Company Review: Elder Pharma

Company Review: Elder Pharma

Elder Pharma, incorporated in 1988, is one of the fastest growing companies in the Indian pharmaceutical industry. It was ranked 29th in the Indian Pharma Sector, as on June 2008 (ORG-IMS).

Elder predominantly focuses on the Indian market and in FY2008, domestic sales constituted 95.8% of its total net sales.

Domestic sales posted CAGR of 24% over FY05-08 from Rs276 crore to Rs528 crore with key products such as, Shelcal, Somazina and Formic-O being the key growth drivers.

Pertinently, the Domestic Pharmaceutical Industry is estimated to grow at a steady CAGR of 13% over 2006-07 to 2011-12 to $11.4 billion from $6.2 billion. We believe Elder will continue with its India-centric strategy given its presence in niche therapeutic areas and strong sales force.

Exports, though a marginal contributor to the company’s topline, grew at a CAGR of 49.1% over FY05-08 from Rs7 crore to Rs23 crore.

Over the past few years, the company has been targeting to enhance its international presence through acquisitions, joint ventures (JVs) and alliances.

Elder’s operating profit posted CAGR of 37.4% during FY05-08 from Rs40 crore to Rs104 crore on the back of strong revenue CAGR of 24.7% and expansion of OPM by 480bp during the mentioned period.

For FY2009, Elder expects revenue to grow in the range of 20-22% and EBITDA margins at 20-22%.


Elder’s focus on the domestic market makes it vulnerable to any changes in the domestic policy. Currently, Eldervit and Amifru (4.8% of FY2008 net sales) are under the Drug Price Control Order (DPCO).

Elder heavily relies on Shelcal for its domestic growth (contributed 15.0% of FY2008 Net Sales).

Successful ramping up of the acquisitions would be a challenge.