Suven Pharma vs AstraZeneca Pharma India
Suven Pharma vs AstraZeneca Pharma India: Pharmaceutical companies tend to grow by investing heavily in research and development to advance technology and develop new drugs. Looking at regulations and market dynamics, it is clear that building a pharmaceutical business is difficult.
Getting approval for a drug and making a profit is one of the most difficult aspects for pharmaceutical companies. In this article, we will look at Suven Pharma and AstraZeneca Pharma India, which operate in the pharmaceutical sector.
Suven Pharma vs AstraZeneca Pharma India
Suven Pharma – Company Overview
Suben Pharma Founded in 2018, the company specializes in the development and production of intermediates, active pharmaceutical ingredients (APIs), specialty chemicals and formulated drug products within Contract Research and Manufacturing Services (CRAMS) for international pharmaceutical, biotechnology and chemical companies. do.
Headquartered in Hyderabad, the company is a fully integrated CDMO company targeting renowned global pharmaceutical and fine chemicals leaders on NCE development initiatives. Comprehensive services range from early process research and development to advanced-stage clinical and commercial manufacturing.
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Within the Contract Development and Manufacturing Organization (CDMO) framework, the business model includes four processes: process research, custom compounding, formulation development and analytical services, and clinical supply manufacturing and packaging.
The company has four manufacturing plants, three in Telangana and one in Vizag (Andhra). The two remaining offices are the headquarters in Hyderabad and the business office in New Jersey, USA.
segment analysis
The Company recognized revenue from operations in its Pharmaceutical Manufacturing and Services segments. The majority of its revenue comes from Europe, accounting for 86.67%. The United States accounts for 6.22%. India accounts for 2.62%. The rest of the world accounts for 4.49% of the revenue in FY23.
AstraZeneca Pharma India – Company Overview
Founded in 1979, it is a subsidiary of AstraZeneca Pharma and is headquartered in Bangalore. AstraZeneca Pharma India It is actively involved in the production, distribution and promotion of pharmaceutical products through its sole operating segment centered on Healthcare.
The company focuses on key therapeutic areas including cardiovascular, renal and metabolic (CVRM), oncology, respiratory, inflammation and autoimmunity, neuroscience, infections and vaccines.
segment analysis
AstraZeneca’s FY23 operating revenue comes from pharmaceutical sales, including tablets (75.20%), injections (16.68%), and inhalants (2% of revenue). The remaining revenue comes from selling services to related parties. Clinical trials account for 6.10%.
As of FY23, revenue from operations in India accounted for the majority at 93.61%, while overseas accounted for the remaining revenue at 6.38%. The share of therapeutic segment-based product sales is Oncology at 55.80%, Cardiovascular at 27%, Diabetes at 13.70% and Respiratory at 3.50% in FY23.
Suven Pharma and AstraZeneca Pharma India – Industry Analysis
The Indian pharmaceutical sector is one of the world’s leading producers, with the market expected to soar to USD 130 billion by 2030. By fiscal 2025, the domestic pharmaceutical industry is expected to reach US$57 billion. Increased operating margins range from 100 to 150 bps.
India serves as an important hub for generic drug production and is seeing a surge in patent applications from pharmaceutical companies. It is the third largest producer of active pharmaceutical ingredients (APIs) and holds an 8% share in the global API industry.
Up to 100% for greenfield pharmaceutical projects foreign direct investment(FDI) is allowed through automatic channels. For brownfield pharmaceutical projects, up to 74% FDI is allowed through the automatic route, and government approval is required for investments exceeding this threshold.
India boasts the largest number of FDA-approved plants beyond the US border. Indian pharmaceutical companies hold a significant share of the prescription market in both the US and the European Union.
India produces over 500 individual APIs, representing 57% of the APIs listed on the WHO pre-certification list. According to Allied Market Research, India’s pharmaceutical packaging industry reached a value of US$ 1,434.1 million in 2020. As per projections, this figure is expected to increase to US$ 3,027.14 billion by 2030, demonstrating a compound annual growth rate (CAGR). 7.54%.
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Suven Pharma and Astrazeneca Pharma India – Finance
Sales and Net Profit
Suven reported operating revenue of Rs in FY23, up 1.52% year-on-year. 1,340.33 crore from Rs. 1,320.22 crore. Astra improved 24.50% YoY to Rs. 1,002.97 crore in FY23 from Rs. 805.60 crore.
Both companies’ revenues are roughly in the same range. However, while Suven revenues have remained consistent in recent years, they have roughly tripled since FY19. Astra’s revenue has been flat since FY19 and has recently increased in FY23. exponentially.
Suven’s net profit is Rs. 411.29 crore, down 9.36% from Rs. 453.80 crore. In comparison, Astra’s net profit was Rs. 99.29 crore in FY23, representing a 61.18% YoY increase from Rs. 61.60 crore.
Suben’s profits decreased due to increased costs such as manufacturing costs. Net income has improved over the years since 2020. Astra’s net profit improved in FY23, with profits fluctuating widely over five years.
profit
Suven’s OPM was 44.20% in FY23, down from 47.56% year-on-year. Similarly, Astra improved from 12.30% in FY22 to 14.67% in FY23. Suven’s OPM decline was due to manufacturing costs increasing 13.15% in FY23 compared to 13.11% in FY22, and staffing costs increasing 8.24% in FY23 and 7.61% in FY22.
Astra’s margin increase was due to lower material costs of 35.89% in FY23 compared to 38.72% in FY22 and employee costs from 28.57% to 25.83%. The costs of both companies are compared to their operating revenues.
Suven’s FY23 NPM was 29.66%, down from 32.13% in the same period last year. Astra’s NPM improved from 7.51% in FY22 to 9.65% in FY23. Suven’s NPM decreased due to a 49.81% decrease in other profits and a slight increase in expenses compared to the same period last year.
Astra’s profit increase was due to improved operating costs, but there was an exceptional item of Rs. ₹40.23 crore related to voluntary retirement schemes and severance costs in FY23.
rate of return
Suven’s RoE stood at 25.21% in FY23 compared to 29.79% in FY22. Astra’s RoE was 33.22% compared to 40.62% in FY22. Suven’s RoE decreased year-over-year due to lower net income compared to Astra’s improved net income. Return on funds on additional capital decreased for Suven, while it improved significantly for Astra.
Over the years, RoE has been around 25-45% for Suven and 12-23% for Astra, excluding FY19 for both companies. Compared to RoE, Suven is higher than AstraZeneca.
Suven’s RoCE decreased from 40.62% in FY22 to 33.22% in FY23. Astra’s RoCE was 30.47% in FY23 compared to 16.76% in FY22. Both companies have impressive profits, but Suven’s is higher than Astra’s.
Suven has very little debt and returns over the past four years have been around 33-50%. Although Astra is relatively debt-free, it has low rental liabilities and returns over the past four years have been around 16-34%.
debt analysis
Suven’s debt-to-equity ratio decreased from 0.09 in FY22 to 0.05 in FY23. Astra decreased from 0.02 in FY22 to 0.01 in FY23. Both companies have low debt, which is advantageous for the companies when it comes to increasing capex.
They can finance expansion through internal accruals and borrow money when interest rates are low, benefiting from a lower cost of capital and higher return opportunities.
Suven’s interest coverage decreased from 70.56 times in FY22 to 44.69 times in FY23. In the case of Astra, it improved from 88.41 times in FY22 to 273.76 times in FY23.
Both companies have a comfortable level of covering their interest expenses from net income. A company with more than three times its interest expenses is said to be a better company. However, it must be analyzed according to the industry cycle. Any negative impact on the industry may affect profitability and rates over time.
Suven Pharma and AstraZeneca Pharma India – Key Indicators
Let’s take a look at some of the key indicators of Suven Pharma and AstraZeneca Pharma India.
Suven Pharma vs AstraZeneca Pharma India – What’s Next?
Suben Pharma
- Management’s goal is to meet existing capabilities before investing new capital in the business in the short term.
- We are seeking to expand production capacity in line with the business environment over the next 4 to 6 quarters.
- The Cohance Lifesciences merger expanded the facility’s capacity from 1,400 KL to over 2,650 KL.
- The Suryapet facility with a capacity of over 400 KL is being prepared for commercial operations.
- Management is open to inorganic growth opportunities arising from building out the CDMO platform over the next five to seven years.
AstraZeneca Pharma India
- The company’s main goal is to launch new products in various therapeutic areas, including biopharmaceuticals, rare diseases, and oncology.
- More than 15 new assets and new indications are expected to be submitted to regulators in the next 3-4 years.
- Expanding pipeline across all therapeutic areas, including oncology, biologics, and rare diseases.
- Major investments in new products through market expansion, evidence generation, and prescriber education programs.
- Establishment of a new therapeutic area for a dedicated rare disease business unit
Read more: Pharmaceutical stocks with high dividend yield
conclusion
Towards the end of the article, we will take a brief look at these companies. Both companies operate in the pharmaceutical sector. Suven has higher profits and better ratios compared to AstraZeneca. However, AstraZeneca has the upper hand in terms of cash conversion.
The days of receivables are less than the number of days of payment, and the excess funds can be used for company operations without additional financing. Suven has a higher cash conversion cycle. AstraZeneca’s cash flow is better compared to Suven Pharma. AstraZeneca has a higher P/E compared to Suven Pharma.
Investors should analyze a company thoroughly before investing, as comparisons based solely on certain aspects may not provide a comprehensive understanding. What do you think about the company’s potential? Let us know your thoughts in the comments section below.
Written by Santosh
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