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LETTER OF OFFER
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTIONThis Letter of Offer is sent to you as a shareholder(s) / beneficial owner(s) of Pfizer Limited. If you require any clarifications about the action tobe taken, you may consult your stock broker or investment consultant or the Manager / Registrar to the Offer. In case you have recently sold yourshares in the Target Company, please hand over this Letter of Offer and the accompanying Form of Acceptance-cum-Acknowledgement, Formof Withdrawal and Transfer Deed (in case of physical form) to the member of Stock Exchange through whom the said sale was effected.
CASH OFFER AT Rs. 675/- (Rupees Six Hundred and Seventy Five only)
PER FULLY PAID-UP EQUITY SHARE
(“Offer Price”)
Pursuant to The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 and subsequent amendments thereof (the “SEBI (SAST) Regulations” or “Regulations”)
TO ACQUIRE
10,078,143 Fully Paid-Up Equity Shares of face value Rs. 10/- each (“Offer”)
representing 33.77% of the Paid-Up Equity Share Capital
OF
Pfizer LimitedRegistered Office: Pfizer Centre, Patel Estate,Off S.V.Road, Jogeshwari(West), Mumbai – 400 102
Tel: +91 22 6693 2000 Fax: +91 22 6693 2377
(the “Target Company” or “Pfizer India”)
BY
Pfizer Investments Netherlands B.V.Registered Office: Rivium Westlaan 142, 2909 LD Capelle aan den IJssel, the Netherlands
Tel:31-10-406-4349 Fax: 31-10-406-4481
(the “Acquirer”)
and
Pfizer Inc.Registered Office: Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801
Tel: 302-658-7581 Fax: 302-655-5049
The ultimate holding company of the Acquirer, which is acting in concert
(the “Person Acting in Concert” or “PAC”)
Note:
1. The Offer is being made pursuant to and in accordance with the provisions of Regulation 11(1) of the Regulations and subsequent amendments thereto.
2. On May 5, 2009, the Acquirer had filed an application with the RBI seeking its approval for acquisition of shares in the Offer from residents of India, non-resident Indians and
erstwhile overseas corporate bodies, as may be required, under the Foreign Exchange Management Act, 1999 and the regulations thereunder. Besides the above, no other approvals
are required to acquire shares tendered pursuant to this Offer.
3. The procedure for acceptance of this Offer is set out in this Letter of Offer. A Form of Acceptance-cum-Acknowledgement and Transfer Deed (where applicable) along with Form
of Withdrawal are enclosed with this Letter of Offer.
4. Should the Acquirer / PAC decide to revise the Offer Price upward, such upward revision will be made in terms of Regulation 26 of the Regulations not later than June 25, 2009. If
there is any upward revision in the Offer Price, the same would be notified by way of a public announcement in the same newspapers in which the Public Announcement (“PA”)
appeared. Such revised offer price would be payable to all shareholders who have accepted this Offer and tendered their shares at any time during the term of the Offer to the extent to
which their acceptance and tenders have been found valid and accepted by the Acquirer / PAC.
5. Shareholders who have accepted the Offer by tendering the requisite documents in accordance with the procedures set forth in the PA and this Letter of Offer can withdraw the
same up to three (3) working days prior to the date of closure of the Offer viz. Saturday, July 4, 2009.
6. A copy of the Public Announcement and Letter of Offer (including Form of Acceptance-cum-Acknowledgement and the Form of Withdrawal) would be available on SEBI’s
website at www.sebi.gov.in from the Offer opening date viz. Monday, June 15, 2009. The Form of Acceptance-cum-Acknowledgement may be downloaded and used to accept
the Offer only in jurisdictions where legally permissible. Persons outside India accessing these pages are required to inform themselves of and observe any relevant
restrictions.
7. This document has not been filed, registered or approved in any jurisdiction outside India. Recipients of this document resident in jurisdictions outside India should inform
themselves of and observe any applicable legal requirements.
8. If there is a competitive bid, the public offers under all the subsisting bids shall close on the same date. As the Offer Price cannot be revised during the 7 (seven) working
days prior to the closing date of the offers / bids, it would, therefore, be in the interest of shareholders to wait until the commencement of that period to know the final
offer price of each bid and tender their acceptance accordingly.
9. This Offer is not conditional upon any minimum level of acceptance.
10. This Offer is not a competitive bid. There has been no competitive bid as of the date of the Letter of Offer.
11. All future correspondence, if any, should be addressed to the Registrar to the Offer shown below:
Manager to the Offer Registrar to the Offer
HSBC Securities and Capital Markets (India) Private Limited Karvy Computershare Private Limited
52/60 M.G.Road, Fort Plot No 17-24, Vithalrao Nagar, Madhapur,
Mumbai 400 001 Hyderabad 500 081
Telephone: +91-22-2268 1285 Telephone: +91- 40-2342 0815-23
Facsimile: +91-22-2263 1984 Facsimile: +91- 40-2343 1551
Contact Person: Ms. Sonam Jalan Contact Person: Mr. M. Murali Krishna
Email: [email protected] E-mail: [email protected]
OFFER OPENS ON : Monday, June 15, 2009 OFFER CLOSES ON : Saturday, July 4, 2009
(For schedule of major activities relating to the Offer, please refer to the next page)
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SCHEDULE OF MAJOR ACTIVITIES RELATING TO THE OFFER:
All public shareholders (registered or unregistered) of shares of the Target Company are eligible to participate in
the Offer anytime before the closing of the Offer.
Activity Original Schedule Revised Schedule
Public Announcement date (“PA”) April 16, 2009 (Thursday)
April 16, 2009 (Thursday)
Specified Date (for the purpose of determining the names of shareholders to whom the Letter of Offer would be sent)
May 8, 2009 (Friday) May 8, 2009 (Friday)
Last date for a competitive bid May 7, 2009 (Thursday) May 7, 2009 (Thursday)
Date by which individual Letters of Offer will be dispatched to the shareholders
May 28, 2009 (Thursday) June 2, 2009 (Tuesday)
Offer Opening Date June 10, 2009 (Wednesday)
June 15, 2009 (Monday)
Last date for revising the Offer Price / number of shares
June 18, 2009 (Thursday) June 25, 2009 (Thursday)
Last date for withdrawal by shareholders June 24, 2009 (Wednesday)
July 1, 2009 (Wednesday)
Offer Closing Date June 29, 2009 (Monday) July 4, 2009 (Saturday)
Date by which acceptance / rejection would be intimated and the corresponding payment for the acquired shares and/or the share certificates for the rejected / withdrawn shares will be dispatched and/or credited to the beneficiary account in case of dematerialized equity shares
July 14, 2009 (Tuesday) July 17, 2009 (Friday)
3
RISK FACTORS
Risks related to the Open Offer
1) In the event of statutory approvals not being received in a timely manner or litigation leading to a stay on
the Offer, or SEBI instructing that the Offer should not proceed, the Offer process may be delayed beyond
the schedule indicated in this Letter of Offer. Consequently, the payment of consideration to the shareholders
whose shares have been accepted in the Offer as well as the return of the shares not accepted by the
Acquirer may be delayed. In case of delay due to non-receipt of statutory approvals, as per Regulation
22(12) of the Regulations, SEBI may, if satisfied that the non-receipt of approvals was not due to the willful
default or negligence on part of the Acquirer / PAC, grant an extension for the purpose of the completion of
the Offer subject to the Acquirer agreeing to pay interest.
2) The Acquirer / PAC make no assurance with respect to the market price of the shares during / after the Offer.
3) The shares tendered in the Offer will lie to the credit of the depository escrow account till the completion of
the Offer formalities, and the shareholders will not be able to trade such shares. During such period, there
may be fluctuations in the market price of the shares. Accordingly, the Acquirer / PAC make no assurance
with respect to the market price of the shares both during the Offer period and upon the completion of the
Offer, and disclaim any responsibility with respect to any decision by any shareholder on whether to
participate or not to participate in the Offer.
4) In the event of oversubscription in the Offer, the acceptance of the tendered shares will be on a proportionate
basis as per Regulation 21(6) of the Regulations in consultation with the Manager to the Offer, taking care
to ensure that the basis of acceptance is decided in a fair and equitable manner.
5) The Acquirer / PAC and the Manager to the Offer accept no responsibility for the statements made,
otherwise than in the Public Announcement or the Letter of Offer or in the advertisement or any materials
issued by, or at the instance of the Acquirer / PAC and the Manager to the Offer, and anyone placing
reliance on any other source of information would be doing so at his / her / their own risk.
Risks related to the Acquirer / PAC and the Target Company
1) The Acquirer / PAC do not make any assurance with respect to the continuation of the past trend in the
financial performance of the Target Company.
The risk factors set forth above are not intended to be a complete analysis of all risks in relation to the Offer
or in association with the Acquirer and the PAC, but are only indicative. They do not relate to the present
or future business or operations of the Target Company or any other related matters, and are neither
exhaustive nor intended to constitute a complete analysis of the risks involved in the participation by a
shareholder in the Offer. The shareholders are advised to consult their stockbroker, investment consultant
or tax advisor, if any, for further risks with respect to their participation in the Offer.
4
TABLE OF CONTENTS
Disclaimer Clause ............................................................................................................................... 6
1. Background to the Offer ..................................................................................................................... 6
2. Details of the Offer .............................................................................................................................. 7
3. Object of the Acquisition / Offer ......................................................................................................... 8
4. Background of the Acquirer and PAC ................................................................................................ 8
5. Option in terms of Regulation 21(2) ................................................................................................. 44
6. Background of the Target Company ................................................................................................. 44
7. Offer Price and Financial Arrangements ......................................................................................... 56
8. Terms and Conditions of the Offer .................................................................................................... 58
9. Statutory Approvals ............................................................................................................................ 59
10. Procedure for Acceptance and Settlement ........................................................................................ 59
11. Documents for Inspection .................................................................................................................. 64
12. Declaration by the Acquirer and the PAC ......................................................................................... 64
Attached: Form of Acceptance-cum-Acknowledgement, Form of Withdrawal and Transfer Deed (where
applicable)
5
DEFINITIONS/ABBREVIATIONS
Acquirer Pfizer Investments Netherlands B.V.
BSE The Bombay Stock Exchange Limited
CDSL Central Depository Services Limited
Depository Escrow account The depository account called “KCPL Escrow Account - PL Open Offer”,opened by the Registrar with Karvy Stock Broking Ltd. at NationalSecurities Depository Limited (NSDL). The DP ID is IN302470 and thebeneficiary client ID is 40235580
DP Depository Participant
Eligible Person(s) All public shareholders (registered and unregistered) of the TargetCompany whose names appear on the register of members any timebefore the closure of the Offer
FEMA Foreign Exchange Management Act, 1999
Public Announcement or PA The public announcement relating to the Offer made by the Acquirer /PAC as appeared in the newspapers on April 16, 2009
Letter of Offer or LOF The letter of offer to the shareholders of Pfizer Limited relating to theOffer made by the Acquirer / PAC
Manager to the Offer / HSCI HSBC Securities and Capital Markets (India) Private Limited
NSDL National Securities Depository Limited
NSE The National Stock Exchange of India Limited
NYSE New York Stock Exchange
Offer or Open Offer Voluntary offer being made by the Acquirer / PAC to all the publicshareholders of the Target Company to acquire 10,078,143 fully paid-upequity shares of face value of Rs. 10/- each, representing 33.77% of thepaid-up equity share capital of the Target Company on the termscontained in this Letter of Offer
Offer Size 10,078,143 fully paid-up equity shares of Rs.10 each
Offer Opening Date June 15, 2009
Offer Closing Date July 4, 2009
Offer Price Rs. 675/- (Rupees Six Hundred and Seventy Five only) per fully paid-upequity share
PAC or Person Acting in Concert Person Acting in Concert along with the Acquirer, Pfizer Inc.
RBI Reserve Bank of India
Registrar to the Offer Karvy Computershare Private Limited
SEBI (SAST) Regulations or Securities and Exchange Board of India (Substantial Acquisition ofRegulations Shares and Takeovers) Regulations, 1997 and subsequent amendments
thereto
SEBI Securities and Exchange Board of India
SEBI Act Securities and Exchange Board of India Act, 1992
Specified Date Date for the purpose of determining the names of shareholders, asappearing in the Register of Members of the Target Company or thebeneficial records of the relevant DPs, to whom the Letter of Offer willbe sent. This date has been determined as May 8, 2009
Target Company or Pfizer India Pfizer Limited
USD United States Dollar
Voting Capital Means the subscribed and paid-up capital of the Target Company(excluding 2,640 forfeited shares amounting to Rs. 17,600) isRs. 298,414,400
CURRENCY OF PRESENTATION
Please note that all financial data contained in United States Dollar (“USD”) in this Letter of Offer has beenrounded off to the nearest million and all the financial data contained in Rupees in this LOF has been rounded offto the nearest lakh, except where stated otherwise.Certain financial details contained in this Letter of Offer are denominated in USD. The rupee equivalent quoted ineach case for USD is calculated based on the RBI reference rate of Rs.49.86 per USD as on April 13, 2009.
6
This Letter of Offer is being issued by HSBC Securities and Capital Markets (India) Private Limited (“HSCI” or the
“Manager to the Offer”), on behalf of the Acquirer and the PAC pursuant to Regulation 11(1) and other applicable
provisions of the Regulations.
Disclaimer
AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE
DISTINCTLY UNDERSTOOD THAT THE FILING OF THE DRAFT LETTER OF OFFER WITH SEBI SHOULD
NOT, IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR
APPROVED BY SEBI. THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI FOR A LIMITED
PURPOSE OF OVERSEEING WHETHER THE DISCLOSURES CONTAINED THEREIN ARE GENERALLY
ADEQUATE AND ARE IN CONFORMITY WITH THE REGULATIONS. THIS REQUIREMENT IS TO FACILITATE
THE SHAREHOLDERS OF PFIZER LIMITED TO MAKE AN INFORMED DECISION WITH REGARD TO THE
OFFER. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF THE
ACQUIRER, THE PAC OR OF THE TARGET COMPANY WHOSE SHARES / CONTROL ARE / IS PROPOSED TO
BE ACQUIRED OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN
THE LETTER OF OFFER. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT, WHILE THE ACQUIRER / PAC
ARE PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY, AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THIS LETTER OF OFFER, THE MANAGER TO THE OFFER IS EXPECTED TO EXERCISE
DUE DILIGENCE TO ENSURE THAT THE ACQUIRER / PAC DULY DISCHARGE THEIR RESPONSIBILITIES
ADEQUATELY. IN THIS BEHALF, AND TOWARDS THIS PURPOSE, HSBC SECURITIES AND CAPITAL
MARKETS (INDIA) PRIVATE LIMITED, THE MANAGER TO THE OFFER, HAS SUBMITTED A DUE DILIGENCE
CERTIFICATE DATED APRIL 29, 2009 TO SEBI IN ACCORDANCE WITH THE SEBI (SUBSTANTIAL
ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS 1997 AND SUBSEQUENT AMENDMENT(S)
THERETO. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ACQUIRER / PAC
FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY CLEARANCES AS MAY BE REQUIRED FOR
THE PURPOSE OF THE OFFER.
1. Background to the Offer
1.1. The voluntary offer (the “Offer” or the “Open Offer”) is pursuant to the desire of Pfizer Inc. (“PAC”) and
Pfizer Investments Netherlands B.V. (“Acquirer”) to consolidate the holding of the Pfizer group in Pfizer
Limited (“Pfizer India” or “Target Company”) under Regulation 11(1) of the Regulations, while ensuring
that the public shareholding in the Target Company does not fall below the minimum level of shareholding
required to be maintained under the Listing Agreements, as amended from time to time, entered into by the
Target Company with the Bombay Stock Exchange (the “BSE”), and the National Stock Exchange of India
Limited (the “NSE”). Pursuant to Circular No. SEBI/CFDDIL/LA/2006/13/4 issued by the SEBI on April 13,
2006, the minimum level of public shareholding required to be maintained under the Listing Agreements as
amended from time to time, entered into by the Target Company with the BSE and NSE is 10%.
1.2. The Acquirer along with the PAC is making the Offer to the public shareholders of the Target Company to
acquire up to 10,078,143 fully paid-up equity shares of Rs.10 each (the “Offer Size”) constituting 33.77%
of the Voting Capital (as defined in Clause 2.2 below) of the Target Company. The Offer is being made at a
price of Rs.675/- (Rupees Six Hundred and Seventy Five only) per equity share (the “Offer Price”), to be
paid in cash, in accordance with the provisions of the Regulations and subject to the terms and conditions
mentioned in this Letter of Offer in relation to the Offer.
1.3. The Acquirer holds no shares in the Target Company. Subsidiaries of the PAC hold an aggregate of
12,302,937 equity shares of the Target Company constituting 41.23% of the voting equity share capital of
the Target Company. There are no partly paid-up shares in the Target Company or any instruments convertible
into shares of the Target Company at a future date.
1.4. Upon completion of the Offer, assuming full acceptances and taking into account the existing holding, the
Pfizer group will hold 75% of the Voting Capital (as defined in Clause 2.2 below) in the Target Company.
1.5. The Offer is voluntary and in accordance with Regulation 11(1) of the Regulations and has not been
triggered by any agreement of the Acquirer or the PAC with any person for the purpose of acquisition of
shares in the Target Company.
1.6. The Acquirer is a private company incorporated on March 27, 2009, under the laws of The Netherlands, with
its registered office located at Rivium Westlaan 142, 2909 LD Capelle aan den IJssel, the Netherlands.
7
1.7. The Target Company is a public limited company, incorporated on November 21, 1950 under the name
Dumex Limited. In 1958, Dumex Limited was taken over by the Pfizer group and its name was changed to
Pfizer Private Limited in 1961, which was further changed to Pfizer Limited in 1966. The Target Company is
a part of the Pfizer group and is engaged in the business of pharmaceuticals, animal health products and
services – medical and research division.
1.8. None of the Acquirer or PAC or Target Company has been prohibited by SEBI from dealing in securities, in
terms of direction issued under Section 11B of the SEBI Act or under any of the regulations made there
under.
1.9. The Acquirer does not have any intention to change the board of directors of Pfizer India during the offer
period, except to the extent permitted by applicable law.
1.10. The Manager to the Offer does not hold any equity shares of the Target Company as on the date of the PA.
In terms of Regulation 24(5A) of the SEBI (SAST) Regulations, the Manager to the Offer shall not deal in the
equity shares of the Target Company during the period commencing from the date of its appointment in
terms of Regulation 13 of the SEBI (SAST) Regulations till the expiry of (15) fifteen days from the date of
closure of the Offer.
2. Details of the Offer
2.1 The Public Announcement of the Offer appeared on April 16, 2009 in the following newspapers in accordance
with Regulation 15 of the Regulations:
A copy of the PA is also available on the SEBI website: www.sebi.gov.in
2.2 As of the date of the PA, the issued equity share capital of the Target Company is Rs. 298,440,800 divided
into 29,844,080 outstanding equity shares of face value of Rs. 10 each (including 2,640 forfeited shares).
The subscribed and paid-up capital of the Target Company (excluding 2,640 forfeited shares amounting to
Rs. 17,600) is Rs. 298,414,400 (“Voting Capital”) divided into fully paid-up 29,841,440 equity shares of face
value of Rs. 10 each. There are currently no outstanding partly paid-up shares or any other instruments
convertible into equity shares of the Target Company at a future date.
2.3 This Offer to all the public shareholders of the Target Company is to acquire 10,078,143 fully paid-up equity
shares of Rs. 10 each representing 33.77% of the present fully paid-up equity share capital of the Target
Company at the Offer Price of Rs. 675 (Rupees Six Hundred and Seventy Five only) per share, from all the
public shareholders of the Target Company who tender their shares and whose shares are acquired by the
Acquirer.
2.4 The Offer Price will be payable in cash, subject to the terms and conditions mentioned in this Letter of Offer.
2.5 The Offer is not conditional upon any minimum level of acceptance. Accordingly, the Acquirer / PAC will
accept all shares tendered by the public shareholders pursuant to the Offer at the Offer Price, subject to the
shares tendered, not exceeding 10,078,143 shares. In case the number of shares tendered exceeds this
number, the acceptance will be made on a proportionate basis in terms of Regulation 21(6) of the Regulations.
2.6 This is not a competitive bid and there has been no competitive bid to this Offer as on the date of this Letter
of Offer.
2.7 Neither the Acquirer, nor the PAC has acquired any shares of the Target Company after the date of the PA
and up to the date of this Letter of Offer.
2.8 Any decision for the upward revision in the Offer Price by the Acquirer up to the last date of revision (June
25, 2009) or withdrawal of the Offer would be communicated by way of a public announcement in the same
newspapers in which the PA had appeared. In case of an upward revision in the Offer Price, the Acquirer
would pay such revised price for all the shares validly tendered any time during the Offer and accepted
under the Offer. The acquisition of shares, which are validly tendered, by the Acquirer under this Offer will
take place on or before July 17, 2009, in accordance with the schedule of events set out in this Letter of Offer
and not at any point earlier in time.
Newspapers Language Edition
Business Standard English All Editions
Prathakal Hindi All Editions
Sakal Marathi Mumbai
8
2.9 As the Offer Price cannot be revised during 7 (seven) working days prior to the closure of the Offer, it
would, therefore, be in the interest of the shareholders to wait until the commencement of that period to
know the final offer price and tender their acceptance accordingly.
2.10 Shares that are subject to any charge, lien or encumbrance, any court order / any other attachment / dispute
are liable to be rejected in the Offer. Applications in respect of shares that are the subject matter of litigation
wherein the shareholders may be prohibited from transferring the shares during the pendency of such
litigation are liable to be rejected if the directions / orders permitting transfer of these shares are not
received together with the shares tendered under the Offer. The Acquirer will acquire the equity shares
together with all rights attached thereto, including the rights to all dividends, bonuses and rights
subsequently declared. The tender by any shareholder of any equity shares in the Offer must be absolute,
unconditional and unqualified.
2.11 As mentioned in this Letter of Offer, the Offer will close on July 4, 2009. The record date for determining the
shareholders entitled for payment of a dividend for the financial year ended November 2008 in respect of
shares held in electronic form is as on the closure of business hours on April 4, 2009 and in respect of shares
held in physical form as on April 15, 2009. The shareholders who tender their equity shares in the Open
Offer shall be eligible for receipt of the dividend declared for the financial year ended November 2008
subject to other applicable conditions for the same.
3. Object of the Acquisition / Offer
3.1 The Pfizer group has operations worldwide and has achieved a leading global position in the pharmaceutical
industry. The Acquirer and the PAC wish to consolidate and enhance the stake of the Pfizer group in order
to create more flexibility for how the Pfizer group organizes its commercial and financial activities in India.
3.2 Subsidiaries of the PAC hold an aggregate of 12,302,937 equity shares of the Target Company constituting
41.23% of the issued and paid-up equity share capital of the Target Company as of the date of the PA. The
Pfizer group wishes to further consolidate its shareholding to 75% by making this Offer to public shareholders
of Pfizer India in accordance with Regulation 11(1) of the SEBI (SAST) Regulations, while ensuring that the
public shareholding in the Target Company does not fall below 10%, the minimum level of public shareholding
required to be maintained under the Listing Agreements, as amended from time to time, entered into by the
Target Company with the BSE and NSE.
3.3 The Acquirer and the PAC do not have any specific future plans with respect to the Target Company. The
Acquirer and the PAC shall consider the merits of any future proposal for the disposal or encumbrance of
the assets of the Target Company as and when such opportunities arise. Under the second proviso to
Regulation 16(ix) of the extant SEBI (SAST) Regulations, the Acquirer shall not sell, dispose of or otherwise
encumber any substantial asset of the Target Company, except with the prior approval of the shareholders.
3.4 The Acquirer does not have any intention to change the board of directors of Pfizer India during the Offer
period, except to the extent permitted by applicable law.
4. Background of the Acquirer and PAC
4.1 The Acquirer
The Acquirer is an unlisted company incorporated on March 27, 2009, under the laws of The Netherlands.
Address of Corporate and Registered Office (with phone numbers)
4.1.1 Brief history & major areas of operation:
The Acquirer has been incorporated on March 27, 2009, among other things, to invest in one or more
companies in the South Asia region, as the board of directors of the Acquirer may decide from time to time.
4.1.2 Identity of promoters
The PAC is the ultimate parent company of the Acquirer.
Principal place of
business
Rivium Westlaan 142, 2909 LD Capelle aan den IJssel, the Netherlands Tel: 31-10-406-4349; Fax: 31-10-406-4481
Registered Office Rivium Westlaan 142, 2909 LD Capelle aan den IJssel, the Netherlands
Tel: 31-10-406-4349; Fax: 31-10-406-4481
9
4.1.3 Compliance with Chapter II of the Regulations
As the Acquirer does not hold any shares of the Target Company, provisions of Chapter II of the Regulations
are not applicable to the Acquirer.
4.1.4 Name, Addresses of the Board of Directors of the Acquirer
None of the above directors is on the Board of the Target Company.
4.1.5 Details of experience and qualifications of the Board of Directors of the Acquirer
Camilla Uden joined the PAC in 2003 from Pharmacia Corporation where she held the position of Assistant
Treasurer. Ms. Uden is currently an Assistant Treasurer of the PAC. Prior to assuming her current
responsibilities, she served as Managing Director, International Treasury of the PAC and as the Managing
Director of Pfizer International Bank Europe, Ireland.
Adrie van der Knaap, registered accountant, had joined Pfizer in 2000 coming from Warner-Lambert Company
(“WLC”) as the Benelux Finance Director and acting General Manager for the Dutch Parke-Davis
organization. He has taken leadership roles in the merger processes of both WLC and Pharmacia. Mr. van
der Knapp is also responsible for significant Pfizer international holding structures residing in the
Netherlands. After successfully developing his commercial competencies as Sales Director as of early 2004,
he has assumed responsibility for the Finance Director position starting September 2005.
4.1.6 Since the Acquirer has been incorporated in March 27, 2009, no audited financial statements are available.
As of the date of the PA, the total shareholder’s equity of the Acquirer is USD 140 million. The Acquirer’s
revenues and net profit is zero and the book value, EPS and return on net worth are not ascertainable.
Source: Pfizer Investments Netherlands B.V.
4.1.7 As on the date of the PA, the Acquirer has no contingent liabilities.
4.1.8 Significant accounting policies of the Acquirer
a) General
Unless otherwise stated, assets and liabilities are carried at nominal value. The income and expenses
are accounted for in the period to which they relate.
Name Address Designation, Date of Appointment
Camilla Uden 235 East 42nd Street, New York, New York 10017
Director, Appointed on April 6, 2009
Adrie van der Knaap Rivium Westlaan 142, 2909 LD Capelle aan den IJssel, the Netherlands
Director, Appointed on March 27, 2009
Balance Sheet As on April 16, 2009
(USD mn) (Rs. Lacs)
Source of funds
Paid-up Share Capital 140 69,804
Reserves & Surplus (excluding revaluation reserves) - -
Net Worth 140 69,804
Secured Loans - -
Unsecured Loans - -
Total 140 69,804
Uses of funds
Net fixed Assets - -
Investments - -
Net Current Assets 140 69,804
Total Miscellaneous expenditure not written off - -
Total 140 69,804
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b) Fixed Assets
The accounts of the Acquirer state intangible, tangible and financial fixed assets in accordance with
accounting principles generally accepted for financial reporting in the Netherlands. Pursuant to
these principles, long-lived assets should be assessed on impairment in the case of changes or
circumstances arising that lead to the suspicion that the book value of the asset may not be recovered.
The recoverability of the assets in use is determined by comparing the book value of an asset with
the recoverable amount as the higher of the discounted future net cash flow that the asset is
expected to generate or an asset’s fair value less costs to sell. If the book value of an asset exceeds
the fair value, an amount for impairment is charged to the result equal to the difference between the
book value and the recoverable amount of the asset. Assets for sale are stated at book value or lower
market value, less selling costs.
c) Intangible fixed assets
Intangible fixed assets other than goodwill acquired are capitalized and amortized against income
over the estimated useful life of the underlying assets, not exceeding 20 years.
d) Tangible fixed assets
Tangible fixed assets are stated at cost. With the exception of land, tangible fixed assets are depreciated
over their estimated economic lives by the straight line method.
e) Financial fixed assets
Participation in respect of which less than 20% of the voting rights are held are carried at cost or
lower realizable value.
Participations in respect of which 20% or more of the voting rights are held are carried at net asset
value. The net asset value is calculated on the basis of the accounting principles generally accepted
for financial reporting in the Netherlands. In case the net equity of such participation is a negative
amount, a provision is created and booked against (long term) receivables from subsidiaries or
affiliated companies, and the remaining amount is recognized as a provision.
Securities held to maturity and securities held-for-sale, presented under long term investments, are
carried at fair value (observable market quotes).
Long term loans are reported at their principal amount outstanding. Interest Income on loans is
credited to Income based on loan principal amounts outstanding at applicable interest rates. Any
profit or loss is accounted for under net financial income.
The deferred income taxes and the other financial fixed assets are valued at nominal value or lower
market value.
f) Receivables
Receivables are stated at nominal value reduced, where appropriate, by a provision for doubtful
debtors.
Securities available for sale, forward exchange contracts and interest rate swaps are carried at fair
value.
g) Minority interest
The minority interests are valued at net asset value, which is determined in accordance with
accounting principles generally accepted for financial reporting in the Netherlands.
h) Provisions – Deferred tax liabilities
Insofar as valuations of assets and liabilities for tax purposes differ from their carrying amounts, and
this results in deferred tax liabilities, a provision is formed for these liabilities, calculated at the tax
rates that are expected to apply to the period when the liability is settled. Deferred tax assets are only
recognized if it is probable that sufficient taxable profit will be available to realize such assets.
i) Long term liabilities
Securities and cross currency swaps are stated at fair value. Long term debt is stated at nominal
value reduced, where appropriate.
11
j) Net turnover
Net turnover is stated net of returns, commissions, discounts and value added tax
k) Revenues
Revenues are accounted for in the period to which they relate on the basis of the accounting
principles generally accepted for financial reporting in the Netherlands.
l) Taxation
The taxation on result comprises both taxes payable in the short term and deferred taxes, taking
account of tax facilities and non-deductible costs. No taxes are deducted from profits if and insofar
as profits can be offset against unrecognized losses from previous years.
Tax credits on losses are cognized if these can be offset against profits in previous years and this
results in a tax rebate. In addition, taxes may be deducted if and insofar as may be reasonably
expected that losses can be offset against future profits.
m) Result from participations
The share in the result of participating interests consists of dividends received from participations
carried at cost, the share of the group in the result of participating interests carried at net asset value
and the result of divestitures.
n) Foreign currencies
The reporting currency of the Acquirer is the USD.
For most international operations, local currencies have been determined to be the functional
currencies. The effects of converting non-functional currency assets and liabilities into the functional
currency are recorded in other expenses. The Acquirer translates functional currency assets and
liabilities to their U.S. dollar equivalents at rates in effect at the balance sheet date and records these
translation adjustments in Shareholder’s Account – Currency Translation Difference. The Acquirer
translates functional currency statement of Income amounts at average rates for the period. Assets
and liabilities at year end and transactions during the year denominated n foreign currencies are
translated into the reporting currency at exchange rates ruling at the end of the year and at the time
of the transaction, respectively. Any exchange gains or losses are recognized in the statement of
income under net financial income.
During consolidation intercompany exchange gains or losses recorded in net financial income are
eliminated against Shareholder’s Account – Currency Translation Difference.
For operations in highly inflationary economies, the Acquirer translates monetary items at rates in
effect at the balance sheet date with translation adjustments recorded in Net Financial Income and
non-monetary items at historical rates.
o) The use of estimates
The preparation of the financial statements requires the management to form opinions and to make
estimates and assumptions that influence the application of principles and the reported values of
assets and liabilities and of income and expenditure. The actual results may differ from these estimates.
The estimates and the underlying assumptions are constantly assessed. Revisions of estimates are
recognized in the period in which the estimate is revised and in future periods for which the revision
has consequences.
p) Financial instruments
• Foreign exchange risk
The Acquirer entered into financial instruments to hedge or offset by the same currency an
appropriate portion of the currency risk and the timing of the hedged or offset item.
All derivative contracts used to manage foreign currency risk are measured at fair value and
reported as assets or liabilities on the balance sheet. Changes in fair value are reported in the
profit and loss account or are deferred, depending on the nature and effectiveness of the
offset or hedging relationship.
Until recognition the fair value changes of cashflow hedges are taken to the Acquirer’s
12
accounts. The Acquirer recognizes the profit and loss account impact of foreign currency
swaps and foreign currency forward-exchange contracts designated as cash flow hedges in
the profit and loss account upon recognition of the foreign exchange gain or loss on the
translation to US dollars of the hedged items.
The Acquirer recognizes the profit and loss account impact of foreign currency swaps and
foreign currency forward-exchange contracts that are used to offset foreign currency assets
or liabilities in the profit and loss account during the terms of the contracts, along with the
profit and loss account impact of the items they generally offset.
Any ineffectiveness in a hedging relationship is recognized immediately into the profit and
loss account.
• Interest rate risk
The Acquirer entered into financial instruments to hedge variable interest rates to fixed
interest rates on the hedged items and convert fixed interest rates to variable interest rates,
matching the amount and timing of the hedged item.
All derivative contracts used to manage interest rate risk are measured at fair value and
reported as assets or liabilities on the balance sheet. Changes in fair value are reported in the
profit and loss account or are deferred, depending on the nature and effectiveness of the
offset or hedging relationship
Until recognition the fair value changes of cash flow hedges are taken to the Acquirer’s
accounts. The Acquirer recognizes the profit and loss account impact of interest rate swaps
designated as cash flow hedges in the profit and loss account upon the recognition of the
interest related to the hedged items.
The Acquirer recognizes the profit and loss account impact of interest rate swaps as fair
value hedges in the profit and loss account upon the recognition of the change in fair value
for interest rate risk related to the hedged items.
Any ineffectiveness in a hedging relationship is recognized immediately into the profit and
loss account.
4.1.9 The Acquirer has not made any earlier acquisitions in the Target Company.
4.1.10 The Acquirer has not undertaken any merger/demerger/spin-off during the last 3 years ended November 30,
2008, 2007 and 2006.
4.1.11 Shareholding pattern of the Acquirer as on date of PA
Source: Pfizer Investments Netherlands B.V.
4.1.12 Name and contact details of the Compliance Officer
Name: Mr. Freek Kerkhof
Designation: Compliance Officer
Address: Rivium Westlaan 142, 2909 LD Capelle aan den IJssel, the Netherlands
Tel: 31-10-406-4225
Fax: 31-10-406-4203
4.2 The PAC
The PAC is a listed company incorporated under the laws of the State of Delaware on June 2, 1942 (Tax ID
number: 13-5315170).
Address of Corporate and Registered Office (with phone numbers)
Name of Shareholder No. of shares held % shareholding
C.P. Pharmaceuticals International C.V.
18,000 100%
Total 18,000 100%
13
The principal trading market for PAC’s shares is the New York Stock Exchange (“NYSE”). Its shares are also
traded on the London, Euronext and Swiss Stock Exchanges.
4.2.1 Brief History & Major areas of operation:
4.2.1.1.The PAC was incorporated on June 2, 1942 as Chas. Pfizer & Co., Inc. It changed its name to Pfizer Inc. on
April 20, 1970.
4.2.1.2. The PAC’s brief history is as follows:
Source: Company website
4.2.1.3. The PAC is a research-based, global pharmaceutical company that discovers, develops, manufactures and
markets leading prescription medicines for humans and animals. It operates in 3 business segments namely
- pharmaceuticals, animal health and other businesses:
a) The PAC has medicines across 11 therapeutic areas of Cardiovascular and Metabolic diseases;
Central Nervous System disorders; Arthritis and Pain; Infectious and Respiratory diseases; Urology;
Oncology; Ophthalmology; and Endocrine disorders. Revenues from this segment contributed to
91.5% of total revenues in 2008.
b) It discovers, develops and sells products for the prevention and treatment of diseases in livestock
and companion animals.
c) It also operates several other businesses, including the manufacture of gelatin capsules, contract
manufacturing and bulk pharmaceutical chemicals. These businesses are relatively smaller in size.
4.2.2 Identity of promoters and major shareholders
The PAC is the ultimate parent company of the Pfizer group. The PAC is a listed company with circa 224,155
registered shareholders and circa 2.5 million beneficial shareholders as of April 16, 2009. The PAC currently
has no known beneficial owners of five percent (5%) or more of its common stock.
4.2.3 Compliance with Chapter II of the Regulations
As the PAC does not directly hold any shares of the Target Company, provisions of Chapter II of the
Regulations are not applicable to the PAC.
4.2.4 Name, Addresses of the board of directors of the PAC
Principal place of
business
235 East 42nd Street, New York, New York 10017 Tel: 212-573-2323 Fax: 212-573-1853
Registered Office Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801. Tel: 302-658-7581 Fax: 302-655-5049
Period Event
1849 – 1899 In 1849, cousins Charles Pfizer and Charles Erhart founded Charles Pfizer & Company in Brooklyn, NY. Pfizer soon became America’s leading producer of citric acid and by 1899, was considered a leader in the American chemical business.
1900 - 1925 Successfully pioneered the mass production of citric acid from sugar through mold fermentation, which fueled its growth for years.
1926 - 1950 By the late 1940s, Pfizer was the established leader in the manufacture of vitamins, a leader in fermentation technology and the world’s largest producer of penicillin.
1951 - 1999 Major international expansion of Pfizer’s operations. The second half of the 1900´s saw intense pharmaceutical research and launch of several new innovative products.
2000 - 2009 After successfully merging with Warner-Lambert Company and Pharmacia Corporation, Pfizer became the fastest-growing major pharmaceutical company. Pfizer is included in the Dow Jones Industrial Average.
Name Address Designation, Date of Appointment
Jeffrey B. Kindler 235 East 42nd Street, New York, New York 10017
Chairman, Appointed on December 19, 2006
Dennis A. Ausiello, M.D. 235 East 42nd Street, New York, New York 10017
Director, Appointed on December 1, 2006
Michael S. Brown 235 East 42nd Street, New York, New York 10017
Director, Appointed on May 23, 1996
14
Source: Company Website
None of the above directors is on the board of directors of the Target Company.
4.2.5 Details of experience and qualifications of the Board of Directors of the PAC
Jeffrey B. Kindler is the Chairman of the PAC since December 19, 2006. Currently, he is a Member of the
U.S.-Japan Business Council and the Boards of Trustees of Ronald McDonald House Charities and Tufts
University. Previously, Mr. Kindler has served as Chairman of Boston Market Corporation from 2000 to
2001, and President of Partner Brands during 2001, both companies owned by McDonald’s Corporation.
Dennis A. Ausiello, M.D. has been a board member of the PAC since December 2006. Currently, he is the
Jackson Professor of Clinical Medicine at Harvard Medical School and the Chief of Medicine at
Massachusetts General Hospital. He is a Member of the Institute of Medicine and a Fellow of the American
Academy of Arts and Sciences. He is also a Director of MicroCHIPS (drug delivery technology) and
Advisor to the Chairman of the Board of TIAX (formerly Arthur D. Little). Prior to this, he was the President
of the Association of American Physicians in 2006.
Michael S. Brown, M.D. has been a board member of the PAC since 1996. Currently, he is the Distinguished
Chair in Biomedical Sciences since 1989 and Regental Professor since 1985 at the University of Texas
Southwestern Medical Center at Dallas. He was the co-recipient of the Nobel Prize in Physiology or Medicine
in 1985. He is a Member of the National Academy of Sciences, the Institute of Medicine and Foreign
Member of the Royal Society (London). He is also a Director of Regeneron Pharmaceuticals, Inc.
M. Anthony Burns has been a board member of the PAC since 1988. Currently, he is the Chairman Emeritus
of Ryder System Inc. He is also a Director of The Black & Decker Corporation and J.C. Penney Company,
Inc. He is a Life Trustee of the University of Miami.
Robert N. Burt has been a board member of the PAC since 2000. He is a retired Chairman and Chief
Executive Officer of FMC Corporation and FMC Technologies Inc.. He is a Life Trustee of the Rehabilitation
Institute of Chicago and Chicago Symphony Orchestra.
W. Don Cornwell has been a board member of the PAC since 1997. He is a Director of Avon Products, Inc.
and the Wallace Foundation. He is a Trustee of Big Brothers/Sisters of New York. He has been the Chairman
of the Board and Chief Executive Officer of Granite Broadcasting Corporation.
William H. Gray III has been a board member of the PAC since 2000. Currently, he is the Chairman of the
Amani Group. He is also a Director of Dell Inc., J. P. Morgan Chase & Co., Prudential Financial Inc. and
Visteon Corporation. He is the Pastor Emeritus of the Bright Hope Baptist Church in Philadelphia. He has
M. Anthony Burns 235 East 42nd Street, New York, New York 10017
Director, Appointed on October 27, 1988
Robert N. Burt 235 East 42nd Street, New York, New York 10017
Director, Appointed on June 22, 2000
W. Don Cornwell 235 East 42nd Street, New York, New York 10017
Director, Appointed on February 27, 1997
William H. Gray III 235 East 42nd Street, New York, New York 10017
Director, Appointed on June 22, 2000
Constance J. Horner 235 East 42nd Street, New York, New York 10017
Director, Appointed on January 28, 1993
Suzanne Nora Johnson 235 East 42nd Street, New York, New York 10017
Director, Appointed on September 27, 2007
James M. Kilts 235 East 42nd Street, New York, New York 10017
Director, Appointed on September 27, 2007
George A. Lorch 235 East 42nd Street, New York, New York 10017
Director, Appointed on June 22, 2000
Dana G. Mead 235 East 42nd Street, New York, New York 10017
Director, Appointed on January 1, 1998
Stephen W. Sanger 235 East 42nd Street, New York, New York 10017
Director, Appointed on February 1, 2009
William C. Steere, Jr. 235 East 42nd Street, New York, New York 10017
Director, Appointed on April 23, 1987
William R. Howell 235 East 42nd Street, New York, New York 10017
Director, Appointed on June 22, 2000
15
been the President and Chief Executive Officer of The College Fund/UNCF (Educational Assistance) and
has served as a Congressman from the Second District of Pennsylvania.
Constance J. Horner has been a board member of the PAC since 1993 and a Lead Director since February
2007. She is a Director of Ingersoll-Rand Company Limited, Prudential Financial, Inc., Fellow, National
Academy of Public Administration; Member of the Board of Trustees of the Prudential Foundation.
Previously, she has been a Guest Scholar at The Brookings Institution, Commissioner of the U.S. Commission
on Civil Rights, Assistant to President George H. W. Bush, Director of Presidential Personnel, Deputy
Secretary, U.S. Department of Health and Human Services.
James M. Kilts has been a board member of the PAC since September 2007. He is a Founding Partner of
Centerview Partners Management, LLC, Director of Metropolitan Life Insurance Company and
Meadwestvaco Corporation. He is a Trustee of Knox College and the University of Chicago and a member
of the Board of Overseers of Weill Cornell Medical College. He has been a Vice Chairman of The Procter &
Gamble Company, Chairman and CEO of the Gillette Company, President and CEO of the Nabisco Group
Holdings Corporation.
George A. Lorch has been a board member of the PAC since 2000. Currently, he is the Chairman Emeritus of
Armstrong Holdings, Inc. He is also a Director of Autoliv, Inc., The Williams Companies, Inc., HSBC
Finance Co. and HSBC North America Holding Company. Previously, he was the Chairman, President and
CEO of Armstrong World Industries, Inc.
Dana G. Mead, Ph.D. has been a board member of the PAC since 1998. Currently, he is the Chairman of
Massachusetts Institute of Technology Corporation, Chairman of the Board of the Ron Brown Award for
Corporate Leadership and a Lifetime Trustee of the Association of Graduates, U.S. Military Academy, West
Point. He has been the Chairman and CEO of Tenneco, Inc., Chairman of the Business Roundtable and the
National Association of Manufacturers.
Suzanne Nora Johnson has been a board member of the PAC since 2007. She is a Retired Vice Chairman of
Goldman Sachs Group, Inc., Director of American International Group, Inc., Director of Intuit and VISA,
Board member of the American Red Cross, Brookings Institution, the Carnegie Institution for Science and
the University of Southern California.
Stephen W. Sanger has been a board member of the PAC since February 2009. He is a Director of Target
Corporation and Wells Fargo & Company. Prior thereto, he has been the Chairman and CEO of General
Mills, Inc.
William C. Steere, Jr. has been a board member of the PAC since 1987. He is the Chairman Emeritus of the
PAC, Director of MetLife, Inc. and Health Management Associates, Inc., Director of the New York University
Medical Center and the New York Botanical Garden and a Member of the Board of Overseers of Memorial
Sloan-Kettering Cancer Center. He has been the Chairman and CEO of the PAC.
William R. Howell has been a board member of the PAC since 2000. He is a Chairman Emeritus of J. C.
Penney Company, Inc., Director of The Williams Companies, Inc., Director of Deutsche Bank Trust Corporation
and Deutsche Bank Trust Company Americas. He was a director on the board of directors of the PAC as on
the date of PA. He retired from the board of directors of the PAC on April 23, 2009 and no other director has
been appointed in his place.
4.2.6 Brief audited consolidated financial statements of the PAC for the three years ended December 31, 2006,
2007 and 2008
12 months period ending December 31,
Profit & Loss Statement 2006 2007 2008
(USD mn) (Rs. Lacs) (USD mn) (Rs. Lacs) (USD
mn) (Rs. Lacs)
Total Revenues 48,371 24,117,781 48,418 24,141,215 48,296 24,080,386
Total Expenditure (30,487) (15,200,818) (35,039) (17,470,445) (34,284) (17,094,002)
Profit Before Depreciation & Amortization, Interest, Minority Interests and Tax
17,884 8,916,962 13,379 6,670,769 14,012 6,986,383
Depreciation & Amortization (5,293) (2,639,090) (5,200) (2,592,720) (5,090) (2,537,874)
Net Interest Income / (expense) (1)
437 217,888 1,099 547,961 772 384,919
16
Source: Annual Reports
4.2.7 Primary reasons for fall/rise in total revenues and net profit of the PAC are as under:
Year ended December 2008 compared to Year ended December 2007
a) Revenues
Revenues of USD 48,296 million were essentially flat when compared to 2007 with a decline in
revenues of -0.3%. This was due to the following factors:
• The favorable impact of foreign exchange, which increased revenues by approximately USD
Profit Before Tax 13,028 6,495,761 9,278 4,626,011 9,694 4,833,428
Provision for taxes (1,992) (993,211) (1,023) (510,068) (1,645) (820,197)
Minority Interest (12) (5,983) (42) (20,941) (23) (11,468)
Income from continuing operations
11,024 5,496,566 8,213 4,095,002 8,026 4,001,764
Income from discontinuing operations – net of tax
8,313 4,144,862 (69) (34,403) 78 38,891
Net income 19,337 9,641,428 8,144 4,060,598 8,104 4,040,654
12 months period ending December 31,
Balance Sheet 2006 2007 2008
(USD mn) (Rs. Lacs) (USD mn) (Rs. Lacs) (USD mn) (Rs. Lacs)
Source of funds
Paid-up Share Capital 441 219,883 442 220,381 443 220,880
Retained Earnings 49,669 24,764,963 49,660 24,760,476 49,142 24,502,201
Others (2) 21,248 10,594,253 14,908 7,433,129 7,971 3,974,341
Net Worth 71,358 35,579,099 65,010 32,413,986 57,556 28,697,422
Minority Interest 74 36,896 114 56,840 184 91,742
Loans - Secured and Unsecured 5,546 2,765,236 7,314 3,646,760 7,963 3,970,352
Non Current Liabilities (3) 8,454 4,215,164 13,299 6,630,881 15,477 7,716,832
Total 85,432 42,596,395 85,737 42,748,468 81,180 40,476,348
Uses of funds
Net fixed Assets (4) 16,632 8,292,715 15,734 7,844,972 13,287 6,624,898
Investments 3,892 1,940,551 4,856 2,421,202 11,478 5,722,931
Other non current assets (5) 45,226 22,549,684 41,880
20,881,368 39,185
19,537,641
Net Current Assets 25,559 12,743,717 25,014 12,471,980 16,067 8,011,006
Other assets, deferred tax assets (Net)
(5,877) (2,930,272) (1,747) (871,054) 1,163 579,872
Total 85,432 42,596,395 85,737 42,748,468 81,180 40,476,348
Note: (1) Includes capitalized interest income
(2) Includes preferred stock, additional paid in capital, employee benefit trust, treasury stock, accumulated other comprehensive income / (expense)
(3) Includes pension benefit obligations, postretirement benefit obligations, other taxes payable and other noncurrent liabilities
(4) Represents fixed assets net of accumulated depreciation
(5) Includes goodwill and other identifiable intangible assets
12 months period ending December 31,
Other Financial Data 2006 2007 2008
(USD) (Rs.) (USD) (Rs.) (USD) (Rs.)
Dividend (% of Net Income) 38% 100% 106%
Earnings per Common Share – Diluted
2.66 132.55 1.17 58.52 1.20 59.86
Earnings per Common Share – Basic
2.67 133.13 1.18 58.70 1.20 60.07
Return on Net Worth (%) 28.20% 11.94% 13.22%
Book Value per Share – Diluted
9.81 489.13 9.37 467.13 8.53 425.15
Book Value per Share – Basic 9.85 491.29 9.40 468.61 8.56 426.60
17
1.6 billion in 2008
• An aggregate year-over-year increase in revenues from Pharmaceutical products launched
since 2006
• Solid aggregate performance of the balance of the broad portfolio of patent-protected
medicines.
• This was offset by the impact of loss of U.S. exclusivity on Norvasc in March 2007, Camptosar
in February 2008 and the loss of U.S. exclusivity & cessation of selling of Zyrtec/ZyrtecD in
January 2008. Norvasc, Camptosar and Zyrtec/ZyrtecD collectively experienced a decline in
revenues of about USD 2.6 billion in 2008 compared to 2007.
b) Net Income
Net income reduced by -0.5% to USD 8,104 million. This was due to the following factors:
Income from continuing operations:
• A USD 2.3 billion, pre-tax and after-tax, charge resulting from an agreement in principle with
the U.S. Department of Justice to resolve the previously reported investigation regarding
allegations of past off-label promotional practices concerning Bextra, as well as certain other
open investigations, and a USD 640 million, after-tax charge related to agreements and
agreements in principle to resolve certain non-steroidal anti-inflammatory drugs (NSAID)
litigations and claims
• Higher Acquisition-related in-process research and development charges (IPR&D). In 2008,
USD 633 million of IPR&D was incurred, pre-tax primarily related to acquisitions of Serenex,
Encysive, CovX, Coley and a number of animal health product lines from Schering-Plough, as
well as 2 smaller acquisitions also related to Animal Health, compared with IPR&D of USD 283
million, pre-tax, in 2007, primarily related to acquisitions of BioRexis Pharmaceutical Corp. and
Embrex Inc.
• Up-front payment of USD 225 million to Medivation, Inc. in connection with the collaboration
to develop and commercialize Dimebon and the up-front payment of USD 75 million to Auxilium
Pharmaceuticals, Inc. in connection with the collaboration to develop and commercialize
Xiaflex
• Higher effective income tax rate, despite the tax benefits in 2008 related to favorable effectively
settled tax issues and sale of Esperion Therapeutics, Inc.
• Lower interest income compared to 2007, due primarily to lower average net financial assets
during 2008 as compared to 2007, reflecting proceeds of USD 16.6 billion from the sale of the
Consumer Healthcare business in December 2006, and lower interest rates.
• This was partially offset by lower asset impairment charges, primarily due to USD 1.8 billion,
after-tax, in 2007 related to the decision to exit Exubera; favorable impact of foreign exchange;
savings related to cost reduction initiatives and a payment recorded in 2007 to Bristol-Myers
Squibb Company in connection with the collaboration to develop and commercialize apixaban.
Income from discontinued operations – net of tax:
• A gain of USD 78 million in 2008, compared with a loss of USD 69 million in 2007
Year ended December 2007 compared to Year ended December 2006
a) Revenues
Revenues of USD 48,418 million were essentially flat when compared to 2006 with an increase in
revenues of 0.1%. This was due to the following factors:
• The favorable impact of foreign exchange
• An aggregate year-over-year increase in revenues from Pharmaceutical products launched in
the U.S. since 2005
• Solid aggregate performance of the balance of the broad portfolio of patent-protected
medicines. This was offset by the impact of loss of U.S. exclusivity on Zoloft in August 2006
and Norvasc in March 2007; which collectively led to a decline in revenues of about USD 3.5
18
billion in 2007 compared to 2006.
• These declines were offset by an aggregate revenue increase in new products and the balance
of the portfolio of patent-protected products and alliance revenues
b) Net Income
Net income reduced by 58% to USD 8,144 million. This was due to the following factors:
Income from continuing operations:
• Higher asset impairment charges. In 2007, USD 2.8 billion was expensed pre-tax related to the
decision to exit Exubera, compared to USD 320 million pre-tax in 2006 related to the impairment
of Depo-Provera intangible asset
• Higher restructuring charges and acquisition-related costs associated with expanded cost-
reduction initiatives.
• This was partially offset by lower acquisition-related IPR&D. In 2007, IPR&D expenses of
USD 283 million, pre-tax were incurred primarily related to acquisitions of BioRexis
Pharmaceutical Corp. and Embrex Inc., compared with IPR&D of USD 835 million, pre-tax, in
2006, primarily related to acquisitions of PowderMed ltd. and Rinat Neuroscience Corp.
• Higher interest income compared to 2006, due primarily to higher net financial assets during
2007 compared to 2006, reflecting proceeds of USD 16.6 billion from the sale of the Consumer
Healthcare business and higher interest rates
• A lower effective income tax rate. In 2007, the effective tax rate on continuing operations of
11% was lower than the 15.3% in 2006, which largely reflects the tax impact of the decision to
exit Exubera in 2007, the tax impact of higher cost reduction expenditures in 2007 compared to
2006 and the volume and geographic mix of product sales in 2007 compared to 2006
Income from discontinued operations – net of tax:
• Losses of USD 69 million in 2007, compared with an income of USD 8.3 billion in 2006. This
result in 2006 was primarily due to the sale of the Consumer Healthcare business.
4.2.8 As on December 31, 2008 the contingent liabilities of the PAC are as follows:
a) Contractual Obligations
Payments due under contractual obligations as of December 31, 2008, mature as follows:
(a) Long-term debt obligations include both expected principal and interest obligations. Calculations
of expected interest payments incorporates only current period assumptions for interest rates,
foreign currency translation rates and hedging strategies. Long-term debt consists of senior,
unsecured notes, floating rate, unsecured notes, foreign currency denominated notes, and other
borrowings and mortgages.
(b) Includes expected payments relating to unfunded U.S. supplemental (non-qualified) pension plans,
Years
TOTAL WITHIN 1 OVER 1 to 3 OVER 3 to 5 AFTER 5
USD
mn Rs. Lacs
USD
mn
Rs.
Lacs
USD
mn
Rs.
Lacs
USD
mn
Rs.
Lacs
USD
mn Rs. Lacs
Long-term debt(a) 10,357 5,164,000 1,126 561,424 1,739 867,065 373 185,978 7,119 3,549,533
Other long-term liabilities reflected on the consolidated balance sheet under U.S. GAAP(b)
3,355 1,672,803 352 175,507 633 315,614 649 323,591 1,721 858,091
Lease commitments(c)
1,547 771,334 207 103,210 298 148,583 182 90,745 860 428,796
Purchase obligations and other(d)
2,692 1,342,231 699 348,521 798 397,883 913 455,222 282 140,605
Uncertain tax positions(e)
129 64,319 129 64,319 — — — — — —
19
postretirement plans and deferred compensation plans.
(c) Includes operating and capital lease obligations.
(d) Includes agreements to purchase goods and services that are enforceable and legally binding and
include amounts relating to advertising, information technology services, employee benefit
administration services, and potential milestone payments deemed reasonably likely to occur.
(e) Except for amounts reflected in Income taxes payable, the PAC is unable to predict the timing of tax
settlements, as tax audits can involve complex issues and the resolution of those issues may span
multiple years, particularly if subject to negotiation or litigation.
Source: Annual Report
In 2009, the PAC expects to spend approximately $1.6 billion on property, plant and equipment.
Due to significant operating cash flow, the PAC believes that it has the ability to meet its
capital investment needs and foresee no delays to planned capital expenditures.
b) Off-Balance Sheet Arrangements
In the ordinary course of business and in connection with the sale of assets and businesses,
the PAC often indemnifies its counterparties against certain liabilities that may arise in
connection with a transaction or that are related to activities prior to a transaction. These
indemnifications typically pertain to environmental, tax, employee and/or product-related
matters, and patent infringement claims. If the indemnified party were to make a successful
claim pursuant to the terms of the indemnification, the PAC would be required to reimburse
the loss. These indemnifications are generally subject to threshold amounts, specified claim
periods and other restrictions and limitations. Historically, the PAC has not paid significant
amounts under these provisions and as of December 31, 2008, recorded amounts for the
estimated fair value of these indemnifications are not significant.
Certain of the PAC’s co-promotion or license agreements gives its licensors or partners the
rights to negotiate for, or in some cases to obtain, under certain financial conditions, co-
promotion or other rights in specified countries with respect to certain of the PAC’s products.
c) Tax Contingencies
The PAC is subject to income tax in many jurisdictions and a certain degree of estimation is
required in recording the assets and liabilities related to income taxes. All of the PAC’s tax
positions are subject to audit by the local taxing authorities in each tax jurisdiction. Tax audits
can involve complex issues and the resolution of issues may span multiple years, particularly
if subject to negotiation or litigation.
The United States is one of the PAC’s major tax jurisdictions. The PAC is currently appealing
two issues related to the IRS’ audits of the PAC tax returns for the years 2002 through 2005.
The 2006, 2007 and 2008 tax years are currently under audit as part of the IRS Compliance
Assurance Process, a real-time audit process. All other tax years in the U.S. for the PAC are
closed under the statute of limitations. With respect to Pharmacia Corporation, the IRS is
currently conducting an audit for the year 2003 through the date of merger with Pfizer (April
16, 2003). In addition to the open audit years in the U.S., the PAC has open audit years in
other major tax jurisdictions, such as Canada (1998-2008), Japan (2006-2008), Europe (1996-
2008, primarily reflecting Ireland, the U.K., France, Italy, Spain and Germany) and Puerto Rico
(2004-2008).
The PAC regularly reevaluates its tax positions based on the results of audits of federal, state
and foreign income tax filings, statute of limitations expirations, and changes in tax law that
would either increase or decrease the technical merits of a position relative to the ‘more-
likely-than-not’ standard. The PAC believes that its accruals for tax liabilities are adequate for
all open years. Many factors are considered in making these evaluations, including past
history, recent interpretations of tax law, and the specifics of each matter. Because tax laws
and regulations are subject to interpretation and tax litigation is inherently uncertain, these
evaluations can involve a series of complex judgments about future events and can rely
heavily on estimates and assumptions. The PAC’s evaluations are based on estimates and
assumptions that have been deemed reasonable by management. However, if the estimates
20
and assumptions are not representative of actual outcomes, the PAC’s results could be
materially impacted.
In 2008, the PAC effectively settled certain issues common among multinational corporations
with various foreign tax authorities primarily relating to tax years 2000 to 2005. As a result, the
PAC recognized USD 305 million in tax benefits.
Because tax law is complex and often subject to varied interpretations, it is uncertain whether
some of the PAC’s tax positions will be sustained upon audit. The amounts associated with
uncertain tax positions in 2008 are as follows:
(a) Included in Other assets, deferred taxes and deferred charges.
(b) Includes gross accrued interest of USD 1.3 billion as of December 31, 2008. Accrued penalties are not
significant.
(c) As of December 31, 2008, included in Income taxes payable (USD 85 million) and Taxes and other
current assets (USD 44 million).
Source: Annual Report
Tax liabilities associated with uncertain tax positions represent unrecognized tax benefits,
which arise when the estimated benefit recorded in the financial statements differs from the
amounts taken or expected to be taken in a tax return because of the uncertainties described
above. These unrecognized tax benefits relate primarily to issues common among multinational
corporations. Substantially all of these unrecognized tax benefits, if recognized, would impact
the effective income tax rate.
Tax assets associated with uncertain tax positions represent the estimate of the potential tax
benefits in one tax jurisdiction that could result from the payment of income taxes in another
tax jurisdiction. These potential benefits generally result from cooperative efforts among
taxing authorities, as required by tax treaties to minimize double taxation, commonly referred
to as the competent authority process. The recoverability of these assets, which we believe
to be more likely than not, is dependent upon the actual payment of taxes in one tax jurisdiction
and, in some cases, the successful petition for recovery in another tax jurisdiction.
A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits
and accrued interest is as follows:
(a) Decreases are primarily a result of effectively settling certain issues with various foreign
tax authorities for a net benefit of USD 305 million, reflecting the reversal of the related tax
As of December 31, 2008
USD (mn) Rs. Lacs
Noncurrent deferred tax assets(a) 589 293,675
Other tax assets(a) 809 403,367
Income taxes payable(b)(c) (129) (64,319)
Other taxes payable(b) (6,568) (3,274,805)
Total amounts associated with uncertain tax positions (5,299) (2,642,081)
USD (mn) Rs. Lacs
Balance, January 1, 2008 (6,654) (3,317,684)
Decreases based on tax positions taken during a prior period(a)
1,022 509,569
Increases based on tax positions taken during the current period(b)
(990) (493,614)
Increases in accrued interest due to the passage of time (333) (166,034)
Impact of foreign exchange 245 122,157
Other, net(c) 13 6,482
Balance, December 31, 2008(d) (6,697) (3,339,124)
21
assets associated with the competent authority process
(b) Primarily included in Provision for taxes on income.
(c) Includes increases based on tax positions taken during a prior period, decreases due to
settlements with taxing authorities and decreases as a result of a lapse of the applicable
statute of limitations.
(d) In 2008, included in Income taxes payable (USD 85 million), Taxes and other current
assets (USD 44 million) and Other taxes payable (USD 6.6 billion).
Source: Annual Report
If the PAC’s estimates of unrecognized tax benefits and potential tax benefits are not
representative of actual outcomes, the PAC’s financial statements could be materially affected
in the period of settlement or when the statutes of limitations expire, as the PAC treats these
events as discrete items in the period of resolution. Finalizing audits with the relevant taxing
authorities can include formal administrative and legal proceedings and, as a result, it is
difficult to estimate the timing and range of possible change related to our uncertain tax
positions. However, any settlements or statute expirations would likely result in a significant
decrease in the PAC’s uncertain tax positions. The PAC estimates that within the next 12
months, its gross uncertain tax positions could decrease by as much as USD 200 million, as
a result of settlements with taxing authorities or the expiration of the statute of limitations.
4.2.9 Significant accounting policies of the PAC
a) Consolidation and Basis of Presentation
The consolidated financial statements include the PAC, the parent company and all subsidiaries,
including those operating outside the U.S., and are prepared in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP). The consolidation decision requires
consideration of majority voting interests, as well as effective economic or other control. For
subsidiaries operating outside the U.S., the financial information is included as of and for the year
ended November 30 for each year presented. Substantially all unremitted earnings of international
subsidiaries are free of legal and contractual restrictions. All significant transactions among the
businesses have been eliminated.
b) New Accounting Standards
Financial Instruments—Fair Value—As of January 1, 2008, the PAC adopted on a prospective basis
certain required provisions of SFAS No. 157, Fair Value Measurements. Those provisions relate to
its financial assets and liabilities carried at fair value and its fair value disclosures related to financial
assets and liabilities. SFAS No. 157, as amended, defines fair value, expands related disclosure
requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs
used to develop the fair value measures. Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. There are three levels of inputs to fair value measurements—Level 1, meaning the
use of quoted prices for identical instruments in active markets; Level 2, meaning the use of quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in
markets that are not active or are directly or indirectly observable; and Level 3, meaning the use of
unobservable inputs. Observable market data should be used when available.
Many, but not all, of the PAC’s financial instruments are carried at fair value. For example, substantially
all of its cash equivalents, short-term investments and long-term investments are classified as
available-for-sale securities and are carried at fair value, with unrealized gains and losses, net of tax,
reported in Other comprehensive income/(expense). Derivative financial instruments are carried at
fair value in various balance sheet categories, with changes in fair value reported in current earnings
or deferred on qualifying hedging relationships. Virtually all of its valuation measurements use Level
2 inputs. The adoption of SFAS No. 157, as amended, did not have a significant impact on the
consolidated financial statements. As of January 1, 2008, the PAC did not elect to adopt SFAS No.
157, as amended, for acquired nonfinancial assets and assumed nonfinancial liabilities.
Goodwill and Other Intangible Assets—Other Intangible Assets—As of January 1, 2008, the
provisions of Emerging Issues Task Force (EITF) Issue No. 07-3, Accounting for Nonrefundable
22
Advance Payments for Goods or Services to Be Used in Future Research and Development Activities
was adopted, for new contracts entered into on or after that date. EITF Issue No. 07-3 requires that
non-refundable advance payments for goods and services that will be used in future research and
development (R&D) activities be expensed when the R&D activity has been performed or when the
R&D goods have been received rather than when the payment is made. The adoption of EITF Issue
No. 07-3 did not have a significant impact on the consolidated financial statements.
Taxes on Income—Income Tax Contingencies—As of January 1, 2007, the PAC adopted the
provisions of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an
interpretation of SFAS 109, Accounting for Income Taxes, as amended, and changed its policy
related to the accounting for income tax contingencies to a ‘more-likely-than-not’ standard from a
‘probable’ standard.
Pension and Post-retirement Benefit Plans and Defined Contribution Plans—As of December 31,
2006, the PAC adopted the provisions of SFAS No. 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans (an amendment of Financial Accounting Standards Board
(FASB) Statements No. 87, 88, 106 and 132R). SFAS 158 requires it to recognize on the consolidated
balance sheet the difference between the benefit obligations and any plan assets of the benefit
plans. In addition, the PAC is required to recognize as part of other comprehensive income/(expense),
net of taxes, gains and losses due to differences between the actuarial assumptions and actual
experience (actuarial gains and losses) and any effects on prior service due to plan amendments
(prior service costs or credits) that arise during the period and which are not yet recognized as net
periodic benefit costs. At adoption date, the PAC recognized the previously unrecognized actuarial
gains and losses, prior service costs and credits and net transition amounts within Accumulated
other comprehensive income/(expense), net of tax.
c) Estimates and Assumptions
In preparing the consolidated financial statements, the PAC uses certain estimates and assumptions
that affect reported amounts and disclosures. These estimates and underlying assumptions can
impact all elements of the financial statements. For example, in the consolidated statement of income,
estimates are used when accounting for deductions from revenues (such as rebates, chargebacks,
sales returns and sales allowances), determining cost of sales, allocating cost in the form of
depreciation and amortization, and estimating restructuring charges and the impact of contingencies.
On the consolidated balance sheet, estimates are used in determining the valuation and recoverability
of assets, such as accounts receivables, investments, inventories, fixed assets and intangible assets
(including goodwill), and estimates are used in determining the reported amounts of liabilities, such
as taxes payable, benefit obligations, the impact of contingencies, rebates, chargebacks, sales returns
and sales allowances and restructuring reserves.
The estimates and assumptions are regularly evaluated, using historical experience and other factors,
including the economic environment. The estimates are often based on complex judgments,
probabilities and assumptions that are believed to be reasonable but that are inherently uncertain
and unpredictable.
As future events and their effects cannot be determined with precision, the estimates and assumptions
may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur
that might cause the PAC to change those estimates and assumptions. Market conditions, such as
illiquid credit markets, volatile equity markets, dramatic fluctuations in foreign currency rates and
economic recession, can increase the uncertainty already inherent in these estimates and
assumptions. The estimates and assumptions are adjusted when facts and circumstances indicate
the need for change. Those changes will be reflected in the financial statements on a prospective
basis. It is possible that other professionals, applying reasonable judgment to the same facts and
circumstances, could develop and support a range of alternative estimated amounts. The PAC is
also subject to other risks and uncertainties that may cause actual results to differ from estimated
amounts, such as changes in the healthcare environment, competition, litigation, legislation and
regulations.
d) Contingencies
The PAC and certain of its subsidiaries are involved in various patent, product liability, consumer,
23
commercial, securities, environmental and tax litigations and claims; government investigations;
and other legal proceedings that arise from time to time in the ordinary course of its business. Except
for income tax contingencies, accruals for contingencies are recorded to the extent that it can be
concluded that their occurrence is probable and that the related liabilities are estimable and anticipated
recoveries are recorded under existing insurance contracts when assured of recovery. For tax matters,
beginning in 2007 upon the adoption of a new accounting standard, accruals for income tax
contingencies are recorded to the extent that it can be concluded that a tax position is not sustainable
under a ‘more- likely-than-not’ standard and the estimate of the potential tax benefits is recorded in
one tax jurisdiction that could result from the payment of income taxes in another tax jurisdiction
when it is concluded that the potential recovery is more likely than not. Many factors are considered
in making these assessments. Because litigation and other contingencies are inherently unpredictable
and excessive verdicts do occur, these assessments can involve a series of complex judgments
about future events and can rely heavily on estimates and assumptions
e) Acquisitions
The consolidated financial statements reflect an acquired business after the completion of the
acquisition and are not restated. Acquired businesses are accounted for using the purchase method
of accounting, which requires that most assets acquired and liabilities assumed be recorded at the
date of acquisition at their fair values. Any excess of the purchase price over the assigned values of
the net assets acquired is recorded as goodwill. Amounts allocated to acquired in-process research
and development (IPR&D) have been expensed at the date of acquisition. When net assets that do
not constitute a business under U.S. GAAP have been acquired, no goodwill has been recognized.
f) Foreign Currency Translation
For most international operations, local currencies have been determined to be the functional
currencies. Functional currency assets and liabilities are translated to their U.S. dollar equivalents at
rates in effect at the balance sheet date and record these translation adjustments in Shareholders’
equity—Accumulated other comprehensive income/(expense). Functional currency statement of
income amounts are translated at average rates for the period. The effects of converting non-
functional currency assets and liabilities into the functional currency are recorded in Other (income)/
deductions—net.
For operations in highly inflationary economies, monetary items are translated at rates in effect at
the balance sheet date, with translation adjustments recorded in Other (income)/deductions—net,
and nonmonetary items at historical rates.
g) Revenues
Revenue Recognition—Revenues from product sales are recorded when the goods are shipped and
title passes to the customer. At the time of sale, estimates are also recorded for a variety of sales
deductions, such as sales rebates, discounts and incentives, and product returns. When the amount
of future product returns cannot be reasonably estimated, the revenues are recorded when the risk
of product return has been substantially eliminated.
Deductions from Revenues—Gross product sales are subject to a variety of deductions that are
generally estimated and recorded in the same period that the revenues are recognized and primarily
represent rebates and discounts to government agencies, wholesalers, distributors and managed
care organizations with respect to our pharmaceutical products. These deductions represent estimates
of the related obligation and, as such, judgment and knowledge of market conditions and practices
are required when estimating the impact of these sales deductions on gross sales for a reporting
period.
Specifically:
• In the U.S., provisions for pharmaceutical Medicaid, Medicare and contract rebates are
recorded based upon the PAC’s experience ratio of rebates paid and actual prescriptions
written during prior quarters. The experience ratio is applied to the respective period’s sales
to determine the rebate accrual and related expense. This experience ratio is evaluated regularly
to ensure that the historical trends are as current as practicable. As appropriate, this ratio will
be adjusted to better match current experience or expected future experience. In assessing
24
this ratio, current contract terms, such as changes in formulary status and discount rates are
considered.
• Outside the U.S., the majority of the pharmaceutical rebates, discounts and price reductions
are contractual or legislatively mandated and these estimates are based on actual invoiced
sales within each period; both of these elements help to reduce the risk of variations in the
estimation process. Some European countries base their rebates on the government’s
unbudgeted pharmaceutical spending and the PAC uses an estimated allocation factor (based
on historical payments) and total revenues by country against its actual invoiced sales to
project the expected level of reimbursement. Third-party information is obtained to help
monitor the adequacy of these accruals.
• Provisions for pharmaceutical chargebacks (primarily reimbursements to wholesalers for
honoring contracted prices to third parties) closely approximate actual as these deductions
are settled generally within two to four weeks of incurring the liability.
• Provisions for pharmaceutical returns are based on a calculation at each market that incorporates
the following, as appropriate: local returns policies and practices; returns as a percentage of
sales; an understanding of the reasons for past returns; estimated shelf-life by product; an
estimate of the amount of time between shipment and return or lag time; and any other factors
that could impact the estimate of future returns, such as loss of exclusivity, product recalls, or
a changing competitive environment, as appropriate.
• Sales incentives are recorded as a reduction of revenues at the time the related revenues are
recorded or when the incentive is offered, whichever is later. The cost of the sales incentives
are estimated based on historical experience with similar incentives programs.
• Accruals for Medicaid rebates, Medicare rebates, performance-based contract rebates and
chargebacks were USD 1.5 billion as of December 31, 2008, and USD 1.4 billion as of December
31, 2007, and are included in Other current liabilities.
Taxes collected from customers relating to product sales and remitted to governmental
authorities are presented on a net basis; that is, they are excluded from Revenues.
Alliances— The PAC has agreements to co-promote pharmaceutical products discovered by
other companies. Alliance revenues are earned when the co-promotion partners ship the
related product and title passes to their customer. Alliance revenues are primarily based upon
a percentage of the co-promotion partners’ net sales. Expenses for selling and marketing
these products are included in Selling, informational and administrative expenses.
h) Cost of Sales and Inventories
Inventories are valued at lower of cost or market. Cost is determined as follows:
• finished goods and work in process at average actual cost; and
• raw materials and supplies at average or latest actual cost.
i) Selling, Informational and Administrative Expenses
Selling, informational and administrative costs are expensed as incurred. Among other things, these
expenses include the costs of marketing, advertising, shipping and handling, information technology
and non-manufacturing employee compensation.
Advertising expenses relating to production costs are expensed as incurred and the costs of radio
time, television time and space in publications are expensed when the related advertising occurs.
Advertising expenses totaled approximately USD 2.6 billion in 2008, USD 2.7 billion in 2007 and USD
2.6 billion in 2006.
j) Research and Development Expenses
Research and development (R&D) costs are expensed as incurred. These expenses include the costs
of proprietary R&D efforts, as well as costs incurred in connection with third-party collaboration
efforts. Before a compound receives regulatory approval, milestone payments are recorded made by
the PAC to third parties under contracted R&D arrangements as expense when the specific milestone
has been achieved. Once a compound receives regulatory approval, any subsequent milestone
payments are recorded in Identifiable intangible assets, less accumulated amortization and, unless
25
the assets are determined to have an indefinite life, they are amortized evenly over the remaining
agreement term or the expected product life cycle, whichever is shorter.
k) Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets
Long-lived assets include:
• Goodwill—Goodwill represents the excess of the purchase price of an acquired business
over the assigned values of its net assets. Goodwill is not amortized.
• Identifiable intangible assets, less accumulated amortization—These acquired assets are
recorded at the PAC’s cost. Intangible assets with finite lives are amortized evenly over their
estimated useful lives. Intangible assets with indefinite lives are not amortized.
• Property, plant and equipment, less accumulated depreciation—These assets are recorded at
original cost and increased by the cost of any significant improvements after purchase. Thecosts are evenly depreciated over the assets’ estimated useful lives. For tax purposes,
accelerated depreciation methods are used as allowed by tax laws.
Amortization expense related to acquired intangible assets that contribute to the PAC’s
ability to sell, manufacture, research, market and distribute products, compounds andintellectual property are included in Amortization of intangible assets as they benefit multiple
business functions. Amortization expense related to intangible assets that are associated
with a single function and depreciation of property, plant and equipment are included in Costof sales, Selling, informational and administrative expenses and Research and development
expenses, as appropriate.
All of the PAC’s long-lived assets, including goodwill and other intangible assets are reviewed,
for impairment indicators at least annually and detailed impairment testing is performed forgoodwill and indefinite-lived assets annually and for all other long-lived assets whenever
impairment indicators are present. When necessary, charges are recorded for impairments of
long-lived assets for the amount by which the present value of future cash flows, or someother fair value measure, is less than the carrying value of these assets. The process for
evaluating goodwill requires the calculation of the fair value of the corresponding businesssegment and determining the implied fair value of goodwill by subtracting the fair value of all
the identifiable net assets other than goodwill from the fair value of the business segment.
l) Acquisition-Related In-Process Research and Development Charges and Restructuring Charges
and Acquisition-Related Costs
When recording acquisitions, amounts related to acquired IPR&D in Acquisition-related in-process
research and development charges have been expensed.
Restructuring charges may be incurred in connection with cost-reduction initiatives, as well as in
connection with acquisitions, when plans to restructure and integrate the acquired operations are
implemented. For restructuring charges associated with a business acquisition that are identified inthe first year after the acquisition date, the related costs have been recorded as additional goodwill,
if any, because they have been considered to be liabilities assumed in the acquisition. All otherrestructuring charges, all integration costs and any charges related to our pre-existing businesses
impacted by an acquisition have been expensed as incurred in Restructuring charges and acquisition-related costs. Termination costs are a significant component of the restructuring charges and are
recorded when the actions are probable and estimable.
m) Cash Equivalents and Statement of Cash Flows
Cash equivalents include items almost as liquid as cash, such as certificates of deposit and time
deposits with maturity periods of three months or less when purchased. If items meeting this definitionare part of a larger investment pool, they are classified as Short-term investments.
Cash flows associated with financial instruments designated as fair value or cash flow hedges maybe included in operating, investing or financing activities, depending on the classification of the
items being hedged. Cash flows associated with financial instruments designated as net investmenthedges are classified according to the nature of the hedge instrument. Cash flows associated with
financial instruments that do not qualify for hedge accounting treatment are classified according to
their purpose and accounting nature.
26
n) Investments, Loans and Derivative Financial Instruments
Many, but not all, of the financial instruments are carried at fair value. For example, substantially allof the cash equivalents, short-term investments and long-term investments are classified as available-
for-sale securities and are carried at fair value, with unrealized gains and losses, net of tax, reportedin Other comprehensive income/(expense). Derivative financial instruments are carried at fair valuein various balance sheet categories, with changes in fair value reported in current earnings ordeferred on qualifying hedging relationships. Virtually all of the valuation measurements are basedon the use of quoted prices for similar instruments in active markets or quoted prices for identical orsimilar instruments in markets that are not active or are directly or indirectly observable.
Realized gains or losses on sales of investments are determined by using the specific identification
cost method.
o) Income Tax Contingencies
The income tax contingencies are accounted for using a benefit recognition model. If a tax positionis considered more likely than not of being sustained upon audit, based solely on the technicalmerits of the position, the benefits are recognized. The benefits are measured by determining theamount that is greater than 50% likely of being realized upon settlement, presuming that the taxposition is examined by the appropriate taxing authority that has full knowledge of all relevant
information. Under the benefit recognition model, if the initial assessment fails to result in therecognition of a tax benefit, the position is regularly monitored and subsequently recognize the taxbenefit: (i) if there are changes in tax law or analogous case law that sufficiently raise the likelihoodof prevailing on the technical merits of the position to more likely than not; (ii) if the statute oflimitations expires; or (iii) if there is a completion of an audit resulting in a favorable settlement of thattax year with the appropriate agency. The tax positions are regularly reevaluated based on the
results of audits of federal, state and foreign income tax filings, statute of limitations expirations, andchanges in tax law that would either increase or decrease the technical merits of a position relative tothe ‘more-likely-than-not’ standard. Liabilities associated with uncertain tax positions are classifiedas current only when the PAC expects to pay cash within the next 12 months. Interest and penalties,if any, are recorded in Provision for taxes on income and are classified on the consolidated balancesheet with the related tax liability.
The PAC is subject to income tax in many jurisdictions and a certain degree of estimation is required
in recording the assets and liabilities related to income taxes. All of the tax positions are subject toaudit by the local taxing authorities in each tax jurisdiction. Tax audits can involve complex issuesand the resolution of issues may span multiple years, particularly if subject to negotiation or litigation.
p) Pension and Postretirement Benefit Plans
Defined benefit pension plans are provided for the majority of employees worldwide. In the U.S.,there are both qualified and supplemental (non-qualified) defined benefit plans, as well as otherpostretirement benefit plans, consisting primarily of healthcare and life insurance for retirees. Theoverfunded or underfunded status of each of the defined benefit plans is recognized as an asset or
liability on the consolidated balance sheet. The obligations are generally measured at the actuarialpresent value of all benefits attributable to employee service rendered, as provided by the applicablebenefit formula. The pension and other postretirement obligations may include assumptions such aslong-term rate of return on plan assets, expected employee turnover and participant mortality. Forthe pension plans, the obligation may also include assumptions as to future compensation levels.For other postretirement benefit plans, the obligation may include assumptions as to the expected
cost of providing the healthcare and life insurance benefits, as well as the extent to which thosecosts are shared with the employee or others (such as governmental programs). Plan assets aremeasured at fair value. Net periodic benefit costs are recognized, as required, into Cost of sales,selling, informational and administrative and Research and development expenses, as appropriate.
q) Share-Based Payments
The PAC’s compensation programs can include share-based payments. All grants under share-based payment programs are accounted for at fair value and these fair values are generally amortized
on an even basis over the vesting terms into Cost of sales, Selling, informational and administrativeexpenses and Research and development expenses, as appropriate.
27
4.2.10 The Acquirer / PAC have never acquired shares in the Target Company. The following are the details of
earlier acquisitions by other entities in the Pfizer group.
4.2.11 Current status of corporate governance
a) Role and Composition of the Board of Directors (“Board”)
• General: The Board of Directors, which is elected by the shareholders, is the ultimate decision-
making body of the PAC, except with respect to those matters reserved to the shareholders.
It selects the Chief Executive Officer and other members of the senior management team,
which is charged with the conduct of the PAC’s business. Having selected the senior
management team, the Board acts as an advisor and counselor to senior management and
ultimately monitors its performance. The function of the Board to monitor the performance of
senior management is facilitated by the presence of outside Directors of stature who have
substantive knowledge of the PAC’s business.
• Succession Planning: The Board also plans for succession to the position of Chief Executive
Officer as well as certain other senior management positions. To assist the Board, the Chief
Executive Officer annually provides the Board with an assessment of senior managers and of
their potential to succeed him or her. He or she also provides the Board with an assessment
of persons considered potential successors to certain senior management positions.
• Board Leadership: The independent Directors will annually elect a Chairman of the Board,
who may or may not be the Chief Executive Officer of the PAC. If the individual elected as
Chairman of the Board is the Chief Executive Officer, the independent Directors shall also
elect a Lead Independent Director. The Chairman of the Board shall preside at all meetings of
the stockholders and of the Board as a whole. He or she shall perform such other duties, and
exercise such powers, as from time to time shall be prescribed in the PAC’s By-laws or by the
Board of Directors. The Lead Independent Director shall preside over executive sessions of
the PAC’s independent Directors, facilitate information flow and communication among the
Directors, and perform such other duties as may be specified by the Board and outlined in the
Resultant
Particulars No. of shares
acquired/sold Capital as on date
of acquisition/sale Shareholding %
Status of
Compliance with
the provisions of
Chapter II
Upon acquiring controlling interest (1958)
30,000 (1) 3,990,000 75.19% N.A.
Further issue of shares (1960) 25,100 (1) 6,500,000 84.77% N.A.
Bought from Ex-Promoter (1961) 9900 (1) 6,500,000 100.00% N.A.
Further issue of shares (1964) 100,000 7,500,000 100.00% N.A.
Further issue of shares (1965) 1,250,000 20,000,000 100.00% N.A.
Bonus shares (1:2) (1968) 1,000,000 39,874,800 75.24% N.A.
Bonus shares (2:5) (1972) 1,200,000 55,810,280 75.25% N.A.
Bonus shares (4:5) (1977) 3,360,000 100,458,480 75.25% N.A.
Sold to Financial Institutions (1982) 527,900 117,201,480 60.00% N.A.
Sold to employees, existing shareholders and business associates (1988)
2,344,050 117,201,480 40.00% N.A.
Bonus shares (1:1) (2000) 4,688,050 234,402,960 40.00% N.A.
Issued on merger with Parke Davis (India) Limited (2003)
2,142,896 287,975,400 40.00%
Issued on merger with Pharmacia Healthcare Limited (2005)
783,941 298,414,400 41.23%
Net holding of Promoter as on the
date of PA 12,302,937 298,414,400 41.23%
28
Charter of the Lead Independent Director.
• Director Independence: It is the policy of the PAC that the Board consists of a majority of
independent Directors. The Corporate Governance Committee of the Board has established
Director Qualification Standards to assist it in determining director independence, which
either meet or exceed the independence requirements of the New York Stock Exchange
(“NYSE”) corporate governance listing standards. The Board will consider all relevant facts
and circumstances in making an independence determination, and not merely from the
standpoint of the Director, but also from that of persons or organizations with which the
Director has an affiliation.
• Board Size: It is the policy of the PAC that the number of Directors not exceed a number that
can function efficiently as a body. The Corporate Governance Committee considers and make
recommendations to the Board concerning the appropriate size and needs of the Board. The
Corporate Governance Committee considers candidates to fill new positions created by
expansion and vacancies that occur by resignation, by retirement or for any other reason.
• Selection Criteria: Candidates are selected for, among other things, their integrity,
independence, diversity of experience, leadership and their ability to exercise sound judgment.
Scientific expertise, prior government service and experience at policy-making levels involving
issues affecting business, government, education, technology, as well as areas relevant to
the PAC’s global business are among the most significant criteria. Final approval of a candidate
is determined by the full Board.
• Voting for Directors: In accordance with the PAC’s By-laws, if none of the stockholders
provides the PAC notice of an intention to nominate one or more candidates to compete with
the Board’s nominees in a Director election, or if the stockholders have withdrawn all such
nominations by the day before the PAC mails its notice of meeting to the stockholders, a
nominee must receive more votes cast for than against his or her election or re-election in
order to be elected or re-elected to the Board. The Board expects a Director to tender his or
her resignation if he or she fails to receive the required number of votes for re-election. The
Board shall nominate for election or re-election as Director only candidates who agree to
tender, promptly following such person’s failure to receive the required vote for election or
re-election at the next meeting at which such person would face election or re-election, an
irrevocable resignation that will be effective upon Board acceptance of such resignation. In
addition, the Board shall fill Director vacancies and new directorships only with candidates
who agree to tender, promptly following their appointment to the Board, the same form of
resignation tendered by other Directors in accordance with this Corporate Governance
Principle. If an incumbent Director fails to receive the required vote for re-election, then,
within 90 days following certification of the shareholder vote, the Corporate Governance
Committee will act to determine whether to accept the Director’s resignation and will submit
such recommendation for prompt consideration by the Board, and the Board will act on the
Committee’s recommendation. The Corporate Governance Committee and the Board may
consider any factors they deem relevant in deciding whether to accept a Director’s resignation.
Any Director who tenders his or her resignation pursuant to this provision shall not participate
in the Corporate Governance Committee recommendation or Board action regarding whether
to accept the resignation offer. Thereafter, the board will promptly disclose its decision-
making process and decision regarding whether to accept the Director’s resignation offer (or
the reason(s) for rejecting the resignation offer, if applicable) in a Form 8-K furnished to the
Securities and Exchange Commission. If each member of the Corporate Governance Committee
fails to receive the required vote in favor of his or her election in the same election, then those
independent Directors who did receive the required vote shall appoint a committee amongst
themselves to consider the resignation offers and recommend to the Board whether to accept
them. However, if the only Directors who receive the required vote in the same election
constitute three or fewer Directors, all Directors may participate in the action regarding
whether to accept the resignation offers.
• Director Service on Other Public Boards: Ordinarily, Directors should not serve on more than
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four other boards of public companies in addition to the PAC’s Board. Current positions in
excess of these limits may be maintained, unless the Board of Directors determines that doing
so would impair the Director’s service on the PAC’s Board.
• Former Chief Executive Officer as Director: Effective 2001, upon retirement from the PAC, the
former Chief Executive Officer will not retain Board membership.
• Change in Director Occupation: When a Director’s principal occupation or business
association changes substantially during his or her tenure as a Director, that Director shall
tender his or her resignation for consideration by the Corporate Governance Committee. The
Corporate Governance Committee will recommend to the Board the action, if any, to be taken
with respect to the resignation.
• Director Compensation: The Corporate Governance Committee annually reviews the
compensation of Directors.
• Ownership Requirements: All non-employee Directors are required to hold at least USD
300,000 worth of the PAC stock, and/or the units issued as compensation for Board service,
while serving as a Director of the PAC. New Directors will have five years to attain this
ownership threshold. Shares or units held by a Director under any deferral plan, are included
in calculating the value of ownership to determine whether this minimum ownership requirement
has been met.
• Director Retirement: Directors are required to retire from the Board when they reach the age
of 73; a Director elected to the Board prior to his or her 73rd birthday may continue to serve
until the annual shareholders meeting coincident with or next following his or her 73rd birthday.
On the recommendation of the Corporate Governance Committee, the Board may waive this
requirement as to any Director if it deems such waiver to be in the best interests of the PAC.
• Board and Committee Self-Evaluation: The Board, and each Committee, are required to conduct
a self-evaluation of their performance at least annually.
• Term Limits: The Board does not endorse arbitrary term limits on Directors’ service, nor does
it believe in automatic annual re-nomination until Directors reach the mandatory retirement
age. The Board self-evaluation process is an important determinant for continuing service.
• Committees: It is the general policy of the PAC that all major decisions be considered by the
Board as a whole. As a consequence, the Committee structure of the Board is limited to those
Committees considered to be basic to, or required for, the operation of a publicly owned
company. Currently these Committees are the Executive Committee, Audit Committee,
Compensation Committee, Corporate Governance Committee and Science and Technology
Committee. The members and chairs of these Committees are recommended to the Board by
the Corporate Governance Committee. The Audit Committee, Compensation Committee and
Corporate Governance Committee are made up of only independent Directors. The membership
of these Committees is rotated from time to time. In addition to the requirement that a majority
of the Board satisfy the independence standards noted above in bullet point 4, Director
Independence, members of the Audit Committee also must satisfy an additional NYSE
independence standard. Specifically, they may not accept directly or indirectly any consulting,
advisory or other compensatory fee from the PAC or any of its subsidiaries other than their
Director compensation. As a matter of policy, the Board also will apply a separate and
heightened independence standard to members of both the Compensation and Corporate
Governance Committees. No member of either Committee may be a partner, member or principal
of a law firm, accounting firm or investment banking firm that accepts consulting or advisory
fees from the PAC or any of its subsidiaries.
• Director Orientation and Continuing Education: In furtherance of its policy of having major
decisions made by the Board as a whole, the PAC has a full orientation and continuing
education process for Board members that includes extensive materials, meetings with key
management and visits to PAC facilities.
• Chief Executive Officer Performance Goals and Annual Evaluation: The Compensation
Committee is responsible for setting annual and long-term performance goals for the Chief
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Executive Officer and for evaluating his or her performance against such goals. The Committee
meets annually with the Chief Executive Officer to receive his or her recommendations
concerning such goals. Both the goals and the evaluation are then submitted for consideration
by the outside Directors of the Board at a meeting or executive session of that group. The
Committee then meets with the Chief Executive Officer to evaluate his or her performance
against such goals.
• Senior Management Performance Goals: The Compensation Committee also is responsible
for setting annual and long-term performance goals and compensation for the direct reports
to the Chief Executive Officer. These decisions are approved or ratified by action of the
outside Directors of the Board at a meeting or executive session of that group.
• Communication with Stakeholders: The Chief Executive Officer is responsible for establishing
effective communications with the PAC’s stakeholder groups, i.e., shareholders, customers,
PAC associates, communities, suppliers, creditors, governments and corporate partners. It is
the policy of the PAC that management speaks for the PAC. This policy does not preclude
outside Directors, including the Lead Independent Director, from meeting with shareholders,
but it is suggested that in most circumstances any such meetings be held with management
present.
• Annual Meeting Attendance: All Board members are expected to attend the Annual Meeting
of Shareholders, unless an emergency prevents them from doing so.
b) Board Functions
• Agenda: The Chief Executive Officer, with approval from the Lead Independent Director (if
one has been elected), shall set the agenda for Board meetings with the understanding that
the Board is responsible for providing suggestions for agenda items that are aligned with the
advisory and monitoring functions of the Board. Agenda items that fall within the scope of
responsibilities of a Board Committee are reviewed with the chair of that Committee. Any
member of the Board may request that an item be included on the agenda.
• Board Materials: Board materials related to agenda items are provided to Board members
sufficiently in advance of Board meetings to allow the Directors to prepare for discussion of
the items at the meeting.
• Board Meetings: At the invitation of the Board, members of senior management recommended
by the Chief Executive Officer shall attend Board meetings or portions thereof for the purpose
of participating in discussions. Generally, presentations of matters to be considered by the
Board are made by the manager responsible for that area of the PAC’s operations.
• Director Access to Corporate and Independent Advisors: In addition, Board members have
free access to all other members of management and employees of the PAC and, as necessary
and appropriate, Board members may consult with independent legal, financial, accounting
and other advisors to assist in their duties to the PAC and its shareholders.
• Executive Sessions: Executive sessions or meetings of outside Directors without management
present are held regularly (at least four times a year) to review the report of the independent
registered public accounting firm, the criteria upon which the performance of the Chief Executive
Officer and other senior managers is based, the performance of the Chief Executive Officer
against such criteria, the compensation of the Chief Executive Officer and other senior
managers, and any other relevant matters. Meetings are held from time to time with the Chief
Executive Officer for a general discussion of relevant subjects.
• Annual Board Self-Evaluation: The Board, under the direction of the Corporate Governance
Committee, will prepare an annual performance self-evaluation.
c) Committee Functions
• Independence: The Audit, Compensation and Corporate Governance Committees consist
only of independent Directors.
• Meeting Conduct: The frequency, length and agenda of meetings of each of the Committees
are determined by the chair of the Committee. Sufficient time to consider the agenda items is
provided. Materials related to agenda items are provided to the Committee members sufficiently
31
in advance of the meeting where necessary, to allow the members to prepare for discussion of
the items at the meeting.
• Scope of Responsibilities: The responsibilities of each of the Committees are determined by
the Board from time to time.
• Annual Committee Self-Evaluation: Each Committee is responsible for preparing an annual
performance self-evaluation.
d) Policy on Poison Pills
• Expiration of Rights Agreement. The Board amended the PAC’s Rights Agreement, or “Poison
Pill,” to cause the Agreement to expire on December 31, 2003. The term Poison Pill refers to a
type of shareholder rights plan that some companies adopt to provide an opportunity for
negotiation during a hostile takeover attempt. The Board has adopted a statement of policy
that it shall seek and obtain shareholder approval before adopting a Poison Pill; provided,
however, that the Board may determine to act on its own to adopt a Poison Pill, if, under the
circumstances, the Board, including the majority of the independent members of the Board, in
its exercise of its fiduciary responsibilities, deems it to be in the best interest of the PAC’s
shareholders to adopt a Poison Pill without the delay in adoption that would come from the
time reasonably anticipated to seek shareholder approval. If the Board were ever to adopt a
Poison Pill without prior shareholder approval, the Board would either submit the Poison Pill
to shareholders for ratification, or would cause the Poison Pill to expire within one year. The
Corporate Governance Committee will review this Poison Pill policy statement on an annual
basis, including the stipulation which addresses the Board’s fiduciary responsibility to act in
the best interest of the shareholders without prior shareholder approval, and report to the
Board any recommendations it may have concerning the policy.
e) Periodic Review of Corporate Governance Principles
• These principles are reviewed by the Board at least annually.
4.2.12 Pending litigations involving the PAC
Following are the material litigations involving the PAC as of May 8, 2009.
a) Patent Matters
• Lipitor (atorvastatin)
In April 2007, Teva Pharmaceuticals USA, Inc. (Teva) notified the PAC that it had filed an
abbreviated new drug application with the FDA seeking approval to market a generic version
of Lipitor. Teva asserts the invalidity of the patent covering the enantiomer form of atorvastatin,
which (including the six-month pediatric exclusivity period) expires in June 2011, and the
non-infringement of certain later-expiring patents. Teva is not challenging the PAC’s basic
patent, which (including the six-month pediatric exclusivity period) expires in March 2010. In
June 2007, the PAC filed suit against Teva in the U.S. District Court for the District of Delaware
asserting the validity and infringement of the enantiomer patent. In April 2009, the parties
entered into an agreement in principle to resolve this litigation on terms the PAC believes are
favorable to it.
In November 2008, Apotex Inc. (Apotex) notified the PAC that it had filed an abbreviated new
drug application with the FDA seeking approval to market a generic version of Lipitor. Apotex
asserts the invalidity of the PAC’s enantiomer patent and the non-infringement of certain
later-expiring patents. Apotex is not challenging the basic patent. In December 2008, the PAC
filed suit against Apotex in the U.S. District Court for the District of Delaware and the U.S.
District Court for the Northern District of Illinois asserting the validity and infringement of
the enantiomer patent.
In January 2007, the PAC filed a reissue application with the U.S. Patent and Trademark Office
(the Patent Office) seeking to correct a technical defect in its enantiomer patent. In January
2009, the Patent Office accepted the application for reissue of the enantiomer patent and
issued a Notice of Allowance. Certain formalities must be completed before the reissue patent
will be granted. The reissued patent will have the same force and effect and same June 2011
expiration date (including the six-month pediatric exclusivity period) as the original enantiomer
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patent.
In July 2008, the PAC entered into an agreement to settle its litigation with Apotex with
respect to certain patents for Lipitor in Canada, subject to certain conditions. Those conditions
have been satisfied, and that litigation has been settled. The settlement does not apply to the
aforementioned litigation against Apotex with respect to the PAC’s Lipitor enantiomer patent
in the U.S., which remains pending.
In February 2009, Pharmascience Inc. (Pharmascience) served notice of its application with
Health Canada that seeks approval to market a generic version of Lipitor in Canada and
includes challenges to the PAC’s Lipitor patents. Pharmascience asserts the invalidity of the
PAC’s enantiomer patent, which expires in July 2010 in Canada, and the non-infringement of
certain other later-expiring Lipitor patents. In April 2009, the PAC filed two actions in the
Canadian Federal Court in Toronto asserting the validity and infringement of its patents and
seeking to prevent approval of Pharmascience’s generic product.
• Norvasc (amlodipine)
Certain generic manufacturers are seeking to market their own generic amlodipine products in
Canada and are challenging the PAC’s Norvasc patents in that country, including the PAC’s
amlodipine besylate patent. In April 2008, the Canadian Federal Court in Toronto upheld the
validity of the PAC’s amlodipine besylate patent in the PAC’s action against Pharmascience
Inc. (Pharmascience) and issued an order preventing approval of Pharmascience’s generic
product containing amlodipine besylate, which is the salt form used in Norvasc, until the
expiration of the patent in August 2010. In May 2008, Pharmascience appealed the decision to
the Federal Court of Appeal of Canada. In September 2008, Dr. Reddy’s Laboratories Limited
(Dr. Reddy’s) filed an application with Health Canada also seeking to market a generic product
containing amlodipine besylate, and in October 2008, the PAC filed an action in the Canadian
Federal Court in Toronto seeking to prevent approval of Dr. Reddy’s generic product.
In addition, in February and April 2008, respectively, Pharmascience and Apotex notified the
PAC that they are alleging the non-infringement of the PAC’s Norvasc patent in connection
with their applications with Health Canada seeking to market in Canada products containing
amlodipine salt forms other than amlodipine besylate. In April and June 2008, respectively,
the PAC filed actions against Pharmascience and Apotex in the Canadian Federal Court in
Toronto asserting the infringement of its Norvasc patent.
In March 2009, the PAC entered into an agreement to settle all of its litigation with
Pharmascience with respect to the PAC’s patents for Norvasc in Canada on terms the PAC
believes are favorable to it. As part of the settlement, the lawsuits between Pfizer and
Pharmascience referred to above regarding the PAC’s Norvasc patents in Canada have been
withdrawn. Challenges by certain other generic manufacturers to the PAC’s Norvasc patents
in Canada remain outstanding.
• Celebrex (celecoxib)
In March 2008, Mylan Pharmaceuticals, Inc. (Mylan) notified the PAC that it had filed an
abbreviated new drug application with the FDA challenging the PAC’s patent for Celebrex
covering use in the treatment of inflammation, which expires in December 2015. Mylan is
seeking to market a product containing celecoxib upon the expiration in May 2014 of the
PAC’s two main patents covering the active ingredient and a pharmaceutical composition
thereof.
In April 2008, Teva notified the PAC that it had filed an amendment to its previously filed
abbreviated new drug application with the FDA with respect to the 50 mg dose of Celebrex
challenging the patent for Celebrex covering use in the treatment of inflammation. Teva is
seeking to market a 50 mg product containing celecoxib upon the expiration of the PAC’s two
main patents in May 2014.
• Neurontin (gabapentin)
In August 2005, the U.S. District Court for the District of New Jersey held that the generic
gabapentin (Neurontin) products of a number of generic manufacturers did not infringe the
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PAC’s gabapentin low-lactam patent, which expires in 2017, and it granted summary judgment
in their favor. Several generic manufacturers launched their gabapentin products in 2004 and
2005. In September 2007, the U.S. Court of Appeals for the Federal Circuit reversed the
District Court’s summary judgment decision and remanded the case to the District Court for
trial on the patent-infringement issue. If successful at trial, the PAC intends to seek
compensation from the generic manufacturers for damages resulting from their at-risk launches
of generic gabapentin.
• Detrol (tolterodine)
In March 2004, the PAC brought a patent infringement suit in the U.S. District Court for the
District of New Jersey against Teva, which had filed an abbreviated new drug application
with the FDA seeking approval to market a generic version of Detrol. In January 2007, Teva
withdrew its challenge to the patent, and the patent infringement suit was dismissed. At
about the same time in January 2007, Ivax Pharmaceuticals, Inc. (Ivax), a wholly owned
subsidiary of Teva, amended its previously filed abbreviated new drug application for
tolterodine to challenge the PAC’s basic patent for Detrol, and the PAC brought a patent
infringement action against Ivax in the U.S. District Court for the District of New Jersey. The
basic patent (including the six-month pediatric exclusivity period) expires in September 2012.
• Detrol LA (tolterodine)
In October 2007 and January 2008, respectively, Teva and Impax Laboratories, Inc. notified
the PAC that they had filed abbreviated new drug applications with the FDA challenging on
various grounds four patents relating to Detrol LA, an extended-release formulation of Detrol
(tolterodine), and seeking approval to market their generic versions of Detrol LA. The PAC
filed suit against each of them in the U.S. District Court for the Southern District of New York
asserting the infringement of three of the patents relating to Detrol LA., which (including the
six-month pediatric exclusivity period) expire between 2012 (the basic patent ) and 2020. Each
of these actions subsequently was transferred to the U.S. District Court for the District of
New Jersey.
In March 2008, Sandoz Inc., a division of Novartis AG (Sandoz), also notified the PAC that it
had filed an abbreviated new drug application with the FDA seeking approval to market a
generic version of Detrol LA. Sandoz is challenging three later-expiring patents, which
(including the six-month pediatric exclusivity period) expire in 2020, but not the PAC’s basic
patent.
• Vfend (voriconazole)
In July 2008, Matrix Laboratories Ltd. notified the PAC that it had filed an abbreviated new
drug application with the FDA challenging on various grounds four of the PAC’s patents
relating to Vfend, which expire between 2009 and 2016, and seeking approval to market a
generic version of Vfend.
In November 2008, Sandoz notified the PAC that it had filed an abbreviated new drug application
with the FDA challenging on various grounds two of the PAC’s patents relating to Vfend,
which expire in 2016 and 2018, and seeking approval to market a generic version of Vfend for
intravenous use.
• Aricept (donepezil hydrochloride)
In October 2005, Teva notified Eisai Co., Ltd. (Eisai) that Teva had filed an abbreviated new
drug application with the FDA challenging on various grounds Eisai’s U.S. basic patent for
Aricept, which expires in November 2010, and seeking approval to market a generic version of
Aricept. In December 2005, Eisai filed suit against Teva in the U.S. District Court for the
District of New Jersey asserting infringement of that patent. While Teva has received final
approval from the FDA for its generic product, it is subject to a preliminary injunction
prohibiting the marketing of its product pending the outcome of Eisai’s patent infringement
action. The PAC co-promotes Aricept with Eisai in the U.S. but is not a party to Eisai’s patent
infringement action.
Lyrica (pregabalin)
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In March and April 2009, several generic manufacturers notified the PAC that they had filed
abbreviated new drug applications with the FDA seeking approval to market generic versions
of Lyrica. Each of the generic manufacturers is challenging one or more of three patents for
Lyrica: the basic patent, which expires in 2018, and two other patents, which expire in 2013
and 2018. Each of the generic manufacturers asserts the invalidity and/or the non-infringement
of the patents subject to challenge. In April 2009, the PAC filed an action against each of thegeneric manufacturers in the U.S. District Court for the District of Delaware asserting the
infringement and validity of its patents for Lyrica.
Zyvox (linezolid)
In April 2009, Gate Pharmaceuticals (Gate) notified the PAC that it had filed an abbreviatednew drug application with the FDA seeking approval to market a generic version of Zyvox.
Gate asserts the non-infringement of two patents that expire in 2021, but it is not challengingthe PAC’s basic patent, which (including the six-month pediatric exclusivity period) expires in
2015.
b) Product Litigation
• Asbestos
Quigley
Quigley Company, Inc. (Quigley), a wholly owned subsidiary, was acquired by the PAC in1968 and sold small amounts of products containing asbestos until the early 1970s. In
September 2004, the PAC and Quigley took steps that were intended to resolve all pending
and future claims against the PAC and Quigley in which the claimants allege personal injuryfrom exposure to Quigley products containing asbestos, silica or mixed dust. The PAC recorded
a charge of USD 369 million before-tax (USD 229 million after-tax) in the third quarter of 2004in connection with these matters.
In September 2004, Quigley filed a petition in the U.S. Bankruptcy Court for the SouthernDistrict of New York seeking reorganization under Chapter 11 of the U.S. Bankruptcy Code. In
March 2005, Quigley filed a reorganization plan in the Bankruptcy Court that needed theapproval of both the Bankruptcy Court and the U.S. District Court for the Southern District of
New York after receipt of the vote of 75% of the claimants. In connection with that filing, the
PAC entered into settlement agreements with lawyers representing more than 80% of theindividuals with claims related to Quigley products against Quigley and the PAC. The
agreements provide for a total of USD 430 million in payments, of which USD 215 millionbecame due in December 2005 and is being paid to claimants upon receipt by the PAC of
certain required documentation from each of the claimants. The reorganization plan provided
for the establishment of a Trust (the Trust) for the payment of all remaining pending claims aswell as any future claims alleging injury from exposure to Quigley products.
As certified by the balloting agent in May 2006, more than 75% of Quigley’s claimantsholding claims that represented more than two-thirds in value of claims against Quigley
voted to accept Quigley’s plan of reorganization. In August 2006, in reviewing the votingtabulation methodology, the Bankruptcy Court ruled that certain votes that accepted the
plan were not predicated upon the actual value of the claim. As a result, the reorganization
plan was not accepted.
In June 2007, Quigley filed an amended plan of reorganization that is intended to address the
Bankruptcy Court’s concerns regarding the voting tabulation methodology. In February2008, the Bankruptcy Court authorized Quigley to solicit its amended reorganization plan for
acceptance by claimants. According to the official report filed with the court by the ballotingagent in July 2008, the requisite number of votes was cast in favor of the amended plan of
reorganization. The Bankruptcy Court has scheduled a confirmation hearing to be heldsometime after March 16, 2009 at which it will consider any objections to the plan’s confirmation
and determine whether to approve the plan. If approved by the claimants and the courts, the
amended reorganization plan will result in a permanent injunction directing all pending andfuture claims alleging personal injury from exposure to Quigley products to the Trust.
Under the amended reorganization plan (as under the original reorganization plan), the PAC
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will contribute to the Trust USD 405 million through a note as well as approximately USD 100
million in cash and insurance, and will forgive a USD 30 million secured loan to Quigley. In
addition, the PAC entered into an agreement with the representative of future claimants that
provides for the contribution to the Trust of an additional amount with a present value of
USD 88.4 million.
In a separately negotiated transaction with an insurance company in August 2004, the PAC
agreed to a settlement related to certain insurance coverage which provides for payments to
the PAC over a ten-year period of amounts totaling USD 405 million.
Other Matters
Between 1967 and 1982, Warner-Lambert owned American Optical Corporation, which
manufactured and sold respiratory protective devices and asbestos safety clothing. In
connection with the sale of American Optical in 1982, Warner-Lambert agreed to indemnify
the purchaser for certain liabilities, including certain asbestos-related and other claims. As of
December 31, 2008, approximately 104,000 claims naming American Optical and numerous
other defendants were pending in various federal and state courts seeking damages for
alleged personal injury from exposure to asbestos and other allegedly hazardous materials.
The PAC is actively engaged in the defense of, and will continue to explore various means to
resolve, these claims. Several of the insurance carriers that provided coverage for the American
Optical asbestos and other allegedly hazardous materials claims have denied coverage. The
PAC believes that these carriers’ position is without merit and are pursuing legal proceedings
against such carriers.
Numerous lawsuits are pending against the PAC in various federal and state courts seeking
damages for alleged personal injury from exposure to products containing asbestos and
other allegedly hazardous materials sold by Gibsonburg Lime Products Company
(Gibsonburg). Gibsonburg was acquired by the PAC in the 1960s and sold small amounts of
products containing asbestos until the early 1970s.
There also is a small number of lawsuits pending in various federal and state courts seeking
damages for alleged exposure to asbestos in facilities owned or formerly owned by the PAC
or its subsidiaries.
• Celebrex and Bextra
Product Liability and Consumer Actions
Product liability suits, including purported class actions, were filed against the PAC in various
U.S. federal and state courts and in certain other countries alleging personal injury as a result
of the use of Celebrex and/or Bextra. In addition, purported class actions were filed against
the PAC in various U.S. federal and state courts and in certain other countries alleging
consumer fraud as a result of alleged false advertising of Celebrex and Bextra and the
withholding of information from the public regarding the alleged safety risks associated with
Celebrex and Bextra. Subsequently, all of the U.S. federal product liability and consumer fraud
actions were transferred for consolidated pre-trial proceedings to a Multi-District Litigation
(In re Celebrex and Bextra Marketing, Sales Practices and Product Liability Litigation MDL-
1699) in the U.S. District Court for the Northern District of California.
On October 17, 2008, the PAC announced that it had reached agreements in principle to settle
the pending U.S. consumer fraud purported class action cases and more than 90% of the
known U.S. personal injury claims. The proposed settlements of the pending U.S. consumer
fraud purported class action cases are subject to approval by the appropriate courts.
In connection with these agreements in principle, the PAC recorded pre-tax charges in the
third quarter of 2008 of approximately USD 745 million for all known U.S. personal injury
claims and approximately USD 89 million for the pending U.S. consumer fraud purported
class action cases. The PAC believes that the charges of approximately USD 745 million will
be sufficient to resolve all known U.S. personal injury claims, including those not being
settled at this time. However, additional charges may have to be taken in the future in connection
with certain pending claims and unknown claims relating to Celebrex and Bextra.
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The PAC believes that it has insurance coverage for a portion of the proposed personal
injury settlements and is seeking to recover payments to which it believes it is entitled under
the applicable insurance policies.
The agreements in principle and the charges do not apply to the other actions relating to
Celebrex and Bextra discussed immediately below.
Securities, Fiduciary Duty and ERISA Actions
Beginning in late 2004, actions, including purported class and shareholder derivative actions,
have been filed in various federal and state courts against the PAC, Pharmacia Corporation
(Pharmacia) and certain current and former officers, directors and employees of the PAC and
Pharmacia. These actions include: (i) purported class actions alleging that the PAC and
certain of its current and former officers violated federal securities laws by misrepresenting
the safety of Celebrex and Bextra; (ii) purported shareholder derivative actions alleging that
certain of the PAC’s current and former officers and directors breached fiduciary duties by
causing the PAC to misrepresent the safety of Celebrex and, in certain of the cases, Bextra;
and (iii) purported class actions filed by persons who claim to be participants in the PAC or
Pharmacia Savings Plan alleging that the PAC and certain current and former officers, directors
and employees of the PAC or, where applicable, Pharmacia and certain former officers, directors
and employees of Pharmacia, violated certain provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) by selecting and maintaining the PAC stock as an investment
alternative when it allegedly no longer was a suitable or prudent investment option. In June
2005, the federal securities, fiduciary duty and ERISA actions were transferred for consolidated
pre-trial proceedings to a Multi-District Litigation (In re Pfizer Inc. Securities, Derivative and
“ERISA” Litigation MDL-1688) in the U.S. District Court for the Southern District of New
York.
In July 2007, the purported federal shareholder derivative action alleging breach of fiduciary
duty was dismissed with prejudice by the court in the Multi-District Litigation. The plaintiffs
appealed the decision to the U.S. Court of Appeals for the Second Circuit and, in January
2009, the Second Circuit affirmed the dismissal order. In March 2008, the purported shareholder
derivative action in the Supreme Court of the State of New York, New York County, alleging
breach of fiduciary duty also was dismissed with prejudice. In April 2008, the plaintiffs filed
a notice of appeal with the Appellate Division of the Supreme Court of the State of New York,
First Department. The plaintiff failed to perfect the appeal by the due date in January 2009 and
filed a notice of voluntary dismissal in April 2009.
Securities Action in New Jersey
In 2003, several purported class action complaints were filed in the U.S. District Court for the
District of New Jersey against Pharmacia, the PAC and certain former officers of Pharmacia.
The complaints allege that the defendants violated federal securities laws by misrepresenting
the data from a study concerning the gastrointestinal effects of Celebrex. These cases were
consolidated for pre-trial proceedings in the District of New Jersey (Alaska Electrical Pension
Fund et al. v. Pharmacia Corporation et al.). In January 2007, the court certified a class consisting
of all persons who purchased Pharmacia securities from April 17, 2000 through February 6,
2001 and were damaged as a result of the decline in the price of Pharmacia’s securities
allegedly attributable to the misrepresentations. Plaintiffs seek damages in an unspecified
amount. In October 2007, the court granted defendants’ motion for summary judgment and
dismissed the plaintiffs’ claims. In November 2007, the plaintiffs appealed the decision to the
U.S. Court of Appeals for the Third Circuit. On January 30, 2009, the Third Circuit vacated the
District Court’s grant of summary judgment in favor of defendants and remanded the case to
the District Court for further proceedings. The Third Circuit also held that the District Court
erred in determining that the class period ended on February 6, 2001, and directed that the
class period end on August 5, 2001.
• Trovan
In May 2007, the Attorney General of the Federation of Nigeria filed civil and criminal actions
in the Federal High Court in Abuja against the PAC, one of the PAC’s Nigerian subsidiaries,
37
and several current and former U.S. and Nigerian employees, including a current Pfizer Inc.
director. Also in May 2007, the Attorney General of the State of Kano, Nigeria, filed substantially
similar civil and criminal actions in the High Court of Kano State against substantially the
same group of defendants. The federal civil action was voluntarily withdrawn by the federal
authorities in July 2007, and a new federal civil complaint seeking substantially similar damages
against substantially the same group of defendants was filed shortly thereafter.
All of these actions arise out of a 1996 pediatric clinical study of Trovan, an antibiotic then in
late-stage development, that was conducted during a severe meningitis epidemic in Kano.
The actions allege, among other things, that the study was conducted without proper
government authorization and without the informed consent of the parents or guardians of
the study participants and that it resulted in injury or death to a number of study participants.
In the civil actions, the federal government is seeking more than USD 6 billion in damages and
the Kano state government is seeking USD 2.075 billion in damages for, among other things,
the costs incurred to provide treatment, compensation and support for the alleged victims
and their families; the costs of unrelated health initiatives that failed, allegedly due to societal
misgivings attributable to the Trovan study; and general damages. The PAC believes that it
has strong defenses in these actions.
The 1996 Trovan clinical study also has been the subject of two civil lawsuits filed against
the PAC in the U.S. District Court for the Southern District of New York on behalf of the study
participants. Both of these actions assert that the PAC violated the federal Alien Tort Statute,
and one of the actions also asserts that the PAC violated the Connecticut Unfair Trade
Practices Act and the Connecticut Products Liability Act, in connection with the 1996 Trovan
clinical study. The District Court dismissed both cases in 2005, and the plaintiffs appealed the
decisions to the U.S. Court of Appeals for the Second Circuit. In January 2009, the Second
Circuit reversed the District Court’s dismissal of both actions, and remanded them to the
District Court for further proceedings, on the ground that the District Court erred in holding
that it did not have subject matter jurisdiction over the plaintiffs’ claims under the Alien Tort
Statute.
• Hormone-Replacement Therapy
The PAC and certain wholly-owned subsidiaries and limited liability companies, along with
several other pharmaceutical manufacturers, have been named as defendants in a number of
lawsuits in various federal and state courts alleging personal injury resulting from the use of
certain estrogen and progestin medications prescribed for women to treat the symptoms of
menopause. Plaintiffs in these suits allege a variety of personal injuries, including breast
cancer, stroke and heart disease. Certain co-defendants in some of these actions have asserted
indemnification rights against the PAC and its affiliated companies. The cases against the
PAC and its affiliated companies involve the products femhrt (which the PAC divested in
2003), Activella and Vagifem (which are Novo Nordisk products that were marketed by a PAC
affiliate from 2000 to 2004), and Provera, Ogen, Depo-Estradiol, Estring and generic MPA, all
of which remain approved by the FDA for use in the treatment of menopause. The federal
cases have been transferred for consolidated pre-trial proceedings to a Multi-District Litigation
(In re Prempro Products Liability Litigation MDL-1507) in the U.S. District Court for the
Eastern District of Arkansas.
This litigation originally included both individual actions as well as various purported
nationwide and statewide class actions. However, as a result of the voluntary dismissal of
certain purported class actions and the withdrawal of the class action allegations by the
plaintiffs in certain other actions, this litigation now consists of individual actions and a few
purported statewide class actions.
In November 2008, the State of Nevada filed an action against the PAC, Pharmacia & Upjohn
Company and Wyeth in state court in Nevada alleging that they had engaged in deceptive
marketing of their respective hormone replacement therapy medications in Nevada in violation
of the Nevada Deceptive Trade Practices Act. In January 2009, the action was removed to the
U.S. District Court for the District of Nevada. The action seeks monetary relief, including civil
38
penalties and treble damages.
• Viagra
A number of lawsuits, including purported class actions, have been filed against the PAC in
various federal and state courts alleging that Viagra causes certain types of visual injuries.
The plaintiffs in the purported class actions seek to represent nationwide and certain statewide
classes of Viagra users. All of the actions seek damages for personal injury, and the purported
class actions also seek medical monitoring. In January 2006, the federal cases were transferred
for consolidated pre-trial proceedings to a Multi-District Litigation (In re Viagra Products
Liability Litigation MDL-1724) in the U.S. District Court for the District of Minnesota.
• Zoloft
A number of individual lawsuits have been filed against the PAC in various federal and state
courts alleging personal injury as a result of the purported ingesting of Zoloft.
• Mirapex
A number of individual lawsuits seeking damages have been filed against the PAC and
Boehringer Ingelheim Pharmaceuticals, Inc. (BIPI) in various U.S. federal and state courts
and one purported class action has been filed in Canada alleging that Mirapex, a treatment for
Parkinson’s disease, causes certain impulse-control disorders. The PAC co-promoted Mirapex
with BIPI until May 2005 but, as a result of the sale of the PAC’s interests in this product to
BIPI, it no longer manufactures or sell Mirapex. In June 2007, all of the U.S. federal cases were
transferred for consolidated pre-trial proceedings to a Multi-District Litigation (In re Mirapex
Products Liability Litigation MDL -1836) in the U.S. District Court for the District of Minnesota.
The PAC and BIPI have agreed to indemnify each other with respect to portions of certain of
the claims in these actions. The PAC and BIPI have resolved or are in the process of resolving
a majority of the lawsuits pending in the U.S. on terms the PAC considers favorable.
• Neurontin
A number of lawsuits, including purported class actions, have been filed against the PAC in
various federal and state courts alleging claims arising from the promotion and sale of
Neurontin. The plaintiffs in the purported class actions seek to represent nationwide and
certain statewide classes consisting of persons, including individuals, health insurers,
employee benefit plans and other third-party payers, who purchased or reimbursed patients
for the purchase of Neurontin that allegedly was used for indications other than those
included in the product labeling approved by the FDA. In October 2004, many of the suits
pending in federal courts, including individual actions as well as purported class actions,
were transferred for consolidated pre-trial proceedings to a Multi-District Litigation (In re
Neurontin Marketing, Sales Practices and Product Liability Litigation MDL-1629) in the U.S.
District Court for the District of Massachusetts. Purported class actions also have been filed
against the PAC in various Canadian provincial courts alleging claims arising from the
promotion and sale of Neurontin and generic gabapentin.
In the Multi-District Litigation, in August 2007, the court denied without prejudice plaintiffs’
motion to certify a nationwide class of all consumers and third-party payers who allegedly
purchased or reimbursed patients for the purchase of Neurontin for “off-label” uses from
1994 through 2004. In December 2007, plaintiffs filed a renewed motion for class certification.
In June 2007, a Pennsylvania state court certified a class of all individuals in Pennsylvania
who allegedly purchased Neurontin for “off-label” uses from 1995 to the present. The court
subsequently expanded the class to include purchasers of generic gabapentin. However, in
February 2009, the court determined that class certification was not appropriate and entered
an order decertifying the class. Plaintiffs are seeking certification of statewide classes of
Neurontin purchasers in actions pending in California, Illinois, Indiana, Missouri and
Oklahoma. State courts in New York and New Mexico have declined to certify statewide
classes of Neurontin purchasers.
A number of individual lawsuits have been filed against the PAC in various U.S. federal and
state courts and in certain other countries alleging suicide, attempted suicide and other
39
personal injuries as a result of the purported ingesting of Neurontin. Certain of the U.S.
federal actions have been transferred for consolidated pre-trial proceedings to the same
Multi-District Litigation referred to in the first paragraph of this section.
• Lipitor
In March and April 2006, six purported class actions were filed against the PAC in various
federal courts alleging claims relating to the promotion of Lipitor. In May 2006, five of the
actions were voluntarily dismissed without prejudice, and the plaintiffs in those actions were
added as plaintiffs in the remaining action, which had been filed in the U.S. District Court for
the Northern District of Illinois. In May 2008, on the PAC’s uncontested motion, the action
was transferred to the U.S. District Court for the Southern District of New York. Plaintiffs,
who are third-party payers, allege that, through patient and medical education programs and
other actions, the PAC promoted Lipitor for use by certain patients contrary to national
cholesterol guidelines that plaintiffs claim are a part of the labeled indications for the product.
In addition, in an amended complaint, plaintiffs allege that, primarily as the result of the PAC’s
purported failure to fully disclose the risks of alleged side-effects of Lipitor, the prices that
plaintiffs paid for Lipitor were higher than they otherwise would have been. The plaintiffs
seek to represent nationwide and certain statewide classes consisting of health and welfare
funds and other third-party payers that purchased Lipitor or reimbursed patients for the
purchase of Lipitor since January 1, 2002. The plaintiffs allege, among other things, fraud,
unjust enrichment and a violation of the federal Racketeer Influenced and Corrupt
Organizations (RICO) Act and certain state consumer fraud statutes and seek monetary and
injunctive relief, including treble damages.
In 2004, a former employee filed a “whistleblower” action against the PAC in the U.S. District
Court for the Eastern District of New York. The complaint remained under seal until September
2007, at which time the U.S. Attorney for the Eastern District of New York declined to intervene
in the case. The PAC was served with the complaint in December 2007. Plaintiff alleges that,
through patient and medical education programs, written materials and other actions aimed at
doctors, consumers, payers and investors, the PAC promoted Lipitor for use by certain
patients contrary to national cholesterol guidelines that plaintiff claims are a part of the
labeled indications for the product. Plaintiff alleges violations of the Federal Civil False
Claims Act and the false claims acts of certain states and seeks treble damages and civil
penalties on behalf of the federal government and the specified states as the result of their
purchase, or reimbursement of patients for the purchase, of Lipitor allegedly for such “off-
label” uses. Plaintiff also seeks compensation as a whistleblower under those federal and
state statutes. In addition, plaintiff alleges that he was wrongfully terminated, in violation of
the anti-retaliation provisions of the Federal Civil False Claims Act, the Civil Rights Act of
1964 and applicable New York law, for raising concerns about the alleged “off-label” promotion
of Lipitor and about alleged instances of sexual harassment in the workplace, and he seeks
damages and the reinstatement of his employment.
• Chantix/Champix
In August 2008, an individual filed a purported nationwide class action against the PAC in the
U.S. District Court for the Southern District of Illinois alleging claims relating to the marketing
of Chantix. In November 2008, the action was dismissed without prejudice by the court at the
request of the plaintiff.
A number of individual lawsuits have been filed against the PAC in various federal and state
courts alleging suicide, attempted suicide and other personal injuries as a result of the purported
ingesting of Chantix, as well as economic loss. Plaintiffs in these actions seek compensatory
and punitive damages and the disgorgement of profits resulting from the sale of Chantix.
In December 2008, a purported class action was filed against the PAC in the Ontario Superior
Court of Justice (Toronto office) on behalf of all individuals and third-party payers in Canada
who have purchased and ingested Champix or reimbursed patients for the purchase of Champix.
This action asserts claims under Canadian product liability law, including with respect to the
safety and efficacy of Champix, and, on behalf of the putative class, seeks monetary relief,
40
including punitive damages. In April 2009, a substantially similar purported class action was
filed against the PAC in the Superior Court of Quebec (Montreal Division).
c) Commercial and Other Matters
• Aricept Strategic Alliance and Development Agreement
The PAC has recently received a letter from Eisai Co., Ltd., with whom it has exclusive rights
to co-promote Aricept in the U.S. and several other countries, and from whom the PAC also
has an exclusive license to sell Aricept in certain other countries; all of these agreements also
include the rights to line extensions for Aricept. Eisai has indicated to the PAC that, in its
view, upon consummation of the Wyeth acquisition, Eisai will have the right to terminate the
Aricept Strategic Alliance and Development Agreement. PAC does not believe that Eisai has
any legal basis to terminate the Strategic Alliance and Development Agreement and will
oppose any effort by Eisai to do so.
• Merger Agreement between the PAC and Wyeth
In late January and early February 2009, four purported class action complaints were filed by
Wyeth shareholders challenging Wyeth’s proposed merger with the PAC. The actions were
filed in federal court in New Jersey and in state courts in New Jersey and Delaware. The
complaints in all four actions name as defendants the members of Wyeth’s board of directors
and Wyeth. The complaints in three of the actions also name the PAC as a defendant. The
plaintiffs allege that (i) each of the members of Wyeth’s board of directors breached his or her
fiduciary duties to Wyeth and its shareholders by authorizing the sale of Wyeth to the PAC
for what plaintiffs deem “inadequate” consideration; (ii) Wyeth directly breached and/or
aided and abetted the other defendants’ alleged breaches of fiduciary duties; and (iii) in the
three actions in which the PAC is a defendant, that the PAC aided and abetted the alleged
breaches of fiduciary duties by Wyeth and its directors. The plaintiffs seek, among other
things, to enjoin the defendants from consummating the merger on the agreed-upon terms.
• Average Wholesale Price Litigation
A number of states as well as most counties in New York have sued Pharmacia, the PAC and
other pharmaceutical manufacturers alleging that they provided average wholesale price (AWP)
information for certain of their products that was higher than the actual prices at which those
products were sold. The AWP is used to determine reimbursement levels under Medicare Part
B and Medicaid and in many private-sector insurance policies and medical plans. The plaintiffs
claim that the alleged spread between the AWPs at which purchasers were reimbursed and the
actual sale prices was promoted by the defendants as an incentive to purchase certain of their
products. In addition to suing on their own behalf, many of the plaintiff states seek to recover
on behalf of individual Medicare Part B co-payers and private-sector insurance companies and
medical plans in their states. These various actions generally assert fraud claims as well as
claims under state deceptive trade practice laws, and seek monetary and other relief, including
civil penalties and treble damages. Several of the suits also allege that Pharmacia and/or the
PAC did not report to the states their best price for certain products under the Medicaid
program.
In addition, Pharmacia, the PAC and other pharmaceutical manufacturers are defendants in a
number of purported class action suits in various federal and state courts brought by employee
benefit plans and other third-party payers that assert claims similar to those in the state and
county actions. These suits allege, among other things, fraud, unfair competition and unfair
trade practices and seeks monetary and other relief, including civil penalties and treble damages.
All of these state, county and purported class action suits were transferred for consolidated
pre-trial proceedings to a Multi-District Litigation (In re Pharmaceutical Industry Average
Wholesale Price Litigation MDL-1456) in the U.S. District Court for the District of
Massachusetts. Certain of the state and private suits have been remanded to their respective
state courts. In November 2006, the claims against the PAC in the Multi-District Litigation
were dismissed with prejudice; the claims against Pharmacia are still pending.
In April 2008, the court in the Multi-District Litigation granted preliminary approval with
41
respect to the fairness of a proposed settlement of the claims against 11 defendants, including
Pharmacia, for a total of USD 125 million. The court has scheduled a hearing in March 2009 to
consider final approval of the settlement. If the settlement is approved, Pharmacia’s
contribution would be immaterial.
• Monsanto-Related Matters
In 1997, Monsanto Company (Former Monsanto) contributed certain chemical manufacturing
operations and facilities to a newly formed corporation, Solutia Inc. (Solutia), and spun off
the shares of Solutia. In 2000, Former Monsanto merged with Pharmacia & Upjohn Company
to form Pharmacia Corporation (Pharmacia). Pharmacia then transferred its agricultural
operations to a newly created subsidiary, named Monsanto Company (New Monsanto),
which it spun off in a two-stage process that was completed in 2002. Pharmacia was acquired
by the PAC in 2003 and is now a wholly-owned subsidiary of the PAC.
In connection with its spin-off that was completed in 2002, New Monsanto assumed, and
agreed to indemnify Pharmacia for, any liabilities related to Pharmacia’s former agricultural
business. New Monsanto is defending and indemnifying Pharmacia for various claims and
litigation arising out of, or related to, the agricultural business.
In connection with its spin-off in 1997, Solutia assumed, and agreed to indemnify Pharmacia
for, liabilities related to Former Monsanto’s chemical businesses. As the result of its
reorganization under Chapter 11 of the U.S. Bankruptcy Code, Solutia’s indemnification
obligations related to Former Monsanto’s chemical businesses are limited to sites that Solutia
has owned or operated. In addition, in connection with its spin-off that was completed in
2002, New Monsanto assumed, and agreed to indemnify Pharmacia for, any liabilities primarily
related to Former Monsanto’s chemical businesses, including, but not limited to, any such
liabilities that Solutia assumed. Solutia’s and New Monsanto’s assumption of and agreement
to indemnify Pharmacia for these liabilities apply to pending actions and any future actions
related to Former Monsanto’s chemical businesses in which Pharmacia is named as a defendant,
including, without limitation, actions asserting environmental claims, including alleged exposure
to polychlorinated biphenyls.
• Pharmacia Cash Balance Pension Plan
In 2006, several current and former employees of Pharmacia Corporation filed a purported
class action in the U.S. District Court for the Southern District of Illinois against the Pharmacia
Cash Balance Pension Plan (the Plan), Pharmacia Corporation, Pharmacia & Upjohn Company
and the PAC. Plaintiffs seek monetary and injunctive relief on behalf of a class consisting of
certain current and former participants in the Plan who accrued a benefit in the Monsanto
Company Pension Plan prior to its conversion to a cash balance plan in 1997. In January 2002,
after various corporate reorganizations, certain of the assets and liabilities of the Monsanto
Company Pension Plan were transferred to the Plan. Plaintiffs claim that the Plan violates the
age discrimination provisions of the Employee Retirement Income Security Act of 1974 by
providing certain credits to such participants only to age 55. This action has been consolidated
in the U.S. District Court for the Southern District of Illinois (Walker, et al., v. The Monsanto
Company Pension Plan et al.) with purported class actions pending in the same court that
make largely similar claims against substantially similar cash balance plans sponsored by
Monsanto Company and Solutia Inc., two former affiliates of Pharmacia. In May 2008, at the
request of the parties, the court issued an order permitting the case to proceed as a class
action.
• Trade Secrets Action in California
In 2004, Ischemia Research and Education Foundation (IREF) and its chief executive officer
brought an action in California Superior Court, Santa Clara County, against a former IREF
employee and the PAC. Plaintiffs allege that defendants conspired to misappropriate certain
information from IREF’s allegedly proprietary database in order to assist the PAC in designing
and executing a clinical study of a drug of the PAC. In December 2008, the jury returned a
verdict for compensatory damages of approximately USD 38.7 million. In February 2009, the
judge held a hearing on plaintiffs’ motions seeking punitive damages (which, under applicable
42
law, may not exceed two times compensatory damages) as well as prejudgment interest from
2002 to the present. In March 2009, the court awarded prejudgment interest for the period
from March 2002 through the date on which the judgment will be signed, but declined to
award punitive damages. PAC will be filing motions for judgment notwithstanding the verdict
and for a new trial.
• Environmental Matters
In January 2009, the PAC submitted a corrective measures study report to the U.S
Environmental Protection Agency with regard to Pharmacia Corporation’s discontinued
industrial chemical facility in North Haven, Connecticut.
The PAC is a party to a number of other proceedings brought under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA or
Superfund), and other state, local or foreign laws in which the primary relief sought is the cost
of past and/or future remediation.
d) Government Investigations and Requests for Information
Like other pharmaceutical companies, the PAC is subject to extensive regulation by national,
state and local government agencies in the U.S. and in the other countries in which it operates.
As a result, the PAC has interactions with government agencies on an ongoing basis. Among
the investigations and requests for information by government agencies are those discussed
below. It is possible that criminal charges and substantial fines and/or civil penalties could
result from pending government investigations, including, but not limited to, those discussed
below.
In January 2009, the PAC entered into an agreement in principle with the U.S. Department of
Justice to resolve the previously reported investigation regarding allegations of past “off-
label” promotional practices concerning Bextra as well as certain other open investigations.
In connection with the agreement in principle, the PAC recorded a pre-tax and after-tax charge
of USD 2.3 billion in the fourth quarter of 2008.
The PAC has voluntarily provided the Department of Justice and the Securities and Exchange
Commission with information concerning potentially improper payments made in connection
with certain sales activities outside the U.S. Certain potentially improper payments and other
matters are the subject of investigations by government authorities in certain foreign countries,
including the following: In Germany, a wholly-owned subsidiary of the PAC is the subject of
a civil and criminal investigation with respect to certain tax matters. In Italy, a wholly-owned
subsidiary of the PAC is under criminal investigation by various government authorities with
respect to gifts and payments allegedly provided to certain doctors operating within Italy’s
national healthcare system. The subsidiaries of the PAC are fully cooperating in these
investigations. In November 2008, final court approval was granted to a plea bargain agreement
between the prosecutor in Bari, Italy, and a wholly-owned subsidiary of the PAC pursuant to
which the subsidiary paid a total of Euro 1.5 million, which included a criminal penalty of Euro
90,000, to resolve allegations of improper payments to certain doctors in the Puglia region of
Italy, which includes Bari. Criminal investigations by various other government authorities in
Italy of alleged improper payments to certain doctors are continuing.
• Tax Matters
The United States is one of the PAC’s major tax jurisdictions. The PAC is currently appealing
two issues related to the IRS’s audits of its tax returns for the years 2002 through 2005. The
2006, 2007 and 2008 tax years are currently under audit as part of the IRS Compliance Assurance
Process, a real-time audit process. The 2009 tax year is not yet under audit. All other tax years
in the U.S. for the PAC are closed under the statute of limitations. With respect to Pharmacia
Corporation, the IRS is currently conducting an audit for the year 2003 through the date of
merger with the PAC (April 16, 2003). In addition to the open audit years in the U.S., the PAC
has open audit years in other major tax jurisdictions, such as Canada (1998-2008), Japan
(2006-2008), Europe (1997-2008, primarily reflecting Ireland, the U.K., France, Italy, Spain and
Germany) and Puerto Rico (2004-2008).
43
The PAC regularly reevaluates its tax positions based on the results of audits of federal, state
and foreign income tax filings, statute of limitations expirations, and changes in tax law that
would either increase or decrease the technical merits of a position relative to the ‘more-
likely-than-not’ standard. The PAC believes that its accruals for tax liabilities are adequate for
all open years. Many factors are considered in making these evaluations, including past
history, recent interpretations of tax law and the specifics of each matter. Because tax laws
and regulations are subject to interpretation and tax litigation is inherently uncertain, these
evaluations can involve a series of complex judgments about future events and can rely
heavily on estimates and assumptions. The PAC’s evaluations are based on estimates and
assumptions that have been deemed reasonable by management. However, if its estimates
and assumptions are not representative of actual outcomes, its results could be materially
impacted.
4.2.13 Acquisitions / mergers involving the PAC during the last 3 years ended December 31, 2008, 2007 and 2006
2009
On January 26, 2009, the PAC announced that they have entered into a definitive merger agreement under
which they will acquire Wyeth in a cash-and-stock transaction valued on that date at USD 50.19 per share,
or a total of USD 68 billion. The transaction is expected to close at the end of the third quarter or during the
fourth quarter of 2009, subject to receipt of approvals.
2008
In the fourth quarter of 2008, the PAC concluded the acquisition of a number of animal health product lines
from Schering-Plough Corporation (Schering-Plough) for sale in the European Economic Area. The cost of
acquiring these product lines was approximately USD 170 million.
In the second quarter of 2008, the PAC acquired Encysive Pharmaceuticals Inc. (Encysive), a
biopharmaceutical company, whose main product (Thelin), for the treatment of pulmonary arterial
hypertension, is commercially available in much of the E.U., is approved in certain other markets, and is
under review by the U.S. Food and Drug Administration (FDA). The cost of acquiring Encysive, through a
tender offer and subsequent merger, was approximately USD 200 million, including transaction costs. In
addition, in the second quarter of 2008, the PAC acquired Serenex, Inc. (Serenex), a privately held
biotechnology company that owns SNX-5422, an oral Heat Shock Protein 90 (Hsp90) inhibitor currently in
phase I trials for the potential treatment of solid tumors and hematological malignancies, and an extensive
Hsp90 inhibitor compound library, which has potential uses in treating cancer and inflammatory and
neurodegenerative diseases. In connection with these acquisitions, the PAC recorded approximately USD
170 million in Acquisition-related in-process research and development charges and approximately USD
450 million in intangible assets.
In the first quarter of 2008, the PAC acquired CovX, a privately held biotherapeutics company specializing
in preclinical oncology and metabolic research and the developer of a biotherapeutics technology platform.
Also in the first quarter of 2008, it acquired all of the outstanding shares of Coley Pharmaceutical Group,
Inc., (Coley), a biopharmaceutical company specializing in vaccines and drug candidates designed to fight
certain cancers, allergy and asthma disorders, and autoimmune diseases, for approximately USD 230 million.
In connection with these and two smaller acquisitions related to Animal Health, approximately USD 440
million in Acquisition-related in-process research and development charges was recorded.
2007
In the first quarter of 2007, the PAC acquired BioRexis Pharmaceutical Corp. (BioRexis), a privately held
biopharmaceutical company with a novel technology platform for developing new protein drug candidates,
and Embrex, Inc. (Embrex), an animal health company. In connection with these and other smaller acquisitions,
USD 283 million in Acquisition-related in-process research and development charges was recorded.
2006
The PAC completed the acquisition of the sanofi-aventis worldwide rights, including patent rights and
production technology, to manufacture and sell Exubera, for approximately USD 1.4 billion in cash (including
transaction costs).
The PAC completed the acquisition of PowderMed Ltd. (PowderMed), a U.K. company which specializes in
the emerging science of DNA-based vaccines for the treatment of influenza and chronic viral diseases, and
44
in May 2006, the PAC completed the acquisition of Rinat Neurosciences Corp. (Rinat), a biologics company
with several new central-nervous-system product candidates. In 2006, the aggregate cost of these and
other smaller acquisitions was approximately USD 880 million (including transaction costs).
4.2.14 Divestments
In 2006, the PAC sold its Consumer Healthcare business for USD 16.6 billion to Johnson & Johnson.
4.2.15 Name and contact details of the Compliance Officer
Name: Douglas M. Lankler
Designation: Sr. Vice President & Associate General Counsel – Corporate Compliance
Address: 235 East 42nd Street, New York, New York-10017
Tel: 212/733-0752
Fax: 646/792-4758
4.3 Future plans / strategies of the Acquirer / PAC with regard to the Target Company
4.3.1 The Pfizer group has operations worldwide and has achieved a leading global position in the pharmaceutical
industry. The Acquirer and the PAC wish to consolidate and enhance the stake of the Pfizer group in order
to create more flexibility for how the Pfizer group organizes its commercial and financial activities in India.
4.3.2 Subsidiaries of the PAC hold an aggregate of 12,302,937 equity shares of the Target Company constituting
41.23% of the issued and paid-up equity share capital of the Target Company as of the date of the PA. The
Pfizer group wishes to further consolidate its shareholding to 75% by making this Offer to public shareholders
of Pfizer India in accordance with Regulation 11(1) of the SEBI (SAST) Regulations.
4.3.3 The Acquirer is an indirect wholly-owned subsidiary of the PAC, as mentioned above. The Acquirer has
been incorporated with the view, among other things, of making the Pfizer group’s investments in South
Asia in accordance with decisions to be taken by its board of directors, as per the requirements of business
and in line with opportunities and changes in the economic scenario from time to time.
4.3.4 The Acquirer and the PAC do not have any specific future plans with respect to the Target Company. The
Acquirer and the PAC shall consider the merits of any future proposal for the disposal or encumbrance of
the assets of the Target Company as and when such opportunities arise. Under the second proviso to
Regulation 16(ix) of the extant SEBI (SAST) Regulations, the Acquirer shall not sell, dispose of or otherwise
encumber any substantial asset of the Target Company, except with the prior approval of the shareholders.
5. Option in terms of Regulation 21(2)
5.1. The Offer to the public shareholders of the Target Company is made in accordance with Regulation 11(1) of
the Regulations for consolidating the holding of the PAC and its other subsidiaries, including the Acquirer,
in the Target Company, while ensuring that the public shareholding in the Target Company does not fall
below 10%, the minimum level of shareholding required to be maintained under the Listing Agreements, as
amended from time to time, entered into by the Target Company with the BSE and NSE.
5.2. Therefore, pursuant to Regulation 11(1) and other applicable provisions of the Regulations, the Acquirer is
making an Offer to the public shareholders of the Target Company to acquire 10,078,143 fully paid-up equity
shares of Rs.10/- each representing 33.77% of the total paid-up voting equity share capital of the Target
Company as on December 31, 2008.
5.3. In terms of Regulation 11(1) of the Regulations, the Acquirer would acquire such number of equity shares
in the Target Company through the Offer so as not to breach the minimum public shareholding requirement
of 10% in conformity with the SEBI circular bearing reference number SEBI/CFD/DIL/LA/2006/13/4 dated
April 13, 2006.
5.4. The Acquirer and the PAC do not intend to delist the Target Company within the next three years.
6. Background of the Target Company
6.1 Address of Corporate and Registered Office (with phone numbers)
Corporate Office Pfizer Centre, Patel Estate, Off S.V.Road, Jogeshwari (West), Mumbai – 400 102
Tel: +91 22 6693 2000; Fax: +91 22 6693 2377
Registered Office Pfizer Centre, Patel Estate, Off S.V.Road, Jogeshwari (West), Mumbai – 400 102
Tel: +91 22 6693 2000; Fax: +91 22 6693 2377
45
6.2 Brief History
The Target Company was incorporated on November 21, 1950 as a private limited company under the name
Dumex Limited. Its name was thereafter changed to Dumex Private Limited pursuant to Section 24 of the
Companies Act, 1956. In 1958, Pfizer group took over the company and its name was changed to Pfizer
Private Limited in 1961 and further changed to Pfizer Limited in 1966. The Target Company is a part of the
Pfizer group. The equity shares of Pfizer India are listed on BSE and NSE. The shares of the Target Company
have been listed on the BSE since 1966 and on NSE since 1999.
Major areas of operation
Pfizer India is mainly in the business of pharmaceuticals, animal health products and services – medical and
research division:
a) The pharmaceuticals business comprises of manufacturing of bulk drugs and formulations, trading
of formulations and also includes rendering of marketing services
b) The animal health business has a presence primarily in the large animal health poultry market,
companion animal and dairy business segments, and also includes rendering of marketing services
c) Services - medical & research division is responsible for providing regulatory and medical support
to Pfizer’s operations in India. This division, amongst other offerings, undertakes clinical development
operations that primarily include clinical trails, new product development and comprehensive data
management for new drug development.
6.3 Location and other details of manufacturing facilities
Pfizer Limited, Thane Belapur Road, K.U.Bazar Post, Navi Mumbai – 400 705, India, Tel: 022- 6791 6161, Fax:
022- 6791 6160
6.4 Share capital structure of the Target Company
Source: Annual Report
6.5 Build up of the current capital structure since inception.
Paid-up equity shares of target
company No. of Shares/voting rights % of shares/voting rights
Fully Paid-up Equity Shares 29,841,440 100%
Partly Paid-up Equity Shares Nil Nil
Equity Shares forfeited 2,640 Negligible
Total Equity Shares 29,844,080 100%
Total Voting Rights in Target Company 29,844,080 100%
Cumulative paid-up
Capital Date of
Allotment
No. & %age of
Shares issued Rs. As on
Mode of
Allotment
Identity of
Allottees
(promoters/
ex-promoters/
others)
Status of
Complian
ce
13-06-1951 2,000(1) (0.07%) 200,000 Issue date First Issue of
shares Ex-Promoter Complied
18-09-1952 3,000(1) (0.10%) 500,000 Issue date Further issue of
shares Ex-Promoter Complied
29-12-1956 4,900(1) (0.16%) 990,000 Issue date Further Issue of
shares Ex Promoter Complied
23-07-1958 30,000(1) 3,990,000 Issue date Issue of
Redeemable Preference Shares
Ex-Promoters Complied
25-07-1958 30,000(1) (1.01%) 6,990,000 Issue date Further issue of
shares Promoters Complied
31-05-1960 15,000(1) 5,490,000 Date of
Redemption 50% Redemption
of Pref. Shares Held by
Ex-Promoters Complied
22-06-1960 25,100(1) (0.84%) 8,000,000 Issue date Further issue of
shares Promoters Complied
02-01-1961 15,000(1) 6,500,000 Date of
Redemption
Balance 50% Redemption of
Pref. Shares
Held by Ex-Promoters
Complied
46
Source: Pfizer Limited
(1) Face Value Rs.100/- per share
* partly offset by forfeiture of equity shares.
** Includes annulment of forfeiture of shares
6.6 As on the date of the PA, the trading of shares of the Target Company has not been suspended either on
BSE or NSE.
6.7 As on the date of the PA, there have been no instances of non-listing of some and/or all shares of the Target
Company at any stock exchange(s) as applicable.
6.8 As on the date of the PA, the Target Company has no outstanding warrants, fully convertible debentures,
partly convertible debentures, partly paid-up shares or any other instruments convertible into shares of the
Target Company at a future date.
6.9 The Target Company (as well as promoters) are in compliance with Chapter II of the Takeover Code to the
extent indicated in the below table. Delays in compliance, if any, are clarified in the column titled ‘Remarks’.
Please find below the details of compliance with the applicable provisions of Chapter II of SEBI (SAST)
Regulations by the Target Company as on the date of the Public Announcement.
24-07-1964 100,000 (0.34%) 7,500,000 Issue date Further issue of
shares Promoters Complied
30-11-1965 1,250,000 (4.19%)
20,000,000 Issue date Further issue of
shares Promoters Complied
01-03-1966 660,000 (2.21%) 26,600,000 Issue date Public Issue Public Complied
27-06-1968 1,329,100 (4.45%)
39,874,800* Issue date Bonus Shares Existing
Shareholders Complied
14-03-1972 1,594,568 (5.34%)
55,810,280** Issue date Bonus Shares Existing
Shareholders Complied
27-01-1977 4,464,820 (14.96%)
100,458,480 Issue date Bonus Shares Existing
Shareholders Complied
29-07-1982 1,674,300 (5.61%)
117,201,480 Issue date Public Issue &
Rights Issue Indian Shareholders Complied
28-06-2000 11,720,148 (39.27%)
234,402,960 Issue date Bonus Issue Existing
shareholders Complied
10-09-2003 5,357,244 (17.95%)
287,975,400 Issue date Allotment under
Scheme of Amalgamation
Allotment to members of Transferor Company
(including indirect subsidiaries of
PAC) under scheme of amalgamation.
Complied
28-04-2005 1,043,900 (3.50%)
298,414,400 Issue date Allotment under
Scheme of Amalgamation
Allotment to members of Transferor Company
(including indirect subsidiaries of
PAC) under scheme of amalgamation
Complied
47
S.
No. Regulation/Sub-Regulation
Due date of Compliance
mentioned in Regulation
Actual date of
compliance
Delay, if
any Remarks
1 6(2) 20-05-1997 29-03-2003 -
2 6(4) 20-05-1997 29-03-2003 -
3 8(3) 30-04-1998 29-03-2003 -
4 8 (3) 23-05-1998 29-03-2003 -
5 8(3) 30-04-1999 29-03-2003 -
6 8(3) 19-05-1999 29-03-2003 -
7 8(3) 30-04-2000 29-03-2003 -
8 8(3) 25-05-2000 29-03-2003 -
9 8(3) 30-04-2001 29-03-2003 -
10 8(3) 26-05-2001 29-03-2003 -
11 8(3) 30-04-2002 29-03-2003 -
The Disclosures were made in terms of SEBI Regularization Scheme 2002.
12 8(3) 27-05-2002 29-03-2003 -
13 8(3) 30-4-2003 23-04-2003 -
14 8(3) 23-11-2003 15-12-2003 22 days Delayed
Compliance.
15 7(3) 18-03-2004 23-03-2004 5 days Delayed
Compliance.
16 8(3) 30-04-2004 15-04-2004 -
17 8(3) 29-05-2004 01-05-2004 -
18 8(3) 30-4-2005 05-07-2005 66 days
Delayed Compliance - Initially forms received under
Regulations 8(1) and 8(2) were filed after a
delay of 53 days on 22-06-2005.
The Target Company voluntarily
made a revised submission
under Regulation 8(3) on 05.07.2005.
19 8(3) 28-05-2005 05-07-2005 38 days
Delayed Compliance - Initially forms received under
Regulations 8(1) and 8(2) were filed after a
delay of 25 days on 22-06-2005.
The Target Company voluntarily
made a revised submission
under Regulation 8(3) on 05.07.2005.
48
Source: Pfizer Limited
As on the date of Public Announcement, the following table details the compliance by the Promoter group,
i.e. Pfizer Corporation and other entities which are part of the Promoter group, viz., Warner-Lambert Company
LLC and Parke, Davis & Company LLC (which have become part of the Promoter group consequent to the
merger of the Target Company with erstwhile Parke-Davis (India) Limited in 2003) and Pharmacia Corporation
(which has become part of the Promoter group consequent to the merger of the Target Company with
erstwhile Pharmacia Healthcare Limited in 2005), with the provisions of Chapter II of SEBI (SAST) Regulations.
The required disclosures under Regulation 8(1) and 8(2) are made by Pfizer Corporation, which is the
majority shareholder holding 31.42% of shares in the Target Company as on the date of Public Announcement,
for itself and on behalf of the other three entities as well. The disclosure made by Pfizer Corporation
contains the name, address, number of shares held and % of shares / voting rights to total paid-up capital
of Target Company for all the four entities, i.e. Pfizer Corporation, Warner-Lambert Company LLC, Parke,
Davis & Company LLC and Pharmacia Corporation.
20 8(3) 30-04-2006 23-06-2006 54 days
Delayed Compliance - Initially forms received under Regulation 8(1) and 8(2) were
filed on 13-04-2006. However, the
Target Company was
informed by the Bombay Stock
Exchange to file the form under
Regulation 8(3). The revised
submission was made on
23.06.2006.
21 8(3) 21-05-2006 23-06-2006 33 days
Delayed Compliance-
Initially forms received under Regulation 8(1) and 8(2) were
filed on 02-05-2006. However, the
Target Company was
informed by the Bombay Stock
Exchange to file the form under
Regulation 8(3). The revised
submission was made on
23.06.2006.
22 8(3) 30-04-2007 03-04-2007 -
23 8(3) 21-04-2007 03-04-2007 -
24 8(3) 30-04-2008 24-04-2008 -
25 8(3) 15-05-2008 24-04-2008 -
26 7(3) 05-02-1999 04-02-1999 -
27 7(3) 16-07-2007 10-07-2007 -
28 7(3) 29-07-2008 23-07-2008 -
49
Source: Pfizer Limited
6.10 Pfizer India has duly complied with the various requirements of Clause 49 relating to corporate governance
S.
No. Regulation/Sub-Regulation
Due date of Compliance
mentioned in Regulation
Actual date of
compliance
Delay, if
any Remarks
1 6(1) 20-4-1997 28-03-2003 -
2 6(3) 20-4-1997 28-03-2003 -
3 8(1) 21-4-1998 28-03-2003 -
4 8(2) 21-4-1998 28-03-2003 -
5 8(2) 14-05-1998 28-03-2003 -
6 8(1) 21-4-1999 28-03-2003 -
7 8(2) 21-4-1999 28-03-2003 -
8 8(2) 10-05-1999 28-03-2003 -
9 8(1) 21-4-2000 28-03-2003 -
10 8(2) 21-4-2000 28-03-2003 -
11 8(2) 16.05.2000 28-03-2003 -
12 8(1) 21-4-2001 28-03-2003 -
13 8(2) 21-4-2001 28-03-2003 -
14 8(2) 17-05-2001 28-03-2003 -
15 8(1) 21-4-2002 28-03-2003 -
16 8(2) 21-04-2002 28-03-2003 -
17 8(2) 27-05-2002 28-03-2003 -
The Disclosures were made in terms of SEBI Regularization Scheme 2002
18 8(1) 21-4-2003 19-04-2003 -
19 8(2) 21-4-2003 19-04-2003 -
20 8(2) 14-11-2003 12-12-2003 28 days Delayed
Compliance.
21 8(1) 21-4-2004 12-04-2004 -
22 8(2) 21-4-2004 12-04-2004 -
23 8(2) 20-5-2004 27-04-2004 -
24 8(1) 21-4-2005 12-04-2005 -
25 8(2) 21-4-2005 12-04-2005
26 8(2) 19-05-2005 30-04-2005 -
27 8(1) 21-4-2006 10-04-2006 -
28 8(2) 21-4-2006 10-04-2006 -
29 8(2) 12-05-2006 26-04-2006 -
30 8(1) 21-4-2007 02-04-2007 -
31 8(2) 21-4-2007 02-04-2007 -
32 8(2) 12-04-2007 02-04-2007 -
33 8(1) 21-4-2008 15-04-2008 -
34 8(2) 21-4-2008 15-04-2008 -
35 8(2) 06-05-2008 15-04-2008 -
50
under the Listing Agreements with the BSE and NSE, as amended from time to time, save and except for the
following: On June 28, 2007, with the appointment of Mr. Yugesh Goutam as an executive director the total
number of non-executive directors in the Target Company fell below 50% prescribed in clause 49(I)(A)(i) of
the Listing Agreements. The position was rectified on November 30, 2007 with the appointment of Mr.
Richard Gane as a non-executive director. No penal actions have been initiated by the BSE and NSE against
the Target Company till the date of Public Announcement.
6.11 Composition of the board of directors of the Target Company as on the date of PA
Source: Pfizer Limited
6.12 As on the date of the PA, Mr. Richard Gane is an employee of the PAC and is designated as the Regional
Legal Lead for North Asia, India, Pakistan and Thailand. Mr. Kewal Handa is the country manager of the
Pfizer group for India.
6.13 Details of the Qualifications and Experience of the Board of Directors
Mr. R. A. Shah has specialized in a broad spectrum of Corporate Laws in general with special focus on
Foreign Investments, Joint Ventures, Technology and License Agreements, Intellectual Property Rights,
Mergers and Acquisitions, Industrial Licensing, Anti-trust Laws, Company Law and Taxation. He has been
a Director on the Board of Pfizer India since November, 1965. Currently, he is a Solicitor and Senior Partner
of M/s. Crawford Bayley & Co., a reputed firm of Advocates & Solicitors, Mumbai. He is also a Member on
the Managing Committees of various Commerce & Industry Associations such as Bombay Chamber of
Commerce and Industry, Indo German Chamber of Commerce and the President of the Society of Indian Law
Firms (Western Region). Presently, he is also a Director on a number of public limited companies in India.
Mr. Kewal Handa holds a Masters degree in commerce and is a member of the Cost and Works Accountants
of India and the Institute of Company Secretaries of India. He has also completed Programmes from Harvard
University, Columbia Business School and Indian Institute of Management, Ahmedabad. He joined Pfizer
Limited in 1990 as Controller-MIS and took over as Executive Director - Finance before he rose to his
present position as Managing Director in 2005. He has been on the board of Pfizer Limited since December,
1996. Currently, he is also the Chairman of the Pricing Committee of the Organization of Pharmaceutical
Producers of India and the President of the Bombay Management Association. He is also a Committee
Member of the Confederation of Indian Industry, Indian Pharmaceutical Alliances and the Bombay Chamber
of Commerce and Industry. He is a visiting faculty in NMIMS.
Mr. Pradip P Shah holds an MBA from the Harvard Business School. He is also a Chartered Accountant
and a Cost Accountant. He has been a Director on the Board of Pfizer India since December, 1999. Currently,
he is Chairman of IndAsia Fund Advisors Pvt. Ltd and a Director on the Board of several reputed companies.
Name Residential Address Designation, Date of Appointment
Mr. R. A. Shah Panorama, 2nd Floor, 203, Walkeshwar Road, Teen Batti, Mumbai-400 006.
Chairman Appointed on December 7, 1999
Mr. Kewal Handa
Flat No. 3, Damiano, East Avenue, Santacruz (west), Mumbai-400 054.
Managing Director Appointed on April 28, 2005
Mr. Pradip P. Shah
72-A. Embassy Apts., 46, Nepean Sea Road, Mumbai-400 006.
Non – Executive Independent Director Appointed on December 7, 1999
Dr. Bomi M. Gagrat
Flat No. 1401 B, Sterling Tower, Harishchandra Goregaonkar Marg, Gamdevi, Mumbai-400 007.
Executive Director – Technical Operations Appointed on April 28, 2005
Mr. Richard Gane
FT 2 6/F, Bamboo Grove, 82, Kennedy Road, Wan Chai, Hong Kong
Non – Executive Director Appointed on November 30, 2007
51
He is also a member of the Managing Committees of two chambers of commerce. He is the founding
Managing Director of CRISIL, India’s first and largest credit rating agency and has also assisted in founding
the Housing Development Finance Corporation (HDFC) in 1977. He has also served as a consultant to
USAID, the World Bank and the Asian Development Bank. He has served as a member of various committees
of the Government on matters concerning finance.
Mr. Richard Gane holds a LL.B. degree from Queens University in Belfast and a LL.M. post graduate
degree in International Law from Nottingham University. He attended law school at the College of Law,
Chester, UK. He was a Director on the Board of Pfizer India from October, 2003 to September, 2005. He was
again appointed as a Director on the Board of Pfizer India with effect from November 30, 2007. He joined
Pfizer in January 1997 as a Legal Advisor in the UK for Pfizer’s prescription business and in January, 2001,
he became the Head of Legal Affairs in the UK and European Union (EU) for Pfizer’s Consumer Healthcare
products. He is currently Regional Legal Lead – North Asia, India, Pakistan and Thailand for the Emerging
Markets Business Unit. He is a Member of the UK Law Society. Prior to joining Pfizer in 1997, he was a
trainee Solicitor with Edwards Geldard , Cardiff, UK .
Dr. B.M. Gagrat holds a Master’s Degree in Science and a Ph.D from the University of Mumbai. He holds
a Post Graduate Diploma in “Operations Management” from the Jamnalal Bajaj Institute of Management in
Mumbai. He has published scientific papers in international journals. He has been on the Board of Pfizer
India since September, 1998. Dr. Gagrat joined Pfizer India in May, 1989 as Plant Manager, Thane Plant and
then moved to head the Animal Health Division in December, 1996. He was the head of Marketing before
taking on the assignment of Technical Operations.
6.14 General Body Meeting (Last 3 AGMs)
6.15 Details of merger/de-merger / spin-offs during last three years involving the Target Company
In June 2006, in line with the global strategy to divest the Consumer Healthcare business to Johnson and
Johnson, Pfizer India approved the transfer of the exclusive license with respect to trademarks relating to
four Consumer Healthcare brands, viz., Benadryl, Caladryl, Benylin and Listerine and certain assets related
thereto to Johnson & Johnson Limited at their meeting of the board of directors held on December 31, 2007,
for a total consideration of Rs. 21,485 lakhs.
6.16 Change of name since incorporation / listing and dates thereof
The Target Company was incorporated on November 21, 1950 as Dumex Limited. In 1957, the Target Company
was renamed to Dumex Private Limited pursuant to Section 24 of the Companies Act, 1956. In 1961, the
Target Company was renamed to Pfizer Private Limited and subsequently changed to Pfizer Limited in 1966.
6.17 Brief audited consolidated financial statements for the last three years ended November 30, 2006, 2007 and
2008
AGM Financial Year Date and Time Venue of AGM
58th 2007-08 April 15, 2009 at 3.00p.m.
57th 2006-07 April 15, 2008 at 3.00p.m.
56th 2005-06 March 22, 2007 at 3.00p.m.
Y.B. Chavan Auditorium, General Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana,
Mumbai – 400 021
12 months period ending November 30,
Profit & Loss Statement 2006 2007 2008
(Rs. Lakhs) (Rs. lakhs) (Rs. lakhs)
Income from operations 66,679 67,669 68,170
Other Income 5,960 34,307 9,301
Total Income 72,639 101,976 77,471
Total Expenditure 52,724 54,147 55,237
PBDIT 19,916 47,829 22,234
Depreciation 1,307 958 1,112
Interest 7 2
-
Net Exceptional items (Income / (Expense)
(2,337) (1,735) 20,791
PBT 16,265 45,134 41,913
Provision for Tax 5,631 11,134 11,956
PAT 10,633 34,000 29,957
52
Source: Annual Reports, Capital Market
(1) Calculated as Proposed Dividend for the year / Profit After Tax for the year
(2) Calculated as Profit After Tax / Average of the Net worth at the beginning and the Net worth at the end of the year.
(3) Adjusted Earnings Per Share represents reported earnings per share excluding extraordinary items as identified by
Capital Market
(4) There maybe rounding off errors in the table due to use of a higher unit than a single Re.
6.18 Reasons for fall/ rise in total income and Profit after tax
The Company’s sales grew marginally from Rs.67669 lakhs in the previous year to Rs. 68170 lakhs in the
year ended November 2008. The above growth was achieved despite the sale of four Consumer Healthcare
brands to M/s. Johnson & Johnson Limited. Excluding the divested brands, the Company’s sales grew by
11.67% over the corresponding previous year.
The Company achieved a net profit of Rs. 29957 lakhs as compared to Rs.34000 lakhs for the previous year
showing a decline of 11.89%. This decline is due to the impact of other income and exceptional items in the
previous year and the year under review, respectively. The Profit before exceptional items / other income
however, recorded an increase of 8.53%.
As at November 30,
Balance Sheet 2006 2007 2008
(Rs. Lakhs) (Rs. lakhs) (Rs. lakhs)
Source of funds
Paid-up Share Capital 2,984 2,984 2,984
Reserves & Surplus (excluding revaluation reserves)
37,589 61,988 87,125
Net Worth 40,573 64,972 90,109
Secured Loans
-
-
-
Unsecured Loans
-
-
-
Total 40,573 64,972 90,109
Uses of funds
Net fixed Assets 6,676 7,041 8,306
Investments
0.4
50
50
Net Current Assets 31,127 56,290 79,486
Deferred tax assets (Net) 1,436 1,298 2,267
Total Miscellaneous Expenditure not written off
1,334 293
-
Total 40,573 64,972 90,109
12 months period ending November 30,
Other Financial Data 2006 2007 2008
(Rs.) (Rs.) (Rs.)
Dividend (%) (1) 63.1% 24.1% 12.5%
Earnings per share (Rs.) 35.63 113.94 100.39
Return on Net Worth (%)(2) 27.21% 64.43% 38.63%
Book Value per share (Rs.) 135.96 217.72 301.96
Additional Information:
Adjusted Earnings Per Share
(3)
36.1
(Capital Market Vol XXII /
17, Oct 22 – Nov 04, 2007)
43.5 (Capital Market Vol XXIII /
16, Oct 06 – Oct 19, 2008)
50.5 (Capital Market Vol XXIV /
02, Mar 23 – Apr 05, 2009)
53
6.19 Pre and post offer shareholding pattern in the format prescribed by SEBI
Source: Bombay Stock Exchange
The total number of public shareholders of the Target Company as on March 31, 2009 is 72,710.
6.20 The Acquirer / PAC have not acquired any shares of the Target Company after the Public Announcementup to the date of the Letter of Offer.
6.21 Details of change in shareholding of Promoters since inception (as and when it happened)
Source: Pfizer Limited
(1) Face Value Rs.100/- per share
Shareholder Category
Shareholding / Voting
rights prior to the Offer
(as on March 31, 2009)
Shares/Voting rights to
be acquired in the Offer
(assuming full
acceptances)
Shareholder/Voting
rights after the Offer
(assuming full
acceptances)
(A) (B) (A+B)
No. of
Shares %
No. of
Shares % No. of Shares %
(1) Promoter group
Promoters other than Acquirer
12,302,937 41.23% Nil 12,302,937 41.23%
Total (1) 12,302,937 41.23% Nil 12,302,937 41.23%
(2) Acquirer
Acquirer - - 10,078,143 33.77% 10,078,143 33.77%
Total (2) - - 10,078,143 33.77% 10,078,143 33.77% (3) Public (other than
Acquirer) Nil
Institutions Mutual Funds & UTI
Banks, Financial
Institutions
Insurance Companies
FIIs / foreign mutual funds
Sub Total Indian Public Others
Private Corporate Bodies
Directors & their
Relatives & Friends
NRIs / FCBs
Trust
Balance with NSDL/CDSL
Sub Total
4,905,724
100,481
4,566,951 734,198
10,307,354 6,126,555
907,864
3,902
172,851 3,959
16,018 7,231,149
16.44%
0.34%
15.30% 2.46%
34.54% 20.54%
3.04% 0.01%
0.58% 0.01% 0.05%
24.23%
Nil
Nil Nil
Will depend on response to the Offer
Total (3) 17,538,503 58.77% Nil 7,460,360 25.00%
GRAND TOTAL (1 to 3) 29,841,440 100.00% 29,841,440 100.00%
Resultant
Particulars No. of shares
acquired/sold
Capital as on
date of
acquisition/sale Shareholding %
Status of
Compliance with
the provisions of
Chapter II
Upon acquiring controlling interest (1958) 30,000 (1) 3,990,000 75.19% N.A.
Further issue of shares (1960) 25,100 (1) 6,500,000 84.77% N.A.
Bought from Ex-Promoter (1961) 9900 (1) 6,500,000 100.00% N.A.
Further issue of shares (1964) 100,000 7,500,000 100.00% N.A.
Further issue of shares (1965) 1,250,000 20,000,000 100.00% N.A.
Bonus shares (1:2) (1968) 1,000,000 39,874,800 75.24% N.A.
Bonus shares (2:5) (1972) 1,200,000 55,810,280 75.25% N.A.
Bonus shares (4:5) (1977) 3,360,000 100,458,480 75.25% N.A.
Sold to Financial Institutions (1982) 527,900 117,201,480 60.00% N.A.
Sold to employees, existing shareholders and business associates (1988)
2,344,050 117,201,480 40.00% N.A.
Bonus shares (1:1) (2000) 4,688,050 234,402,960 40.00% N.A.
Issued on merger with Parke Davis (India) Limited (2003)
2,142,896 287,975,400 40.00%
Issued on merger with Pharmacia Healthcare Limited (2005)
783,941 298,414,400 41.23%
Net holding of Promoter as on the date of
PA 12,302,937 298,414,400 41.23%
54
6.22 There are no material litigation pending against the Target Company, except as disclosed in the contingent
liabilities.
Source: Annual Report
c) Drug Price Equalization Account (“DPEA”)
• Oxytetracycline & Other Formulations
In respect of certain price fixation Orders of 1981 of the Government of India, the SupremeCourt vide its Order of March 22, 1993 held that, pending disposal of Pfizer India’s WritPetition in the High Court of Mumbai, Pfizer India may deposit 50% of the impugned amountof Rs. 87.61 lakhs, less Rs. 19.90 lakhs already deposited, with the Union of India before May15, 1993 which has been done. In the event that Pfizer India succeeds before the High Courtof Mumbai, this amount will be returned within one month from the date of the decision of theHigh Court with interest at the rate of 15% per annum. However, if Pfizer India loses the WritPetition, the balance amount of Rs. 43.80 lakhs with interest at the rate of 15% per annum willhave to be paid to the Government.
• Multivitamin Formulations
In respect of a certain price fixation Order of 1986 of the Government of India, the SupremeCourt vide its Order dated 3rd December 1992 held that, pending disposal of Pfizer India’s WritPetition in the High Court of Mumbai, Pfizer India may deposit 50% of the impugned amountof Rs. 98.00 lakhs with the Union of India before 31st January, 1993 which has been done. Inthe event that Pfizer India succeeds before the High Court of Mumbai, this amount will bereturned within one month from the date of the decision of the High Court with interest at therate of 15% per annum. However, if Pfizer India loses the Writ Petition, the balance amount ofRs. 49.00 lakhs with interest at the rate of 15% per annum will have to be paid to theGovernment.
• Protinex
In yet another case, Pfizer India had challenged in 1986 a price fixation Order of the Governmentof India by a Writ Petition before the High Court of Mumbai. The Honourable Court passedan ad interim and interim order staying the impugned order. The Petition, while it was stillpending for hearing and final disposal, was withdrawn in 1989 on redressal of Pfizer India’sgrievances. After protracted correspondence on the subject, in 1993 the Government raiseda demand of Rs. 81.83 lakhs on Pfizer India for the period April, 1986 to July, 1989 and directedit to deposit the same into the DPEA. Thereafter, the Drug Prices Liability Review (DPLR)Committee sent a letter dated February 15, 1996 seeking the Company’s submission /representation against the reduced claim amount of Rs. 33.87 lakhs for the period April, 1986to August, 1987 as intimated to the DPLR Committee by the Government of India. The Companyhas made its submissions to the DPLR Committee vide its letter of March 29, 1996 claimingthat no amount whatsoever is due and payable having regard to the facts and relevantmaterial of the case. In the meantime, the Department of Chemicals and Petrochemicals videtheir letter dated February 11, 1997, raised an additional demand of Rs. 178.56 lakhs for theearlier period of February, 1984 to March, 1986 over and above the revised claim of Rs. 33.87lakhs for the period April, 1986 to August, 1987. Thus, the total demand raised now standsrevised to Rs. 212.43 lakhs. The DPLR Committee had, vide its letter dated February 24, 1997invited Pfizer India to make its submissions / representations against the above said claim.Pfizer India has made its submissions to the DPLR Committee vide its letter dated May 14,1997 claiming that no amount whatsoever is due and payable having regard to the facts andrelevant material of the case. Pursuant to the submissions made by Pfizer India, the DPLRCommittee directed by an Order on November 17, 1998 that clarifications should be obtainedfrom the Mumbai High Court on whether the Interim Stay granted in the Civil Writ PetitionNumber 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI andIDMA jointly against any Notice issued by the Government of India after August 25, 1987 to
Nature of contingent liability As on November 30, 2008 (Rs. lakhs)
a) In respect of guarantees given to banks on behalf of third parties 108.14
b) In respect of:
(i) Excise Duty 420.78
(ii) Customs Duty 40.54
(iii) Sales Tax 627.24
(iv) Service Tax 193.11
(v) Income Tax 1286.83
(vi) Pending Labour Matters contested in various courts 122.66
(vii) Claims against the company not acknowledged as Debts Amount Unascertainable
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any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demandedin respect of a period prior to that date). On a Notice of Motion filed by Pfizer India in the saidWrit Petition, the Mumbai High Court has granted ad interim Order that “pending the hearingand final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996pending before the said Drug Prices Liability Review Committee be stayed.”
• Vitamin and Other Formulations
The Government has arbitrarily determined the liability of Pfizer India at Rs. 1466 lakhs beingthe difference in price in respect of Vitamin and other formulations sold by Pfizer India duringthe years 1983 to 1989. Pfizer India has repudiated the liability on this account. Pfizer India’ssolicitors have advised that the repudiation by Pfizer India is legally sustainable. TheGovernment has pursued the matter. Pfizer India maintains its position that the claim by theGovernment is not legally sustainable.
• Chloramphenicol
The Government has arbitrarily determined the liability of Pfizer India at Rs. 145 lakhs and Rs.14 lakhs being the difference between the price of bulk drug Chloramphenicol powder andChloramphenicol Palmitate, respectively, allowed in the formulation price and actualprocurement price for the period 1979 to 1988. Pfizer India has repudiated the liability on thisaccount as advised by its Solicitors. Pfizer India has also obtained a Stay order from theHonourable High Court of Mumbai against the demand. Pursuant to the submissions madeby Pfizer India, the DPLR Committee directed by an Order on November 17, 1998 thatclarifications should be obtained from the Mumbai High Court on whether the Interim Staygranted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This WritPetition is filed by OPPI and IDMA jointly against any Notice issued by the Government ofIndia after August 25, 1987 to any member of the OPPI or IDMA, initiating proceedings forrecovery of an amount demanded in respect of a period prior to that date). On a Notice ofMotion filed by Pfizer India in the said Writ Petition, the Mumbai High Court has granted adinterim Order that “pending the hearing and final disposal of this Notice of Motion, furtherproceedings in the said Case No 23/95 pending before the said Drug Prices Liability ReviewCommittee be stayed.”
• Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged withParke-Davis (India) Limited in 1988 and Parke-Davis (India) Limited merged with Pfizer Indiain 2003) had classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS asdecontrolled products under the DPCO 1979. The categorization was, however, challengedby the Government in 1984 and a demand of Rs. 113 lakhs was raised against Pfizer India.Against this demand an excise duty set off of Rs. 7 lakhs was allowed to Pfizer India and afinal demand of Rs. 106 lakhs was raised in 1987. Pfizer India had deposited an amount of Rs.30 lakhs in February, 1987 and Rs. 25 lakhs in May, 1990 totaling to an aggregate of Rs. 55lakhs in full and final settlement of the demand, as per the arguments set forth by Pfizer India.The Government subsequently raised a demand of Rs. 117 lakhs towards interest on principaldemand. (i.e. interest of Rs. 43 lakhs for Pyridium for the period 1982 to August, 1995 and Rs.74 lakhs for Isokin for the period 1982 to June, 1997). Pfizer India filed a Writ Petition in theAndhra Pradesh High Court in September, 1997 for staying all further proceedings againstPfizer India. The High Court stayed the demand in respect of collection of interest but directedPfizer India to deposit the balance demand of Rs. 51 lakhs (which amount was deposited inNovember, 1997).
• Multivitamin Formulations
The Government has arbitrarily raised a demand of Rs. 182.38 lakhs on account of allegedoverpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited(merged with Pfizer India) for the period 1983 to 1986. Pfizer India has repudiated the liability onthis account as advised by its solicitors. Pfizer India filed a Writ Petition No.814 of 1992 in the HighCourt at Mumbai. The Supreme Court of India, in a Special Leave Petition filed by Pfizer India heldthat pending disposal of Writ Petition filed before the High Court at Mumbai, Pfizer India shallfurnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregatingto Rs. 91.19 lakhs. This amount has been deposited with the Government of India and is includedunder the head “Loans and Advances”.
Pursuant to a Transfer Petition (Civil) No. 475-496 of 2003 filed under Article 139A(1) of theConstitution of India, all pending Writ Petitions in respect of DPEA liabilities are now to betransferred to the Supreme Court to be heard and finally decided by the Supreme Court of India.Consequently, as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e),(f) and (g) above will now be heard and disposed off by the Supreme Court.
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In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favour ofPfizer India, and based on the assessment of the management, no further provision is considerednecessary over and above the sum of Rs.198.37 lakhs, which has been paid off in earlier years.
Pfizer India would continue to seek legal recourse in all the above matters.
d) Material litigation subsequent to the balance sheet date
The Target Company received a show cause notice dated December 16, 2008, directing the TargetCompany to show cause as to why purchases from third parties as per its specifications and packingmaterials for the financial year 2006-07, not to be brought under the purview of section 194C, requiringdeduction of tax at source. The Target Company filed a detailed reply contesting the show causenotice. However, the Income Tax Department took the view that since the products are manufacturedas per the Target Company’s specifications and for consumption of the Target Company alone, itwould fall within the purview of section 194C and imposed an interest and penalty of Rs. 703 Lakhsvide its Order dated December 30, 2008. The Target Company was directed to pay an amount of Rs.200 Lakhs as part payment which the Target Company complied with, and is pursuing for a stay orderfor the balance demand till the disposal of appeal. The Target Company has also preferred an appealagainst the said order before the office of Commissioner of Income Tax (Appeals).
As the TDS wing of the Income-tax Department has decided the matter against the Target Companyas mentioned above in view of the provision inserted by Finance Act 2004 effective financial year2004-05, the assessing officer disallowed the entire amount of trading purchases and packing materialpurchases worth Rs. 11659 Lakhs. For the said year a demand of Rs. 6400 Lakhs was raised on theTarget Company vide Order dated December 31, 2008. The Target Company has made the paymentof Rs. 2000 Lakhs and has obtained the stay for the balance demand. The Target Company has alsofiled an appeal against the said order before the Commissioner of Income Tax.
The Target Company has sought legal opinion from its Legal Advisors. As per the legal advice, theTarget Company has a strong case on merits to succeed at appellate level. There are also legalprecedents on similar issues wherein Mumbai Tribunal has decided the matter against the Revenue.Accordingly, the Target Company expects that both the above demands would be quashed and theTarget Company would get refund of the amount paid with interest.
6.23 Pfizer India established a wholly-owned subsidiary, Duchem Laboratories Limited, on June 21, 1958, whichis mainly in the business of selling and distributing pharmaceuticals and animal health products.
Source: Pfizer Limited
6.24 Name and details of the Compliance Officer
Name: Mr. Prajeet Nair
Designation: Company Secretary
Address: Pfizer Limited, Pfizer Centre, Patel Estate, Off S.V. Road, Jogeshwari (W), Mumbai –400102
Tel: +91-22-6693 2352
Fax: +91-22-2678 5412
7. Offer Price and Financial Arrangements
7.1 Justification of Offer Price
7.1.1. Shares of the Target Company are listed on the BSE and NSE. The annualized trading turnover in the shares
of the Target Company in BSE and NSE based on trading volume during the period October 1, 2008 to
March 31, 2009 (six calendar months preceding the month in which the PA is made) is as given below:
Name of Company Duchem Laboratories Limited
Date of incorporation June 21, 1958
Nature of Business Business of selling and distributing pharmaceuticals and animal health products
Equity capital Rs. 324 lakhs
Total Income Rs. 399 lakhs
Profit after tax (PAT) Rs. 86 lakhs
Earnings Per Share (EPS) Rs. 26.61
Net Asset Value (NAV) Rs. 153 lakhs
Stock Exchange Shares Traded (October 1, 2008 to March 31, 2009)
Total Shares Listed
Trading Turnover (Annualized) (% of total Shares listed)
BSE 351,107 29,841,440 2.35%
NSE 671,358 29,841,440 4.50%
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The annualized trading turnover in the shares of the Target Company in BSE and NSE is less than 5% of the
total number of listed shares and, therefore, the shares are deemed to be infrequently traded on both the
BSE and NSE in terms of the explanation (i) of Regulation 20(5) of the Regulations.
7.1.2. The Offer Price of Rs. 675, is justified in terms of Regulation 20(5) of the Regulations in view of the
following:
7.1.2.1. Justification of Offer Price in terms of Regulation 20(5) of the Regulations:
7.1.2.2. Other Parameters: The financial parameters based on the audited financials for the year ended November
30, 2008 of the Target Company are as follows:
(1) Return on Net worth calculated as Profit after tax / Average of the Net worth at the beginning and Net worth at the
end of the year.
(2) Book value per share calculated as Net worth / Number of outstanding shares as at the end of the year.
(3) Reported Earnings Per Share calculated as net profit attributable to equity holders / weighted average number of
basic shares.
(4) Source: Capital Market Vol XXIV / 02, Mar 23 - Apr 05, 2009. Adjusted Earnings Per Share FY08 represents
reported earnings per share excluding extraordinary items as identified by Capital Market.
(5) Calculated as Offer Price divided by Adjusted FY08 EPS from Capital Market Vol XXIV / 02 Mar 23 - Apr 05, 2009.
(6) Source: Capital Market Vol XXIV / 02, Mar 23 - Apr 05, 2009 excluding outliers (Fulford (India) 7.1x and
GlaxoSmithKline Pharma 25.1x) Industry: Pharmaceuticals - Multinationals.
7.1.2.3. Mr. Vipul Thaker, Chartered Accountant, (Membership no. 049523), of Haribhakti & Company, has certifiedthe fair value of the shares of Target Company as Rs. 465 per share as on April 12, 2009, based on themethodology suggested in the judgment of Hindustan Lever Employees’ Union Vs. Respondent: HindustanLever Limited and others [(1995) 83 CompLJ30 SC].
7.1.3. The Offer Price is in full compliance and is justified in terms of Regulation 20 of the SEBI (SAST) Regulations.
7.1.4. There is no non-compete agreement entered into by the Acquirer with the Target Company.
7.1.5. As per the SEBI (SAST) Regulations, the Acquirer can revise the Offer Price / Offer Size up to 7 (seven)working days prior to the closure of this Offer (i.e. by June 18, 2009), and the revision, if any, would beannounced in the same newspapers where the PA has appeared and the revised price will be paid for allshares acquired pursuant to this Offer.
7.2 Financial Arrangements
7.2.1. The Acquirer / PAC have adequate resources to meet the financial requirements of the Offer in terms of theSEBI (SAST) Regulations and have made firm financial arrangements to meet their obligations in full underthe Offer. As per its latest annual report dated December 2008, the PAC, has consolidated cash and cashequivalents amounting to USD 2,122 million (equivalent to Rs.1,058,029 lakhs based on the exchange rate asdefined on Page 5 under “Currency of Presentation” above).
7.2.2. The total funding requirement for the Offer (assuming full acceptances) i.e. for the acquisition of up to10,078,143 equity shares held by shareholders in the Target Company at Rs. 675 per equity share is Rs.6,802,746,525 (Rupees Six Hundred Eighty Crores, Twenty Seven Lakhs, Forty Six Thousand, Five Hundredand Twenty Five Only).
7.2.3. HSBC Securities (USA) Inc., a Delaware corporation, with its main office at 452 Fifth Avenue, New York10018 USA, issued a letter dated April 14, 2009 confirming that the Acquirer / PAC have sufficient means
A. Negotiated price under the agreement as in Regulation 14(1) of the Regulations Not Applicable
B. Highest price paid by the acquirer or persons acting in concert with him for acquisitions including by way of allotment in a public or rights or preferential issue during the twenty six week period prior to the date of public announcement, referred to in clause (b) of Regulation 20(5) of the Regulations
Not Applicable
C. Other Parameters As described below
Parameter (Rs. / Share)
Return on Net worth (1) 38.63%
Book Value per Share (2) 301.96
Reported Earnings Per Share FY08 (3) 100.4
Adjusted Earnings Per Share FY08 (4) 50.5
Price Earning multiple on Adjusted FY08 EPS (based on Offer Price) (5) 13.4x
Industry Price Earning multiple (6) 10.5x
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and financial capability for the purpose of acquiring in cash up to 10,078,143 fully paid-up equity shares(being 33.77% of the issued share capital of the Target Company) at the Offer Price for a total considerationof approximately Rs. 6,802,746,525 (Rupees Six Hundred Eighty Crores, Twenty Seven Lakhs, Forty SixThousand, Five Hundred and Twenty Five Only).
HSBC Securities (USA) Inc. is registered as a broker-dealer and investment adviser with the U.S. Securitiesand Exchange Commission, and is a member of the New York Stock Exchange and the Financial IndustryRegulatory Authority. As an independent firm, locally situated in the same country as Pfizer Inc., i.e. USA,HSBC Securities (USA) Inc. was approached to conduct an independent assessment of the financial capabilityof the Acquirer and the PAC to fund their share purchase obligations in connection with the transaction.
7.2.4. B S R & Co., Chartered Accountants (Membership No.042070) located at KPMG House, Kamala MillsCompound, 448, Senapati Bapat Marg, Lower Parel, Mumbai - 400013 (Tel: +91 22 3989 6000; Fax: +91 2239836000) have vide their letter dated April 27, 2009 certified that the Acquirer / PAC have made adequatefinancial arrangements to meet the obligations under the Offer.
7.2.5. The financial arrangements for the Offer consist of the capital of the Acquirer, which is in excess of thefinancial requirements of the Offer.
7.2.6. The Acquirer and PAC have vide certificates dated April 15, 2009 and April 13, 2009 respectively, given anundertaking to the Manager to the Offer to meet their financial obligations under the Offer.
7.2.7. By way of security for performance of Acquirer’s obligations under the Regulations, an unconditional,irrevocable and on demand bank guarantee dated April 14, 2009 (“Bank Guarantee”) has been issued byHSBC Bank plc (P.O. Box 61009, 62 - 76 Park Street, London SE1 9RN), on behalf of the Acquirer in favour ofthe Manager to the Offer which is valid up to and including October 14, 2009 for an amount up to Rs.830,274,653 (Rupees Eighty Three Crores, Two Lakhs, Seventy Four Thousand, Six Hundred and FiftyThree Only) being the amount required under Regulation 28(2) of the Regulations, i.e., 25% of the first Rs.100 crores and 10% thereafter. In the event the Offer process is delayed beyond the schedule indicated inthis Letter of Offer, the Acquire, PAC and the Manager to the Offer shall as may be required under Regulation28(6) of the Regulations ensure that the Bank Guarantee shall be valid at least for a period commencing fromthe date of the Public Announcement until twenty days after the Offer closing date.
7.2.8. Further, the Acquirer has created an Escrow Account named “Pfizer Limited Open Offer Escrow Account”(“Escrow Account – Cash”) with The Hongkong and Shanghai Banking Corporation Limited (Shiv Building,Plot No. 139-140 B, Western Express Highway, Sahar Road Junction, Vile Parle (East), Mumbai – 400 057),and has deposited a sum of Rs. 68,027,466 (Rupees Six Crores, Eighty Lakh, Twenty Seven Thousand, FourHundred and Sixty Six Only) in the said Escrow Account – Cash. The amount deposited in Escrow Account– Cash being the amount required under Regulation 28(10) of the Regulations, i.e., at least 1% of the totalconsideration. The Bank Guarantee and Escrow Account – Cash are together referred to as “EscrowAccounts”.
7.2.9. HSCI has been duly authorized to realize the value of the aforesaid Escrow Accounts in terms of the SEBI(SAST) Regulations.
7.2.10. HSCI is satisfied with the ability of the Acquirer and PAC to implement the Offer in accordance with theSEBI (SAST) Regulations as firm financial arrangements are in place to fulfill the obligations under theRegulations.
8. Terms and Conditions of the Offer
8.1 The Letter of Offer, together with a Form of Acceptance-cum-Acknowledgement, will be mailed on or beforeJune 2, 2009 to all shareholders of the Target Company whose names appear in the Register of Members ofthe Target Company and the beneficial owners of the shares, whose names appear on the beneficial recordsof the respective depositories, in each case at the close of business hours on May 8, 2009 (the “SpecifiedDate”).
8.2 The Offer shall open on June 15, 2009 (the “Offer Opening Date”) and will remain open until July 4, 2009(the “Offer Closing Date”).
8.3 The acceptance of the Offer is entirely at the discretion of the shareholders of the Target Company. TheAcquirer will not be responsible in any manner for any loss of equity share certificate(s) and offer acceptancedocuments during transit and the shareholders of the Target Company are advised to adequately safeguardtheir interest in this regard.
8.4 Shares that are subject to any charge, lien or encumbrance are liable to be rejected. Applications in respectof shares of the Target Company that are subject matter of litigation wherein the shareholders of the TargetCompany may be prohibited from transferring the shares during the pendency of the said litigation areliable to be rejected if the directions / orders regarding these shares are not received together with theshares tendered under the Offer. The Letter of Offer in some of these cases, wherever possible, will beforwarded to the concerned statutory authorities for further action by such authorities. The securitiestransaction tax will not be applicable to the shares accepted in the Offer.
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8.5 Shareholders having their beneficiary account in CDSL will, in addition, have to use an inter-depositorydelivery instruction slip.
8.6 All owners (registered or unregistered) of shares of the Target Company are eligible to participate in theOffer anytime before the closure of the Offer.
8.7 Locked-in-shares: There are no locked in shares in the Target Company.
9. Statutory Approvals
9.1 On May 5, 2009, the Acquirer had filed an application with the RBI seeking its approval for acquisition ofshares in the Offer from residents of India, non-resident Indians and erstwhile overseas corporate bodies,as may be required, under the Foreign Exchange Management Act, 1999 and the regulations thereunder.Besides the above, no other approvals are required to acquire shares tendered pursuant to this Offer.
9.2 As of the date of the PA, no other statutory approvals are required to implement the Offer or acquire theshares tendered pursuant to the Offer, other than the approval mentioned above. If any other statutoryapprovals become applicable prior to completion of the Offer, the Offer would be subject to such statutoryapprovals. The Acquirer / PAC will have the right not to proceed with the Offer in the event any of thestatutory approvals that are required are refused in terms of Regulation 27 of the SEBI (SAST) Regulations.Subject to the receipt of statutory and other approvals, the Acquirer / PAC shall complete all proceduresrelating to the Offer, including dispatch of consideration or provide instructions to the clearing system forpayment of consideration through the Electronic Clearing service (“ECS”), Direct Credit, Real Time GrossSettlement (“RTGS”), National Electronic Fund Transfer (“NEFT”) (together, “Electronic Mode”) on orbefore July 17, 2009 to those shareholders whose share certificates and/or other documents are found validand in order and are approved for acquisition by the Acquirer / PAC.
9.3 In case of delay due to the non-receipt of statutory approvals, as per Regulation 22(12) of the Regulations,SEBI may, if satisfied that the non-receipt of approvals was not due to the willful default or negligence of theAcquirer / PAC or failure of the Acquirer / PAC to diligently pursue the applications for such approvals,grant an extension for the purpose of completion of this Offer, subject to the Acquirer / PAC agreeing to payto the shareholders interest as may be specified by SEBI for any delay in dispatch of consideration orproviding instructions to the clearing system for payment of consideration through Electronic Mode beyondJuly 17, 2009.
9.4 However, if the delay occurs on account of the willful default or negligence of the Acquirer / PAC inobtaining the requisite approval(s), the amount held in the Escrow accounts shall be subject to forfeitureand be dealt with in the manner provided in Regulation 28(12) of the Regulations.
9.5 The Acquirer / PAC do not require any approvals from financial institutions or banks for the Offer.
10. Procedure for Acceptance and Settlement
10.1 Procedure for accepting the Offer by eligible persons, unregistered shareholders, owners of shares whohave sent them for transfer or those who did not receive the Letter of Offer.
10.2 Shareholders of the Target Company, who wish to accept this Offer are free to offer their shareholding, inwhole or in part, and should forward the under-mentioned documents to the Registrar to the Offer at theiroffice at Karvy Computershare Private Limited, Unit : Pfizer Limited – open offer, (Plot No 17-24, VithalraoNagar, Madhapur, Hyderabad – 500 081, Tel: (91) - 40-23420815-23, Fax : (91) - 40-23431551, E-mail:[email protected], Contact Person: Mr. M. Murali Krishna) (“Registrar”) either by hand delivery onweekdays or by Registered Post, on or before the closure of the Offer, i.e., no later than July 4, 2009 or at anyof the collection centres mentioned in point no. 10.11, so as to reach the Registrar to the Offer / CollectionCentres on or before the close of business hours, i.e., no later than 3:00 pm on July 4, 2009 in accordancewith the instructions specified in this Letter of Offer and in the Form of Acceptance. Shareholders areadvised to ensure that the Form of Acceptance and other documents are complete in all respect; otherwise,the same is liable to be rejected. In the case of dematerialized shares, the shareholders are advised to ensurethat their shares are credited in favour of the special depository account before the closure of the Offer. TheForm of Acceptance of such dematerialized shares, not credited in favour of the special depository accountbefore the closure of the Offer, will be rejected.
10.3 For shares held in physical form:
a) Shareholders of the Target Company who are holding shares in physical form and who wish totender their shares will be required to send the Form of Acceptance-cum-Acknowledgement, originalshare certificate(s) and transfer deed(s) duly signed to the Registrar to the Offer, Karvy ComputersharePrivate Limited, Unit : Pfizer Limited – open offer, (Plot No 17-24, Vithalrao Nagar, Madhapur, Hyderabad– 500 081, Tel: (91) - 40-23420815-23, Fax : (91) - 40-23431551, E-mail: [email protected], ContactPerson: Mr. M. Murali Krishna) (“Registrar”), either by hand delivery on weekdays or by RegisteredPost, so as to reach the Registrar on or before the close of the Offer, i.e., no later than July 4, 2009 (by3:00 pm) in accordance with the instructions specified in this Letter of Offer and in the Form ofAcceptance-cum-Acknowledgement. They can also tender their shares by hand delivery at any of
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the collection centres mentioned in point no. 10.11.
b) Unregistered owners can send their application in writing to the Registrar, on plain paper stating thename, address, number of shares held, number of shares tendered, distinctive numbers, folio number,together with the original share certificate(s), valid transfer deeds and the original contract notesissued by the broker through whom they acquired their shares and valid share transfer forms asreceived from the market. No indemnity is required from the unregistered owners. Unregisteredowners should not sign the transfer deed and the transfer deed should be valid for transfer.
10.4 For shares held in dematerialized form
a) Beneficial owners (holders of shares in dematerialized form) who wish to tender their shares of theTarget Company will be required to send their Form of Acceptance-cum-Acknowledgement, alongwith the photocopy of the delivery instruction in “Off-market” mode or counterfoil of the deliveryinstructions in “Off-market” mode, duly acknowledged by the Depository Participant (“DP”), infavour of the special depository account KCPL Escrow Account – PL Open Offer. For each deliveryinstruction, the beneficial owner should submit a separate Form of Acceptance. The credit for thedelivered shares should be received in the special depository account on or before the close of theOffer, i.e., no later than July 4, 2009 (by 3:00 pm). The above-mentioned documents needs to be sentto the Registrar to the offer, Karvy Computershare Private Limited, Unit : Pfizer Limited – open offer,(Plot No 17-24, Vithalrao Nagar, Madhapur, Hyderabad – 500 081, Tel: (91) - 40-23420815-23, Fax : (91)- 40-23431551, E-mail: [email protected], Contact Person: Mr. M. Murali Krishna), either by handdelivery on weekdays or by Registered Post acknowledgement due, so as to reach the Registrar onor before the close of the Offer, i.e., no later than July 4, 2009 (by 3:00 pm) in accordance with theinstructions specified in this Letter of Offer and in the Form of Acceptance-cum-Acknowledgement.They can also tender their shares by hand delivery at any of the collection centres mentioned inpoint no 10.11.
10.5 The Registrar to the Offer has opened a special depository account called “KCPL Escrow Account - PLOpen Offer” with Karvy Stock Broking Ltd at National Securities Depository Limited (“NSDL”). The DP IDis IN302470 and the Client ID is 40235580. Shareholders of the Target Company having their beneficiaryaccount in CDSL shall use the inter-depository delivery instruction slip for the purpose of crediting theirshares in favor of the special depository account with NSDL.
10.6 Shareholders who have sent their shares for dematerialization need to ensure that the process of gettingtheir shares dematerialized is completed in time for the credit in the special depository account to bereceived on or before the closing date of the Offer, i.e., no later than July 4, 2009 (by 3.00 p.m.), or else theirapplication will be rejected.
10.7 Shares and other relevant documents should not be sent to the Acquirer / PAC / Target Company / Managerto the Offer.
10.8 In case of non-receipt of the Letter of Offer, the eligible persons may (i) download the Letter of Offer andForm of Acceptance from the SEBI website, (http://www.sebi.gov.in) (ii) obtain a copy of the same bywriting to the Registrar to the Offer, or (iii) may send their consent to the Registrar, on plain paper stating thename, address, number of shares held, distinctive numbers, folio number, number of shares offered, alongwith documents as mentioned above, so as to reach the Registrar on or before the close of the Offer, i.e., nolater than July 4, 2009, or in case of beneficial owners, they may send the application in writing to theRegistrar, on plain paper stating the name, address, number of shares held, number of shares offered, DPname, DP ID, beneficiary account number and a photocopy of the delivery instruction in “Off-market” modeor counterfoil of the delivery instruction in “Off-market” mode, duly acknowledged by the DP, in favour ofthe special depository account, KCPL Escrow Account – PL Open Offer”, so as to reach the Registrar, onor before the close of the Offer, i.e., no later than July 4, 2009 (by 3.00 p.m.). Unregistered owners should notsign the transfer deed and the transfer deed should be valid for transfer.
10.9 If the aggregate of the valid responses to the Offer exceeds the Offer size of 10,078,143 equity shares of theTarget Company (representing 33.77% of the Voting Capital), then the Acquirer / PAC shall accept the validapplications received on a proportionate basis in accordance with Regulation 21(6) of the SEBI (SAST)Regulations. The equity shares of the Target Company are compulsorily traded in dematerialized form,hence the minimum acceptance will be one Share.
10.10 While tendering the shares under the Offer, Non Resident Indians (“NRIs”) / Overseas Corporate Bodies(“OCBs”) / foreign shareholders will be required to submit, along with the Form of Acceptance cumAcknowledgement, the previous RBI approvals (specific or general) that they would have been required tosubmit to acquire the shares of the Target Company. In case the previous RBI approvals are not submitted,the Acquirer reserves the right to reject such shares tendered.
10.11 Tax to be deducted at source
As per the provisions of section 195(1) of the Income Tax Act, 1961 (“Income Tax Act”) any personresponsible for paying to a non-resident any sum chargeable to tax is required to deduct tax at source
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(including surcharge and education cess as applicable). The consideration received by the shareholdersfor shares accepted in the Offer may be chargeable to tax in India either as capital gains under section 45 ofthe Income Tax Act or as business profits, as the case may be, depending on the facts and circumstancesof the case. The Acquirer will need to deduct tax at source (including surcharge and education cess) at theapplicable tax rate as per the Income Tax Act. Please note that the securities transaction tax will not beapplicable on shares accepted in this Offer. Shareholders may please note the following:
a) While tendering their shares under the Offer, NRIs / OCBs / other non-resident shareholders will berequired to submit a No Objection Certificate (“NOC”) or Tax Clearance Certificate (“TCC”) orCertificate for Deduction of Tax at Lower Rate issued by the income tax authorities under the IncomeTax Act, along with the Form of Acceptance cum Acknowledgement, indicating the amount of tax tobe deducted by the Acquirer before remitting the consideration, failing which the Acquirer willarrange to deduct tax at the maximum marginal rate, as may be applicable, to the relevant category towhich the shareholder belongs under the Income Tax Act, on the entire consideration amountpayable to such shareholder.
b) As per the provisions of Section 196D(2) of the Income Tax Act, no deduction of tax at source will bemade from any income by way of capital gains arising from the transfer of securities referred to inSection 115AD of the Income Tax Act to a Foreign Institutional Investor as defined in Section 115ADof the Income Tax Act. However, the interest payment for delay in payment of consideration, if any,will not be governed by this provision.
c) For the purpose of determining as to whether the capital gains are short-term or long-term in nature,the Acquirer shall take actions based on the certification submitted along with the Form of Acceptancecum Acknowledgment by the shareholders. NRI / OCB / other non-resident shareholders shouldcertify their residential status in the Form of Acceptance cum Acknowledgment along with the factwhether the shares are held by them on investment / capital account or on trade account andwhether the investment are held as long-term capital asset or short-term capital asset (with appropriateevidences). In case the Acquirer is of the view that the information / documents provided by theshareholder is inaccurate or incomplete or insufficient, then tax may be deducted at source at theapplicable maximum marginal rate.
d) For interest payments, if any, NRIs / OCBs / other non-resident shareholders will be required tosubmit a NOC or TCC or Certificate for Deduction of Tax at Lower Rate from the income tax authoritiesunder the Income Tax Act, along with the Form of Acceptance cum Acknowledgement, indicating theamount of tax to be deducted by Acquirer / PAC before remitting the consideration, failing whichAcquirer / PAC will arrange to deduct tax at the maximum marginal rate as may be applicable to therelevant category to which the shareholder belongs under the Income Tax Act, on the entireconsideration amount payable to such shareholder.
e) In case of resident shareholders, unless otherwise specified under the Income Tax Act, tax will bededucted only on the interest component exceeding Rs. 5,000 at the applicable current prevailingrates. If the resident shareholder requires that no tax is to be deducted or tax is to be deducted at alower rate than the prescribed rate, such shareholders will be required to submit a NOC or TCC orCertificate for Deduction of Tax at Lower Rate from the income tax authorities under the Income TaxAct indicating the amount of tax to be deducted by Acquirer / PAC or a self-declaration in form 15Gof Form 15H as may be applicable, along with the Form of Acceptance cum Acknowledgement.Resident shareholders eligible to receive interest component exceeding Rs. 5,000 would be requiredto submit their Permanent Account Number for income tax purposes. Clauses relating to payment ofinterest will become applicable only if the Acquirer / PAC become liable to pay interest for delay inrelease of purchase consideration.
f) No tax will be deducted at source for any other category of shareholders who are residents in India.
Shareholders are advised to consult their tax advisors in regard to the tax consequences of tenderingtheir shares in the Offer and the appropriate course of action that they should take. The Acquirer /PAC, the Manager to the Offer and the Registrar to the Offer do not accept any responsibility for theaccuracy or otherwise of such advice.
10.12 In addition to the above-mentioned address of the Registrar, the shareholders of the Target Company whowish to accept the Offer can also deliver the Form of Acceptance-cum-Acknowledgement, along with all ofthe relevant documents, to any of the collection centers specified below in accordance with the procedureas set out in this Letter of Offer on or before the date of closure of the Offer, i.e., no later than July 4, 2009.All of the centers of the Registrar mentioned herein below will be open as follows: (Monday to Friday - 10:00am to 3:00 pm and Saturday - 10:00 am to 1:00 pm). The centres will be closed on Sundays and PublicHolidays.
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10.13 Pursuant to Regulation 22(5A) of the SEBI (SAST) Regulations, shareholders of the Target Companydesirous of withdrawing the acceptance tendered by them in the Offer may do so up to three (3) workingdays prior to the closing date of the Offer. The withdrawal option can be exercised by submitting thedocuments as per the instructions below, so as to reach the Registrar at any of the collection centersmentioned above as per the mode of delivery indicated therein on or before July 1, 2009.
a) The withdrawal option can be exercised by submitting the Form of Withdrawal, which is enclosedwith the Letter of Offer.
b) In case of non-receipt of the Form of Withdrawal, the withdrawal option can be exercised by makinga plain paper application to the Registrar, along with the following details:
• In case of physical shares: name, address, distinctive numbers, folio number, number ofshares tendered; and
• In case of dematerialized shares: name, address, number of shares offered, DP name, DP ID,beneficiary account number and a photocopy of the delivery instruction in “Off-market”mode or counterfoil of the delivery instruction in “Off-market” mode, duly acknowledged bythe DP, in favor of the special depository account
# Collection
Centre
Address of Collection
Centres Contact Person Phone No. Fax
Mode of
delivery
1. Mumbai
Karvy Computershare. Pvt. Ltd., 26-30, Fort Foundation Bldg., Maharashtra Chamber of Commerce Lane, Opp. MSC Bank, Fort, Mumbai – 400 023
Ms. Varija Salian
022-66382666
022-66331135
Hand Delivery
2. New Delhi
Karvy Computershare. Pvt. Ltd.,105-108, Arunachal Bldg., 19, Barakhamba Road, New Delhi - 110 001
Mr. Rakesh Kr Jamwal / Vinod
Singh Negi 011-43509200 011-41036370
Hand Delivery
3. Ahmedabad
Karvy Computershare. Pvt. Ltd., 201-203, Shail, Opp: Madhusudhan House, Behind Girish Cold Drinks, Off C G Road, Ahmedabad - 380 006
Mr.Aditya Gupta/ Robert Joeboy
079-26400528
079-26565551
Hand Delivery
4. Chennai
Karvy Computershare. Pvt. Ltd., No. 33 / 1, Venkatraman Street, T.Nagar, Chennai – 600017
Mr. Gunashekhar
044 – 28151793 /1794
044-28153181
Hand Delivery
5. Hyderabad
Karvy Computershare. Pvt. Ltd., Plot No 17-24, Vithalrao Nagar, Madhapur, Hyderabad - 500 081
Ms. Rinki Sareen
040-23420818- 23
040-23431551
Hand Delivery / Registered
Post
6. Kolkata
Karvy Computershare. Pvt. Ltd., 49, Jatin Das Road, Nr.Deshpriya Park, Kolkata - 700 029
Mr. Sujit Kundu/ Mr. Debnath
033-24644891 033-24644866
Hand Delivery
7. Bengaluru
Karvy Computershare. Pvt. Ltd., No.59, Skanda, Putana Road, Basavanagudi Bengaluru - 560 004
Mr. Kumaraswamy
080- 26621192
080-26621169 Hand
Delivery
8. Vadodara
Karvy Computer Share, Piccadilly, Office No. 5, Jabalpure, Vadodara – 390005
Mr. Rahul Patel 0265-6640870/
871 N / A
Hand Delivery
9. Pune
Karvy Computershare Pvt Ltd., Shrinath Plaza, C wing, Office No.58 & 59,3rd Floor, Dyaneshwar Paduka Chowk,Slno.184/4.Off-FC Road. Pune - 411004
Ms. Sandhya 020-25532078/
783 N / A
Hand Delivery
10. Jaipur
Karvy Computershare Pvt. Ltd., S-16/A, Landmark. Opp: Jaiclub Mahaveer Marg C-Scheme, Jaipur – 302001
Mr .Vinod 0141-2375099 N / A Hand
Delivery
63
c) Shareholders can also download the Form of Withdrawal placed on the SEBI website www.sebi.gov.inand send in their withdrawal by filling the same.
d) The withdrawal of shares will be available only for the share certificates/ shares that have beenreceived by the Registrar / special depository account. The intimation of returned shares to theshareholders will be at the address, through Registered Post, as per the records of the TargetCompany / Depository as the case may be. In case of partial withdrawal of shares tendered inphysical form, if the original share certificates are required to be split, the same will be returned onreceipt of share certificates from Target Company. Partial withdrawal of tendered shares can be doneonly by the registered shareholders / beneficial owners. In the case of partial withdrawal, the earlierForm of Acceptance will stand revised to that effect. Shareholders holding shares in dematerializedform are requested to issue the necessary standing instruction for receipt of the credit in their DPaccount.
10.14 Payment of consideration will be made through Electronic Mode as detailed below or by way of a crossedaccount payee cheque / demand draft / pay order and sent by Registered Post incase of payment of a valuein excess of Rs.1,500/- and ordinary post incase of payment of a value less than Rs.1,500/-, to thoseshareholders/unregistered owners and at their own risk, whose shares/ share certificates and otherdocuments are found in order and accepted by Acquirer / PAC. In case of joint registered holders, cheques/ demand drafts will be drawn in the name of the sole / first named holder / unregistered owner and will besent to him / her. In case of unregistered owners of shares, payment will be made in the name of the personstated in the contract note. It is desirable that shareholders provide bank details in the Form of Acceptance–cum-Acknowledgment, so that the same can be incorporated in the cheque / demand draft.
10.14.1. Payment of Consideration through Electronic Mode:
Credit for the consideration will be paid to the shareholders who have tendered shares in the Offer byElectronic Mode or crossed account payee cheques / pay orders/ demand drafts.
The payment of consideration, if any, would be done through various modes as given hereunder:
• ECS: Payment of consideration would be done through ECS for applicants having an account at thefollowing 15 cities which have ECS centres managed by the Reserve Bank of India:
• Ahmedabad • Kanpur
• Bangalore • Kolkata
• Bhubneshwar • Mumbai
• Chandigarh • Nagpur
• Chennai • New Delhi
• Guwahati • Patna
• Hyderabad • Thiruvananthapuram
• Jaipur
This mode of payment of consideration would be subject to availability of complete bank account details inthe Form of Acceptance-cum-Acknowledgement.
• Direct Credit: Applicants having bank accounts with the same bank through which paymentconsideration shall be made shall also be eligible to receive consideration through direct credit intheir respective bank accounts as mentioned in the Form of Acceptance-cum-Acknowledgement.
• RTGS: Applicants having a bank account at any of the above mentioned centres and whose paymentconsideration exceeds Rs. 1 lakh, have the option to receive refund through RTGS. Such eligibleapplicants who indicate their preference to receive consideration through RTGS are required toprovide the Indian Financial System Code (“IFSC”) code in the Form of Acceptance-cum-Acknowledgement. In the event the same is not provided, payment consideration shall be madethrough other electronic modes or by cheques, pay orders or demand drafts payable.
• NEFT: Payment of consideration shall be undertaken through NEFT wherever the shareholders bankhas been assigned the IFSC, which can be linked to a Magnetic Ink Character Recognition (“MICR”),if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI ason a date immediately prior to the date of payment of consideration, duly mapped with MICRnumbers. Wherever the shareholder has registered their nine digit MICR number and their bankaccount number while opening and operating the demat account, the same will be duly mapped withthe IFSC Code of that particular bank branch and the payment of consideration will be made to theapplicants through this method. The process flow in respect of consideration by way of NEFT is atan evolving stage and hence use of NEFT is subject to operational feasibility, cost and processefficiency.
• For all other applicants, including those applicants whose payment consideration is not credited byECS / Direct credit due to technical errors or incomplete / incorrect bank account details, payment
64
consideration will be dispatched by registered post incase of payment of a value in excess ofRs.1,500/- or by ordinary post incase of payment of a value less than Rs.1,500/-, at the shareholder’ssole risk. Such payment consideration will be made by cheques, pay orders or demand drafts payableat par at places where the address of the shareholder is registered.
In case payment consideration is rejected through the ECS / Direct credit facility, the Registrar to theOffer would endeavor to dispatch the payment consideration within three (3) working days of suchrejection.
The bank account details for ECS / Direct Credit / RTGS / NEFT will be directly taken from thedepositories’ database or from the details as mentioned by the shareholders in the Form of Acceptance-cum-Acknowledgement.
10.15 Unaccepted share certificates, transfer forms and other documents, if any, will be returned by RegisteredPost / speed post at the shareholder’s / unregistered owner’s sole risk to the sole / first shareholder.Unaccepted shares held in dematerialized form will be credited back to the beneficial owners’ depositoryaccount with the respective depository participant as per the details furnished by the beneficial owner inthe Form of Acceptance-cum-Acknowledgement.
10.16 The Registrar will hold in trust the shares / share certificates, shares held in credit of the special depositoryaccount, Form of Acceptance-cum-Acknowledgement, if any, and the transfer form(s) on behalf of theshareholders of the Target Company who have accepted the Offer, until the cheques / drafts for theconsideration or the unaccepted shares / share certificates are dispatched / returned.
10.17 The marketable lot of the shares of the Target Company is one equity share.
11. Documents for Inspection
11.1 The following documents are regarded as material documents and are available for inspection at the officeof HSBC Securities and Capital Market India Private Limited, 52/60 M.G.Road, Fort, Mumbai - 400 001 from10.30 am to 3.00 pm on any day, except Saturdays, Sundays, and Public / Bank Holidays until the OfferClosing Date
a) Deed of Incorporation of the Acquirer and an extract from the trade register of the Chamber ofCommerce for Rotterdam to the Acquirer
b) Letter from B S R & Co. dated April 27, 2009, certifying that the Acquirer / PAC have made adequatefinancial arrangements to meet the obligations under the Offer
c) Audited annual reports of the Target Company for the years ending November 30, 2006, 2007, 2008
d) Audited annual reports of the PAC for the years ending December 31, 2006, 2007 and 2008
e) Copy of the Bank Guarantee issued by HSBC Bank plc (P.O. Box 61009, 62 - 76 Park Street, LondonSE1 9RN) dated April 14, 2009 for Rs. 830,274,653
f) Copy of the letter dated April 13, 2009 from The Hongkong and Shanghai Banking CorporationLimited confirming the amount of Rupees 68,027,466 kept in the Escrow account
g) Copy of the Public Announcement dated April 16, 2009
h) Copy of the letter dated May 20, 2009 from SEBI in terms of provision to Regulation 18(2) of theRegulations
i) Copy of certificate from the Chartered Accountant, Mr. Vipul Thaker, dated April 12, 2009 certifyingthe Offer Price justification
j) Copies of the approvals received from RBI
k) Copy of the agreement between the Registrar and HSCI as the Depository Participant for openingthe Depository Escrow Account for the purpose of the Offer
l) Copy of the mandate letter between the Acquirer and the Registrar for the purpose of the Offer
12. Declaration by the Acquirer and the PAC
12.1 The Acquirer and the PAC accept full responsibility for the information contained in this Letter of Offer.Each of the Acquirer and the PAC is jointly and severally liable for ensuring compliance with the Regulations.
The persons signing the Letter of Offer are duly and legally authorized by the Acquirer and PAC to sign theLetter of Offer.
Enclosed:
1. Form of Acceptance cum Acknowledgement
2. Form of Withdrawal
3. Transfer deed for shareholders holding shares in physical form
Camilla Uden Richard Passov
Place: New York, New York Place: New York, New York
Date: May 28, 2009 Date: May 28, 2009
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
FORM OF ACCEPTANCE-CUM-ACKNOWLEDGEMENT
Pfizer Limited Open Offer
From
Folio No./DP ID No./Client ID No.:
Address :
Tel no:
Fax no:
Email ID:
To,
The Acquirer
C/o Karvy Computershare Private Limited
Unit: Pfizer Limited – Open Offer
Plot No 17-24, Vithalrao Nagar
Madhapur, Hyderabad – 500 081
Dear Sir,
Subject : Open Offer by Pfizer Investments Netherlands B.V. (“Acquirer”) and Pfizer Inc (“PAC”) to the equity shareholders
of Pfizer Limited (“Target Company”) to acquire 10,078,143 equity shares (“Shares”), pursuant to the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Open Offer”)
I / We refer to the Letter of Offer dated May 28, 2009 for acquiring the equity shares held by me/us in Pfizer Limited. I / We, the
undersigned have read the Letter of offer and understood their contents including the terms and conditions as mentioned therein.
SHARES IN DEMATERIALIZED FORM
I / We, holding Shares in the dematerialised form, accept the Offer and enclose the photocopy of the Delivery Instruction in “Off-market”
mode, duly acknowledged by the Depository Participant (“DP”) in respect of my shares as detailed below:
DP Name DP ID Client ID Beneficiary Name No. of Shares
Depository Name National Securities Depository Limited
DP Name Karvy Stock Broking Ltd
DP ID Number IN302470
Client ID 40235580.
Beneficiary Account Name KCPL Escrow Account - PL Open Offer
ISIN INE182A01018
Market Off market
OFFER OPENS ON : Monday, June15, 2009
OFFER CLOSES ON : Saturday, July 4, 2009
Please tick () shareholders status (For taxation/TDS purpose)
Person resident in India who is an individual/HUF/Association of Persons,having anaggregate income upto Rs. 10,00,000
Person resident in India who is an individual/HUF/Association of Persons,having an aggregate income exceeding Rs. 10,00,000
Person resident in India who is a partnership firm
Person resident in India who is a domestic company
Person resident outside India who is a company
Person resident outside India who is an individual/association of personshaving an aggregate income upto Rs. 10,00,000
Person resident outside India who is an individual/association of personshaving an aggregate income exceeding Rs. 10,00,000
Domestic venture capital fund and mutual fund which is a domestic company
International venture capital fund which is a domestic company
International venture capital fund which is a foreign company
Person resident outside India which is a partnership firm
Non-Resident Indian(s)
Foreign Institutional Investors
Multilateral Agency
Bilateral Development Financial Institution
Financial Institutions
Banks
Insurance Company
Others (Specify )
TEAR ALONG THIS LINE
ACKNOWLEDGEMENT SLIP I
Pfizer Limited Open Offer
Received from Mr./Ms./ M/s. residing at
a Form of Acceptance cum Acknowledgement for shares along with :
Copy of delivery instruction slip from DP ID Client ID
Share Certificate(s) transfer deed(s) under folio number (s) for accepting the Offer made
by the Acquirer
Stamp of Collection Centre: Signature of Official: Date of Receipt:
I /We note and understand that the Shares would lie in the special depository account until the time the Acquirer dispatches the purchase
consideration as mentioned in the Letter of Offer. I/We also note and understand that the Acquirer will pay the purchase consideration
only after verification of the documents and signatures.
SHARES IN PHYSICAL FORM
I / We, accept the Offer and enclose the original share certificate (s) and duly signed transfer deed(s) in respect of my/our Shares as detailed
below:
Sr. No. Ledger Folio No(s) Certificate No(s) Distinctive No(s) No. of shares
From To
1.
2.
3.
4.
5.
(In case the space provided in inadequate, please attach a separate sheet with details)
Total No. of Equity Shares
I/We note and understand that the Registrar to the Offer will hold the original share certificate(s) and valid share transfer deed in trust for
me/us until the time the Acquirer dispatches the purchase consideration as mentioned in the Letter of Offer. I / We also note and
understand that the Acquirer will pay the purchase consideration only after verification of the documents and signatures.
For NRIs / OCBs / FIIs / Foreign Shareholders:
I / We have enclosed the following documents:
No Objection Certificate/Tax Clearance Certificate/ Certificate for Deduction of Tax at Lower Rate from Income Tax
Authorities.
RBI approvals for acquiring Shares of Pfizer Limited hereby tendered in the Offer.
Copy of Permanent Account Number / PAN Card
I / We, confirm that the tax deduction on account of equity shares of Pfizer Limited held by me / us is to be
deducted on (tick whichever is applicable):
• Long-term capital gains
• Short-term capital gains
• Trade Account
In order to avail the benefit of lower rate of tax deduction under the applicable Double Taxation Avoidance Agreement (“DTAA”), if any,
kindly enclose a certificate stating that you are a tax resident of your country of incorporation in terms of the DTAA entered into between
India and your country of residence
For FII Shareholders:
I / We, confirm that the equity shares of Pfizer Limited are held by me / us on (select whichever is applicable):
• Investment / Capital Account
• Trade Account
In case the shares are held on trade account, kindly enclose a certificate stating that you are a tax resident of your country of residence/
incorporation and that you do not have a permanent establishment in India in terms of the DTAA entered into between India and your
country of residence. Where the tax is to be deducted on account of long-term capital gains, the shareholders should submit a certificatefrom a Chartered Accountant (along with proof such as demat account statement) certifying that the Shares have been held for more thanone year. In order to claim the benefit of computation of tax liability on the net capital gains (i.e. after reducing the cost of acquisition ofshares), the shareholder should obtain a tax clearance certificate from the appropriate income tax authorities certifying the net incomechargeable to capital gains tax. In the absence of the above tax would be deducted at the maximum marginal rate on the entire considerationpaid to the shareholders.
For the purpose of determining as to whether the capital gains are short-term or long-term in nature, the Acquirer shall take actions basedon the certification submitted along with this Form of Acceptance cum Acknowledgment by the shareholders. NRI / OCB / other non-resident shareholders should provide certification as to their residential status along with this Form of Acceptance cum Acknowledgment.Declarations in this Form of Acceptance cum Acknowledgment as to the fact whether the shares are held, by the NRI / OCB / other non-resident shareholders, on investment / capital account or on trade account and whether the Shares are held as long-term capital asset orshort-term capital asset should be accompanied with appropriate evidences. In case the Acquirer is of the view that the information /documents provided by the shareholder is inaccurate or incomplete or insufficient, then tax may be deducted at source at the applicablemaximum marginal rate on the entire consideration paid to the shareholders.
Bank Details
So as to avoid fraudulent encashment in transit, the shareholder(s) holding Shares in physical form should provide details of bank accountof the first/sole shareholder and the consideration cheque or demand draft will be drawn accordingly. For Shares that are tendered in dematform, the Bank account as obtained from the beneficiary download to be provided by the depositories will be considered and the warrantswill be issued with the said Bank particulars, and not any details provided herein.
Name of the Bank Branch
Account Number Current/Savings/
(Others: please specify)
9 Digit MICR Code IFSC Code
Details for RTGS / NEFT
In addition to the above Bank Details, Shareholders opting for the RTGS / NEFT option should provide the following details:
Payment through RTGS (Yes / No):
Payment through NEFT (Yes / No):
IFSC Code of the Branch where account is maintained:
I/We confirm that the equity shares of Pfizer Limited, which are being tendered herewith by me/us under this Offer, are free from liens,charges and encumbrances of any kind whatsoever. I/We authorize the Acquirer to accept the Shares so offered which it may decide toaccept in consultation with the Manager to the Offer and in terms of the Letter of Offer and I/We further authorize the Acquirer to returnto me/us, Share certificates(s) / Shares in respect of which the Offer is not found valid/not accepted without specifying the reasons thereof.
I/We authorize the Acquirer and the Registrar to the Offer and the Manager to the Offer to send by Registered Post/UPC as may beapplicable at my/our risk, the draft/cheque/warrant, in full and final settlement of the amount due to me/us and/or other documents orpapers or correspondence to the sole/first holder at the address mentioned below. In case I have tendered my Shares in dematerialised form,I authorize Acquirer and the Registrar to the Offer and the Manager to the Offer to use my details regarding my address and bank accountdetails as obtained from my depository participant for the purpose of mailing the aforementioned instruments.
I/we authorize the Acquirer to accept the Shares so offered or such lesser number of Shares that it may decide to accept in terms of theLetter of Offer and I/We authorize the Acquirer to split / consolidate the share certificates comprising the Shares that are not acquired tobe returned to me/us and for the aforesaid purposes the Acquirer is hereby authorized to do all such things and execute such documentsas may be found necessary and expedient for the purpose.
Yours faithfully,Signed and Delivered
Full Name(s) of the shareholders Signature
First/Sole Holder
Joint Holder 1
Joint Holder 2
Joint Holder 3
Address of First/Sole Shareholder
Place: ————————————————————-
Date: ————————————————————-
All future correspondence, if any, should be addressed to the Registrar to the Offer at the following address quoting your
reference Folio No. / DP ID / Client ID
Karvy Computershare Private LimitedUnit: Pfizer Limited – Open Offer
Plot No 17-24, Vithalrao Nagar
Madhapur, Hyderabad – 500 081
Tel: (91) - 40-23420815-23, Fax: (91) - 40-23431551
E-mail: [email protected], Contact Person: Mr. M. Murali Krishna
FORM OF WITHDRAWAL
Pfizer Limited Open Offer
From
Folio No./DP ID No./Client ID No.:
Address :
Tel no:
Fax no :
Email ID :
The Acquirer
C/o Karvy Computershare Private Limited
Unit: Pfizer Limited – Open Offer
Plot No 17-24, Vithalrao Nagar
Madhapur, Hyderabad – 500 081
Dear Sir,
Sub: Open Offer by Pfizer Investments Netherlands B.V. (“Acquirer”) and Pfizer Inc (“PAC”) to the equity shareholders of
Pfizer Limited (“Target Company”) to acquire 10,078,143 equity shares (“Shares”), pursuant to SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997 (“Open Offer”)
I / We refer to the Letter of Offer dated May 28, 2009 for acquiring the equity shares held by me / us in Pfizer Limited. I / We, the
undersigned have read the Letter of offer and understood their contents including the terms and conditions as mentioned therein.
I / We hereby consent unconditionally and irrevocable to withdraw my/our Shares from the Offer and I/we further authorize the Acquirer
to return to me / us, the tendered Share Certificate(s) / Share (s) at my / our sole risk.
I / We note that upon withdrawal of my / our Shares from the Offer, no claim or liability shall lie against the Acquirer / Manager to the
Offer / Registrar to the Offer.
I / We note that this Form of Withdrawal should reach the Registrar to the Offer on or before the last date of withdrawal i.e. Wednesday,
July 1, 2009.
OFFER OPENS ON : Monday, June15, 2009
LAST DATE OF WITHDRAWAL : Wednesday, July 1, 2009
OFFER CLOSES ON : Saturday, July 4, 2009
Please tick () shareholders status (For taxation/TDS purpose)
Person resident in India who is an individual/HUF/Association of Persons,
having anaggregate income upto Rs. 10,00,000
Person resident in India who is an individual/HUF/Association of Persons,
having an aggregate income exceeding Rs. 10,00,000
Person resident in India who is a partnership firm
Person resident in India who is a domestic company
Person resident outside India who is a company
Person resident outside India who is an individual/association of persons
having an aggregate income upto Rs. 10,00,000
Person resident outside India who is an individual/association of persons
having an aggregate income exceeding Rs. 10,00,000
Domestic venture capital fund and mutual fund which is a domestic company
International venture capital fund which is a domestic company
International venture capital fund which is a foreign company
Person resident outside India which is a partnership firm
Non-Resident Indian(s)
Foreign Institutional Investors
Multilateral Agency
Bilateral Development Financial Institution
Financial Institutions
Banks
Insurance Company
Others (Specify )
TEAR ALONG THIS LINE
ACKNOWLEDGEMENT SLIP
Pfizer Limited Open Offer
Received from Mr./Ms./ M/s. residing at
a Form of Withdrawal
for shares along with :
Copy of delivery instruction slip from DP ID Client ID
Copy of acknowledgement slip issued when depositing dematerialised Shares
Copy of acknowledgement slip issued when depositing physical Shares for withdrawing from the Offer made by the Acquirer
Stamp of Collection Centre: Signature of Official: Date of Receipt:
I / We note the Acquirer / Manager to the Offer / Registrar to the Offer shall not be liable for any postal delay / loss in transit of the Shares
held in physical form and also for the non-receipt of Shares held in the dematerialised form in the DP account due to inaccurate /
incomplete particulars / instructions.
I / We also note and understand that the Acquirer will return the original share certificate(s), share transfer deed(s) / Shares in dematerialised
form only on completion of verification of the documents, signatures and beneficiary position as available with the depositories from
time to time.
The particulars of tendered original share certificate (s) and duly signed transfer deed(s) are detailed below:
Sr. No. Ledger Folio No(s) Certificate No(s) Distinctive No(s) No. of shares
From To
1.
2.
3.
4.
5.
(In case the space provided in inadequate, please attach a separate sheet with details)
Total No. of Equity Shares
I/ We hold the following Shares in dematerialised form and had executed an off-market transaction for crediting the Shares to the “KCPL
Escrow Account - PL Open Offer”. Please find enclosed a photocopy of the depository delivery instruction(s) duly acknowledged by
DP. The particulars of the account from which my / our Shares have been tendered are as follows:
DP Name DP ID Client ID Beneficiary Name No. of Shares
I / We note that the Shares will be credited back only to that depository account, from which the Shares have been tendered and necessary
standing instructions have been issued in this regard.
I/ We confirm that the particulars given above are true and correct.
In case of dematerialised Shares, I / we confirm that the signatures have been verified by the DP as per their records and the same have
been duly attested.
Yours faithfully,
Signed and Delivered
Full Name(s) of the shareholders Signature
First/Sole Holder
Joint Holder 1
Joint Holder 2
Joint Holder 3
Address of First/Sole Shareholder
Place: ————————————————————-
Date: ————————————————————-
All future correspondence, if any, should be addressed to the Registrar to the Offer at the following address quoting your
reference Folio No. / DP ID / Client ID
Karvy Computershare Private LimitedUnit: Pfizer Limited – Open Offer
Plot No 17-24, Vithalrao Nagar
Madhapur, Hyderabad – 500 081
Tel: (91) - 40-23420815-23, Fax: (91) - 40-23431551
E-mail: [email protected], Contact Person: Mr. M. Murali Krishna
