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Sun Pharmaceutical Industries LimitedCorporate Office: Acme Plaza, Andheri Kurla Road, Andheri (E), Mumbai - 400 059.
Tel: 91-22-66969696 ▪ Fax: 91-22- 28212010 ▪ www.sunpharma.com
Creating Lasting Value
Investor Presentation – May 2010
Creating Lasting Value - Investor Presentation 2
Disclaimer
Except for the historical information contained herein, statements in this
presentation and the subsequent discussions, which include words or phrases
such as “will”, “aim”, “will likely result”, “would”, “believe”, “may”, “expect”,
“will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”,
“seek to”, “future”, “objective”, “goal”, “likely”, “project”, “should”,
“potential”, “will pursue” and similar expressions or variations of such
expressions may constitute "forward-looking statements". These forward-
looking statements involve a number of risks, uncertainties and other factors
that could cause actual results to differ materially from those suggested by
the forward-looking statements. These risks and uncertainties include, but are
not limited to our ability to successfully implement our strategy, our growth
and expansion plans, obtain regulatory approvals, our provisioning policies,
technological changes, investment and business income, cash flow
projections, our exposure to market risks as well as other risks. Sun
Pharmaceutical Industries Limited does not undertake any obligation to
update forward-looking statements to reflect events or circumstances after
the date thereof.
Creating Lasting Value - Investor Presentation 3
Agenda
RevenueComposition
1
Strategy &Approach
History &Profile
Growth
Key Acquisitions
BusinessOperations
GeographiesAPI, FinishedDosage &Manufacturing
Research &Development
Management & Governance
Financials
23
45
Creating Lasting Value - Investor Presentation 4
Agenda
RevenueComposition
1
Strategy &Approach
History &Profile
Growth
Key Acquisitions
BusinessOperations
GeographiesAPI, FinishedDosage &Manufacturing
Research &Development
Management & Governance
Financials
23
45
Creating Lasting Value - Investor Presentation 5
Revenue Composition
45%
35%9%
11%
IndiaBranded Generics5 Year CAGR 25%
US Generics5 Year CAGR 47%
APIs5 Year CAGR 20%
International BrandedGenerics (ex-US)
5 Year CAGR 42%
Finished Dosage sales 89%5 year CAGR 34%
International sales 53%5 year CAGR 43%
2008-09 Annual sales : Rs 43,751 million5 Year CAGR 32%
Creating Lasting Value - Investor Presentation 6
Creating Value, Continuously…
1983
Began with 5 products 1993
First Research CentreSPARC, Baroda
1994
IPO - Rs. 550 Mn raised
1995
First API Plant Panoli
1997
$7.5Mn invested in Caraco
2004
USD 350mnFCCB raised
2007
Demergerof innovative R&D to SPARC
The performance continues
2010
5 Key operating subsidiaries8,000+ Employees
Invested Rs. 17 billion in Research
19 Manufacturing facilities in 4 Continents
More than 50% of sales from international markets
PART OF
Sun Pharma Today
‘83 ‘10
Creating Lasting Value - Investor Presentation 7
Key Operating Subsidiaries
Caraco Pharmaceutical Laboratories
Develops, manufactures, market and distributes generic and private label pharmaceuticals and markets them throughout the United States.
Chattem Chemicals, Inc.
Narcotic raw material importer and manufacturer of controlled substances with a facility in Tennessee, US
Sun Pharmaceutical Industries Limited
Sun Pharmaceutical (Bangladesh)
Owns and operates a pharmaceutical factory and makes pharmaceutical products that are sold in the local market.
Sun Pharmaceutical Industries, Inc. (SPI)
US based wholly owned subsidiary of Sun Pharmaceutical Industries Limited, India.
Alkaloida Chemical Co. Exclusive Group Ltd
ICN Hungary acquired in 2005, now renamed; one of the few units worldwide, authorized to make controlled substances
Creating Lasting Value - Investor Presentation 8
Agenda
RevenueComposition
1
Strategy &Approach
History &Profile
Growth
Key Acquisitions
BusinessOperations
GeographiesAPI, FinishedDosage &Manufacturing
Research &Development
Management & Governance
Financials
23
45
Creating Lasting Value - Investor Presentation 9
Strategy and Approach
Create sustainable revenue streams
• Focus: Chronic therapies
• Differentiation: Technically complex products
• Speed to market
Seek cost leadership
• Vertical integration : Development through Manufacturing (API and Finished Dosage) to Marketing
• Optimize operational costs
Balance profitability and investments for future• Acquisitions yielding high ROI
• Development of complex generics
Creating Lasting Value - Investor Presentation 10
Growing SteadilyConsistent top-line and bottom-line growth; continuing the trend despite increasing size
Net Sales Net Profit
1,5
00
11,853
3,962
15
,00
0
00-01 01-02 02-03 03-04 04-050
4,5
00
42,723
18,177
004-05 05-06 06-07 07-08 08-09
0
20
,00
0
55
,00
0
0
5,435
1,352
0
6,0
00
96-97 97-98 98-99 99-00 00-01
(Figures in Rs million)
Creating Lasting Value - Investor Presentation 11
Sustained ProfitabilitySuperior business modelMargins consistently higher than peers*
-20%
-10%
0%
10%
20%
30%
40%
50%
04-05 05-06 06-07 07-08 08-09
44% 43%
-20%
-10%
0%
10%
20%
30%
40%
50%
04-05 05-06 06-07 07-08 08-09
80%
40%
50%
60%
70%
80%
04-05 05-06 06-07 07-08 08-09
85%Gross Margin EBITDA
MarginNet Margin
Sun PharmaRange of other Top 10 Pharma Cos. AverageGross margin= (Net Sales – Material Cost) / Net Sales * 100
* Other top 10 Indian Pharma companies include Ranbaxy, DRL, Cipla, Piramal Healthcare, Lupin, Wockhardt, Cadila, Aurobindo, Glenmark and Torrent
Creating Lasting Value - Investor Presentation 12
Successful At AcquisitionsAcquired 14 high potential yet under-performing businesses*; successful turnarounds
Net Sales (MINR) Operating Margin(%) Operating Profit (MINR)
0
2,000
4,000
6,000
8,000
10,000
95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-040
9
18
27
36
45
8 Early Acquisitions
Creating Lasting Value - Investor Presentation 13
Key Acquisitions & RationaleYear Acquisition Country Rationale
2008Caraco acquired some products of Forest’s Inwood business
US Increased generic product offerings
2008Acquired Chattem Chemicals,
Inc.Tennessee, US
Import registration with DEA, API Plant approved by DEA in Tennessee, US
2005 Assets of Able labs New Jersey, US Dosage form plant (NJ, US) and IP
2005 Formulation plant in Bryan Ohio, US Dosage form plant (Ohio, US)
2005 Acquired ICN Hungary Hungary API and dosage form plant (Hungary)
2004 Womens Health Brands US Brands in womens health (US)
2004 Merged Phlox Pharma Baroda, India API Plant
2000Merged Pradeep Drug Company Ltd (PDCL)
Chennai, India API Plant
1999 Merged Milmet Labs India Ophthalmology brands
1998 Brands from Natco India Respiratory brands
1997 Acquired Caraco Detroit, US Dosage form Plant
1997Merged Tamilnadu Dadha Pharmaceuticals Ltd (TDPL)
Chennai, IndiaGynecology and oncology brands; API and dosage form plant
1996 Acquired MJ Pharma Halol, IndiaDosage form plant (now USFDA approved)
1996 Acquired Gujarat LykaAnkleshwar, India
API plant
1996Bulk Drug plant from Knoll Pharma
Ahmednagar, India
API plant (now USFDA approved)
Creating Lasting Value - Investor Presentation 14
Agenda
RevenueComposition
1
Strategy &Approach
History &Profile
Growth
Key Acquisitions
BusinessOperations
GeographiesAPI, FinishedDosage &Manufacturing
Research &Development
Management & Governance
Financials
23
45
Creating Lasting Value - Investor Presentation 15
India Branded Generics : Strong Base
• Market Share – 3.7%
• Leadership in chronic segment; Top 3 in over 50% of more than 500 brands
Neuro-Psychiatry29%
Cardiology20%
Diabetology11%
Gastroenterology11%
Gynaecology &Urology - 7%
Musculo-Skeletal& Pain - 4%
Antiasthamatic &Antiallergic – 4%
Ophthalmology - 4%Others10%
Therapywise Break-up
Creating Lasting Value - Investor Presentation 16
Relentless Customer Focus
1998 Market Share indexed to 100 for all companies
Therapy focused marketing
• 2,500+ sales representatives covering 130,000 specialist doctors
Strong increase in prescription and sales market share
50
100
150
200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Sun Cipla Ranbaxy Nicholas Cadila DRL
Creating Lasting Value - Investor Presentation 17
Therapy Focused Marketing Delivering promotional message to specialty customers.
Cardiology, DiabetologyGastroenterology, Orthopedics
Oncology
Rheumatology, Dermatology
Asthma, COPD
Interventional Cardiology
Fertility, Gynecology,Urology
Psychiatry, Neurology GynecologyOphthalmology
Creating Lasting Value - Investor Presentation 18
Preferred Choice of Doctors
Our Top 10 BrandsLeadership in key therapeutic areas*Specialist Oct '04 Oct '09
Psychiatrists 1 1
Neurologists 1 1
Cardiologists 3 1
Orthopaedic 3 1
Ophthalmologists 2 1
Gastroenterologists 1 2
Diabetologists 3 2
Chest Physicians 6 4
Nephrologists 5 4
Consulting Physicians 6 4
Gynaecologists 10 4
Oncologists 9 6
Urologists 8 8
ENT Specialists 7 16
Brand Name Therapy area
Glucored Oral antidiabetic
Pantocid Proton pump inhibitor/ antiulcerant
Susten Women's healthcare
Aztor CVS, cholesterol reducing agent
Pantocid-D Proton pump imhibitor/ antiulcerant
Strocit CNS, stroke
Repace CVS, Hypertension
Gemer Oral antidiabetic
Encorate chrono CNS, epilepsy
Repace H CVS, Hypertension
*Ranks based on prescription share
Creating Lasting Value - Investor Presentation 19
US GenericsIntegrated generic manufacturer with flexibility for manufacture onshore / offshore
The 76% owned US generics subsidiary, markets own and Sun Pharma ANDAs
Sun Pharmaceutical Industries, Inc. (SPI)
Caraco Pharmaceutical Laboratories Ltd.
A wholly owned subsidiary of Sun Pharma in US
ApprovalsTherapy wise summary
As on Dec-09
Endocine, 1
Gastro, 2
Urology, 1
Allergy, 2
Antibiotic, 2
Cough / Cold, 3
Metabolism, 6
Oncology, 10
CVS, 13
Pain, 14
CNS, 29
Creating Lasting Value - Investor Presentation 20
ANDA Pipeline : Significant ramp upProducts Filed and Approved Status
As of Dec 09, ANDAs for 108
products await approval
(including 12 tentative
approvals)
81 Products pending(with 8 tentative approval)
Sun Pharma
27 Products pending (with 4 tentative approval)
Caraco
40
59
95
142
176
191
1520
29
53
69
83
0
50
100
150
200
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Dec-09
Cumulative Products Filed Cumulative Products Approved
Creating Lasting Value - Investor Presentation 21
US Generics
• Bicalutamide Tablets • Caffeine Citrate Injection • Caffeine Citrate Oral Solution• Carbidopa Levodopa OD Tablets
• Cetrizine HCl Syrup (RX)
• Ergocalciferol Capsule• Ketorolac Tromethamine Opthalmic• Prometh Syrup
16 ANDA Approvals in last 1 year
• Nicardipine HCl Injection• Oxaliplatin for Injection • Oxycodone HCl Tabs • Promethazine HCl Oral Solution • Quinapril Tablets USP • Sumatriptan Succinate Tablets • Vecuronium Bromide for Injection• Wellbutrin SR Tablets
Creating Lasting Value - Investor Presentation 22
Caraco Update• In Oct 2009, Caraco submitted a work plan to FDA for
remedial actions• Additional details and clarifications submitted on January 14,
2010• In 2QFY10, Caraco reduced its workforce by 430 employees
for an indefinite period to align its expenses with the cessation of its manufacturing operations• Has recalled some of these employees in its efforts to restart
manufacturing activities• Caraco has transferred certain of its owned products to
additional alternate manufacturing sites; would allow it regain revenues from those products
Creating Lasting Value - Investor Presentation 23
Europe Generic Markets
Plan to enter key markets
• Working on complex generic products, including injectables
• Filings from Indian site
Acquired an API and Finished
Dosage manufacturing company
in Hungary with controlled
substance capacity
Focus Countries
Creating Lasting Value - Investor Presentation 24
International Branded Generic Markets
Less Regulated Markets
• Product basket width and technology based products as growth drivers
Replicating the speciality template• 40 countries
• 450 strong local sales force promotes brands to doctors
CIS Countries
China
Sri Lanka
Map Not to Scale
Mexico
South AfricaOther Markets
Focus Markets
Brazil
Myanmar
Creating Lasting Value - Investor Presentation 25
Speciality API
High Margin Regulated Markets
• Business largely with end users in regulated markets
• Over 160 speciality APIs across 8 plants
Strong regulatory capability
• 148 DMF / CEP filed
• 84 approved
Creating Lasting Value - Investor Presentation 26
Strong Regulatory CapabilityInternational level quality processes and documentation
75
90
133
148
3340
81 84
0
50
100
150
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09
DMF/CEP Filed DMF/CEP Approved
Creating Lasting Value - Investor Presentation 27
Manufacturing LocationsPlants across four continents enables us to compete with a tight handle on cost and time to market across the geographies
Jammu
Ahmednagar
Maduranthakam
BangladeshPlant
Sikkim Plant
Americas
Cranbury
DetroitBryan
Tennessee
Goiânia (Brazil)
Iztapalapa(Mexico)
Tiszavasvari(Hungary)
Europe
API and Formulations API Formulations
Halol
Ankleshwar
Panoli
DadraSilvassa
Karkhadi
India
Creating Lasting Value - Investor Presentation 28
Finished Dosage Manufacturing
13 Manufacturing sites worldwide
• India : 6, US : 3
• Over 750,000 sq. ft. area
• Capacities available for a variety of finished dosage
Tablets / Capsules
Semisolids
Liquids
Suppository
Injectables / Sterile
Vials Dry powder
Ampoules Eye drops
Pre-filled Syringes MDI
Gels Aerosols
Lyophilized Units
Creating Lasting Value - Investor Presentation 29
API Manufacturing
8 World class locations with all sites ISO 14001, ISO 9002 approved• India : 6, US : 1, Hungary : 1
• Reactor capacity 1200 KL with over 650,000 sq ft area
Over 25 API processes scaled up annually
APIKey Plants
Panoli & Ahmednagar (both India)
• International regulatory approvals: USFDA, European
• Stand alone units for peptides, anti-cancer, steroids, sex hormones
Hungary & Tennessee (US)
• Controlled substances manufacture
Creating Lasting Value - Investor Presentation 30
Agenda
RevenueComposition
1
Strategy &Approach
History &Profile
Growth
Key Acquisitions
BusinessOperations
GeographiesAPI, FinishedDosage &Manufacturing
Research &Development
Management & Governance
Financials
23
45
Creating Lasting Value - Investor Presentation 31
Research and Development• Generic R&D spend around 8% of net
sales
• Strong research teams in generics, finished dosage development, biological support, chemistry
• 2 R&D centers with about 600 scientists
Mumbai
Balancing the risk
Medium term Drug delivery systems
Immediate termANDA, DMF, Products for India
Baroda
Creating Lasting Value - Investor Presentation 32
Pharmacokinetics
Clinical Research
Analytical Method Development
Formulation Development
Organic Synthesis
State of the artresearch Labs
R&D Infrastructure
Baroda • 16 acre campus with nearly
330,000 sq. ft research area
Mumbai• 50,000 Sq. ft research campus• Develops Dosage forms and
generics for US, Europe
World-class equipment for instrumental, chemical and
microbiological analysis; Equipment include: NMR,
XRD,
LC-MS/MS, HPLCs etc.
Creating Lasting Value - Investor Presentation 33
Agenda
RevenueComposition
1
Strategy &Approach
History &Profile
Growth
Key Acquisitions
BusinessOperations
GeographiesAPI, FinishedDosage &Manufacturing
Research &Development
Management & Governance
Financials
23
45
Creating Lasting Value - Investor Presentation 34
Corporate Governance
Our philosophy on corporate governance
envisages working towards high levels of
transparency, accountability and consistent
value systems across all facets of operations
Committee chaired by Keki Mistry comprises Hasmukh Shah and S. Mohanchand Dadha
Audit CommitteeEminent Independent Directors
Hasmukh Shah Chairman Gujarat GasFormer Chairman and Managing Director, IPCL
Keki Mistry
Vice Chairman and CEO, HDFC
S. Mohanchand Dadha Former Chairman & Managing Director, TDPL
Ashwin Dani Vice Chairman and Managing Director, Asian Paints Ltd.
Creating Lasting Value - Investor Presentation 35
Agenda
RevenueComposition
1
Strategy &Approach
History &Profile
Growth
Key Acquisitions
BusinessOperations
GeographiesAPI, FinishedDosage &Manufacturing
Research &Development
Management & Governance
Financials
23
45
Creating Lasting Value - Investor Presentation 36
Shareholding Patternas on Dec 31, 2009
• Rs 1,000 Invested in the 1994 IPO is currently worth more than Rs. 125,696
• Earned dividend of Rs. 4,000
Mutual Funds3%
Promoter and promoter group64%
Bodies Corporate5%
Individuals and Others6%
Financial Inst / Banks3%
FIIs / Foreign Banks19%
Creating Lasting Value - Investor Presentation 37
FinancialsMarket capitalisation Rs. 325 billion / USD 7.3 billion*
2004-05 2005-06 2006-07 2007-08 2008-09
P&L Summary
Net Sales 11,853 16,368 21,359 33,565 42,723
Gross Profit 8,619 11,492 15,592 26,344 34,154
EBITDA 4,167 4,914 6,724 15,511 18,639
Net Profit 3,962 5,733 7,843 14,869 18,177
R&D Spend 1,428 2,014 2,787 2,990 3,320
Fully Diluted EPS (Rs.) 20.7 27.7 38.9 71.8 87.8
BS Summary
Shareholders Funds 11,307 15,902 27,728 49,915 70,449
Loan Funds 18,230 18,745 11,144 1,436 1,789
Net Fixed Assets 6,213 8,977 10,122 11,040 16,196
Investments 6,485 3,541 2,543 7,560 18,595
Cash and Bank Balances 11,809 15,324 13,802 12,389 16,690
Inventories 3,173 5,117 6,645 7,723 9,757
Sundry Debtors 2,511 3,609 6,789 14,177 8,811
Sundry Creditors 1,063 1,110 968 2,393 2,543
Cash Flow Summary
Net Cash from Operating Activities 3,754 1,852 2,395 5,048 21,651
Net Cash used in Asset Creation Activities
1,666 3,387 2,000 1,995 5,900
Figures in Rs million
*Exchange Rate : 1 USD = Rs 44.44
Creating Lasting Value - Investor Presentation 38
Financial Ratios
2004-05 2005-06 2006-07 2007-08 2008-09
Growth (%)
Net Sales 25.5 38.1 30.5 57.1 27.3
Gross Profit 22.2 33.3 35.7 69.0 29.6
EBITDA 5.9 17.9 36.8 130.7 20.2
Net Profit 25.5 44.7 36.8 89.6 22.2
Margins (%)
Gross Margin 72.7 70.2 73.0 78.5 79.9
EBITDA Margin (%) 35.2 30.0 31.5 46.2 43.6
Net Margin 33.4 35.0 36.7 44.3 42.5
Return (%)
Return on Average Capital Employed 20.1 18.7 22.7 35.5 31.5
Return on Average Net Worth 48.6 45.6 37.0 38.3 30.2
Others
Debt / Equity 1.61 1.18 0.40 0.03 0.03
R&D Spend % of Net Sales 12.0 12.3 13.0 8.9 7.8
Revenue 8.5 9.4 11.4 8.5 7.3
Capital 3.5 2.9 1.6 0.4 0.5
Creating Lasting Value - Investor Presentation 39
Q3 and 9m FY10 UpdateFigures in Rs million
68.7
8.2%
2,572.0
45.3%
14,228.5
47.5%
14,893.3
79.6%
24,975.8
22,196.1
9m FY09
46.2
6.4%
1,906
32.0%
9,566.0
31.5%
9,443.0
72.2%
21,619.5
29,936.2
9m FY10
(32.8%)
(25.9%)
(32.8%)
(36.6%)
(13.4%)
(4.6%)
ChangeQ3 FY10 Q3 FY09 Change FY 0809
Net Sales 10,208.6 9,182.8 11.2% 42,723.0
Gross Profit 7,351.3 7,410.2 (0.8%) 34,154.2
Gross Margin 72.0% 80.7% 79.9%
EBITDA 3,684.1 4,134.3 (10.9%) 18,638.8
EBITDA Margin 36.1% 45.0% 43.6%
Net Profit 3,389.5 4,086.4 (17.1%) 18,177.3
Net margin 33.2% 44.5% 42.5%
R&D 514.6 945.7 (45.6%) 3,320.4
R&D as % of Net Sales 5.0% 10.3% 7.8%
EPS (Diluted) INR 16.4 19.7 (17.1%) 87.8 68.7
8.2%
2,572.0
45.3%
14,228.5
47.5%
14,893.3
79.6%
24,975.8
31,378.9
9m FY09
46.2
6.4%
1,906
32.0%
9,566.0
31.5%
9,443.0
72.2%
21,619.5
29,936.2
9m FY10
(32.8%)
(25.9%)
(32.8%)
(36.6%)
(13.4%)
(4.6%)
ChangeQ3 FY10 Q3 FY09 Change FY 0809
Net Sales 10,208.6 9,182.8 11.2% 42,723.0
Gross Profit 7,351.3 7,410.2 (0.8%) 34,154.2
Gross Margin 72.0% 80.7% 79.9%
EBITDA 3,684.1 4,134.3 (10.9%) 18,638.8
EBITDA Margin 36.1% 45.0% 43.6%
Net Profit 3,389.5 4,086.4 (17.1%) 18,177.3
Net margin 33.2% 44.5% 42.5%
R&D 514.6 945.7 (45.6%) 3,320.4
R&D as % of Net Sales 5.0% 10.3% 7.8%
EPS (Diluted) INR 16.4 19.7 (17.1%) 87.8
Creating Lasting Value - Investor Presentation 40
Taro Update
Latest
Background• Taro sent Sun Pharma a notice for purported termination of the merger
agreement claiming a dramatic turnaround
• Sun Pharma’s cash injections of approx. $60 million last year was a major factor, otherwise Taro would have virtually negative cash
• 75% of Taro shareholders who are not identified with either Levitt family or Sun objected to the continued control of the Company by the Levitt family and its representatives on the Board in the 31 Dec 2009 AGM• Despite this, the entire Board was re-elected on account of the voting majority of
the Levitts
• Shareholders voted decisively against the election of Taro’s external director
Creating Lasting Value - Investor Presentation 41
For updates and specific queries, please visit www.sunpharma.com or feel free to contactUday BaldotaTel : +91 22 6645 5645, Ext 605Tel Direct : +91 22 66455605Mobile : +91 98670 [email protected]
Mira DesaiTel : +91 22 6645 5645, Ext 606Tel Direct : +91 22 66455606Mobile : +91 98219 [email protected]
© 2010 Sun Pharmaceutical Industries Limited., All Rights Reserved.
“SUN Pharma”, The Sun Pharmaceutical Industries Logo are trademarks of Sun Pharmaceutical Industries Limited.
In addition to Company data, data from IMS – ORG, CMARC, Stock Exchanges and industry publications has been used for this presentation.
This material was used during an oral presentation; it is not a complete record of the discussion. This work may not be used, sold, transferred, adapted,
abridged, copied or reproduced in whole on or in part in any manner or form or in any media without the prior written consent. All product names and
company names and logos mentioned herein are the trademarks or registered trademarks of their respective owners.