Suven Pharma Vs AstraZeneca Pharma India: Pharma companies tend to grow as they advance in technologies and develop new medicines through investing rigorously in Research and Development. Navigating through regulations and market dynamics it is evident that pharma businesses are hard to build.

Getting approvals for medicines and monetising is one of the hardest parts for any pharma company. In this article, we will look into Suven Pharma and AstraZeneca Pharma India which operates in Pharma Sector.

Suven Pharma Vs AstraZeneca Pharma India

Suven Pharma – Company Overview

Suven Pharma started in 2018 specializes in the development and production of Intermediates, Active Pharmaceutical Ingredients (APIs), specialty chemicals, and formulated drugs within the Contract Research and Manufacturing Services (CRAMS) for international pharmaceutical, biotechnology, and chemical enterprises.

Headquartered in Hyderabad, the company is a fully integrated CDMO enterprise catering to renowned global pharmaceutical and fine chemical leaders in their NCE development initiatives. Comprehensive services span from initial process research and development to advanced-stage clinical and commercial manufacturing.

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Within their Contract Development and Manufacturing Organization (CDMO) framework, their business model encompasses four distinct processes: Process Research, Custom Synthesis, Formulation Development and Analytical Services, and Clinical Supplies Manufacturing and Packaging.

The company has 4 manufacturing plants which is 3 in Telangana and 1 in Vizag (Andhra). The two offices that remain are the Corporate Office in Hyderabad and the Business Office in New Jersey, USA.  

Segment Analysis

The company has recognised its revenue from operations under the Pharma Manufacturing & Services segment. It earns the majority of the revenue from Europe, which accounts for 86.67%; the USA accounts for 6.22%; India accounts for 2.62%; and the remaining revenue from the rest of the world accounts for 4.49% in FY23.

AstraZeneca Pharma India – Company Overview

Established in 1979, and headquartered in Bangalore as a subsidiary of AstraZeneca Pharma, AstraZeneca Pharma India is actively involved in the production, distribution, and promotion of pharmaceutical goods, with its sole operational segment centered around Healthcare.

The company concentrates on key therapeutic areas including Cardiovascular, Renal and Metabolism (CVRM), Oncology, Respiratory, Inflammation and Autoimmunity, Neuroscience, as well as Infection and Vaccines.

Segment Analysis

AstraZeneca’s revenue from operations for FY23 comes from the Sale of Pharmaceutical Products which include Tablets – 75.20%, Injectables – 16.68%, and Inhalation – 2% of the revenue. The remaining revenue comes from the Sale of Services to related parties i.e; Clinical Trials account for 6.10%. 

Their revenues from operations from India account majority of the share which is 93.61% and the remaining from Overseas accounts for 6.38% in FY23. The share from the sale of products based on therapeutic areas is Oncology accounts for 55.80%, Cardiovascular – 27%, Diabetes – 13.70%, and Respiratory – 3.50% in FY23.

Suven Pharma Vs AstraZeneca Pharma India – Industry Analysis

The Indian pharmaceutical sector stands as one of the globe’s foremost producers, with projections suggesting its market scale could soar to US$ 130 billion by 2030. By the fiscal year 2025, the domestic pharmaceutical industry is anticipated to hit US$ 57 billion, accompanied by a rise in operating margins ranging from 100 to 150 basis points (bps).

India serves as a significant hub for the production of generic drugs, witnessing a surge in patent filings by pharmaceutical entities. It ranks as the third-largest producer of Active Pharmaceutical Ingredients (API), commanding an 8% stake in the global API industry.

For Greenfield pharmaceutical projects, up to 100% Foreign Direct Investment(FDI) is permitted through automatic channels. In the case of Brownfield pharmaceutical projects, FDI up to 74% is permitted through automatic routes, with approvals from the government required for investments exceeding this threshold.

India boasts the highest count of FDA-approved plants beyond the borders of the United States. Indian pharmaceutical firms hold a significant portion of the prescription market in both the United States and the European Union. 

India produces over 500 distinct APIs, representing 57% of APIs listed on the WHO prequalified roster. According to Allied Market Research, the pharmaceutical packaging industry in India reached a value of US$ 1,434.1 million in 2020. Projections suggest that this figure is expected to rise to US$ 3,027.14 million by 2030, demonstrating a compound annual growth rate (CAGR) of 7.54%.

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Suven Pharma vs Astrazeneca Pharma India – Financials

Revenue and Net Profit

Suven slightly improved YoY by 1.52% in FY23 and reported its revenue from operations at Rs. 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 the company revenues are nearly in the same range. However, Suven Revenues were consistent in recent years but had increased around 3x times from FY19. Astra’s revenue was subdued from FY19 and lately in FY23 increased exponentially.

Particulars/ Financial YearRevenue (Cr.)
CompaniesSuvenAstrazeneca
2022-23₹1,340.33₹1,002.97
2021-22₹1,320.22₹805.60
2020-21₹1,009.72₹813.56
2019-20₹833.79₹831.81
2018-19₹377.83₹728.29

Net profits of Suven stood at Rs. 411.29 crore, a decrease of 9.36% from Rs. 453.80 crore. Comparably Astra’s Net profit stood at Rs. 99.29 crore in FY23, up an impressive 61.18% YoY from Rs. 61.60 crore.

Suven’s profit was down due to an increase in costs such as Manufacturing costs. Net profits over the years have improved from FY20. Astra’s net profit improved in FY23, over the 5 years profits fluctuated in wide margins.

Particulars/ Financial YearNet Profit (Cr.)
CompaniesSuvenAstrazeneca
2022-23₹411.29₹99.29
2021-22₹453.80₹61.60
2020-21₹362.34₹93.30
2019-20₹317.00₹72.21
2018-19₹109.27₹54.45

Profit Margins

Suven’s OPM stood at 44.20% in FY23 down from 47.56% from a year ago. Likewise for Astra it improved from 12.30% in FY22 to 14.67% in FY23. The decrease in OPM of Suven’s was due to slight increase in Manufacturing costs 13.15% in FY23 compared to 13.11% in FY22 and Employee costs by 8.24% in FY23 and 7.61% in FY22. 

Astra’s margin increase was due to a decrease in Material costs of 35.89% in FY23 compared to 38.72% in FY22 and Employee costs decreased to 25.83% from 28.57% YoY. Both the companies costs are compared to the revenue from operations.

Particulars/ Financial YearOPM (%)
CompaniesSuvenAstrazeneca
2022-2344.20%14.67%
2021-2247.56%12.30%
2020-2144.41%17.95%
2019-2046.92%15.83%
2018-1945.49%11.76%

NPM of Suven stood at 29.66% in FY23 decreased from 32.13% from a year ago. Astra’s NPM stood at 9.65% in FY23 improved from 7.51% in FY22. Suven’s NPM decreased due to drop in Other Income 49.81% YoY and slight increase in expenses.

Astra’s increase in profits was due to improvement in operational costs, however there was an exceptional item of Rs. 40.23 crore related to Voluntary Retirement Scheme and separation costs in FY23. 

Particulars/ Financial YearNPM (%)
CompaniesSuvenAstrazeneca
2022-2329.66%9.65%
2021-2232.13%7.51%
2020-2135.39%11.29%
2019-2037.21%8.55%
2018-1928.88%7.31%

Return Ratios

RoE of Suven 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 YoY due to decrease in net profits compared to Astra’s improvement in its net profits. Returns of funds on additional capital for Suven decreased whereas for Astra improved significantly. 

Over the years the RoE for Suven was around decent 25-45% and for Astra was 12-23% excluding FY19 for both the companies. Compared to RoE Suven’s is higher than AstraZeneca.

Particulars/ Financial YearRoE (%)
CompaniesSuvenAstrazeneca
2022-2325.21%22.95%
2021-2229.79%12.73%
2020-2135.78%22.74%
2019-2044.58%21.71%
2018-1918.92%19.88%

RoCE of Suven stood at 33.22% in FY23 down from 40.62% in FY22. Astra’s RoCE was 30.47% in FY23 compared to 16.76% in FY22. Both the companies had impressive returns, however for Suven it is higher than Astra’s.

For Suven the debt is too low and their returns have been around 33% to 50% over last 4 years. Astra’s have relatively no debt but they carry less value of lease liabilities and their returns been around 16-34% over last 4 years.

Particulars/ Financial YearRoCE (%)
CompaniesSuvenAstrazeneca
2022-2333.22%30.47%
2021-2240.62%16.76%
2020-2140.45%29.94%
2019-2049.77%33.63%
2018-1923.66%26.12%

Debt Analysis

Debt to equity ratio of Suven was 0.05 in FY23 down from 0.09 in FY22. Astra was at 0.01 in FY23 down from 0.02 in FY22. Both the companies hold less debt and that is beneficial for the company for any capex expansion.

They can fund their expansion through internal accruals and can borrow funds when Interest rates are low to benefit from low cost of capital and the opportunity for higher returns.

Particulars/ Financial YearD/E
CompaniesSuvenAstrazeneca
2022-230.050.01
2021-220.090.02
2020-210.160.03
2019-200.190.02
2018-190.140

Interest coverage of Suven stood 44.69 times in FY23 down from 70.56 times in FY22. For Astra, it is 273.76 times in FY23 improved from 88.41 times in FY22. 

Both companies have a comfortable level of covering Interest costs out of their net profits. Any company that is greater than 3 times their Interest cost is termed better. However, based on the Industry cycles it should be analysed. Any adverse effects on the industry can affect the profitability and ratio over time.

Particulars/ Financial YearInterest Coverage
CompaniesSuvenAstrazeneca
2022-2344.69273.76
2021-2270.5688.41
2020-2141.07117.6
2019-2018.53100.97
2018-1957.580

Suven Pharma Vs AstraZeneca Pharma India – Key Metrics

Let’s see some of the Key Metrics of Suven Pharma vs AstraZeneca Pharma India:

ParticularsSuvenAstrazeneca
CMP₹614.75₹5,105.05
Market Cap (Cr.)₹16,577₹14,294
EPS (TTM)₹16.96₹69.20
RoE (%) (TTM)22.31%26.41%
RoCE (%) (TTM)29.55%35.17%
Stock P/E (TTM)38.482.63
Current Ratio (TTM)18.722.2

Suven Pharma Vs AstraZeneca Pharma India – Future Plans

Suven Pharma

  • Management’s objective is to fulfill existing capacities before investing new capital intoto the business in the near term.
  • Over the upcoming 4 to 6 quarters, the company is looking to increase its capacity expansion based on the business environment.
  • Cohance Lifesciences merger helps facility with 1,400 KL capacity to 2,650+ KL capacity expansion.
  • The Suryapet facility with 400+ KL capacity is being readied for commercial operations.
  • The management remains open to inorganic growth opportunities arising out of building a CDMO platform over the next 5 to 7 years.

AstraZeneca Pharma India

  • The company’s main goal is to launch new products in various therapeutic areas, such as biopharmaceuticals, rare diseases, and oncology.
  • Over 15 new assets and new indications are planned for regulatory submission in the next 3-4 years.
  • Pipeline expansion across all therapy areas in areas like oncology, biologics & rare diseases.
  • Investing significantly behind new products through market expansion, evidence generation, prescriber education programs, etc.
  • Establishing a new therapy area for a dedicated rare disease business unit.

Read more: Pharma Stocks With High Dividend Yield

Conclusion

As we near the end of the article, we will look at these companies in brief. Both companies operate in the pharmaceutical space. Suven has higher revenues and ratios are better compared to AstraZeneca. However, AstraZeneca has an edge when it comes to Cash Conversion.

Their receivable days are lower than Days payable and excess funds can be used in the company operations without any fundraising. Suven has a higher cash conversion cycle. The cash flows of AstraZeneca are better compared to Suven Pharma. AstraZeneca commands a higher P/E compared to Suven Pharma.

Investors must thoroughly analyse companies before making investments, 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 views in the comments section below.

Written by Santhosh

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