International Journal of Trend in Scientific Research and Development (IJTSRD)

Volume 9 Issue 1, Jan-Feb 2025 Available Online: www.ijtsrd.com e-ISSN: 2456 – 6470

An Analyzing the Profitability of Pharmaceutical

Companies in India - A Comparative Study
Dr. Khushboo Singh1, Dr. Manish Seth2, Rashmi Tiwari3, Praveen Kumar4, Anjali Neraliya5
1
Ph.D, Faculty of Commerce, Banaras Hindu University, Varanasi, Uttar Pradesh, India
2
Assistant Professor, Department of Commerce,
3,4,5
Research Scholar, Department of Commerce,
2,3,4,5
Guru Ghasidas Vishwavidyalaya, Bilaspur, Chhattisgarh (A Central University), India

ABSTRACT How to cite this paper: Dr. Khushboo

The pharmaceutical industry in India is one of the most lucrative Singh | Dr. Manish Seth | Rashmi Tiwari
sectors, driven by increasing demand for healthcare products, | Praveen Kumar | Anjali Neraliya "An
innovations, and global exports. This study analyzes the profitability Analyzing the Profitability of
of three major pharmaceutical companies in India—Aurobindo Pharmaceutical Companies in India - A
Comparative Study" Published in
Pharmaceutical, Mankind Pharmaceutical, and Torrent International Journal
Pharmaceutical. Using key profitability metrics such as Gross Profit of Trend in
Ratio, Net Profit Ratio, Return on Capital Employed (ROCE), Return Scientific Research
on Assets (ROA), Return on Equity (ROE), and Earnings Per Share and Development
(EPS), this research compares the profitability performance of the (ijtsrd), ISSN: 2456-
companies. The study highlights trends in profitability, efficiency, 6470, Volume-9 |
and growth, offering insights into the strategic measures taken by Issue-1, February IJTSRD76185
these companies to maintain competitiveness in the market. The 2025, pp.1067-
analysis reveals significant differences in the companies' financial 1079, URL:
stability, operational efficiency, and profitability growth. The www.ijtsrd.com/papers/ijtsrd76185.pdf
findings of this study will provide valuable insights for stakeholders, Copyright © 2025 by author (s) and
investors, and policymakers to make informed decisions regarding International Journal of Trend in
the pharmaceutical sector. Scientific Research and Development
Journal. This is an
KEYWORDS: Pharmaceutical Companies, Profitability Analysis,
Open Access article
Financial Performance, Return on Assets (ROA), Earnings Per Share distributed under the
(EPS), Gross Profit Ratio terms of the Creative Commons
Attribution License (CC BY 4.0)
(http://creativecommons.org/licenses/by/4.0)

INTRODUCTION
Indian pharmaceutical industries have expanded billion by 2047. India is the third-biggest
significantly in recent years. Several factors, pharmaceutical market by volume and the world's
including cost advantages, a strong manufacturing largest producer of generic medications, making up
base, and government assistance, have fueled this. about 20% of the global supply. With 60% of global
India's pharmaceutical business has grown vaccine production, 90% of WHO requirements for
tremendously in recent years, ranking third in volume the DPT and BCG vaccines, 70% of WHO
and fourteenth in value. It is anticipated to increase requirements for the measles vaccine, and the most
pharmaceutical quality, cost, and innovation while US-FDA-compliant pharmaceutical facilities outside
capturing roughly 13% of the worldwide market. An of the US, India is a significant global supplier of
essential participant in the global pharmaceutical reasonably priced vaccines. With a strong network of
market is the Indian pharmaceutical sector. The over 10,500 production facilities and a highly
Indian pharmaceutical industry includes biosimilars, qualified labour pool, the nation is home to more than
biologics, contract research and manufacture, 3,000 pharmaceutical enterprises.
vaccines, over-the-counter (OTC), generic, and bulk About 8,000 APIs are produced by 500 API
medications. India is the world's top measles, BCG,
producers, who also produce about 60,000 generic
and DPT vaccine supplier. Currently valued at over brands in 60 therapeutic categories, making up about
$50 billion, the Indian pharmaceutical industry is
20% of the world's generic supply. The availability of
projected to grow to $130 billion by 2030 and $450
affordable HIV treatment from India is among the

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most significant medical advances. Because of its Review of Literature
excellent quality and reasonable costs, Indian The Indian pharmaceutical industry has experienced
pharmaceuticals are known as the "pharmacy of the significant growth over the past few decades,
world." The Indian pharmaceutical sector employs emerging as one of the leading sectors in the country's
millions of people and ensures that this subcontinent's economy. The industry's profitability has been a key
vast population has access to affordable, essential area of interest for researchers due to its critical role
pharmaceuticals. Among the nation's science-based in both domestic and global markets. This review of
industries today, the Indian Pharmaceutical Industry the literature summarizes the key studies and findings
stands out in the complex world of drug manufacture related to the profitability of pharmaceutical
and technology. It has a wide range of abilities. It is companies in India, providing a comparative
in the top three in the third world for technology, drug perspective based on various financial metrics,
quality, and diversity-produced advanced antibiotics, strategies, and market conditions. The Indian
complex cardiac compounds, and simple headache pharmaceutical industry is one of the largest in the
drugs. world, driven by both domestic demand and
Company profile: international exports. The industry has been
Aurobindo Pharmaceutical Company: The recognized as a significant contributor to the country's
Aurobindo Pharma Company was founded in 1986 by economic development, with India being the world's
P.V. Ramprasad Reddy and Shri K. Nityananda third-largest producer of pharmaceuticals by volume.
Reddy. The company in Pondicherry was the first to A comparative analysis by Joshi and Patil (2015)
produce semi-synthetic penicillin (SSP) as a single found that private pharmaceutical companies in India
unit. Aurobindo Pharma eventually went public in tend to outperform their public counterparts in terms
1992. In 1995, it listed its stock on Indian exchanges. of profitability and market share. The study attributed
Important therapeutic areas that Aurobindo Pharma this to greater operational flexibility, better access to
works in include the central nervous system, capital, and stronger brand positioning in the global
cardiovascular, antiretroviral, gastrointestinal, and market. Public pharmaceutical companies, on the
anti-diabetic. It has a substantial position in the global other hand, face challenges in terms of bureaucratic
pharmaceutical market because it consistently inefficiencies and are often limited by government-
provides high-quality, affordable drugs, particularly imposed price regulations. According to Bansal and
in the generic drug segment. The company exports to Kaur (2016), Indian pharmaceutical companies have
more than 150 countries worldwide, with its primary generally shown strong profitability due to the
customers being the US, Europe, and developing significant export market, particularly in generics and
nations. Market capitalization, or market cap, is the active pharmaceutical ingredients (APIs). The study
total market value of all outstanding shares of a emphasized that companies with diversified portfolios
publicly listed company and is widely used to assess a across both domestic and international markets have
company's worth. outperformed their peers in profitability measures.
According to Sharma and Singh (2017), government
Mankind Pharmaceutical Company: Shri Rajiv and price controls on essential medicines have impacted
Ramesh C. Juneja founded the Mankind Pharma the profitability of pharmaceutical companies,
Company in 1991. The company was founded in particularly in the domestic market. However,
1991 and started in 1995. The company first targeted companies with significant international presence
price-sensitive drugs and focused on the rural market. have been able to mitigate this issue through global
Its initial offerings of Zenflox and Moxikind pricing strategies. The key drivers of growth include
Cardiovascular were significantly reduced from those advancements in generics production, government
already on the market. policies, and the rise of healthcare demand (Sharma
Torrent Pharmaceuticals Company: The well- & Thakur, 2018).
known Indian pharmaceutical company Torrent Several studies have focused on the financial
Pharmaceuticals Ltd. focuses on the development, performance of pharmaceutical companies, using
production, marketing, and development of a wide profitability ratios such as Return on Assets (ROA),
range of pharmaceutical goods. In Ahmedabad, Return on Equity (ROE), and Gross Profit Margin
Gujarat, India, Torrent Pharma was established in (GPM). Verma & Chawla( 2018) Moreover, the
1959 by Uttam Bhai Mehta. It belongs to the group introduction of the Goods and Services Tax (GST)
known as Torrent. It has grown into one of India's has had mixed effects on pharmaceutical profitability.
leading pharmaceutical companies in over 40 This study found that the increase in tax burden on
countries globally. certain pharmaceutical products has increased
operational costs for some companies.

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Gupta and Suri (2019) explored the financial ratios of profit ratio, net profit ratio, return on equity (ROE),
leading pharmaceutical companies like Cipla, Dr. return on assets (ROA), and earnings per share (EPS)
Reddy's Laboratories, and Sun Pharmaceuticals, are frequently used to assess profitability. These
comparing them to their international counterparts. ratios show how well businesses use their resources
Their findings suggested that Indian companies had a and produce profits for their owners. However,
competitive advantage in terms of cost efficiency but thorough studies comparing the profitability of the
faced challenges in scaling profit margins due to leading pharmaceutical companies in India are scarce
regulatory issues and pricing pressures in the despite the country's substantial expansion. Analyzing
domestic market. The Indian pharmaceutical sector is how various businesses have performed in terms of
heavily influenced by government regulations, profitability and financial efficiency is crucial given
particularly the National Pharmaceutical Pricing the dynamic nature of this sector, where possibilities
Authority (NPPA) and policies like the Drugs Price and obstacles are constantly changing. A combination
Control Order (DPCO). of market strategy, R&D expenditures, operational
The globalization of the pharmaceutical industry has effectiveness, and regulatory considerations influence
significantly impacted the profitability of Indian the profitability of Indian pharmaceutical companies.
companies. India is a major exporter of generic drugs, Comparative research reveals notable differences
which has contributed to the profitability of between businesses, highlighting the significance of
companies such as Dr Reddy's Laboratories, Lupin, strategic management and flexibility in a changing
and Cipla. According to Reddy and Rao (2020), the domestic and international environment. So, it is
ability of Indian pharmaceutical companies to capture necessary to study benchmarking and sophisticated
global market share, particularly in the U.S. and analysis from time to time to get a deeper
Europe, has been a key driver of profitability. These understanding of profitability trends.
companies can leverage cost advantages in OBJECTIVES:
manufacturing, particularly in API production, to  To compare the profitability of major
remain competitive. The research by Kumar et al. pharmaceutical companies in India, including
(2021) also suggested that Indian companies with a Aurobindo Pharmaceutical, Mankind
focus on R&D-driven innovation have been able to Pharmaceutical, and Torrent Pharmaceutical,
increase their profit margins, especially in high-value using key profitability ratios.
segments like oncology and biologics. Despite strong
 To evaluate profitability's stability and growth
growth prospects, the Indian pharmaceutical industry
patterns using standard deviation and compound
faces several challenges that could affect profitability
annual growth rate (CAGR) metrics.
in the future. According to Singh and Jain (2022),
rising input costs, intense competition in the generics  To identify the profitability of these
market, and the increasing influence of multinational pharmaceutical companies, providing insights for
corporations pose risks to profit margins. However, stakeholders, including investors, management,
there are significant opportunities, including the and policymakers.
expansion of the biosimilar market and the rising Research Methodology:
demand for personalized medicine. Companies that Data Collection: The study is based on Secondary
are able to capitalize on these emerging trends are data collected from various Annual Reports from
expected to maintain strong profitability in the long pharmaceutical companies. Research Articles and
term. Journals Peer-reviewed articles, industry publications,
Statement of the Problem and research papers related to the pharmaceutical
With substantial contributions to domestic and sector. And annual reports of selected companies
foreign markets, India's pharmaceutical industry is have been taken from 2018 to 2023.
essential to the nation's healthcare and economic Sample Design: The study has taken into
sectors. As one of the biggest manufacturers of consideration the following three public-sector
generic medications worldwide, India's pharmaceutical companies based on their market
pharmaceutical firms deal with several difficulties, capitalization. The top three pharmaceutical
such as shifting raw material prices, regulatory companies in India. According to their market
demands, and escalating domestic and international capitalization, are:
competition. Pharmaceutical firms' profitability
1. Aurobindo Pharmaceutical
significantly impacts their sustainability, financial
health, and capacity to reinvest in R&D, innovation, 2. Mankind Pharmaceutical,
and other areas. Financial ratios, including the gross 3. Torrent Pharmaceutical

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These pharmaceutical companies are also known for The ratios provided can be used to calculate
their performance, customer satisfaction, financial profitability.
performance, and market capitalization.
 Gross Profit Ratio
Analysis Of Profitability
 Net Profit Ratio
The profitability ratio is a tool used to assess a
company's capacity to turn a profit relative to its costs  Return on Capital Employed Ratio
and other income-generating expenses over a given  Return on Assets Ratio
period. This ratio represents the company's outcome.
Profitability is a measure of a company's ultimate  Return on Equity Ratio
success or its profitability. It also shows how well the  Earnings Per Share Ratio
owner's money has been invested in the business.
1. Gross Profit Ratio: The gross profit margin shows the percentage of revenue that exceeds the cost of goods
sold (COGS). It measures how efficiently a company is producing its products or services.
Formula:
Gross Profit Ratio = Gross Profit/Net Revenue of Operations × 100
Table 1: Gross Profit Ratio of the Selected Pharmaceutical Companies(In Percentage)
Year Aurobindo pharma. Company Mankind pharma. Company Torrent Pharma. Company
2018-19 16.20 12.16 16.22
2019-20 17.92 26.38 18.10
2020-21 26.49 26.04 21.17
2021-22 14.50 24.76 21.74
2022-23 12.62 19.22 20.49
Mean 17.55 21.71 19.54
SD 5.37 6.07 2.32
CV 30.62 27.94 11.86
CAGR -0.05 0.09 0.05
Source: - Compiled and Computed from various Annual reports of selected Pharmaceutical Companies.
Interpretation:
The table presents the Gross Profit Ratio (GPR) data for three pharmaceutical companies—Aurobindo Pharma,
Mankind Pharma, and Torrent Pharma—over five years, from 2018-2019 to 2022-2023. The analysis of this data
involves the calculation of the mean, standard deviation (SD), coefficient of variation (CV), and compound
annual growth rate (CAGR), which provide insights into the performance, consistency, and growth trends of
each company.
Aurobindo Pharma's GPR exhibited significant variability over the five years, ranging from a low of 12.62 in
2022-2023 to a high of 26.49 in 2020-2021. The mean GPR for Aurobindo Pharma is 17.546, reflecting an
average profitability ratio over the period. The standard deviation of 5.37 suggests that Aurobindo Pharma
experienced substantial fluctuations in its gross profit ratio, with a relatively high degree of variability. The
coefficient of variation (CV) for Aurobindo Pharma is 30.62%, which indicates a high level of risk or
inconsistency in its profitability during the given period. This high CV means that Aurobindo Pharma's
profitability is less predictable and shows more volatility compared to its peers. The compound annual growth
rate (CAGR) of -4.87% (After converting into percentage) for Aurobindo Pharma indicates a negative growth
trend in its gross profit ratio over the five years, suggesting that the company's profitability has been on the
decline on an annualized basis.
Mankind Pharma's GPR also shows variability, though it appears more stable than Aurobindo Pharma. The GPR
ranged from a low of 12.16 in 2018-2019 to a peak of 26.38 in 2019-2020, reflecting a higher overall mean GPR
of 21.71. The standard deviation for Mankind Pharma is 6.07, which is higher than Aurobindo's, indicating that
although the company's profitability fluctuated, it did so to a more significant extent. The coefficient of variation
(CV) of 27.95% suggests moderate variability in its profitability ratio, signalling that Mankind Pharma's profit
performance was somewhat inconsistent but not as volatile as Aurobindo's. Mankind Pharma experienced a
positive CAGR of 9.59%, which indicates a healthy growth trajectory in its profitability over the observed
period. This positive growth rate means that, despite fluctuations, Mankind Pharma has generally improved its
gross profit ratio year over year.

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Torrent Pharma demonstrated a more stable gross profit ratio, with figures ranging from 16.22 in 2018-2019 to
21.74 in 2021-2022. The mean GPR for Torrent Pharma is 19.54, which lies between that of Aurobindo Pharma
and Mankind Pharma. Torrent Pharma exhibited the lowest standard deviation of the three companies, at 2.32,
indicating a relatively stable profitability ratio with minimal fluctuations. The coefficient of variation (CV) for
Torrent Pharma is 11.86%, the lowest among the three companies, reflecting a lower degree of volatility and
greater predictability in its profit performance. The positive CAGR of 4.78% indicates steady growth in its gross
profit ratio, although at a slower pace compared to Mankind Pharma. This suggests that Torrent Pharma has
managed to maintain a consistent and gradual increase in profitability over the past five years.
2. Net Profit Ratio: A company's profitability or financial success after taxes is gauged by its net profit ratio,
sometimes called its net profit margin. It facilitates comparing the organization's earnings to the total capital
contributed to the enterprise. The net profit ratio shows what's left over after deducting manufacturing costs,
finance, and administrative expenses from sales and income taxes.
Formula:
Net Profit Ratio = (Net Profit / Net Sales) x 100
Table 2: Net Profit Ratio of the Selected Pharmaceutical Companies (In Percentage)
Year Aurobindo pharma. Company Mankind pharma. Company Torrent Pharma. Company
2018-19 12.48 17.23 12.93
2019-20 14.12 19.98 15.21
2020-21 19.67 19.61 17.63
2021-22 12.88 18.39 14.7
2022-23 9.61 15.36 13.66
Mean 13.75 18.11 14.83
SD 3.70 1.88 1.80
CV 26.89 10.39 12.15
CAGR -0.05 -0.02 0.01
Source: - Compiled and computed from various Annual reports of selected Pharmaceutical Companies.
Interpretation: The table provides data on the Net Profit Ratio (NPR) of three leading pharmaceutical
companies—Aurobindo Pharma, Mankind Pharma, and Torrent Pharma—for the five years from 2018-19 to
2022-23. The net profit ratio is a crucial indicator of a company's financial health, reflecting its ability to convert
revenue into actual profit after accounting for all expenses, taxes, and interest. The mean, standard deviation
(SD), coefficient of variation (CV), and compound annual growth rate (CAGR) have been computed to provide
insights into the companies' profitability, stability, and overall financial performance trends.
Aurobindo Pharma's net profit ratio fluctuated significantly over the given period. In 2018-19, the NPR was
12.48, and it reached its peak of 19.67 in 2020-21. After that, it declined to 9.61 in the year 2022-23. The mean
NPR over the five years stands at 13.752, indicating a moderate profitability level compared to the other two
companies. The standard deviation (3.698) suggests that Aurobindo Pharma's net profit ratio has undergone
substantial fluctuations over time. The coefficient of variation (CV) is 26.89%, the highest among the three
companies, suggesting significant inconsistency and unpredictability in net profit generation. This high
variability could be due to multiple factors, such as fluctuating production costs, changing market demand, or
regulatory challenges affecting its profitability.
Furthermore, Aurobindo Pharma's CAGR is -5.09%, indicating a consistent decline in the net profit ratio over
the five years. The negative CAGR is concerning, as it reflects a downward trend in profitability, suggesting
challenges such as increasing operational costs, pricing pressure, or inefficiencies in managing expenses. The
company may need strategic interventions to reverse this declining profitability trend.
Mankind Pharma demonstrates a relatively strong and stable financial performance in terms of net profit ratio.
The company's NPR ranged from 17.23 in 2018-19 to a peak of 19.98 in 2019-20, but then slightly declined to
15.36 in 2022-23. The mean NPR over five years stands at 18.114, which is the highest among the three
companies, highlighting its strong profitability. In terms of volatility, Mankind Pharma has the lowest standard
deviation (1.88), which means its net profit ratio has been relatively consistent over the years. The coefficient of
variation (CV) is 10.39%, indicating minimal fluctuations and strong stability in profit generation. A lower CV
suggests that the company has managed its financial operations efficiently, maintaining steady earnings and cost
control strategies. However, the company's CAGR (-2.27%) suggests a slight decline in net profitability over the

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five-year period, although not as steep as Aurobindo Pharma's. The negative CAGR might indicate slight margin
pressures or increased operational costs in recent years. Nevertheless, Mankind Pharma still maintains the most
substantial profitability among the three companies, which showcases its resilience in financial management.
Torrent Pharma exhibited moderate but stable performance in terms of net profit ratio. Its NPR ranged from
12.93 in 2018-19 to 17.63 in 2020-21 before declining slightly to 13.66 in 2022-23. The mean NPR of 14.83
suggests that its average profitability is higher than Aurobindo Pharma but lower than Mankind. With a standard
deviation of 1.80, Torrent Pharma demonstrated low volatility in the net profit ratio, indicating consistent
profitability. The coefficient of variation (CV) of 12.15% further reinforces its stable financial performance
compared to Aurobindo Pharma. Its ability to maintain financial consistency makes it a reliable performer in the
industry. The CAGR for Torrent Pharma is positive at 1.10%, making it the only company among the three to
register growth in net profit ratio over the five years. This indicates that despite periodic fluctuations, the
company has maintained an overall upward trajectory in terms of net profitability.
3. Return on Capital Employed Ratio: A long-term profitability measure called return on capital employed
(ROCE) is used to evaluate a company's efficiency and profitability.
Formula:
ROCE = (EBIT / Capital Employed) x 100
Table 3: Return on Capital Employed Ratio of the Selected Pharmaceutical Companies(In
Percentage)
Year Aurobindo pharma. Company Mankind pharma. Company Torrent Pharma. Company
2018-19 17.23 28.26 10.46
2019-20 18.04 34.04 13.14
2020-21 25.51 29.99 14.88
2021-22 9.40 29.06 16.79
2022-23 8.84 19.65 16.66
Mean 15.80 28.20 14.39
SD 6.90 5.27 2.65
CV 43.69 18.69 18.44
CAGR -0.12 -0.07 0.10
Source: - Compiled and Compiled from various Annual reports of selected Pharmaceutical Companies.
Interpretation: The table presents the ROCE ratio of three pharmaceutical companies—Aurobindo Pharma,
Mankind Pharma, and Torrent Pharma—over five years (2018-19 to 2022-23). To evaluate their performance,
we analyze the mean ROCE, standard deviation (SD), coefficient of variation (CV), and compound annual
growth rate (CAGR) to understand the profitability trends, stability, and efficiency of capital utilization for each
company.
Aurobindo Pharma's ROCE has shown significant fluctuations, starting at 17.23% in 2018-19, reaching a peak of
25.51% in 2020-21, and then declining sharply to 8.84% in 2022-23. The mean ROCE over the five years is
15.80%, indicating a moderate level of capital efficiency. However, the standard deviation (6.91%) and
coefficient of variation (CV: 43.70%) show that Aurobindo Pharma has experienced the highest volatility among
the three companies. This suggests that the company's ability to generate returns on capital has been inconsistent
and unpredictable. The sharp decline after 2020-21 may be attributed to operational inefficiencies, increased
financial costs, or reduced profit margins affecting overall capital efficiency. Furthermore, Aurobindo Pharma's
CAGR (-12.49%) over the five years indicates a continuous decline in ROCE. The negative CAGR suggests that
the company is facing difficulties in maintaining efficient capital utilization, possibly due to rising expenses,
higher borrowing costs, or declining revenue growth. To reverse this downward trend, Aurobindo Pharma needs
to optimize its financial and operational strategies, reduce inefficiencies, and improve cost management.
Mankind Pharma has demonstrated the strongest and most stable capital efficiency among the three companies.
The company's ROCE started at 28.26% in 2018-19, peaked at 34.04% in 2019-20, and ended at 19.65% in
2022-23. Despite the slight decline in recent years, Mankind Pharma maintains a high mean ROCE of 28.2%, the
best among the three companies. The standard deviation (5.27%) and CV (18.69%) indicate that Mankind
Pharma's ROCE has shown moderate fluctuations but remains relatively stable compared to Aurobindo Pharma.
A lower coefficient of variation signifies better predictability and strong financial control over capital utilization.
This suggests that the company has been able to consistently generate strong returns on its invested capital,

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making it a highly efficient player in the pharmaceutical industry. However, the negative CAGR (-7.01%)
suggests that Mankind Pharma's ROCE has been gradually decreasing over time. While it still leads in capital
efficiency, the declining trend raises concerns about potential market pressures, increased operational costs, or
changes in investment strategy. Mankind Pharma may need to focus on maintaining its strong capital efficiency
by optimizing investments, improving profit margins, and controlling capital expenditures to sustain its leading
position.
Torrent Pharma's ROCE has shown steady improvement over the five years, indicating efficient capital
utilization and growth. The ROCE started at 10.46% in 2018-19, increased gradually, peaking at 16.79% in
2021-22, and slightly declined to 16.66% in 2022-23. The mean ROCE is 14.386%, slightly lower than
Aurobindo Pharma but much more stable. The standard deviation (2.65%) and CV (18.44%) indicate that
Torrent Pharma has the lowest fluctuations and highest consistency in its ROCE compared to the other two
companies. A low CV means that the company's financial performance is predictable, which is a positive sign
for investors and stakeholders who seek stability. Importantly, Torrent Pharma is the only company among the
three with a positive CAGR of 9.76%, indicating continuous long-term growth in capital efficiency. Unlike
Aurobindo and Mankind Pharma, which exhibited negative growth trends, Torrent Pharma's ability to steadily
enhance its ROCE over time suggests strong financial and operational management. This consistent
improvement makes it a reliable and steadily growing pharmaceutical company.
4. Return on Assets Ratio: A financial indicator that assesses how well a business uses its assets to produce a
profit is the return on assets or ROA ratio. It is computed by splitting the business's net income by its assets'
value. ROA explains how healthy management is turning the company's resources into profits.
Formula:
ROA=Net Income/Total Assets x 100
Table 4: Return on Assets Ratio of the Selected Pharmaceutical Companies(In Percentage)
Year Aurobindo pharma. Company Mankind pharma. Company Torrent Pharma. Company
2018-19 8.43 14.87 6.19
2019-20 9.58 21.14 7.87
2020-21 13.42 18.44 9.67
2021-22 6.73 15.87 8.88
2022-23 4.93 13.32 8.16
Mean 8.61 16.73 8.15
SD 3.21 3.09 1.30
CV 37.23 18.47 15.94
CAGR -0.10 -0.02 0.05
Source:- Compiled and Computed from various Annual reports of selected Pharmaceutical Companies.
Interpretation: The table presents the ROA ratios of Aurobindo Pharma, Mankind Pharma, and Torrent Pharma
for the five years from 2018-19 to 2022-23. To assess their financial performance, we analyze their mean ROA,
standard deviation (SD), coefficient of variation (CV), and compound annual growth rate (CAGR) to understand
profitability trends, stability, and efficiency of asset utilization.
Aurobindo Pharma's ROA has declined over the last five years, indicating a weakening ability to generate profits
from its asset base. The ROA started at 8.43% in 2018-19, peaked at 13.42% in 2020-21, but then declined
sharply to 4.93% in 2022-23. The mean ROA over five years is 8.618%, reflecting a moderate level of asset
efficiency. The standard deviation (3.21%) and coefficient of variation (CV: 37.23%) indicate that Aurobindo
Pharma's ROA has experienced the highest fluctuations among the three companies. The high CV suggests
inconsistent performance in asset utilization, possibly due to fluctuating operating costs, regulatory challenges,
or inefficient asset management. The most concerning factor is the CAGR of -10.17%, which confirms a long-
term declining trend in ROA. This consistent deterioration suggests increasing capital intensity, lower profit
margins, or rising operational expenses. To improve performance, Aurobindo Pharma must optimize its asset
utilization by improving efficiency in production processes, reducing financial liabilities, and enhancing
operational productivity.
Mankind Pharma has demonstrated the highest and most stable ROA among the three companies, highlighting
strong profitability and efficient asset management. The company's ROA started at 14.87% in 2018-19, peaked
at 21.14% in 2019-20, and then slightly declined to 13.32% in 2022-23. Despite the drop, it maintains a five-year

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mean ROA of 16.73%, which is significantly higher than the other two companies, demonstrating superior
financial efficiency. With a standard deviation of 3.09% and CV of 18.47%, Mankind Pharma has demonstrated
relative stability in its asset utilization. The lower CV reflects a more consistent financial performance, meaning
that the company's profitability relative to its assets does not fluctuate drastically over time. However, the
negative CAGR (-2.18%) suggests that the company's asset efficiency has gradually declined over the past five
years. While Mankind Pharma maintains a high ROA, the declining growth trend may indicate increasing costs
of assets, changing market conditions, or slight inefficiencies in capital allocation. To sustain its lead, Mankind
Pharma must focus on maintaining efficient asset turnover, investing in cost-effective expansion strategies, and
managing operational costs efficient.
Torrent Pharma exhibited the most stable ROA with a continuous growth trend over the period. The company's
ROA increased from 6.19% in 2018-19 to 9.67% in 2020-21, before reaching at 8.16% in 2022-23. The mean
ROA of 8.15% places it slightly below Aurobindo Pharma but with much more stability. With a standard
deviation of 1.30% and the lowest coefficient of variation (CV: 15.95%), Torrent Pharma has demonstrated the
least amount of fluctuation and highest predictability in performance among the three companies. This
consistency is beneficial for long-term investors and reflects well-structured asset utilization policies.
Additionally, Torrent Pharma has the only positive CAGR of 5.68%, signifying a steady improvement in ROA
over time. This upward trajectory indicates better asset utilization, improved profit margins, and sound financial
management strategies. Among the three companies, Torrent Pharma is the only one showing consistent growth
in profitability relative to its assets, suggesting that its operational efficiency is gradually strengthening over
time.
5. Return on Equity: This ratio calculates the profitability of the company's equity fund investments. It also
gauges how well owner capital has been deployed to produce revenue for the business. A higher ratio
indicates that the industry is doing better.
Formula:
ROE = Net Income / Shareholders' Equity x 100
Table 5: Return on Equity Ratio of the Selected Pharmaceutical Companies(In Percentage)
Year Aurobindo pharma. Company Mankind pharma. Company Torrent Pharma. Company
2018-19 13.47 20.56 14.86
2019-20 14.37 26.24 18.32
2020-21 19.55 22.90 18.86
2021-22 8.50 22.00 15.62
2022-23 6.86 16.03 16.28
Mean 12.55 21.546 16.788
SD 5.04 3.72 1.73
CV 40.22 17.28 10.30
CAGR -0.12 -0.05 0.02
Source: - Compiled and Computed from various Annual reports of selected Pharmaceutical Companies.
Interpretation: The table presents the ROE ratios for Aurobindo Pharma, Mankind Pharma, and Torrent
Pharma over five financial years, from 2018-19 to 2022-23. The analysis considers mean ROE, standard
deviation (SD), coefficient of variation (CV), and compound annual growth rate (CAGR) to assess profitability
trends, consistency, and financial efficiency.
Aurobindo Pharma has shown a significant decline in ROE over the five-year period, suggesting a diminishing
capacity to generate profits from its shareholders' investments. The ROE started at 13.47% in 2018-19, peaked at
19.55% in 2020-21, and then sharply fell to 6.86% in 2022-23, marking a worrying trend. The mean ROE over
five years is 12.55%, which is the lowest among the three companies, indicating weaker profitability in relation
to shareholder equity. The standard deviation of 5.05% and the coefficient of variation (CV: 40.22%) highlight
that Aurobindo Pharma has the most volatile and inconsistent ROE trends, making it less predictable for
investors.
The CAGR of -12.62% confirms that Aurobindo Pharma's ROE is on a continuous downward trajectory. This
steep decline may stem from decreasing net profit margins, rising debt obligations, or inefficient equity
deployment. The company needs to adopt strategic cost management, optimize capital structure, and enhance
profitability through operational improvements to regain investor confidence.

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Mankind Pharma has exhibited the highest and most stable ROE performance among the three companies,
indicating strong financial efficiency. The company's ROE began at 20.56% in 2018-19, peaked at 26.24% in
2019-20, and settled at 16.03% in 2022-23. With a mean ROE of 21.55%, Mankind Pharma surpasses its
competitors, demonstrating effective utilization of shareholders' funds to generate high returns. The standard
deviation (3.72%) and coefficient of variation (CV: 17.28%) indicate moderate fluctuations and relative stability.
However, the CAGR (-4.86%) suggests a declining trend in ROE over time. While Mankind Pharma remains the
most profitable in terms of equity utilization, the gradual reduction signals potential challenges, such as higher
capital expenditures, lower margins, or increased reinvestment of earnings. To sustain its leadership, the
company should focus on efficiency improvements, cost-effective expansion strategies, and maintaining healthy
profit margins.
Torrent Pharma displays steady and consistent ROE growth, making it a reliable company for investors seeking
stable returns. The ROE increased from 14.86% in 2018-19 to 16.28% in 2022-23, reaching a peak of 18.86% in
2020-21. The mean ROE of 16.79% is moderate but higher than Aurobindo Pharma, indicating better efficiency
in utilizing shareholder funds. The standard deviation of 1.73% and the lowest coefficient of variation (CV:
10.31%) suggest remarkable stability in ROE trends, making Torrent Pharma the least volatile and most
predictable investment option. The CAGR of +1.84% makes Torrent Pharma the only company with a positive
growth trend in ROE. This steady improvement indicates strong financial management, efficient capital
allocation, and sustained profitability. Among the three, Torrent Pharma stands out for its ability to generate
consistent returns while maintaining stability in financial performance.
6. Earnings Per Share: A crucial financial indicator that assesses a company's profitability per share is
earnings per share (EPS). The Profitability ratio shows how much profit is allocated to each company's
share, earnings per share, or EPS. Divided by the total number of outstanding shares of common stock, it is
computed as the corporation's net income (net of taxes and preferred shareholder distributions).
Formula:
EPS = (Net Income – Preferred Dividends) / Weighted Average Shares Outstanding
Table 6: Earnings Per Share Ratio of the selected Pharmaceutical Companies(In Rupees)
Year Aurobindo pharma. Company Mankind pharma. Company Torrent Pharma. Company
2018-19 26.11 15.26 44.05
2019-20 31.96 23.92 55.46
2020-21 53.13 27.07 67.24
2021-22 24.83 33.33 58.59
2022-23 21.00 31.16 39.79
Mean 31.41 26.14 53.03
SD 12.76 7.09 11.12
CV 40.65 27.11 20.97
CAGR -0.04 0.15 -0.02
Source:- Compiled and Computed from various Annual reports of selected Pharmaceutical Companies.
Interpretation: The table displays the EPS ratios for Aurobindo Pharma, Mankind Pharma, and Torrent Pharma
from 2018-19 to 2022-23, alongside calculated figures such as mean EPS, standard deviation (SD), coefficient of
variation (CV), and compound annual growth rate (CAGR). Through this analysis, we aim to assess the
companies' profitability trends, stability in earnings, and overall financial performance.
Aurobindo Pharma has experienced fluctuating EPS over the five years, with a noticeable decline in the most
recent years. The EPS started at 26.11 in 2018-19, increased to 53.13 in 2020-21, but then declined to 21.00 in
2022-23. The mean EPS of 31.406 indicates that Aurobindo Pharma has had a moderate average earnings
performance over the five years. However, its standard deviation of 12.77 and coefficient of variation (CV) of
40.65% point to high variability in earnings, signalling an unpredictable performance. Such volatility could be
attributed to fluctuating sales, varying costs, regulatory changes, or operational inefficiencies.
Additionally, Aurobindo's negative CAGR of -4.26% highlights a long-term declining trend in its earnings,
suggesting decreasing profitability and lower returns for shareholders. The decline in EPS may stem from
declining sales in key markets, higher input costs, or reduced operational efficiency. The company must focus on
stabilizing earnings by controlling costs, enhancing operational processes, and targeting sustainable growth to
regain investor confidence.

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Mankind Pharma has shown a steady and slightly increasing trend in EPS over the years, with consistent
improvement in profitability. The company's EPS began at 15.26 in 2018-19, peaked at 33.33 in 2021-22, and
remained solid at 31.16 in 2022-23. With a mean EPS of 26.148, Mankind Pharma has demonstrated strong but
moderately lower earnings compared to Torrent Pharma. However, the standard deviation of 7.09 and CV of
27.11% point to less volatility compared to Aurobindo Pharma, indicating more stable performance. The lower
CV suggests that Mankind Pharma's earnings have shown a more consistent performance despite occasional
variations in growth. Importantly, Mankind Pharma recorded a positive CAGR of +15.35%, reflecting strong
sustained growth in profitability. The positive growth trend shows that the company has consistently enhanced
its earnings performance, signalling effective business strategies and efficiently managing operational costs and
revenue generation. Mankind Pharma is likely to continue increasing its earnings if it sustains its competitive
edge and adapts to changing market conditions.
Torrent Pharma exhibits the highest EPS growth among the three companies, signaling a strong and consistent
increase in earnings per share over time. The company's EPS rose from 44.05 in 2018-19 to 67.24 in 2020-21
before declining slightly to 39.79 in 2022-23. With a mean EPS of 53.026, Torrent Pharma has shown the
highest average EPS performance, indicating superior profitability in relation to shareholding value over the
analyzed period. Furthermore, the standard deviation of 11.12 and CV of 20.97% reveal moderate volatility, but
overall, the company's earnings have been more stable than Aurobindo's. The CAGR of -2.01%, while negative,
indicates only a slight decline in growth, suggesting that Torrent Pharma's earnings growth is stabilizing after
several years of rapid increase. This could indicate the company reaching a level of maturation in its market
expansion or facing increased competition. Still, Torrent Pharma remains one of the most profitable companies
in terms of EPS. Torrent Pharma will likely need to explore ways to sustain its earnings growth through
innovation, cost containment, and expansion into new markets to combat any potential future slowdowns.
Key Profitability Metrics Overview
Metric Company Mean CAGR
Mankind Highest Positive
Gross Profit Ratio Torrent Moderate Positive
Aurobindo Low Negative
Mankind Highest Negative
Net Profit Ratio Torrent Moderate Positive
Aurobindo Low Negative
Mankind Highest Negative
ROCE Aurobindo Moderate Negative
Torrent Low Positive
Mankind Highest Negative
ROA Aurobindo moderate Negative
Torrent Low Positive
Mankind Highest Negative
Torrent Moderate Positive
ROE
Aurobindo Low Negative
Torrent Highest Negative
EPS Aurobindo Moderate Negative
Mankind Low Positive

Comparative analysis:
Mankind Pharma consistently outperforms its peers in reinvigorate growth and address declining metrics
most profitability metrics, including Gross Profit like ROCE and EPS. Challenged Performer
Ratio, Net Profit Ratio, ROCE, ROA, and ROE. Aurobindo Pharmaceutical Aurobindo struggles with
Despite some variability, its positive CAGR in critical declining trends across most metrics, including
metrics like EPS and ROCE reflects robust growth ROCE, ROA, ROE, and EPS, and shows significant
and operational efficiency. Stable Performer Torrent variability, indicating an inconsistent performance.
Pharmaceutical has historically shown low to Operational inefficiencies, cost challenges, or
moderate profitability (e.g., EPS, ROE) and low declining revenues might contribute to this downward
variability across most metrics, but it has faced trajectory.
declining trends in recent years. The company must

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Findings: strong shareholder returns. Aurobindo Pharma's
 The Gross Profit Ratio (GPR) measures the CAGR of -12.62% indicates a decline in equity
company's profitability by comparing gross profit returns, while Torrent Pharma showed some
with sales. Aurobindo Pharma's GPR declined at positive growth with a CAGR of 1.84%. Mankind
a CAGR of -4.87%, indicating a slight reduction Pharma's consistently higher ROE makes it an
in profitability over the 5 years. Torrent Pharma attractive choice for shareholders.
showed a more stable GPR, with a positive
 EPS shows how much profit a company generates
CAGR of 4.78%, indicating a slight improvement
for each outstanding share. Torrent Pharma leads
in profitability over time. Mankind Pharma
in this category with the highest mean EPS of
demonstrated a strong performance in the first
53.03, which reflects the company's higher
few years, but its GPR declined in recent years,
profitability per share. Mankind Pharma also
with a CAGR of 9.59%. Mankind Pharma has the
showed good growth, especially with a positive
highest mean GPR at 21.71, showing its overall
CAGR of 15.35%, indicating strong future
higher profitability than the others. While
growth prospects. Aurobindo Pharma's decline in
maintaining a steady GPR, Torrent Pharma also
EPS, with a CAGR of -4.26%, suggests that the
shows consistent growth, making it an attractive
company may face challenges in increasing its
choice in terms of stability.
earnings per share over the years.
 Net Profit Ratio (NPR) reflects a company's
Suggestions:
ability to convert sales into actual profit. Mankind
 Mankind Pharma stands out as a leader in most
Pharma leads with a mean NPR of 18.11,
profitability ratios, including the Net Profit Ratio,
demonstrating its superior efficiency in managing
Return on Capital Employed, and Return on
costs and generating profit from sales. Aurobindo
Equity. This makes it an attractive investment
Pharma showed a decline in its NPR over the
option for those seeking high profitability and
years, with a CAGR of -5.09%, reflecting
efficient capital management. However, its recent
challenges in maintaining profitability. Torrent
decline in the Gross Profit Ratio suggests a need
Pharma showed a slight positive growth, with a
for cost control or improvement in operational
CAGR of 1.1%. The relatively stable NPR of
efficiency.
Torrent Pharma is a positive indicator for
investors seeking stability.  Torrent Pharma has shown consistent and stable
performance, particularly in gross profit ratio and
 ROCE measures the profitability and efficiency of
return on assets. It is a good option for investors
a company in utilizing its capital. Mankind
looking for stability and gradual growth. The
Pharma leads with a mean ROCE of 28.20,
company should maintain and improve its
reflecting substantial capital utilization.
profitability ratios to stay competitive.
Aurobindo Pharma's CAGR of -12.49% indicates
a significant decline in its ability to generate  Despite showing some growth in its early years,
returns from capital employed. Torrent Pharma Aurobindo Pharma has faced a decline across
showed an improvement in ROCE with a CAGR several key profitability ratios, including Net
of 9.76%, suggesting increasing efficiency in Profit Ratio and Return on Capital Employed.
utilizing capital. Mankind Pharma has The company must identify the reasons for the
consistently been the leader in capital utilization decline and explore cost-cutting measures, better
over the five years. asset utilization, or more strategic investments to
restore profitability.
 ROA evaluates how efficiently a company utilizes
its assets to generate profits. Mankind Pharma  All companies should focus on improving their
demonstrated strong efficiency, with a mean ROA Gross Profit Ratio and Net Profit Ratio in the
of 16.73. While Aurobindo Pharma showed a coming years. Given the pharmaceutical sector
decline in ROA at a CAGR of -10.17%, Torrent trend, focusing on product innovation and better
Pharma managed to increase its ROA at 5.68%. cost management may help improve margins and
This suggests that Torrent Pharma has more sustain profitability.
effectively converted its assets into profit than  Future Outlook The pharmaceutical industry
Aurobindo Pharma. Mankind Pharma remains a remains competitive, and companies must
top performer in asset utilization. continue improving efficiency, cost management,
 ROE measures the profitability relative to and capital utilization to sustain growth.
shareholders' equity. Mankind Pharma again leads Companies with higher increases in EPS (like
with the highest mean ROE of 21.55, reflecting Torrent Pharma and Mankind Pharma) may see

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 International Journal of Trend in Scientific Research and Development @ www.ijtsrd.com eISSN: 2456-6470
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