AstraZeneca Pharma NCDs get P1 rating

MUMBAI: CRISIL has assigned ‘P1+’ rating to the short term secured fully-paid redeemable non-convertible bonus debenture issue of AstraZeneca Pharma India Ltd.

The rating is driven by AstraZeneca India’s financial profile, and the support from its parent company, AstraZeneca PLC, UK. AstraZeneca India is a subsidiary of AstraZeneca Pharmaceuticals AB, Sweden, which is an indirect subsidiary of AstraZeneca PLC, UK.

These strengths are partially offset by AstraZeneca India’s revenue concentration and modest brand portfolio in the domestic formulations market.

AstraZeneca India has a robust financial profile, driven by a strong revenue growth and healthy profitability margins; it registered operating margins of 26 to 28 per cent, and profit after tax margins of 18 to 19 per cent during the past few years.

The company had cash and cash equivalents aggregating Rs 108 crore and a current ratio of over 2 times as on December 31, 2006; its zero-debt capital structure mirrors the parent’s policy of not resorting to debt.

In CRISIL’s assessment, strong cash accruals will be sufficient to fund the company’s working capital and ongoing capital expenditure plans. Moreover, with AstraZeneca India’s continuous access to AstraZeneca PLC’s product pipeline of patented drugs, CRISIL believes the company’s revenue generation will remain stable over the medium term, backed by new product launches.

However, AstraZeneca’s revenue profile is concentrated in the domestic market, exposing it entirely to the regulatory and business environment herein. In the past, pharmaceutical companies have experienced volatility due to fiscal and regulatory changes, including implementation of value-added tax and price controls. The presence of fewer strong brands in AstraZeneca India’s product portfolio, compared with other major companies in India, accentuates its susceptibility to volatility in revenues.