Top 5 Pharma Companies in India by Growth

The global pandemic not only brought the world to its knees but also significantly impacted the pharma industry.

In India, the top pharma companies have been at the forefront of this crisis, rapidly developing and distributing life-saving drugs and vaccines.

However, beyond this unprecedented event, the Indian pharma industry has been undergoing a paradigm shift with new technologies and developments that have yet to receive the attention they deserve. Currently, India ranks third in pharmaceutical production in the world and is the largest supplier of generic medicine, with a 20% global market share.

Moreover, India caters to over 50% of the global demand for various vaccines, 40% of generic demand in the US, and 25% of all medicines in the UK.

With supply constraints from China, and the world adopting the 'China plus one' strategy, Indian pharma companies are in a sweet spot.

To add to this, the government's initiatives, such as the product-linked incentive (PLI) scheme and the development of bulk drug parks, give a further boost to the Indian pharma sector.

With this in mind, we have shortlisted the top Indian pharma stocks that have registered the highest sales and profit growth.

Take a look...

#1 Gland Pharma

First on the list is Gland Pharma.

From a humble beginning in 1978 as a contract manufacturer, the company has become one of India's fastest-growing injectable-focused companies.

The company has a presence in over 60 countries across the globe. It operates on a business-to-business (B2B) model in several countries, including India, the USA, Australia, Canada, and European countries.

Gland Pharma has eight manufacturing facilities, four each for finished formulations and APIs (active pharmaceutical ingredients), with a capacity to manufacture 727 million (m) units per annum.

Its products cover major therapeutic areas such as cardiac, gastrointestinal, hormones, respiratory, vitamins, and minerals, which it supplies to hospitals, government facilities, and nursing homes.

The company's R&D (research and development) spending went up from 3.5% to 5.2% of sales in 2022. This resulted in the company launching 25 new stock-keeping units (SKUs) in nine months of the financial year 2023. During this period, it also filed for 20 ANDAs and got approval for 21 ANDAs.

The company has already spent Rs 2.5 billion (bn) in the financial year 2023 and plans to spend Rs 3 bn in the next financial year to expand its contract development manufacturing facility.

During the financial year 2023, it acquired Cenexi to expand and establish its presence in the branded contract development and manufacturing organisation (CDMO) space.

Recently, the company also announced an investment of Rs 4 bn in its Genome Valley facility in Hyderabad to manufacture biologicals, biosimilars, antibodies, and recombinant insulin.

All these indicate that the company is poised for next leg of growth.

Gland Pharma's previous capex spends have helped the company more than double its revenue. In the last five years, the company's revenue has grown at a compound annual growth rate (CAGR) of 22.7%.

The net profit has grown at a CAGR of 30.4% during the same time.

The return on equity (RoE) and return on capital employed (RoCE) also stood high at 17% and 22.7%, respectively.

Despite spending heavily on capex, the company is debt-free.

Gland Pharma Financial Snapshot (2018-2022)

Particulars (Rs m)	FY18	FY19	FY20	FY21	FY22
Total Revenue	16,658.0	21,298.0	27,724.0	35,977.0	46,246.0
Growth		27.9%	30.2%	29.8%	28.5%
Operating Profit	5,351.0	6,863.0	9,555.0	13,022.0	15,102.0
Operating Profit Margin	33.1%	33.6%	36.3%	37.6%	34.3%
Net Profit	3,211.0	4,519.0	7,729.0	9,970.0	12,117.0
Net Profit Margin	19.9%	22.1%	29.4%	28.8%	27.5%

Source: Equitymaster

Going forward, Gland Pharma's expansion plans and growing R&D spending will drive its revenue in the medium term.

To know more, check out Glad Pharma's financial factsheet and latest quarterly results.

#2 Divi's Laboratories

Second on the list is Divi's Laboratories.

The company is a leading manufacturer of APIs, intermediaries, and registered starting materials in India. It has a diversified market presence across developed, pharma-emerging and developing countries by exporting its products to over 95 countries.

Divi's Laboratories has a portfolio of over 160 products spread across various therapeutic areas, including anti-inflammatory, analgesic, and antidepressants.

The company also has 39 drug master files (DMFs) with the USFDA and 25 CEPs (certificates of suitability) issued by EDQM authorities and has 41 patents for generic products on its name.

Currently, the company has six multipurpose manufacturing facilities and three R&D centres. It plans to invest Rs 10 bn in setting up a new manufacturing facility in Andhra Pradesh which should be ready in the next three years.

The company is also investing in new technologies such as vapour-phased chemistry, continuous flow chemistry, photochemistry, gadolinium compounds, and peptides.

Apart from this, Divi's Laboratories has taken up debottlenecking and backward integration projects at its manufacturing sites to improve cost efficiency.

This exercise has surely paid off, as the company's net profit has grown at a CAGR of 27.5% in the last five years.

The revenue has also grown at a CAGR of 17.9% on the back of improved demand for bulk drugs and export markets.

Its return metrics are strong with RoE and RoCE coming in at 25.2% and 31.4%, respectively.

The company's debt-to-equity ratio is zero, despite investing heavily in capex.

It has also maintained consistency in dividend payouts.

Divi's Laboratories Financial Snapshot (2018-2022)

Particulars (Rs m)	FY18	FY19	FY20	FY21	FY22
Total Revenue	39,836.0	51,019.0	55,841.0	70,321.0	90,757.0
Growth		28.1%	9.5%	25.9%	29.1%
Operating Profit	12,628.0	18,730.0	18,232.0	28,611.0	38,811.0
Operating Profit Margin	32.6%	37.9%	33.8%	41.1%	43.3%
Net Profit	8,770.0	13,527.0	13,765.0	19,843.0	29,605.0
Net Profit Margin	22.7%	27.3%	25.5%	28.5%	33.0%

Source: Equitymaster

Going forward, the growth in the Indian pharma industry and the company's expansion plans will drive its revenue growth.

To know more, check out Divi's Laboratories' financial factsheet and latest quarterly results.

#3 Laurus Labs

Third on the list is Laurus Labs.

It is a fully integrated pharmaceutical and biotechnology company with leadership in active pharmaceutical ingredients (APIs).

Laurus Labs also provides contract research and manufacturing services to global pharma companies.

The company currently has ten production facilities and one R&D lab where it manufactures over 60 products covering different therapeutic areas such as oncology, anti-retroviral, anti-diabetic, and cardiovascular.

As of March 2023, the company has a strong team of 1,050 R&D scientists, who contributed towards acquiring 208 patents and 73 DMFs.

The company has made several investments to grow its business. In the financial year 2023, it invested Rs 9.9 bn towards greenfield and brownfield projects. It is expanding its capacity small molecules capacity by the 1,500-kilo litre (KL) in its Vishakhapatnam plant.

The company also acquired land to build a manufacturing plant in Hyderabad. It is also building an R&D lab in Hyderabad, which will be in operation in the financial year 2024.

Laurus Labs has filed for 13 product dossiers and received approval for 11. It has also filed a First New Drug Application (NDA) with the USFDA for Paediatric HIV based on the ODF technology platform.

Apart from this, the company is focussing on diversifying its product portfolio by adding more therapeutic areas to its bucket. Given the growing demand for pharmaceuticals in the domestic market, the company is all set to cater to it.

Coming to its financials, the company's revenue has grown at a CAGR of 21.2%, driven by volume growth across all therapeutic segments.

The net profit also grew at a CAGR of 53.1% during the same time. As a result, the RoE and RoCE have improved significantly and currently stand at 24.9% and 30.1%, respectively.

The company's debt-to-equity ratio is 0.2x and is expected to go up as the company is funding its capex partially through debt.

Laurus Labs also pays consistent dividends to its shareholders.

Laurus Labs Financial Snapshot (2018-2022)

Particulars (Rs m)	FY18	FY19	FY20	FY21	FY22
Total Revenue	20,725.0	23,081.0	28,376.0	48,372.0	49,509.0
Growth		11.4%	22.9%	70.5%	2.4%
Operating Profit	4,133.0	3,560.0	5,646.0	15,507.0	14,224.0
Operating Profit Margin	20.2%	15.5%	19.9%	32.2%	28.8%
Net Profit	1,676.0	938.0	2,553.0	9,838.0	8,324.0
Net Profit Margin	8.2%	4.1%	9.0%	20.4%	16.9%

Source: Equitymaster

Going forward, capacity expansions and diversification of the product portfolio will drive the company's growth in the medium term.

To know more, check out Laurus Labs' financial factsheet and latest quarterly results.

#4 JB Chemicals & Pharmaceuticals

Next on the list is JB Chemicals & Pharmaceuticals.

Established in 1976, it is one of the leading pharma companies in India.

The company manufactures a wide range of pharma formulation specialities, radio diagnostics, APIs, and intermediates. It also undertakes contract manufacturing for global pharmaceutical companies.

JB Chemicals and Pharma has a presence in India and serves 50 other countries, including the USA, Europe, Canada, Australia, Asia, and the Middle East.

The company has a well-balanced portfolio of products with acute and chronic segments. Rantac, Cilacar, Metrogyl, Cilacar-T, Nicardia, and Azmarda are its most popular brands and feature among the top 300 brands in India.

At present, the company has seven state-of-the-art manufacturing facilities in India, where it manufactures its products in 10 different dosage forms, including capsules, tablets, IV infusions, vials, and ointments.

Like many other pharma majors, JB Chemicals has also grown over the years through acquisitions. It has acquired several brands from major pharmaceutical companies to grow its product portfolio.

In financial year 2023, it acquired Razel, the cardiac franchise of Glenmark, and four brands from Dr Reddy's. The company also acquired several brands in the probiotics and reproductive segment from Sanzyme.

It spent Rs 10.4 bn for these acquisitions, which are funded partly through internal accruals and partly through debt. The company also plans to spend Rs 1 bn towards annual maintenance, which will be funded through internal accruals.

Apart from this, the company plans to launch new brands and increase the contribution to revenue from chronic therapies.

As of March 2022, the company was debt free. However, the debt is expected to go up slightly in the financial year 2023.

In the last five years, the company's revenue has grown at a CAGR of 10.9%, driven by revenue from its top brands. The net profit has grown at a CAGR of 22.7% during the same time.

Its RoE and RoCE currently stand at 18.6% and 24.6%, respectively. The company also has a decent track record of paying dividends and has a five-year average payout ratio of 25.1%.

JB Chemicals & Pharma Financial Snapshot (2018-2022)

Particulars (Rs m)	FY18	FY19	FY20	FY21	FY22
Total Revenue	14,691.0	16,846.0	18,256.0	21,591.0	24,643.0
Growth		14.7%	8.4%	18.3%	14.1%
Operating Profit	1,991.0	3,058.0	3,676.0	5,562.0	5,426.0
Operating Profit Margin	14.1%	18.6%	20.7%	27.2%	22.4%
Net Profit	1,387.0	1,940.0	2,724.0	4,485.0	3,860.0
Net Profit Margin	9.8%	11.8%	15.3%	22.0%	15.9%

Source: Equitymaster

Going forward, its growth plans and new acquisitions will drive the company's growth.

To know more, check out JB Chemical and Pharma's financial factsheet and latest quarterly results.

#5 Ipca Laboratories

Last on the list is Ipca Laboratories.

Founded in 1949 by a group of businessmen and medical professionals, Ipca Laboratories is a fully integrated pharma company.

It manufactures over 350 formulations and over 80 APIs across several therapeutic areas such as dermatology, cardiovascular, antidiabetics, pain management, and anti-malarial.

The company has 18 manufacturing facilities in India that manufacture a portfolio of over 154 brands. Four of its brands, Zerodol SP, Zerodol P, HCQS, and Folitrax, feature in the top 300 brands in India.

Ipca Laboratories exports to over 100 countries and derives nearly 50% of its revenues from exports.

In the last five years, the revenue has grown at a CAGR of 12.3%, driven by a diversified product mix. The net profit has also grown at a CAGR of 30.2% during the same time.

The RoE and RoCE currently stand at 16.6% and 19.5%, respectively. It also rewards shareholders with consistent dividends.

Ipca Laboratories Financial Snapshot (2018-2022)

Particulars (Rs m)	FY18	FY19	FY20	FY21	FY22
Total Revenue	32,900.0	37,929.0	46,759.0	54,991.0	58,854.0
Growth		15.3%	23.3%	17.6%	7.0%
Operating Profit	4,420.0	6,783.0	8,905.0	14,812.0	12,576.0
Operating Profit Margin	13.7%	18.2%	19.4%	27.6%	21.8%
Net Profit	2,437.0	4,440.0	6,114.0	11,488.0	9,110.0
Net Profit Margin	7.5%	11.9%	13.3%	21.4%	15.8%

Source: Equitymaster

The company's debt increased in 2023 due to a heavy debt-funded capex. However, it has a healthy interest coverage ratio of 102.4x which will help it fund the operations.

Ipca Laboratories is setting up a new manufacturing plant for its APIs with an initial outlay of Rs 2.5 bn.

It also acquired Lyka Labs and ABCD Technologies in 2022 to expand its portfolio and digitalise healthcare infrastructure in India.

The company is also launching new products. Five new products are in the pipeline, and two are in the clinical stage.

Currently, it enjoys market leadership in dermatology with a 60% market share. It plans to bifurcate this into two segments. Moreover, it is also creating another segment for neuropsychiatry and adding two more marketing divisions to the cardiology segment.

All this shows that the company has high growth plans, which will drive its revenue and profit growth in the medium term.

To know more, check out Ipca Laboratories' financial factsheet and latest quarterly results.

Why should you include pharma stocks in your portfolio?

With a market size of around US$ 49 bn, the Indian pharma sector ranks third in terms of volume and thirteenth in terms of value in the world.

It is expected to grow to US$ 65 bn by 2024 and US$ 130 bn by 2030.

Growing domestic consumption, rising per capita income, improving healthcare facilities, and the prevalence of chronic disease is expected to drive this growth.

To capitalise on this growth, pharma companies are investing heavily to expand their production capacity.

Although the growth prospects are high, it is important to note that pharma companies are highly regulated and subject to regulations by various federal agencies.

Hence you should be equally wary of regulatory and management issues before acting on any pharma stock.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...