About EMCURE PHARMACEUTICALS Limited

Emcure Pharmaceuticals Limited is engaged in developing, manufacturing and globally marketing a broad range of pharmaceutical products across several major therapeutic areas. Their core strength and competitive advantage lie in their established presence in all major therapeutic areas including Gynaecology, cardiology, blood-related, oncology, respiratory, CNS & HIV among others. Emcure has launched 6 Biologics in the Domestic Market & RoW markets & they are the domestic leader in three biologics. They have 13 manufacturing facilities across India. Their facilities are capable of producing pharmaceutical and biopharmaceutical products across a wide range of dosage forms, including oral solids, oral liquids, injectables, including liposomal and lyophilized injectables, biotherapeutics and complex APIs, including chiral molecules, iron molecules and cytotoxic products. 

They are a research and development (“R&D”) driven company with a differentiated product portfolio that includes orals, injectables and biotherapeutics, which has enabled them to reach a range of target markets across over 70 countries, with a strong presence in India, Europe and Canada. They were ranked as (i) the 13th largest pharmaceutical company in India in terms of Domestic Sales for MAT Financial Year 2024, (ii) the 4th largest pharmaceutical company by market share in their Covered Markets in terms of Domestic Sales for MAT Financial Year 2024, and (iii) the largest pharmaceutical company in the gynecology and human immunodeficiency virus (“HIV”) antivirals therapeutic areas in India in terms of Domestic Sales for MAT Financial Year 2024.

The Company have experienced rapid growth in sales in India in recent years. Chronic therapeutic areas in the IPM are expected to register higher growth than acute therapeutic areas over the next five Financial Years. Chronic therapeutic areas contributed to ₹25,460.48 million or 46.22% of their total Domestic Sales for MAT Financial Year 2024. The Company is standing strong with their 10,852 Employees as of September 30,2023.

INDIAN PHARMACEUTICAL INDUSTRY

The Indian pharmaceutical industry is the world’s third largest by volume and was valued at ₹3.6-3.8 trillion (including bulk drugs and formulation exports) as of the Financial Year 2024. The industry can be broadly classified into formulations and bulk drugs. Formulations can further be divided into domestic formulations and export formulations, both having almost an equal share in the market. At present, low-value generic drugs constitute a large part of Indian exports. India accounts for approximately 3.5% of total drugs and medicines exported globally, and exports pharmaceuticals to more than 200 countries and territories, including highly regulated markets such as the US, the UK, the European Union and Canada. India has a complete ecosystem for the development and manufacturing of pharmaceuticals, with companies having state-of-the-art facilities and skilled/ technical manpower. Moreover, the country has several renowned pharmaceutical educational and research institutes and a robust ecosystem of allied industries.

Indian Domestic formulations market to grow at approximately 8-9% CAGR over the Financial Year 2024 to the Financial Year 2029: The Indian domestic formulation market has seen healthy growth in the recent times. As of the Financial Year 2024, the Indian domestic formulation market contributed to approximately 2% of the total global pharmaceutical market. Indian domestic formulations market (consumption) grew at a healthy rate at a CAGR of 8.5% from the Financial Year 2019 to the Financial Year 2024. The Indian domestic formulations segment (consumption) is expected to grow at a CAGR of 8-9% over the next five years from the Financial Year 2024 to reach approximately ₹2.9-3.0 trillion in the Financial Year 2029, aided by strong demand because of rising incidence of chronic diseases, increased awareness and access to quality healthcare.

Biologics Market in India
Biopharmaceuticals or biologics are substances produced by manipulating living organisms via techniques such as genomics (mapping of genes), proteomics (study of structure of proteins), mutation analysis (change in the DNA sequence of a cell) and systems biology (study of complex interactions in a biological system) intended for human/animal treatment. Globally, these techniques are referred to as biotechnology, which in other words is a process technology or a drug discovery research tool. Biopharmaceuticals are drugs developed by applying biotechnology on living organisms / biologics for treatment of diseases.

The Indian biologics industry can be roughly categorised under traditional vaccine makers and manufacturers focused more on therapeutic biologicals. Further, there are players primarily focusing on recombinant therapeutics and monoclonal antibodies. Erythropoietin (used in severe anemia/cancer), streptokinase and recombinant human insulin, filgrastim etc. are the most common recombinant drugs currently marketed in India. In the therapeutic category, Indian companies are present in areas such as immunological, oncology, osteoarthritis, anti-diabetic etc.

During the Financial Year 2019 to the Financial Year 2024, the Indian biopharmaceuticals industry clocked a CAGR of approximately 18%, primarily on account of increase in sale of vaccines in the domestic as well as global markets. On the other hand, in the therapeutic segment, growth has been lower than that in the vaccines segment due to limited product launch by Indian players to enter the regulated markets of the US and Europe.

Going forward, growth is expected to be driven by new product launches in the domestic market and regulated exports market. Growth in exports is set to witness strong growth, driven by vaccines and biosimilars in the regulated and semi-regulated markets.
Higher effectiveness of biologics over conventional drugs has prompted global players to undertake more research and development in the segment. Therefore, the share of biopharmaceuticals segment is expected to increase in the near to medium term. Hence, more Indian players are likely to align their capabilities with the global trend and invest in biosimilars.

Gynaecology therapy area in Indian pharmaceutical market have shown healthy growth over the years
There is still a lot of potential for women’s healthcare in India with awareness among female population for treatments of various diseases. Gynaecology medications as well as some of the nutraceuticals used in women’s health thus have seen increased demand in recent years. Gynaecology therapy area have seen the traction in recent years and have marginally outperformed the overall Indian domestic formulation market in terms of growth from the Financial Year 2020 to the Financial Year 2024. This can be attributed to rise in alertness regarding well-being and health in the Indian female population which in turn has resulted in a rise in the demand for gynaecological therapies. More women are seeking medical help for gynaecological diseases leading to greater penetration of the gynaecological drugs in the Indian domestic formulation market. This shows that women’s healthcare industry, especially gynecology in India, is a growing market with tailwinds such as improved access and awareness in women’s healthcare.

India’s healthcare spending as a percentage of GDP increased
In 2021, healthcare expenditure as a percentage of GDP increased to 10.3% globally (approximately US$9.8 trillion), owing to prioritization of public health during the pandemic, availability of better medical facilities, advancements in medicine and increase in disposable incomes. During the year, the US, Germany and UK recorded high current healthcare expenditure (“CHE”) as a percentage of GDP at 17.4%, 12.9% and 12.4% respectively.

India’s CHE as a percent of GDP is much lower than that of its global peers. In 2021, India’s expenditure on healthcare was 3.3% of GDP; it trails not just developed countries such as the US and the UK, but also developing countries such as Brazil, Nepal, Singapore, Sri Lanka, Malaysia and Thailand. However, India’s CHE as a percentage of its GDP improved post onset of COVID by approximately 3%, suggesting higher focus on healthcare.

In terms of government expenditure as a percentage of GDP, India spends approximately 2.2% on healthcare. This includes expenditure on healthcare by central and state governments. In the national health policy document, 2017, it was recommended that the government’s healthcare expenditure be increased to 2.5% of GDP by 2025. Also, the Fifteenth Finance Commission, in its report, had recommended that public health expenditure of union and states together be increased in a progressive manner to reach 2.5% of GDP by 2025. In keeping with this objective, the central and state governments’ budgeted expenditure on the healthcare sector reached 2.1% of GDP last Financial Year and 2.2% in the Financial Year 2022, against 1.6% in the Financial Year 2021.

Europe and Canada Pharmaceutical Market

Europe is one of the developed pharmaceutical markets in the world. The pharmaceutical markets in Europe have well established regulatory environment and there are established guidelines for manufacturing and marketing of the pharmaceutical products. In recent past there has been a shifted focus to use of generic medicines in markets like Europe. There has been as major opportunity in the regulated markets like Europe for generic players. More and more generic players are expected to tap in this opportunity and expand their presence in markets like Europe. 
Europe pharmaceutical market have shown healthy growth in the past and forms approximately 26% of the global formulation market as of 2023. Europe market have grown at 4.6% CAGR from the Calendar Year 2018 to 2023 growing from US$311 billion (approximately ₹21 trillion) in the Calendar Year 2018 to US$390 billion (₹32 trillion) in the Calendar Year 2023. The Europe market is expected to grow at approximately 4-5% CAGR from the Calendar Year 2023 to Calendar Year 2028, reaching approximately US$490-520 billion (₹40-43 trillion) by the Calendar Year 2028. The major factors contributing to growth of this market is the growing demand for generics as well as faster approvals for biologics and biosimilars which presents a great potential in the global pharmaceutical market.

Canada has been one of the developed pharmaceutical markets in the North America region. The well-developed regulatory environment in Canada has seen major pharmaceutical players operating in this market in recent years. The pharmaceutical market in Canada has seen moderate amount of growth in the last few years. Canada pharmaceutical market grew at approximately 2.4% CAGR from Calendar Year 2018 to Calendar Year 2023 and forms approximately 3% of the global formulation market as of 2023. The Canada pharmaceutical market was valued at US$42 billion (₹3 trillion) as of 2023. The market is expected to reach approximately US$50-55 billion (₹4-5 trillion) by the Calendar Year 2028, growing at 3-4% CAGR from 2023 to 2028.

EMCURE PHARMACEUTICALS LIMITED STRENGTHS

1. Well-placed to Leverage their Position in the Domestic Market
2. Demonstrated Capabilities of Building Brands
3. Large, Diversified and Fast-Growing Product Portfolio in International Markets
4. Strong R&D Capabilities Driving Differentiated Portfolio of Products
5. Extensive and Diversified Manufacturing Capacity
6. Highly Qualified, Experienced and Entrepreneurial Management Team and Board

EMCURE PHARMACEUTICALS LIMITED STRATEGIES

1. Increase their Market share in the Domestic Market
2. Continue to Invest in Research & Development and Manufacturing Capabilities to Enhance and Grow their Differentiated Product Portfolio
3. Deepen and Expand their International Presence with a Focused Go-to-Market Approach
4. Pursue Strategic Acquisitions, Partnerships and In-Licensing Arrangements
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EMCURE PHARMACEUTICALS LIMITED RISK FACTORS & CONCERNS

1. Their manufacturing and research and development operations are subject to operational risks.
2. Any failure to comply with applicable quality standards may result in product liability claims.
3. They have de-merged their U.S. operations, they have ongoing civil proceedings in the United States, including class-action antitrust cases and complaints filed by U.S. state attorneys-general.
4. Certain therapeutic areas contribute to a more significant portion of their total revenue in India.
5. The availability of counterfeit drugs, such as drugs passed off by others as their products, could adversely affect their results of operations.
6. Their international operations expose them to complex management, legal, tax and economic risks.
7. Their Company and two of their Subsidiaries, Zuventus and Gennova, have been subjected to search and seizure operations conducted by the Income Tax Department.
8. They depend on third-party transportation providers for the transportation of their raw materials and finished products.
9. The unsuccessful integration of any businesses they acquire could result in operating difficulties or costly divestments.
10. They are subject to the risk of loss due to fire, accidents and other hazards as their R&D and manufacturing processes and materials are highly flammable and hazardous.
11. The Company de-merged its U.S. market business pursuant to the Scheme of Arrangement.