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Your Directors take pleasure in presenting this 65th Annual Report along with the Audited Financial Statements for the financial year ended March 31, 2016. The Company operates only in one business segment viz., “Pharmaceuticals” and this Report covers its Pharmaceutical business performance.
Your Directors recommended a dividend of Rs.15.00 (150%) per equity share for the period under review. The dividend payout will be Rs.6,862 Lakhs and the dividend distribution tax payable by the Company would amount to Rs.1,397 Lakhs. This aggregates to Rs.8,259 Lakhs.
Your Company’s net sales for the year ended March 31, 2016 was Rs.199,486 Lakhs as compared to Rs.182,774 Lakhs in the previous year, registering a growth of 9%.
Profit before tax and exceptional items for the financial year ended March 31, 2016, increased by 23% to Rs.39,232 Lakhs from Rs.31,846 Lakhs.
Your Company achieved a Net Profit of Rs.22,277 Lakhs for the Financial year ended March 31, 2016 as compared to Rs.6,982 Lakhs in the previous year after giving effect to the scheme of amalgamation of Wyeth Limited with Pfizer Limited.
Indian Economic Overview
Amid global uncertainty, the Indian economy continued to restore its macroeconomic stability. India’s GDP grew by 7.6% in 2015–16, making it one of the fastest growing major economies in the world. Inflation remained under control and fiscal and current account deficits continued to remain moderate. The Government of India’s strong commitment to fiscal targets, focus on infrastructure creation and attracting investments bolstered the confidence of entrepreneurs and investors.
Government initiatives like Make in India, Smart Cities campaign, Pradhan Mantri Jan Dhan Yojana augur well for the country’s overall development. Besides, the Swachh Bharat Abhiyan has brought hygiene, sanitation and their linkage to health onto the forefront.
The Department of Industrial Policy and Promotion (DIPP) announced the Startup India Stand up India initiative to celebrate India’s entrepreneurial spirit and to encourage an ecosystem for fostering innovation and entrepreneurship in the country.
While these programmes act on distinct levers of socio–economic growth, the Government’s underlying focus has been on enhancing the ease and attractiveness of doing business in India. In the World Bank’s rankings on ease of doing business, India moved up 12 ranks to 130.
Going forward, India’s economic growth is projected to remain robust, at around 7.25%, as reported by Organization of Economic Co–operation and Development in November 2015. Three key trends are expected to play a major role in the growth of both GDP and demand:
1. A favourable demographic – with an approximate addition of 200 million to the working age group by 2030
2. Rapid expansion in the number of high–income households – from 9 million in 2010 to 32 million by 2020. Fast emergence of middleincome families – from 63 million to 117 million by 2020
3. Increased pace of urbanisation: 40% of India’s population will be urban by 2030, compared to 31% in 2010 resulting in the urban economy constituting as much as 75% of the national GDP. (Source: Euromonitor, Bain, BCG, PwC).
Indian Pharma Industry
Indian pharmaceutical market is the third–largest in terms of volume and 13th largest in terms of value (Source: UBM India) in the world.
According to IMS MAT (March 2016), the Indian Pharmaceutical Market (IPM) touched Rs.1,04,633 crores, registering 14.4% growth in 2015–16. The volume of existing products, new products and price increase made 5.0%, 3.6% and 3.6% contributions to this growth respectively. The growth of the IPM improved to 14.4% in 2015–16 from 13.4% in 2014–15.
Generic drugs form the largest segment of the Indian pharmaceutical sector. The branded generic segment itself comprises over 40,000 brands. The McKinsey India Pharma 2020 report suggests that while the mix of therapies will continue to gradually move in favour of speciality and super–speciality therapies, mass therapies will still command half of the total market share in 2020.
Domestic growth drivers
The growth in the healthcare market has been buoyant on account of several advantages:
1. Strong demand – Rising incomes, greater health awareness, demand for treatment of lifestyle diseases and increasing access to insurance
2. Attractive opportunities – Investment in healthcare infrastructure is set to rise. From the creation and up gradation of primary, secondary and tertiary healthcare facilities to investments in research and development capabilities. Medical tourism remains a strong demand creator for the sector.
3. Quality & expanding access – Expansion of healthcare institutional services, deeper penetration of the market by pharmaceutical companies and growing demand for quality therapies.
4. Policy support – Through ongoing programs such as the National Rural Health Mission (NRHM), expansion of the Universal Immunisation Program, Government and state funded health insurance schemes like “Arogyasri” and the expansion of the Jan Aushadhi scheme to increase access to affordable generic drugs.
While the long term outlook continues to be positive driven by these mega trends, in the short run, recent policy decisions are adversely impacting the industry. Over the last few years, price control has dented the revenues of the industry. Further the manner in which the latest NLEM price changes have been implemented as well as the process followed for the notification banning certain Fixed Dose Combinations have not been in the Government’s spirit of “ease of doing business”. Your Company recommends that the Government ensure a greater balance between the needs of patients with that of the pharmaceutical industry in future policy initiatives and implementations.
Policy Implementation challenges: The Government framed the Draft National Health Policy 2015 to provide universal access to public health facilities. However, its implementation has been challenging. Several provisions, including the proposal to provide free essential drugs have been deprioritised.
Fund allocations: Budgetary allocation to healthcare has remained stagnant. At 1.3% of GDP, India’s allocation continues to remain among the lowest globally. The 12th five year plan as well as the draft National Health Policy committed to increase this to 2.5% of GDP.
By comparison, the other BRICS countries allocate between 3.5 to 8.5% of their GDP towards healthcare priorities.
Drug price control: Expanding scope of price controls will remain the single most significant challenge for the industry. Through policy measures, such as the Drug Price Control Order, the Government continues to actively regulate prices of an expanding number of pharmaceutical products. This was evident during the year with the expansion of the National List of Essential Medicines. The recent amendment to the DPCO 2013 has seen the number of drug formulations under price control increasing.
The expansion of the National List of Essential Medicines (NLEM) has added 106 drugs and deleted 70 drugs as on December 2015. This brings the total number of listed drugs to 376. In line with provisions under DPCO 2013, the prices of 530 formulations are subject to price control. The ceiling price of these formulations has been further revised downwards by 2.71% in April 2016 following a reduction in the annual wholesale price index.
While the Government’s objective is to improve access through price control, your Company believes and recommends that a tiered pricing model that allows for differential pricing between public and private markets is a more effective tool to achieve the said objective.
Ban on fixed dosage combination (FDC) drugs: In March 2016, the DCGI announced a ban on approximately 350 FDCs, after review of 6000 FDCs. While the intent of the Government in taking action against unsafe or irrational pharmaceutical products that have not received due approvals by the central drug regulator is well appreciated, concerns have been raised on including products that have received all requisite approvals, as also on the process followed to arrive at the list.
The government’s priorities include providing healthcare infrastructure, expanding universal insurance and enhancing access to medicines.
Through the National IPR Policy, the Government has also indicated its priority to improve the innovation eco–system in India. The policy proposes initiatives ranging from increasing awareness around IP to strengthening the legislative frameworks and encouraging industry–academia collaborations. These measures and priorities provide an opportunity for continued growth for the industry.
Going forward, the expanding medical infrastructure, increasing awareness and detection of chronic diseases and a fast expanding health insurance cover will drive the pharma sector’s growth. McKinsey suggests a health insurance penetration of 45% by 2020. The government sponsored schemes, particularly the Rashtriya Swasthya Bima Yojana is expected to contribute 22% of the overall health insurance coverage.
Although the growth may slowdown slightly in the remaining part of 2016, it is expected to remain steady throughout the forecast period.
India’s consistent economic growth and rapid increase in chronic diseases will contribute to steady market growth. The market will continue to be regulated to ensure promulgation of most effective medicines.
REVIEW OF OPERATIONS:
Your Company maintained its position as the 3rd largest MNC and 10th largest company in the Indian pharma market. In nine of its 15 therapy areas, Pfizer Limited is positioned among the top 10 in the market. Eight products of your Company feature in the list of top 100 pharmaceutical brands in India. Three of your Company’s key brands Prevenar–13 (pneumococcal vaccine), Becosules (Multivitamin) and Corex (Cough Formulation) ranked among the top 20 pharmaceutical brands in India.1 Your Company is focused on growing and strengthening the power brands with an active promotion of new and innovative products in its therapy areas and expansion of these power brands with line extensions. Your Company has nine teams promoting various products of the Company.
Prevenar13 is a pneumococcal conjugate vaccine, approved for the prevention of pneumococcal pneumonia and invasive pneumococcal disease caused by 13 streptococcus pneumonia strains. Prevenar13 has consistently been one of Pfizer’s strongest performing brands with a growth momentum in mid double digits year on year with a market share of 18% in the Indian Vaccine market2.
Aligning with the Government of India’s priority of reducing child mortality due to vaccine preventable diseases, your Company is working closely with the Government to arrive at solutions that will have a major impact on the health of millions of children in India and will help lower the global burden of pneumococcal disease. The introduction of a new presentation of multi–dose vial globally reflects the Company’s commitment to creating an affordable and sustainable program in the world’s more vulnerable communities including India.
Your Company has implemented a number of initiatives to educate and create awareness amongst healthcare professionals to emphasize the need of Pneumococcal vaccine in saving lives of children and adults. Some of these include Continued Medical Educational Programs, Speaker Development Programs, Nurses & Paramedic Educational Programs on best practices in immunization.
The Trade Rx team manages the flagship brands like Gelusil, Becosules and Corex through pioneering customer centric marketing programs aimed at making the brand relevant to the current stakeholders.
The portfolio with the blockbuster brand Corex enjoys 50% market share3 in its category; new line extensions have been introduced to further strengthen the portfolio – Tricorex and Corex Nasal Spray caters to conditions arising out of wet cough and to soothe nasal congestion respectively.
The Government of India recently passed a prohibitory order for the manufacture for sale, sale and distribution of fixed dose combination of Chlopheniramine Maleate + Codeine Syrup. Your Company had challenged the said notification before the Hon’ble Delhi High Court for its product “Corex” and obtained an interim stay on the operation and execution of the notification. The legal proceedings are ongoing. The stay order from the Hon’ble Delhi High Court has enabled the Company to continue manufacture and sale of Corex.
Becosules is the No.1 B–Complex in India with a market share of 55%4 in its category and this year, the Portfolio also introduced new line extensions – Becosules Performance and Becosules Plus.
With 28% market share5, Gelusil is the No.1 liquid antacid, used for relief in acidity, heartburn and flatulence and is a leader in its category. The team introduced uniquely positioned new line extensions of Gelusil Xtracool for acidity with nausea and Gelusil sachet for the on–the–go consumer. Some of the key programs undertaken for the year under review were Doctors’ engagement programs, Trade / Retail outreach, Consumers outreach and activities to enhance category presence.
Women’s Health Care (WHC):
The Women’s Health continues to be one of the most significant therapy areas for your Company. Pfizer Limited’s brands are amongst the Top 3 in the catagories of contraceptives, folic acid, iron supplements and Menopausal Hormone Therapy. The WHC portfolio continues to retain leadership in the represented gynecology market with a market share of about 12%6. WHC team focused on increasing volumes through prescriptions for its portfolio by enhancing the scientific engagement with physicians through sustained medical education programs which continue to yield positive results.
Your Company is the leader in the defined Contraception Market with 29.9% market share. In order to enhance awareness and increase the adoption of oral contraceptives, the marketing team of WHC conceptualized a ‘Myth Busting Campaign’. The campaign reached out to doctors and patients alike to demystify the myths associated with long term oral contraceptive usage. Further, the campaign also included expanded usage of oral contraceptives by strengthening the “Act on Facts” initiative.
Becosules Women, a line extension of Becosules is a nutritional supplement for women and has performed well since it was launched in the third quarter 2015–16.
Mucaine Gel, which is the category leader in Liquid Antacid, registered a good growth on the back of an active promotional campaign and introduction of a new bigger 350 ml pack.
Anti–Infective, Ophtha & Cardiovascular:
Your Company ranks 5th in the hospital segment7 with a wide portfolio covering categories across the critical care segment. This position has been built over the years through initiatives such as scientific engagements and strong medical advocacy.
Your Company has further strengthened this position with the strategy of establishing “Leadership in Hospitals” through segmentation of the market & key accounts to ensure optimal focus. The team designed interventions to drive key brands & segments with strong scientific engagement and to address needs of each segment effectively to achieve competitive advantage.
The Ophthalmology business grew by 21.3% over the previous year8. The portfolio introduced a unique device called Xalease in the second half of the year under review. This device provides a convenient way for self–administration of eye drops.
The Cardiovascular team operates in the anti–hypertensive segment with its flagship brand ‘Minipress XL’, which is the second largest anti–hypertensive brand in India. Amlodipine, Pfizer’s research molecule and one of world’s largest used antihypertensive is marketed by the team in India as Amlogard.
Pfizer’s blockbuster and one of the most popular brands in the world ‘Viagra’ continues to provide millions of patients in India with a proven solution to erectile dysfunction. The team is well placed to build a strong portfolio and deliver robust growth in 2016.
Pain, Respiratory & Central Nervous System (CNS):
Pfizer’s pain portfolio is ranked 5th in Non–Steroidal Anti Inflammatory Drugs (NSAID) market9. This portfolio offers brands as Dolonex & Dalacin C capsules; both leading brands in the molecule segment. Dolonex oral is one of the top–3 brands in oral NSAID market.
Pain Management team has focused on brand & specialty wise imperatives to leverage growth opportunities in targeted segments.
1. Foot note ISP meeting via live webcast that saw a participation from over 680 surgeons.
2. Know pain cascade meeting at Primary Care Physicians (‘PCPs’) that saw engagement with more than 2000 PCPs through 50 meetings.
Dolonex as a brand has more than 78.5% value market share in its molecule segment10. Mobility clinic launch and know your root program at Dentists were some of the key initiatives that the brand undertook during the year.
Dalacin C Capsule is the leading brand in its molecule segment with more than 65% market share11.
Your Company’s respiratory portfolio is ranked 3rd in the represented market12. This year the team drove several Key Opinion Leader (KOL) advocacy programs for its brands. Partnerships have been created with leading bodies nationally and internationally, to cascade disease continuums to over 3000 physicians. The respiratory team initiated engaging knowledge programs in areas like inflammation and infection for ENT conditions. The team also collaborated with top Indian and international speakers around appropriate management of asthma exacerbations.
Your Company’s Neuroscience portfolio is ranked 6th in the CNS market with a year on year growth of over 9%13. Major innovative brands like Ativan, Pacitane and Daxid are leaders in the respective Therapeutic Category IV (molecule segment).
Some of the key initiatives for the year under review have been Innovative scientific and Key Opinion Leader (KOL) advocacy programs coupled with multi–channel marketing activities that drove the portfolio across Psychiatrists.
The CNS team has further created an innovative program to engage opinion leaders through virtual advisory boards. This platform was successful and engaged more than 470 Psychiatrists across India.
For the year under review, initiatives were undertaken to enhance distribution coverage into smaller towns in select states. The team developed innovative display programmes that were launched to drive in–store visibility for Anacin and Anne French. A new TV campaign was launched for Anne French to enhance its brand equity and extend usage among non–users of hair removing creams.
Your Company values the confidence and faith reposed by the patients in support of Pfizer Quality products. Your Company has various levels of quality systems starting from local quality assurance to global quality audits and approvals that ensure that the same high standards of quality are followed across Pfizer worldwide.
Your Company’s continued focus on non–renewable resources has created an excellent model for environmental sustainability. There is a constant emphasis on conservation of resources across manufacturing sites and to reduce waste. Your Company has a state of art and award winning manufacturing facility at Goa. The plant manufactures products with the most stringent global quality. The site holds ISO 9001 and GMP accreditation along with ISO 14001 & OHSAS 18001. The site has a Formulation Development Cell catering to new product development and technology transfer needs of India Business operations. The Plant strictly adheres to Global safety and environmental norms and has received a number of corporate awards. The Plant was the recipient of Frost and Sullivan “FUTURE READY (PLATINUM) AWARD” in 2015.
In September 2015, your Company entered into a Business Transfer Agreement (“BTA”) for transfer of the Company’s Business at Thane Plant as a going concern.
MEDICAL AFFAIRS DIVISION:
The Medical Affairs Division through its scientific engagement with healthcare professionals supports all business units and works towards creating scientific partnerships with stakeholders beyond Key Opinion Leaders through various strategic initiatives
1. Young Specialists: To partner with specialists with less than five years of clinical practice, the Medical team launched a “young doctor’s program” which is a multipronged education initiative involving webinars on case discussions, face to face preceptorship meetings and also developing treatment algorithms in trauma management and infectious disease. This initiative will benefit over 5000 doctors across multiple disciplines.
2. Pharmacist Education Program: In India we have seen a huge knowledge gap amongst retail Pharmacists which leads to potential medication errors. Towards bridging this gap, your Company contributed by launching Pharmacy Education Program that will provide certified training to about 1000 Pharmacists on educational modules prepared by an independent agency.
3. Digital CMEs: To scale up our physician reach in a cost effective way your Company developed unique format of digital CMEs called “meet the expert” in partnership with commercial and business strategy team using an in–house HCP portal called Inquimed.
Till date more than 6000 physicians have benefitted through these programs.
4. Physician association partnership: We created strong scientific partnership with physician associations such as FOGSI (Federation of Gynecologists and obstetricians in India) and IMS (International menopausal society) by providing them educational grants to conduct CMEs around the myths of contraception and hormonal therapy. Pfizer was acknowledged by FOGSI as a knowledge partner in this initiative in their annual newsletter.
HUMAN RESOURCES (“HR”)
Your Company has consolidated and strengthened the interventions set into motion last year under People priorities. Our focus continues to remain on integrated talent management, leadership development and driving the OWN IT culture. In the year gone by, your Company enhanced focus on leadership development through:
• Talent review exercise conducted to identify top talent within the country along with creation of Individual Development Plans and career planning for leaders.
• Partnering with top business schools to create skill development programs for middle managers
• Career planning for chosen senior leaders
• Succession planning for critical positions
A dedication to field colleagues, the Year of the Field Force campaign aims to provide our flag bearers result oriented approach across the following three areas:
• Enhancing the ease of getting things done – implemented actions include automated Pfizer Financial tool for quick turnaround in payments, digital dashboards for actionable insights
• Create opportunities to connect and interact with leadership team – Actions implemented include HR Kiosks for Pfizer policy clarity and addressing queries
• Focus on skill development – implemented actions include Competency based evaluation process, incentive schemes. Upcoming – Sales career architecture for cross–functional team movement
Strategy & Business Operations (SBO)
Strategy & Business Operations (SBO) focuses on the identification of opportunities for growth, effectiveness, efficiencies and the implementation of initiatives to target these opportunities.
Some of the key contributions for the year under review are:
• Supported the launch of new products across the Nutraceuticals, Women’s Health, GI & Respiratory therapy areas
• Developed an innovative, managed–services based operating model for multi–channel marketing
• Development and roll–out of digital commercial dashboards across the field force
• Worked towards multiple business development deals to address both portfolio and route–to–market opportunities
• Played a key role in supporting projects to enhance the effectiveness of our field force (e.g. territory segmentation, real–time detailing reports)
Your Company’s Legal Division is committed to providing responsive, client–centric service that protects and advances Pfizer’s goals.
The Legal team’s activities include protecting your Company’s interest in every transaction, ensuring compliance with all applicable laws governing the industry, protecting your Company’s intellectual property and other assets, assisting various business units in evaluating the risks associated with completing transactions and other activities.
Some of the areas where your Company’s Legal team partnered are:
• Contribution to position papers on draft Intellectual Property Rights Policy
• Supported your Company’s Manufacturing Division for the Thane Plant business transfer transaction
• Played active role in mitigating risks relating to litigation of our select brands
Your Company’s Legal Director Mr. Samir Kazi was awarded the ‘Pfizer Global General Counsel Award 2015’ by Pfizer Inc., USA
Your Company’s Business Technology Division connects the entire organization and drives business results using innovative technology platforms. This team works closely with all Business Units to strategize, develop and deliver business solutions that help them keep their customers and stakeholders in the forefront. Some of the key business technology initiatives for the year under review are:
• Enhance knowledge dissemination and augmenting reach to healthcare practitioners through multi–channel marketing and digital capabilities
• Enhancement of e–detailing capabilities for field colleagues leading to better in–clinic effectiveness with Healthcare practitioners
• Launch of e–crucible, your Company’s internal quarterly magazine on i–pads providing a rich interactive multi–media experience for the field colleagues
• Introduction of commercial business intelligence dashboard leading to actionable data and insights at the click of a button for effective decision making
• Introduction of leading edge technologies at the new corporate office with soft phone facility for all colleagues, follow–me printing, meeting room bookings via i–pads. These newer technologies have led to greater efficiency and increased colleague productivity with significant cost savings.
INTERNAL CONTROL SYSTEMS, THEIR ADEQUACY AND COMPLIANCE
Overview: Compliance Controls and Risk (CCR) Team is responsible for continuously monitoring the adequacy and effectiveness of internal controls. The team’s objective is to provide to the Senior Management and Audit Committee, an independent and reasonable assurance on the adequacy and effectiveness of the Company’s risk management, control and governance processes. This is achieved through a co–sourced internal audit model which includes independent reviews performed by CCR team together with audit reviews performed through an independent Chartered Accountant firm.
Internal Financial Control: The Company has laid down Internal Financial Controls that includes a risk based framework to ensure orderly and efficient conduct of its business, safeguarding of its assets, accuracy and completeness of the accounting records and assurance on reliable financial information. The Audit Committee evaluated the design framework and operative assessment and discussed with members of management and Statutory Auditors to ascertain their views or opinion. The Audit Committee satisfied itself with the adequacy and effectiveness of the internal financial control system laid down by management. The Statutory Auditors have confirmed the adequacy of the internal financial control systems over financial reporting.
Internal Audit Plan: Annually, based on the risk assessment and findings from previous internal audits, the CCR Team makes the annual audit plan which is approved by the Audit Committee and followed throughout the year. As part of the quarterly review, status of the annual audit plan, design assessment, operating effectiveness, key audit findings and remediation status of prior findings are presented and discussed with Audit Committee.
MAPP: Your Company has a policy covering interaction with Healthcare Professionals and Government officials called ‘My Anti–Corruption Policy & Procedures’ (MAPP). The policy addresses both local legal requirements while also leveraging on best practices followed in other markets. As a way of reinforcing its compliance culture, your Company has identified 100 odd colleagues as “Compliance Champions” from various teams who act as first point of contact for any colleague in case they have policy related questions.
Given all the above, your Company is well placed in driving the spirit of compliance across its colleagues and stakeholders.
WHISTLE BLOWER / VIGIL MECHANISM
Your Company has established a Whistle Blower / Vigil Mechanism through which its Directors, Employees and Stakeholders can report their genuine concerns about unethical behaviours, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy.
The said Policy provides for adequate safeguards against victimization and also direct access to the higher levels of supervisors. The e–mail ID for reporting genuine concerns is: ‘email@example.com’. In appropriate and exceptional cases, concerns may be raised directly to the Chairman of the Audit Committee at ‘Chairman.IndiaAuditcom@pfizer.com’. A quarterly report on the whistle blower complaints received and action taken thereon is placed before the Audit Committee for its review.
Prevention of Sexual Harassment Policy
The ‘Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013’ (“the Act”) seeks to protect women colleagues against sexual harassment at their workplace. A specially–designed online course was rolled out to help all colleagues and contingent associates to understand what constitutes sexual harassment at workplace and how to address it; as well as the organization’s role in preventing it. During the financial year under review, one complaint was received and the same was duly attended to, in accordance with the Act.
This year the Corporate Affairs Division through its functions of Government Relations, Internal and External Communications and Corporate Social Responsibility, undertook number of policy advocacy, stakeholder engagement, reputation building, community outreach and colleague engagement programs. Some of the key highlights were –
This has been a year of active advocacy and engagement with Government departments, ministries and policy stakeholders. Areas of dialogue included policy measures that impact the pharmaceutical industry in general, and in certain instances, your Company in particular.
Key highlights of the year under review include:
1. Pricing: Your Company actively led the deliberations around the revision of the National List of Essential Medicines and its resulting impact on pricing of listed drugs. Pfizer participated in successive consultations held by the NLEM committee across the country, contributed through position papers that represented the views of the industry and submitted arguments specific to the Company’s portfolio.
2. IPR: As a part of its association, the OPPI, Pfizer was one of the key contributors towards the industry position and recommendations on the draft National IPR Policy.
3. NIP: Your Company worked extensively with the Ministry of Health and Family Welfare to advocate for the inclusion of a Pneumococcal Conjugate Vaccine in the National Universal Immunization Program.
Strategic Initiatives aligned with the Government’s flagship programs:
1. Make in India: Your Company sponsored and participated in flagship Government of India events including the ‘India Pharma 2016’ and ‘Make in India Week’, and showcased its manufacturing footprint in the country.
2. Startup India, Stand up India: Your Company was invited by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, to showcase the Pfizer IIT Delhi Innovation and IP Program to Prime Minister Narendra Modi, Commerce Minister Nirmala Sitharaman and Finance Minister Arun Jaitley, among other senior representatives of the Government.
3. Building a strong reputation: Your Company was proud to receive the ‘Most Trusted Brand in the Medical Category’ by IBA Infomedia through a consumer validated survey.
Enhancing the One Pfizer culture:
i. New Office Shift: November 2015 saw Pfizer India shifting its Headquarters to Bandra Kurla Complex – the commercial district of Mumbai. The Corporate Affairs team utilized this opportunity to create a high impact internal “Vibrant New Pfizer” campaign – calling out the new way of work with open offices and a tech–enabled workplace.
ii. Rewards & Recognition: Your Company reinstated the Rewards & Recognition program to recognize the efforts of colleagues and teams who have made an impact to the business.
iii. Family Day: For the first time ever, Pfizer India celebrated Family Day across all its locations – HO, Goa Plant and all RCs in March and April 2016. This day brought together colleagues and their families together for a wonderful shared experience. It celebrated the spirit of One Pfizer. Around 30 key projects and more than 120 colleagues were honored for their contribution to make Pfizer one of the foremost pharmaceutical companies in the country.
iv. Crucible: Your Company’s quarterly internal magazine was launched in a digital format ‘e–crucible’ this year. This enabled the Pfizer Field Force to access the magazine on their i–pad devices with rich interactive audio–visual content. The magazine also won an award for the ‘Best Internal Magazine of the year’ instituted by the prestigious Association of Business Communicators of India (ABCI).
CORPORATE SOCIAL RESPONSIBILITY
Your Company launched and took forward a rich portfolio of impactful corporate responsibility initiatives. The programs were aligned to the Pfizer Limited CSR Strategy encompassing five key thrust areas:
1. Encourage and support Indian innovation and Indian Intellectual Property with a focus on Healthcare;
2. Undertake awareness and access programs ourselves or in partnership with NGO’s, Government and Healthcare Providers in areas such as Women and Child health, among others;
3. Support Government’s national and/or state programs and priorities with linkages to healthcare;
4. Enlist employees as volunteers to support activities around health, sanitation and disease awareness;
5. Participate in disaster relief activities.
Some key initiatives undertaken during the year were:
1 Pfizer IIT Delhi Innovation & IP Program
Your Company partnered with the Foundation for Innovation and Technology Transfer (FITT) at the Indian Institute of Technology, Delhi to launch an incubation accelerator initiative – Pfizer IIT Delhi Innovation & IP Program. Through funding support and resident incubation, the Program encourages innovators to create healthcare innovations in and for India.
2. Impact of Air Pollution in Delhi – a partnership with AIIMS
Pfizer Ltd. has provided funding support to the All India Institute of Medical Sciences (AIIMS), towards a program that evaluates the impact of Air Pollution on children in Delhi and raises awareness around the subject.
3. Swachh Vidyalaya Campaign
Pfizer Ltd. extended its contribution towards the Swachh Vidyalaya/Swachh Bharat Campaign – building and refurbishing 84 sanitation facilities in 18 schools across Thane and Raigad districts of Maharashtra with additional funding to extend the program to Delhi, Mewat (Haryana) and Lucknow (UP).
The total amount spent by the Company towards CSR activities during the year is Rs. 644.30 Lakhs. Your Company was proud to fulfill its mandated CSR spending for the year.
A brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in “Annexure – A” of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company – ‘www.pfizerindia.com’.
Certain statements in respect to Management Discussion and Analysis may be forward looking and are stated as required by the applicable laws and regulations. The future results of the Company may be affected by many factors, which could be different from what the Directors envisage in terms of future performance and outlook.
In accordance with the provisions of the Companies Act, 2013, Mr. Vivek Dhariwal (DIN: 02826679) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re–appointment.
The Board of Directors of the Company at their meeting held on March 17, 2016, pursuant to the recommendation of Nomination and Remuneration Committee, appointed Mr. S. Sridhar (DIN: 05162648) as the Managing Director of the Company with effect from March 18, 2016 for a period of 5 (five) years, subject to the approval of members at the ensuing Annual General Meeting.
The Board of Directors of the Company, pursuant to the recommendation of Nomination and Remuneration Committee appointed Ms. Lu Hong (DIN: 07358719) as an Additional Director (Non–Executive Woman Director) with effect from December 4, 2015 who will hold the office till the date of the ensuing Annual General Meeting. The Company has received a Notice for her candidature as a Director from a Member pursuant to Section 160 of the Act.
Mr. Aijaz Tobaccowalla (DIN: 05312126) was appointed as the Managing Director for the period of 3 (three) years effective August 16, 2012. Subsequently, Mr. Tobaccowalla was re–appointed as the Managing Director for the period of 6 (six) months effective August 16, 2015, subject to approval of shareholders at the ensuing Annual General Meeting. Mr. Aijaz Tobaccowalla resigned as Managing Director effective close of business on October 16, 2015. Your Directors wish to place on record their appreciation for the valuable contributions made by Mr. Tobaccowalla during his tenure as the Managing Director of the Company.
Dr. Lakshmi Nadkarni (DIN: 07076164), Executive Director, Human Resources, resigned from the services of the Company with effect from September 4, 2015 and also resigned from the Board of Directors effective the said date. Your Directors wish to place on record their appreciation for the valuable contributions made by Dr. Nadkarni.
All Independent Directors have given the declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Listing Regulations.
Changes in Key Managerial Personnel
Mr. S. Sridhar ceased to be the Chief Financial Officer of the Company with effect from close of business on May 12, 2015. Mr. Ravi Prakash Bhagavathula was appointed as the Chief Financial Officer of the Company with effect from May 13, 2015.
Board Performance Evaluation
The Company has devised a Performance Evaluation Framework and Policy, which sets a mechanism for the evaluation of the Board, Board Committees and Directors.
Performance Evaluation of the Board, Committees and Directors was carried out through an evaluation mechanism in terms of the aforesaid Performance Evaluation Framework and Policy.
Independent Directors’ Meeting
One Meeting of the Independent Directors was held on May 5, 2015, without the presence of the Executive Directors or management personnel. At the Independent Directors Meeting held on May 5, 2015, the Independent Directors carried out performance evaluation of Non– Independent Directors and the Board of Directors as a whole, performance of Chairman of the Company, the quality, content and timelines of flow of information between the Management and the Board, based on the Performance Evaluation framework of the Company. All the Independent Directors were present at the aforesaid Meeting.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
Your Company has in place a Familiarization Program for Independent Directors to provide insights into the Company’s business to enable them contribute significantly to its success. The Executive Directors and Senior Management makes presentations periodically to familiarize the Independent Directors with the strategy operations and functions of the Company. Your Company also circulates news and articles related to the Industry and provides specific regulatory updates to the Independent Directors on a regular basis.
Nomination and Remuneration Policy
The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management, Key Managerial Personnel and their remuneration. The Nomination and Remuneration Policy is annexed herewith as “Annexure – B”.
Meetings of the Board
During the year, five Board Meetings and four Audit Committee Meetings were held and convened. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement read with the Listing Regulations.
DIRECTORS’ RESPONSIBILITY STATEMENT
Your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a. that in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b. that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date;
c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this Report.
RISK MANAGEMENT POLICY
The details pertaining to the Risk Management Policy are included in the Corporate Governance Report, which forms part of this Report.
RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The Company had entered into materially significant related party transactions with Pfizer Export Company, Ireland for purchase of raw materials, bulk drugs and finished goods. The same is within the limits duly approved by the members at the 63rd Annual General Meeting.
All Related Party Transactions are placed on a quarterly basis before the Audit Committee for approval and before the Board for consideration and noting.
The Policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website ‘www.pfizerindia.com’. The weblink for the Policy is http://www.pfizerindia.com/eNewsWebsite/investor/pdf/Related%20Party%20Transaction%20Policy.pdf None of the Directors have any material pecuniary relationships or transactions vis–à–vis the Company. Pursuant to Section 134 of the Companies Act, 2013 and Rules made there under, particulars of transactions with related parties as required under Section 188 (1) of the Companies Act, 2013, in the prescribed Form AOC–2 is annexed herewith as “Annexure – C”.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The Company has not granted any loans, guarantees and investments for the financial year ended March 31, 2016.
DEPOSITS FROM PUBLIC
During the financial year under review, the Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure – D”. A table containing particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, (“the Act”) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as “Annexure – E”.
The information required pursuant to Section 197(12) of the Act read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this Report. However, as per the provision of Sections 134 and 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees’ particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. Any member interested in obtaining a copy of such statement may write to the Company Secretary at the Company’s Registered Office. The Company does not have any subsidiary company or associate company or joint venture company.
The Auditors, Messrs. B S R & Co. LLP, were appointed as Statutory Auditors to hold office for a term of 3 (three) years from conclusion of 63rd Annual General Meeting till the conclusion of the 66th Annual General Meeting subject to ratification by members at every subsequent
Annual General Meeting.
The appointment of Messrs. B S R & Co. LLP will be placed before the members at this Annual General Meeting for ratification. The Auditors’ Report for the financial year ended March 31, 2016 does not contain any qualification, reservation or adverse remark.
Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, the cost audit records maintained by the Company is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed Messrs. RA & Co., to audit the cost accounts of the Company for the financial year 2016–17 on a remuneration of Rs.10.40 Lakhs. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member’s ratification for the remuneration payable to Messrs. RA & Co., Cost Auditors is included at Item No. 8 of the Notice convening the Annual General Meeting.
The Company has filed the Cost Audit Report for Formulations and Compliance Report for the financial year ended March 31, 2015 on September 29, 2015, due date being September 30, 2015. The Cost Audit Report for Formulations and Compliance Report for the financial year ended March 31, 2016 are due to be filed by September 27, 2016.
Messrs. R. A. & Co., have confirmed their eligibility to be the Cost Auditors and have been appointed to conduct Cost Audit of the Company’s records for the financial year ending March 31, 2017. The remuneration is subject to ratification by the shareholders.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Messrs. Saraf & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as “Annexure – F”. The Secretarial Auditor Report for the financial year ended March 31, 2016 does not contain any qualification, reservation or adverse remark.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as “Annexure – G”.
A Report on Corporate Governance along with a Certificate from Messrs. B S R & Co. LLP, regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges read with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Report and annexed herewith as “Annexure – H”.
Your Directors would like to place on record their sincere appreciation for the support and assistance extended by the Company’s suppliers and business associates. Your Directors are thankful to the esteemed shareholders for their continued support and the confidence reposed in the Company and its Management.
Your Directors wish to place on record their appreciation for the support and guidance provided by its Parent Company, Pfizer Inc. USA.
For and on behalf of the Board of Directors
R. A. Shah
Place : Mumbai,
date : May 6, 2016