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| Dividend |
| An interim dividend of Rs.5.50 per equity share of Rs.10 for the year 1999-2000 amounting to Rs.17.78 crores has already been paid in May 2000.This includes the pro-rata dividend of Rs.6.79 crores on bonus shares allotted on 10th December 1999.Your Directors do not recommend any additional dividend to be paid.
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| Operations |
You will be pleased to note that your Company marked its entry into the new millennium with yet another commendable performance.Sales at Rs.759 crores showed an increase of 23% with the Company sustaining its high level of performance both in the domestic and international markets.Profit after tax at Rs.133 crores was 17.5%of sales,marginally lower than the 18.6%level of the previous year.This was mainly because of intense competition, which affected price realisation.
In keeping with its tradition of breaking new ground,your Company achieved a significant ‘first ’during the year.Although the Montreal Protocol makes it obligatory for developing nations to phase out the use of chlorofluorocarbons (CFC)in medicinal products by the year 2010,Cipla became the first outside the USA and Europe to launch CFC-free inhalers –a good ten years before the deadline.
Following the successful introduction of its CFC-free salbutamol inhaler,Cipla also launched the world ’s first CFC-free budesonide inhaler.These are important additions to the Company ’s antiasthmatic range that has the distinction of being the widest in the world.
As part of Cipla ’s continuing commitment to alleviate critical ailments like AIDS,your Company introduced a number of new anti-HIV drugs,developed from the basic stages. Cipla thus reached the new milestone as the first Indian company to offer such a vast and sophisticated armoury to combat this dreaded disease.These anti-HIV drugs are being provided at a fraction of their international prices.
During the year,Cipla once again took the lead in introducing the largest number of formulations in the country. While many of these were spontaneously welcomed by the medical profession,their full potential will emerge in the coming months. Among the major products launched during the year were:
- Asthalin HFA (salbutamol inhaler)–CFC-free bronchodilator aerosol for asthma
- Atorlip (atorvastatin tablets)– advanced lipid lowering agent
- Bambudil (bambuterol tablets)– long--acting bronchodilator for asthma
- Cefadur Rediuse (cefadroxil syrup)– ready--to-use paediatric antibiotic formulation
- Doxacard (doxazosin mesylate tablets)–once-daily alpha blocker for hypertension and symptomatic relief of benign prostatic hyperplasia (BPH)
- Duovir (lamivudine plus zidovudine tablets) – combination antiretroviral for HIV infection
- Entofoam (hydrocortisone acetate foam)–corticosteroid rectal foam for ulcerative colitis
- Lamivir HBV (lamivudine tablets)– new antiviral for chronic hepatitis B
- Melflam (meloxicam tablets)– preferential COX-2 inhibitor NSAID for arthritis
- Nevimune (nevirapine tablets)– novel antiretroviral for HIV infection
- Novaclox-LB (amoxycillin,cloxacillin and lactobacillus capsules)– antibiotic-- lactobacillus combination free of gastrointestinal side effects
- Novamox-AX (amoxycillin plus ambroxol tablets)– antibiotic--mucolytic combination for bronchitis
- Seroflo Rotacaps (salmeterol plus fluticasone)– new corticosteroid bronchodilator combination for asthma
- Synclar Dry Syrup (clarithromycin)–macrolide antibiotic for paediatric respiratory infections
- Oflox-TZ (ofloxacin plus tinidazole tablets) – antibacterial combination for mixed aerobic/anaerobic infections
From the active pharmaceutical ingredients (APIs)under development,the following were successfully scaled up for commercial manufacture:
- Budesonide – corticosteroid
- Cyproterone acetate – antiandrogen
- Docetaxel – anticancer
- Ebastine – antihistamine
- Gabapentin – antiepileptic
- Leflunomide – for rheumatoid arthritis
- Mometasone furoate – corticosteroid
- Nevirapine – non--nucleoside reverse transcriptase inhibitor
- Olanzapine – antipsychotic
- Pantoprazole sodium sesquihydrate – antiulcerant
- Rofecoxib – COX--2 inhibitor for rheumatoid arthritis
- Sibutramine – antiobesity
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| Exports |
| The Company ’s exports at Rs.143 crores grew by more than 20%during the year. Cipla entered into contracts with leading US generic companies,for the supply of select drug formulations to the US market. Similar tie-ups are already in place in Europe and other important markets. The Company earned Rs.3 crores as technical fees for the supply of know-how to companies in various countries including the USA,Europe and the Middle East.
Even as the Company consolidated its existing export business, significant inroads were made into new markets in Latin America, Canada, Europe, Africa, Asia Pacific and the Middle East. A large team of scientists is involved in working out the formalities for product registration in a number of countries. Cipla’s relentless effort towards regulatory approvals over the years is now showing results and will provide the Company the necessary platform to further expand its overseas operations.
The newly launched CFC-free range of medicinal aerosols is likely to give the Company an edge in the global markets after the registration formalities are complete. Cipla ’s overseas performance over the years has reinforced its standing as a renowned source for quality products and technology. Your Company is now poised to extend its reach in the international generic market with a wider range of products.
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| Research and Development |
| As in the past, Cipla’s R&D division continued its focus on technological innovation. The Company zealously follows a system of knowledge management within and outside the organisation to support its research efforts.
A wide spectrum of products has been successfully taken up for commercial manufacture during the year. Several innovative processes have already taken shape in the laboratory for the manufacture of active pharmaceutical drug ingredients including abacavir, alosetron, apraclonidine, atorvastatin, didanosine, ef virenz, linezolid, loteprednol, paroxetine, pioglitazone, quinapril and topotecan. Their commercial manufacture is on the anvil in the near future. Significant progress was also achieved in the area of formulations and medical devices. Besides CFC-free metered dose inhalers, the R&D team has also developed other novel dosage forms. A unique dry powder delivery device is currently under development.
With a view to enhance its participation in the global market, Cipla is focusing on securing international patents for new processes, innovative drug formulations, advanced drug delivery systems and medical devices. The Company is carefully examining its future role in path-breaking areas of research such as genetics. This could open up unexplored venues of global alliances for the introduction of new therapeutic agents.
The Company’s new R&D centres at Kurkumbh and Patalganga obtained recognition from the Department of Scientific and Industrial Research, Government of India. The same was renewed for the existing in-house R&D units at Mumbai and Bangalore.
Cipla ’s R&D units are closely associated with major CSIR laboratories as well as other research institutions in India. During the year, the Company’s expenditure on R&D was Rs.30 crores,approximately 4%of its turnover.
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| Quality Assurance |
Cipla’s world class manufcturing fcilities continue to enjoy the approval of major global regulatory authorities. The bulk drug facilities at Bangalore, Kurkumbh and Patalganga are approved by the US FDA. The formulation manufacturing facilities at Bangalore, Kurkumbh, Patalganga and Vikhroli are approved by the MCC, South Africa and the WHO.Kurkumbh and Patalganga already have the approval of the MCA, UK and the approval of the TGA,Australia was renewed during the year.In addition,the manufacturing facilities of Kurkumbh,Patalganga and Vikhroli have been certified by the SICD, Slovakia to conform to the WHO GMP standards and EEC norms.
The fvourable observations by audit teams of leading overseas customers underline the high standards of the Company’s quality assurance systems.
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| Environment and Safety |
The Company continued to maintain and upgrade its level of safety preparedness through safety audits, periodical hazop studies, ongoing risk management reviews and training programmes. High levels of safety conditions and practices continue to be enforced at all facilities.
Significant contributions from the R&D division and substantial investments in pollution control systems helped maintain effluent treatment at effective levels.
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| Expansion and Modernisation |
| Considering the growing needs of business particularly in the various international markets, the Company invested substantially in modernising its plant and machinery at all its manufacturing locations.
The aggregate capital expenditure incurred during the year was Rs.32.37 crores.
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| Business Environment and Future Prospects |
The expectations of the indigenous pharmaceutical sector were belied, once again, in the absence of any concrete measures to boost the industry.Despite several assurances, there was no relaxation in the drug pricing policy.Besides lacking transparency, the policy guidelines are based on outdated criteria and continue to be applied in an arbitrary and inequitable manner.In this era of liberalisation, the pharmaceutical industry is eagerly waiting steps to relax pricing and other controls that have been hampering its growth for years.
As regards the impending introduction of product patents, it is fervently hoped that the Government will provide for compulsory licensing to protect Indian consumers, while finalising the patent amendment bill. India would do well to learn from the experience of the African countries, which are caught in the patent bind and are unable to provide life-saving drugs, like those to fight AIDS, to their ailing millions.
Regardless of the challenges posed by the changing business environment, Cipla is confident of maintaining its leadership position in the coming years on the basis of its inherent technological strengths and a highly committed and skilled manpower.
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| Social Responsibility |
Cipla's Palliative Care Centre continues to reach out with love and care to terminally ill cancer patients. As of date over 1000 patients have been tended to at this centre. The new Dr. K.A.Hamied Foundation has successfully commenced its training activities in palliative care sciences. Orientation courses and workshops are being conducted regularly for the benefit of medical and para-medical personnel.
The Company continues to support the promotion of education, sports and community welfare both directly and through its charitable trusts.
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| Fixed Deposits |
| Ninety-three deposits, amounting to Rs.7.38 lakhs, due for repayment as on 31st March 2000 were not claimed by the depositors.As of date, 100 deposits amounting to Rs.10.28 lakhs remain unclaimed.
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| Bonus Shares |
| As per the approval accorded at the last Extra-ordinary General Meeting,the Company has allotted bonus shares in the ratio of two shares for every share held.Following the allotment of bonus shares, the paid-up share capital of the Company has increased to Rs.59.97 crores.
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| Personnel |
| The Directors record their appreciation of the support and co-operation of all employees towards the growth of the Company.
Particulars of employees as required under Section 217 (2A)of the Companies Act, 1956, are annexed to this report.
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| Disclosure of Particulars |
As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant information and data are annexed to this report.
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| Directors |
Mr.Amar Lulla,Mr.Harish Chawla and Mr.D.R.Narang retire by rotation and being eligible, offer themselves for reappointment. |
Messrs.R.Nanabhoy &Co.have been reappointed to carry out the cost audit for the year.
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| Auditors |
You are requested to appoint as auditors Messrs.R.S.Bharucha &Co., retiring auditors, who are eligible for reappointment. |
| Acknowledgement |
The Company will complete 65 years in August 2000.The Directors gratefully acknowledge the valuable contribution of every individual associated with the Company, in the past or present, towards its growth and success, and for fulfilling Cipla’s raison d ’etre:Caring for Life. |
On Behalf of the Board,
Y.K.Hamied
Chairman &Managing Director |
| Mumbai, 26th July 2000 |
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