MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Overview Vivo Bio Tech is a full service CRO offering drug development & discovery services to pharmaceutical & biotech companies world-wide in accordance with OECD, AAALAC & IND guidelines. The company offers services in the areas of In vitro, In vivo, toxicity studies, pharmacological investigations, pharmacokinetics & toxicokinetic studies etc. Our experienced & talented scientists offer advice on defining drug development paths tailored to specific molecules. Tailored and dedicated to our clients, we distinguish your development plan is as superlative as the products you bring to our testing facilities. At the leading edge of research and development, Vivo Bio Tech offers extensive range of Biologic Research Services across various exbrssion systems. These services are offered to pharma, biotech and agri companies with short turn-around time without compromising the quality of deliverable. • Molecular Biology Services • Mutation screening by growth promotion tests • Process development & Scale-up of recombinant proteins • Protein Purification & Characterization • Cell Based Assay Development • Stability Studies • Raising polyclonal antibodies & purification • Method development and validation for Biologics I. Industry structure and developments Biotechnology started as a science, referring to the use of living cells as factories to produce protein through manipulation of genes. Yet today, biotechnology refers to an industry, with the top companies in the sector exceeding some of the major pharmaceutical companies in market capitalization. No longer are biotechnology companies constrained to using recombinant DNA technology alone, as the moniker is assigned today to any small company engaged in any life sciences-related research directed toward developing a commercial product, using any scientific means. Belonging to the sector usually also implies a culture - small, nimble, visionary but practical, cash constrained but willing to risk it all. While some of the above characteristics are more idealized than real, it is certainly the case that, while the key factors for success in a development stage company include the very same scientific, analytic, and/or managerial talents that reside in "big pharma", the context is different, requiring the organization to incorporate some additional skills to ensure survival, and non-traditional systems to support success. These systems are meant to reconcile the long product development cycles inherent to the industry with the shorter "survival index" supported by the available cash. In pharma in general, the long Product R&D cycles may minimize the rigor behind decision-making, since there is a long time lag between the action taken, and its ultimate impact. Moreover, paradoxically, there is a "comfort" to operating at a significant loss for many years Opportunities: Growth in the life sciences sector comprised of the pharmaceutical, biotechnology, and medical technology (medtech) segments is closely tied to economic and demographic drivers that fuel a continual transformation of the broader health care industry. Life sciences companies have demonstrated their ability to survive and thrive amidst recent periods of economic recession, health care spending cutbacks, geographic market swings, and changing population profiles. If history is any indication, 2015 will again test the sector's ability to adapt in an era of transformation. The global biotechnology segment is expected to post revenues of $288.7 billion in 2015, culminating a five-year average annual increase of 10.8 percent. The vast majority of biotech revenue is generated in Europe and the United States (where the segment has exhibited growth since 2009).26 Major players have, however, recently reported slower growth rates for U.S. sales compared with other parts of the world. This trend in revenue growth from emerging markets is expected to continue over the next five years as living standards and health care access improve, particularly in India, China, Brazil, and other emerging market. Threats Government Regulations The Biotechnology Indusrty is highly regulated and product commercialization can only occur after many years of compliance with required product standards. Taking a risk-based approach to compliance planning, execution, and monitoring makes good business sense in a heightened regulatory environment. A top priority for drug and device manufacturers is to identify ways to counter increasing instances of unsustainable pricing (extremely high-priced innovations), which elicit defensive legislative responses from government. Long Gestation Period: Developing a new product is an ambitious venture characterized by high cost, long gestation period , high risk, a lengthy period without revenue, and even longer period without profit. All of this requires a degree of persistence, patience, and, above all capital to invest. Compared to pharmaceutical Industry the products in Biotechnology tend to have fewer safety and toxicity issues. During lengthy gestation period the companies' profit is deferred because delay before saleable products come out of the pipeline. Risks & concerns: Biotechnology industry is a high risk industry as the major part of the capital in spent on the Research and development for the development of the new products in the process the product may or may nor emerge. Even after development of new product there is no assurance regardinfg generation of revenue or profitable operations. There are many factors such as competition, patent protection and the regulatory environment that can influence a product's profitability potential. Internal Control Systems & their adequacy: The Management Information Systems is the back bone of our internal control mechanism. The Company has adequate internal control systems and procedures in all operational areas and at all levels equipment procurement, finance and administration marketing and personnel departments. The Company also has internal Audit system commensurate with its size and nature of business. The Audit Committee reviews the internal audit reports and the adequacy of internal controls from time to time. In order to ensure that all checks and balances are in place and all internal control systems and procedures are in order, regular and in- depth internal audit is conducted by the qualified chartered accountants. Internal audit reports are reviewed by the audit committee on a quarterly basis. Discussion on financial performance with respect to operational performance: The financial statements have been brpared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles in India. The Management of the Company accepts responsibility for the integrity and objectivity of the financial statements as well as for the various estimates used therein. The financial statements have been brpared on a prudent basis to reflect an accurate picture of the Company's state of affairs. Revenues: The total income of the Company for the FY 2014-15 is Rs. 1873.60 Lakhs as against Rs. 1,700.84 Lakhs in FY 2013-14 Profits: Profit before Tax (PBT) stood at Rs19.27Lakhs as against Rs.67.69 Lakhs for the brvious year. Profit after Tax (PAT) stood at Rs. 46.28 Lakhs as against Rs. 29.36 Lakhs for the brvious year. Material Developments in Human Resources: Vivo is a performance-driven organization. Our performance management system strongly links organizational values and objectives with individual targets and performance metrics to create a harmonious growth path for all employees. This year, the performance management system was modified to make it more robust and transparent which provided an excellent user experience to all employees undergoing appraisals. Vivo encourages employees to aspire for higher professional goals and supports them in achieving them. The Internal Job Postings initiative helps employees realize their Professional goals through internal promotions/ transfer opportunities. The HR team delivered quality training solutions in a timely manner. A survey launched to measure the effectiveness of training programs revealed that almost 98% employees were able to enhance their skill/knowledge and apply it on the job. As a part of our ongoing effort to enhance leadership skills at Vivo, we initiated the Leadership Talk series. Workshops were conducted for the businesses in order to formulate a common mission and objectives for the year. An engaged employee is a motivated and effective employee. At Vivo we make every effort to make the workplace engaging and encouraging for our staff. Vivo aims at developing industry-ready, high-end talent by equipping bioscientists with skills that enhance their employability. Declaration regarding compliance with the code of conduct and ethics policy of the company by Board Members and senior management personnel This is to confirm that the company has adopted code of conduct and Ethics policy for the Board of Directors and Associates of the Company, which is available at www.vivobio.com <http://www.vivobio.com> I M. Kalyan Ram, Whole Time Director declare that the Board of directors and senior management personnel have affirmed compliance with the Code of Conduct and Ethics Policy of the Company. BY ORDER OF THE BOARD For Vivo Bio Tech Limited M. Kalyan Ram Whole Time Director PLACE : HYDERABAD DATE : 31.08.2015 |