regulatory risks unique to each segment.

6. Export Market Compliance Risk
Export operations across Africa, Southeast Asia, and Latin America are subject to diverse regulatory standards. Failure to meet these can affect market access, cash flows, and revenue generation.

Accretion Pharmaceuticals operates in a heavily regulated and competitive pharmaceutical landscape. Its operations are geographically concentrated, subject to environmental laws, and exposed to market-specific and compliance risks—both domestically and internationally. Brand integrity also remains vulnerable to counterfeit threats.