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Piramal Healthcare Limited
Investor Presentation
April 2012
• Overview of Piramal Healthcare
• Pharma Solutions
• Critical Care
Agenda
2
• Consumer Products Business
• Life Sciences
• Financial Services
• Special investments
Piramal Healthcare – an overview:
� Market Cap: Rs. 8,100 crs
� Debt: Rs. 1,200 crs
� EV: Rs. 9,300 crs
� 9MFY12 Sales: Rs. 1,664 crs
� Cash receivable from Abbott: Rs. 4,000 crs
� Book Value of investment in Vodafone:
Rs. 5,863 crs
� 9MFY12 PAT: Rs. 153 crs
� Select Financials:
� High Standards of Corporate Governance: Board of Directors:Independent Member Particulars
1 Keki Dadiseth Ex-Director, Unilever Plc. & former Chairman, Hindustan Lever Ltd.
International advisor to Goldman Sachs
2 N Vaghul Former Chairman, ICICI Bank Limited,
Director of Mahindra & Mahindra, Wipro Limited
3 Deepak Satwalekar Former CEO & Managing Director – HDFC Standard Life Insurance Co. Ltd Director of Infosys and Franklin Templeton Asset Management (India).
4 S Ramadorai Former CEO, Tata Consultancy Services Limited (TCS)
5 Dr. R. A. Mashelkar An eminent scientist, Former Director General of CSIR, Former Member of
Scientific Advisory Council to the Prime Minister
6 Prof. Govardhan Mehta Internationally acclaimed researcher in organic chemistry, Ex-Director of Indian Institute of Sciences
� High Standards of Corporate Governance: Board of Directors:
Piramal Healthcare – an overview:
Piramal Healthcare
Pharma Business Financial Services Business
4
PharmaSolutions
CriticalCare
OTC
• Partners with MNC pharma cos to service their mfg & development needs
• Sales – Rs. 10.2 bn
• Sells anesthetic products to hospitals globally
• Sales –Rs. 3.9 bn
• Sells OTCProducts in India
• Sales – Rs. 1.9bn
Life Sciences
• Works in 4 TA: Oncology, Diabetes, Inflammation Infectious Diseases
• Has a pipeline of 16 compounds with 8 in clinical trials
• Received approval for cartilage repair gel – BST-Cargel®
NBFC IndiaReit
• NBFC focused on lending to Real estate sector• Current book of Rs. 1.3 billion
• A Real Estate Investment Trust with domestic and offshore fund
• Total AUM –Rs. 38 billion
Pharma Solutions
5
Pharma Solutions
Market Characteristics
• Global Outsourcing market estimated to be USD 32 billion, growing at 12%
• Market share of India extremely low
• Lower costs and high quality manufacturing skill presents compelling
rationale to shift manufacturing to India
• Cost pressures on big pharma due to patent expiries leading to
opportunities for Indian CMOs
India CMOs SizeGlobal Outsourcing Market Size
Market CharacteristicsMarket Characteristics
6Source: Business Insights 2012
India CMOs SizeGlobal Outsourcing Market Size
31.9
64.0
0
10
20
30
40
50
60
70
Year 2011 Year 2017
USD Bn
1.8
5.3
0
1
2
3
4
5
6
Year 2011 Year 2017
USD Bn
A full-service CMO across the drug life-cycle
Early Phase Custom Synthesis and Formulations Development Full scale supplies
Discovery Research
Pre-clinical Dev.API
Phase IAPI
Phase IIaAPI
Phase IIb Phase III Launch
CLINICAL DEVELOPMENT
Medicinal Chemistry
Pre-clinical Dev.Forms
Clinical Trials Formulations
Formulations development
APIAPI API
Medicinal
Early Phase Custom Synthesis and Formulations Development Full scale supplies
Discovery Research
Pre-clinical Dev.API
Phase IAPI
Phase IIaAPI
Phase IIb Phase III Launch
CLINICAL DEVELOPMENT
Medicinal Chemistry
Pre-clinical Dev.Forms
Clinical Trials Formulations
Formulations development
APIAPI API
Medicinal
Early Phase Custom Synthesis and Formulations Development Full scale supplies
Discovery Research
Pre-clinical Dev.API
Phase IAPI
Phase IIaAPI
Phase IIb Phase III Launch
CLINICAL DEVELOPMENT
Medicinal Chemistry
Pre-clinical Dev.Forms
Clinical Trials Formulations
Formulations development
APIAPI API
Medicinal
7
API
• Canada – Torcan
• UK – Morpeth,
• India – Ennore
Formulations
• UK – Morpeth
• India - Ahmedabad
API
•Canada - Torcan
•UK – Morpeth,
• India – Ennore,
Formulations
•UK – Morpeth
• India – Ahmedabad
API
• Torcan (niche APIs only)
• Morpeth,
• Digwal, Ennore
Formulations
• Morpeth
• Pithampur
Medicinal & Synthetic Chemistry Services –India -Ahmedabad
API
• Canada – Torcan
• UK – Morpeth,
• India – Ennore
Formulations
• UK – Morpeth
• India - Ahmedabad
API
•Canada - Torcan
•UK – Morpeth,
• India – Ennore,
Formulations
•UK – Morpeth
• India – Ahmedabad
API
• Torcan (niche APIs only)
• Morpeth,
• Digwal, Ennore
Formulations
• Morpeth
• Pithampur
Medicinal & Synthetic Chemistry Services –India -Ahmedabad
API
• Canada – Torcan
• UK – Morpeth
• India – Ennore
Formulations
• UK – Morpeth
• India - Ahmedabad
API
•Canada - Torcan
•UK – Morpeth,
• India – Ennore,
Formulations
•UK – Morpeth
• India – Ahmedabad
API
• Torcan (niche APIs only)
• Morpeth,
• Digwal, Ennore
Formulations
• Morpeth
• Pithampur
Medicinal & Synthetic Chemistry Services –India -Ahmedabad
Sales break-up (Rs. In crores) 9M FY2012 Growth
Pharma Solutions 963 43.4%
From assets in India 585 74.8%
From assets outside India 378 12.3%
UNITED KINGDOMMorpeth•API development & manufacturing•Formulation development•Commercial formulation manufacturing•Clinical Trial supplies & distributionGrangemouth•Antibody Drug Conjugates development & manufacturing
CANADAToronto•API development & manufacturing
RM supplies
Pharma Solutions – Global Footprint
8
INDIAMumbai R&D•API development•Formulation development
Chennai•API development & manufacturingHyderabad•API manufacturing
•Ahmedabad•Drug Discovery Services•Formulations Development•Clinical Trial manufacturing
•Pithampur•Commercial formulation manufacturing
CHINAShanghai•Sourcing Office
RM supplies
Critical Care
9
Critical Care
Critical Care - expanding product portfolio and enhancing geographic reach
Geographies
/Products
Halothane
Isoflurane
Enflurane
Sevoflurane
US EU RoW
� � �
� � �
US EU RoW
� � �
� � �
� � �
�
US EU RoW
� � �
� � �
� � �
� � �
10
Addressable Market Opportunity $ Million
100 550 1,800
Desflurane
Propofol �
� � �
� � �
2006 2011 2016
Critical Care – Infrastructure in place for sustained rapid growth
38 Managers
32 Sales Field Force
84 Distributors
11
Products Products
Manufactured
Approvals/Certific
ation
Bethlehem USFDA, AFSSAPS
Digwal US FDA, WHO,
UKMHRA, MCC
Ambernath (BSV) WHO
Baddi (Abbott) USFDA
Sevoflurane PropofolEnflurane Isoflurane HalothaneDesflurane Haemaccel
(Rs. In crores) 9M FY2012 Growth
Critical Care Sales 281 3.3%
OTC Business
12
OTC Business
OTC – Strong Track Record
•Moved from no. 40 in 2008 to top-10 in 2011
•Sales have grown by 29% CAGR in last 3 years (9M FY12 sales: Rs.
109 crores)
• Field force expansion to improve distribution to 4 lakh chemists and
cover all 485 1 lakh+ towns in India
• Lacto Calamine
won coveted
13
won coveted
2010 REBRAND
100 Winner
•Successful Rx to
OTC
transformation
for Polycrol,
Tetmosol and
Supractiv
Life Sciences
14
R&D: To launch a molecule globally
16 products under development in various stages
� Our lead molecule for P276 is currently undergoing Phase I/II clinical trials for
multiple indication of cancer: Head & Neck, Mantle Cell Lymphoma, Malignant
Melanoma, Pancreatic and Triple Negative Breast Cancer;
� Potential Market size: $ 10 billion;
� Earliest expected launch: FY2014
15
� Received the European CE mark approval for the innovative bioorthopaedic
product for cartilage repair - BSTCarGel ®.
� Acquired molecular imaging development portfolio of Bayer pharma which
includes rights to Florbetaben – a final stage Phase III clinical trial molecule.
� Explore out-licensing opportunity for P1736, a Diabetes molecule which is
currently in Phase II after the completion of this trial
Annual spend : Rs. 230 – Rs. 250 crores
BST-CarGel®: An overview
� A novel bioscaffold for advanced cartilage regeneration that has clinically demonstrated consistently higher quality cartilage repair
� An EU class III medical device, it is a liquid scaffold which, combined with the patient’s whole blood, is then implanted into a debrided cartilage lesion prepared with bone marrow access
� Received European CE mark regulatory approval in April 2012
� Plans to commercially launch in the fourth quarter of the 2012 calendar year
� Filed for regulatory approval to sell in Canada and will soon file in India
Damaged CartilageBefore Treatment
CartilageAfter Treatment
Current European Market Potential
The CE mark enables us to access a potential $ 200 mn market in Europe.
While we can sell in all EU countries, the largest markets in Europe for BST-CarGel® are: UK, Germany, France, Spain, and Italy
MRI of patient treated with CarGel
� PHL has signed agreement to acquire leading portfolio of molecular imaging
tracers from Bayer AG – forming subsidiary Piramal Imaging
� Lead compound Florbetaben - final stage Phase III molecule
� Reliably detects Beta-Amyloid in the brain, which is the pathological
hallmark of disease in probable Alzheimer's disease patients
� Potential tool to aid in diagnosis and assessment of Alzheimer’s disease
� Positive Phase III results to be presented April 25 at American Academy of
Piramal Imaging – An overview
� Positive Phase III results to be presented April 25 at American Academy of
Neurology Annual Meeting
� Early diagnosis can both improve patients’ quality of life and reduce
healthcare costs
� Potential Market size: $ 1.5 billion
� Earliest regulatory filing: 2012
� Other assets include strong pipeline of PET imaging tracers in CNS, Oncology,
and Cardiovascular diseases
� Core members of Bayer’s R&D team will join Piramal Imaging leadership team
Financial Services
18
Vision to be specialized financial services company
PHL Capital
IndiaReit PHL Finance Infra NBFC
�NBFC lending to Real Estate,
Promoter Financing, Hospitals,
Educational Institutes etc.
� Advisor to
Offshore and
Domestic
� Regulatory
approvals
awaited
19
Educational Institutes etc.
� Team in place for Real Estate
Funding, being set up for other
segments
�Operations commenced; current
loan book of Rs. 131 crores
Domestic
Real estate
funds
� AUM: Rs.
3,800 crores
awaited
Indiareit - Executive Summary
• Best positioned to benefit from emerging Indian real estate
‒ Consistent fund raising
‒ Proven & consistent investment strategy
‒ Strong team with comprehensive investment experience;
• … supplemented with key differentiators
‒ Realized exits across funds
‒ Exits commenced since October 2008
‒ Valuations in sync with guidance and exit delivery
‒ Estimate 2.22x pre-tax money multiple on valued portfolio (March ‘11)
‒ Ability to profitably deploy large pools of capital;
‒ Over USD 650Mn in 4 years
Proven fund
management
expertise,
successful exits
across vehicles
2020
‒ Over USD 650Mn in 4 years
– First to declare independent valuations
– First to commence exits in investee projects
– First to round trip investments across all fund offerings
– First to manage third party portfolio
On track execution
and delivery
• Work commenced on majority projects
• No partners litigations
• No land issues
• No credit default
• Visible cash flows
• Work linked to off-take
Comprehensive Experience
•5 Top Tier 1 cities
•8 Local partners
•23 Projects
•53.7m sq ft of Saleable area currently under development
History of firsts in
the Indian market
IndiaReit: Build on strong Brand Equity
� Current fund raising plans:
� PHL’s commitment to these new funds will be 8 – 10 percent
I – Offshore funds Size
Offshore development fund $ 500 million
Rental yield fund $ 125 million
II – Domestic fund
Slum redevelopment fund Rs. 500 crores
21
� PHL’s commitment to these new funds will be 8 – 10 percent
� IndiaReit to look for special mandates like the investment
management mandate that it has from Trinity Capital PLC under
which it manages US $ 200 mn of assets
� Investment in IndiaReit to generate ROE of 18-20% from 2014
onwards
PHL Finance: Way Forward
� Led by Mr. A. K. Purwar, ex-Chairman of State Bank of India
� Strong systems and process in place aimed at building a book of
quality asset with Gross NPAs less has 2% and Net NPAs less than
1%
22
� To have loan book of Rs. 5,000 crores by FY2016
� PHL’s commitment to be Rs. 750 crores (One time Cash infusion)
� Investment in this NBFC to generate ROE of 15-16% by FY2016
Special Investments
23
Special Investments
PHL to invest surplus funds in investments that give:
o minority equity stake
o global companies in India
o high growth sectors
o short to medium term
o Minimal risk
24
o Minimal risk
o ROE: 17-20% p.a.
PHL has increased it’s stake in Vodafone Essar to 11% with the total investment of $ 1.2 billion
The partnership underscores trust placed by global companies in Piramal values, ethics, corporate governance and good reputation
Back-up slides
26
Back-up slides
Rs. Crores
Profit & Loss Account – Consolidated Continuing Businesses – Q3 FY2012
31-Dec-11 31-Dec-10 % Gr 31-Dec-11 31-Dec-10 % Gr
Total operating income 617.6 534.9 15.5% 1,664.3 1,319.6 26.1%
NCE R&D Expenses 94.0 - - 94.0 - -
Other Operating Expenses 486.9 420.7 15.7% 1,249.3 1,902.7 -34.3%
OPBIDTA 36.6 114.1 -67.9% 320.9 115.4 178.0%
Period ended - ConsolidatedQ3 Ended 9 Months Ended
27
Note: Foreign exchange gain (mainly on Abbott receivables) included in OPBIDTA of Q3 FY2012 and 9MFY2012 of Rs. 28.0 crores and 206.9 crores
OPBIDTA 36.6 114.1 -67.9% 320.9 115.4 178.0%
OPM % 5.9% 21.3% - 19.3% 8.7% -
Interest 22.1 12.9 71.3% 52.4 71.7 -26.9%
Depreciation 40.1 24.0 66.9% 95.6 69.9 36.9%
Profit before tax (25.6) 77.2 - 172.9 (26.1) -
Income tax (37.8) 16.9 - 16.7 3,662.5 -
Profit after tax 9.7 60.3 - 152.6 12,535.2 -
EPS (Rs.) 0.5 2.9 - 9.0 599.8 -
Balance Sheet – Consolidated Q3 FY2012
Rs. Crores
As at As at
31-Dec-11 30-Sep-11
Equity capital 34.5 33.4
Reserves & Surplus 11,541.8 11,879.2
Networth 11,576.4 11,912.7
Minority Interest 8.9 7.7
Deferred tax liability (Net) 60.1 46.1
Loan funds 1,172.9 1,088.9
Period ended- Consolidated
28
Loan funds 1,172.9 1,088.9
Total 12,818.2 13,055.4
Net fixed assets 1,971.9 1,717.9
Investments 3,877.0 3,917.5
Net current assets 6,969.4 7,420.0
Inventories 495.9 455.6
Sundry debtors 396.8 351.9
Other current assets 7,404.1 7,546.2
Current liabilities 1,327.3 933.7
Total 12,818.2 13,055.4
1. Other current assets include amount of Rs. 6,373 crores as receivable from Abbott towards sale of Healthcare Solutions business