1

Corporate Profile On CIPLA LTD. Under the supervision of Dr. RAJAN SHARMA Assistant Professor For the partial fulfillment of the award of degree of BBA Submitted By : ANMOL Class: MBA 5 year 3rdsem Roll no. : 51 Registration no. : 11 UD -

Submitted To : INSTITUTE OF MANAGEMENT STUDIES Kurukshetra University, Kurukshetra August December 2013

DECLARATION
I, ANMOL hereby declare that I have completed the report entitled assigned to me by the Institute, to be submitted in the partial fulfillment of the MBA 5 Year Degree from Kurukshetra University. Further, I declared that this is original work done by me and the information provided in the study is authentic to the best of my knowledge and belief.

Signature ANMOL

ACKNOWLEDGEMENT
In this project, I have made an honest and dedicated attempt to make the Project Report so easy to understand for a person who is willing to get knowledge about the CIPLA LTD. I am deeply indebted to my esteemed teacher & our chairman Prof. M.K Jain, K.U.K., because he gave me opportunity of making project report. I am also thankful to my lecturer as well as my supervisor (Guide) Mr. RAJAN SHARMA for their kind support & suggestion for making project report.

ANMOL MBA 3rd sem

SIGNATURE Roll No. 51

CONTENTS
CHAPTER NO. 1 TITLE OF CHAPTER 1.1 MEDICAL SECTOR 1.2 PLAYERS IN SECTOR 2 CIPLA LTD. 2.1 INTRODUCTION 2.2 ORGANIZATIONAL STRUCTURE 2.3 PRODUCT AND SERVICES 39-40 13-38 38 PAGE NUMBER 4-10 11-12

ANALYSIS AND DISCUSSION 3.1 PROFIT & LOSS ACCOUNT 3.2 BALANCE SHEET 3.3 SHARE HOLDER ACCOUNT

SWOT ANALYSIS & CONCLUSION

5 6

REFRENCES LEARNING FROM THE REPORT

CHAPTER-1
PHARMA INDUSTRY OVERVIEW The Indian Pharmaceutical Industry today is in the front rank of Indias science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously. Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has

expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control.

The pharmaceutical

industry in India meets around 70% of the countrys demand for bulk drugs, drug

intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations.

Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.

ADVANTAGE IN INDIA

Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available. Cost-effective chemical synthesis: Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs. Legal & Financial Framework: India has a 53 year old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community. Information & Technology: It has a good network of world-class educational institutions and established strengths in Information Technology.

Globalization: The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is continuously growing. Consolidation: For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India. THE GROWTH SCENARIO India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries. Over 20,000 registered pharmaceutical manufacturers exist in the country. The domestic pharmaceuticals industry output is expected to exceed Rs. 260 billion in the financial year 2009, which accounts for merely 1.3% of the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54 billion (21%) and formulations, the remaining Rs 210 billion (79%). In financial year 2009, imports were Rs 20 billion while exports were Rs. 87 billion. STEPS TO STRENGTHEN THE INDUSTRY Indian companies need to attain the right product-mix for sustained future growth. Core competencies will play an important role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 2005. Indian companies, in an effort to consolidate their position, will have to increasingly look at merger and acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets. Research and development has always taken the back seat amongst Indian pharmaceutical

companies. In order to stay competitive in the future, Indian companies will have to refocus and invest heavily in R&D.

The Indian pharmaceutical industry also needs to take advantage of the recent advances in biotechnology and information technology. The future of the industry will be determined by how well it markets its products to several regions and distributes risks, its forward and backward integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-marketing and licensing agreements

Sector Profile THE MEDICAL DEVICES AND EQUIPMENT INDUSTRY The Medical Devices and Equipment industry, valued at US$ 2.5 billion contributes only 6% of Indias US$ 40 billion healthcare sector. Moreover, it is growing at a faster annual rate of 15% than 10-12% growth seen in the Healthcare sector in its entirety. A rise in the number of hospitals and the increased requirement for healthcare facilities creates a need for sophisticated devices and equipment, which can provide accurate treatment to individuals. The Medical Electronics segment of this industry incorporates control, conversion, sensing, processing, storage, display, and transfer of information on anatomy and physiology by making use of the Electronics and Communication Technologies. The Medical Equipment industry is quite wide with > 14,000 different products types, as per the Global Medical Device Nomenclature (GMDN). The products range from wound closure pads to stents and IVD machines of medical devices. Further, it can be reasonably said that Medical Electronics is an area, where Electronics and Information Communication Technology play a decisive role. Moreover, significant efforts have been made in the medical technology ecosystem to stimulate innovation in this space so that the opportunities provided in the Indian market can be capitalized by the companies working in this domain and the Indian consumer of healthcare services stands to benefit. In the past, the sector has significantly brought down the incidence of disease among patients, families, society as well as improved the countrys health s ystem, significantly. However, in India the penetration of medical devices is low and inadequate due to the barriers that prevent their usage. Promotion of the Sector by the Government The government is expected to develop a regulatory structure leading to quality products being developed by manufacturers. However, the current regulatory structure lacks active participation from the government but with the increase in competition in the sector, this is just a matter of time. The last few years have seen an increase in domestic manufacturing of medical equipment. With impetus from Government of India schemes, India is beginning to look forward to being recognized as a manufacturing destination for sophisticated medical technology.

The Private and Foreign Investments International companies in this field are also using India as a manufacturing base by either setting up facilities of their own or by acquiring domestic manufacturers. Some examples include 3 M's manufacturing plant in Pune, Becton Dickinson's manufacturing facility in Haryana, Hollister's setting up manufacturing facility in India and Philips Medical Systems' acquisition of Medtronic and Alpha X-Ray Technologies. Medical Technology Parks have been proposed by the Government of India in addition to the existing parks to encourage domestic manufacturing of medical equipment.

FDI inflow will spur R&D and manufacturing innovations, in turn increasing the efficiency and effectiveness of medical electronic products. Advancement of medical electronic product quality and associated successful diagnostic rates are expected to create a spurt in adoption. Some of the leading Medical Device and Medical Electronics Companies Operating in India 1. 3 M 2. India Medtronic 3. Johnson & Johnson 4. Becton Dickinson 5. Abbott Vascular 6. Bausch & Lomb 7. Baxter 8. Zimmer India 9. Edwards Life Sciences 10. St. Jude Medical 11. Stryker 12. Boston Scientific 13. BPL Healthcare India 14. Sushrut Surgicals 15. Trivitron Diagnostics 16. Accurex Biomedical 17. Biopore Surgicals 18. Endomed Technologies 19. Forus Health 20. HD Medical Services (India) 21. Eastern Medikit 22. Harsoria health care 23. Nidhi Meditech System 24. GE Healthcare 25. Philips Medical 26. Wipro Technologies 27. HCL Technologies 28. Texas Instruments

Role Played by Major Competitors in the Medical Technology Sector Medical Technology companies are undertaking a lot of innovations out of India, both, for the domestic as well as the overseas markets. Transasia Biomedical has developed in-vitro diagnostic equipment through its R&D base in Mumbai. The Sushrut Adler Group has developed an external fixator for the Indian market. Johnson and Johnson have developed a knee implant suitable for the Indian market as well as a reusable stapler for use in surgeries at price points, which are amenable to the Indian market. Roche Diagnostics has developed a screening device for cardio-vascular diseases, which is suitable for use in rural settings. GE Healthcare has developed a low cost ECG machine and a low cost Ultrasound machine for the Indian market. Philips Healthcare is using its recent acquisitions in India to develop and launch a low cost Cath Lab for the Indian market. Drivers for Growth of Medical Technology Sector in India

rance

Key Challenges Faced by the Sector

10

Recommendations for Government to Improve Sector ard adoption of the Global Harmonization Task Forces (GHTF) definition and rules-based classification of medical devices.

funds allocation for training and skill up gradation. control, waste management etc. hence, creating an ecosystem for the benefit of SMEs focusing on medical technology.

healthcare services.

ality and enhance consistency of training received by medical and paramedical staff thereby providing creative resources for leading medical innovation efforts. cies like NIPER.

regulatory approval processes for which partnership with Industry associations maybe considered as a practice instead of sporadic efforts.

incentives for medical technology innovation.

11

Major Players
Apollo Hospitals Enterprise Ltd.
Apollo Hospitals Enterprise Ltd. was launched as a single hospital in Chennai in 1983 and today it has expanded its global reach with the opening of Apollo Bram well hospital in Mauritius. Apollo Hospitals secured $50 million worth of loan from International Finance Corporation (IFC), a member of the World Bank Group, to set-up high quality Hospitals in remote areas of India and is planning to add 2,000 beds within the next two Years for an investment of Rs 1,500 crore to Rs 1,600 crore.8 currently it manages a Network of 43 specialty hospitals and clinics with a bed capacity of 7543 across country And abroad. The Hospital chain has recently launched a health city in Hyderabad and intends on Doing so pan India. It has also tied up with Indian Oil Corporation to set up pharmacies at its petrol stations.

Fortis Healthcare Ltd.

Fortis Healthcare Limited, a leading healthcare delivery company in India was formed With the vision of "creating a world-class integrated healthcare delivery system in India, Entailing the finest medical skills combined with compassionate patient care". Fortis Healthcare will acquire nearly 23.9% strategic stake in Singapore-based healthcare Group, Parkway Holdings from TPG Capital (formerly Texas Pacific Group), in an off market Deal, estimated to be around USD 685.3 million. The companys net sales and Operating profit are expected to grow at CAGR of 28.67% and 48.07% from 2008 to 2011.9

Max Healthcare
Max Healthcare operates 18 healthcare facilities in National Capital Region (NCR) of Delhi, has a bed capacity of around 865 beds and is expected to increase to 1,5001,600 beds in the next few years. Has collaborated with Singapore General Hospital in the areas of medical practices, nursing, paramedical research and training. It plans to raise

12

US$ 85.36 million to expand its hospital.

Narayana Hrudalaya
This super specialty hospital is the first of its kind offering cardiac care facilities and is located in Bangalore. It was set up by the Asia Heart Foundation with the ability to 8 First Call Research-Sectoral Report: Indian Healthcare Sector 9 Ibid 19 perform 25 cardiac surgeries a day. The hospital is based on a model that facilitates social inclusion by charging each patient based on his affordability.

Tertiary Hospitals and Medicities

Large corporations such as the Reliance ADA Group and Aditya Birla Group have entered the industry to capitalize on the attractive growth that corporate hospital chains have been experiencing. The Kokilaben Dhirubhai Ambani Hospital and Medical Research Institute at Mumbai, a tertiary multispecialty hospital has been set up by the Reliance ADA Group. Lately, health cities aimed at catering to larger populations and the medical tourism industry by offering multiple specialties, alternative therapies, research and development centres, educational institutions and residential facilities; have been setup by corporate hospital groups. Dr. Naresh Trehans Medicity, a large area catering to the medical and recuperative aspects for patients, is an example of health cities in India.

Competitors:
These are some of the competitors of CIPLA - APOLLO HOSPITALS (HOSPITAL& MEDICAL SERVICES), AURBINDO PHARMA, BILCARE (PACKAGING), BIOCON, DISHMAN PHARMA, DIVIS LABS, Dr. REDDY's LABS, Pftizer, GlaxoSmithKline, Alkem, Glen mark, Ipca LABS , Lupin, Opto Circuits(Hospitals & Medical Services), Orchid Chemicals, Nicholos Piramal Health, Ranbaxy Labs, Sterling Bio, Sun Pharma, Sun

13

Pharma Advanced Research Company, Wockhardt, Zydus Cadila Healthcare, Ajanta Pharma , Alembic, Zandu Pharma , Aarti Drugs etc.

Competition Table (BSE Data): Company Last Price Market Cap. cr.) Sun Pharma Cipla Ranbaxy Labs Dr Reddys Labs 1,177.25 268.05 319.80 784.70 24,382.78 20738.36 13,443.49 13,235.32 12,192.58 8,228.35 6,861.90 6,723.03 6,128.81 5,425.18 3,861.55 5,270.54 4,494.52 4,197.53 1,685.56 2,967.13 2,333.46 1,203.49 1,945.72 856.11 1,265.29 767.83 -1,032.33 560.89 576.57 416.97 275.32 421.26 265.91 217.93 5,175.02 4,336.35 7,442.15 5,899.40 1,546.72 2,320.21 1,520.76 960.05 2,052.70 1,552.79 Sales (Rs. Turnover Net Profit Total Assets

GlaxoSmithKline 1,439.45 Lupin Piramal Health Divis Labs Cadila Health Glenmark 975.40 328.30 514.95 449.00 216.50

14

CHAPTER-2
COMPANY INTRODUCTION
Cipla was registered as a public company with an authorized Capital of Rs 6 lakhs on August 1935. This was started as a small drug and medicines manufacturer under the name The Chemical, Industrial and Pharmaceutical Laboratories, which came too popularly called as Cipla. Cipla was officially opened on September 22, 1937 when the first products were ready for the market. Khwaja Abdul Hamied founded Cipla. In college, he found Chemistry fascinating. He set sail for Europe in 1924 and got admission in Berlin University as a research student of The Technology of Barium

Compounds". He earned his doctorate three years later. He gave the company all his patent and proprietary formulas for several drugs and medicines, without charging any royalty. Cipla Ltd. has displayed remarkable understanding to grow both vertically and horizontally. Since its formation, Cipla has repeatedly scored success in its industrial ventures by tapping opportunities in the market, even in a fierce competition in the international environment. Today, the company is under the chairmanship of Sh. Yusuf Hamied the Company's principal activities are to manufacture chemicals and pharmaceutical products. The company has more than 1,000 products in the domestic market including generic AIDS drugs, antibiotics, anti-asthmatics, anti-cancer, anti-inflammatory, anti-depressant and other drugs. It produces its products at 10 manufacturing plants located throughout the

15

country. Cipla is the leader in the domestic retail pharmaceutical market, ahead of GlaxoSmithKline. The products of the Company are sold in India, Africa, Middle East, Europe, Americas, Asia and Australia. It also exports raw materials, intermediates, prescription drugs, over- the-counter products, and veterinary products to more than 160 countries around the world. A strong financial base and marketing standing are the main reasons of companys consistent and rapid growth that sustained even more than four decades.

Cipla was established in 1935 with the vision of making India self-reliant and self-sufficient in healthcare. Today, we are one of the worlds largest generic pharmaceutical companies with a presence in over 170 countries. We are renowned for making affordable, world-class medicines that meet the needs of patients across therapies. We also offer services like consulting, commissioning, plant engineering, technical know-how transfer and support.

Incorporated

1935

Corporate Office

Cipla Ltd., Mumbai Central, Mumbai 400 008, India

Chairman

Dr. Yusuf K. Hamied

Executive ViceChairman

Mr. M.K. Hamied

Listing

Equity Shares: BSE Limited and National Stock Exchange of India Limited Global Depository Receipts: Luxembourg Stock Exchange

Turnover*

USD 1.5 billion

Employees*

20,000

Approvals

US FDA, WHO-Geneva, MHRA-UK, TGA-Australia, SUKL-Slovak Republic, APVMA-Australia, MCC-South Africa, PIC-Germany, Danish Medical Agency, ANVISA-Brazil, INVIMA- Colombia, NDA-Uganda, Department of Health-Canada and MOH-Saudi Arabia, among others

16

Highlights

One of the worlds largest generic companies. Over 2,000 products, 65 therapeutic categories, over 40 dosage forms.34 state-of-the-art manufacturing facilities approved by major international regulatory agencies Continuous innovation in R&D;

Share holding pattern

Major Achievements of Cipla:

Manufactured ampicillin for the first time in India Lauched etoposide, a breakthrough in cancer chemotherapy, in association with Indian Institute of Chemical Technology

Launches transparent Rotahaler, the world's first such dry powder inhaler device Launches transparent Rotahaler, the world's first such dry powder inhaler device Became the first company, outside the USA and Europe to launch CFC-free inhalers

17

Business Overview
The present businesses of Cipla can be broadly classified into: Domestic branded formulation sales (74% of total sales; 19-20% operating profit margin) Domestic unbranded formulation sales (7% of total sales; over 10% operating profit margin) Exports (19% of total sales; around 38-40% operating profit margin). Breakup of exports is as follows:

Europe (17%), US (30%), Africa (34%), Middle East (8%) and Australia (11%). Cipla has been relatively low profile on its R&D initiatives compared to the domestic peers, all of whom have set their sights on discovering new chemical entities (NCEs). But lately, R&D spend of Cipla has increased by 25% to Rs. 300 mn (4% of sales) and the company has an R&D team of 200 people. In future the R&D expenditure is expected to grow at a faster pace compared to sales and might rise to over 5% of sales. The business environment for Cipla has become highly competitive in the last few years. The major factors affecting Cipla are as follows: New Drug R&D costs are prohibitive, which has made MNCs to spread their R&D costs through Mergers / Acquisitions.

18

In Indian Pharmaceutical Sector prices of over 60% of the Drugs/Formulations is controlled by the government through DPCO (Drug Price Control Order). For Cipla DPCO coverage is around 55% Low entry barriers in the bulk drugs market has led to a situation of over-capacity, which has made major domestic players, shift their focus towards formulations segment. As a result Cipla, which is earning nearly 80-85 percent of its sales from formulations, is facing increasing competition. With the focus on post 2005 era, MNCs are strengthening their position in India through marketing tie-ups with local majors and fully owned subsidiaries. This can lead to even higher degree of competition

HISTORY

Ciplas journey began in 1935 when our founder, Dr. K. A. Hamied, set up an enterprise with the vision to make India self-sufficient in healthcare. Over the past 77 years, we have emerged as one of the worlds most respected pharmaceutical names, not just in India but worldwide.

We have 34 state-of-the-art manufacturing facilities that make Active Pharmaceutical Ingredients (APIs) and formulations, which have been approved by major international Regulatory Agencies. We have over 2000 products in 65 therapeutic categories; with over 40 dosage forms, covering a wide spectrum of diseases ranging from communicable, non-communicable, common and emerging diseases to even rare diseases.

19

There Research and Development (R&D) centre is focused on developing innovative products and drug delivery systems, giving the country and the world many Firsts'. Today, They are one of the worlds largest generic pharmaceutical companies with a strong presence in over 170 countries. We maintain world-class quality across all our products and services. Whether its for millions or for just a few hundreds, our journey to care for all humanity continues. Milestones

In 1935, There founder, Dr. K. A. Hamied set up Cipla to make India self-reliant in healthcare. In 1939, Mahatma Gandhi visited Cipla and inspired our founder to make essential medicines for the country, and strive for self-sufficiency. During World War II, when India was dependent on imported medicines and there was an alarming shortage of life-saving drugs, They manufactured them for the country.

In the 1960s, we pioneered API manufacturing in the country and helped lay the foundation for the bulk drug industry in India.

In 1970, we spearheaded the New Patent Law by which an Indian pharmaceutical company was allowed to manufacture a patented product as long as the process to manufacture it was changed. This enabled Indian companies for the first time to manufacture any medicines and make them available and affordable for all Indians.

In 1978, They pioneered inhalation therapy in India with the manufacture of Metered-Dose Inhaler (MDI), at a time when the country stopped receiving imported supplies. Today, They have the worlds largest range of inhaled medication and devices.

In 1994, They launched Deferiprone, the worlds first oral iron chelator which revolutionized the treatment for thalassemia. For the first time patients with thalassemia had an option that was affordable, painless and convenient.

In 1996, They gave the world the first transparent dry powder inhaler which was so simple and easy to use, it changed the face of inhalation therapy in India.

In 2001, They pioneered the access to HIV treatment by making antiretroviral (ARVs) available at less than a Dollar a Day'. The cost of treatment dramatically fell from $12,000 per patient per year to $300 per patient per year. This caused a revolution where HIV treatment became a reality for the world and millions of lives could be saved.

During the 2005 Bird Flu epidemic, They produced an anti-flu drug within a period of 2-3 months, which would have normally taken at least 3 years to develop.

20

In 2012, they made a breakthrough in reducing the prices of cancer drugs, thus making world-class medicines affordable and accessible to cancer patients.

They are committed to addressing the unmet medical needs of the world by venturing into newer challenges in platform technologies, biotechnology and stem cells.

They will continue to support, improve and save millions of lives with our high-quality drugs and innovative devices. And with the dedication of 20,000 employees, They are ready to face the future challenges of healthcare.

BOARD OF DIRECTORS

Founder Dr. K.A.Hamied (1898-1972)

Chairman Dr. Yusuf K Hamied

Executive Vice-Chairman Mr. M.K. Hamied

Managing Director and Global Chief Executive Officer Mr. Subhanu Saxena Whole-time Director Mr. S. Radhakrishnan

Non-Executive Directors Dr. H.R.Manchanda Mr. V.C.Kotwal Mr. M.R.Raghavan

21

Mr. Pankaj Patel Mr. Ashok Sinha

GLOBAL BUSINESS

They have a global presence in over 170 countries through exports and strategic alliances. There exports include raw materials, intermediates, prescription drugs, OTC and veterinary products. They have partnerships/alliances for product development, technical support and marketing, and help several developing countries in their quest for self-reliance. They are known for our uncompromising quality standards in all our products and services, across the world. CODE OF CONDUCT

As required under revised Clause 49 of the Listing Agreement the following code of conduct has been approved by the Board of Directors and is applicable to the Directors and Senior Management of the Company.

1. Ethical conduct All directors and senior management employees shall deal on behalf of the Company with professionalism, honesty, integrity as well as high moral and ethical standards. Such conduct shall be fair and transparent and be perceived to be as such by third parties.

2. Conflict of interest Any director or senior management employee of the Company shall not engage in any business, relationship or activity, which might detrimentally conflict with the interest of the Company.

3. Transparency All directors and senior management employees of the Company shall ensure that their actions in the conduct of business are totally transparent except where the needs of business security dictate otherwise. Such transparency shall be brought about through appropriate policies, systems and processes.

4. Legal compliance All directors and senior management employees of the Company shall at all times ensure compliance with all the relevant laws and regulations affecting operations of the Company. They shall keep abreast of the affairs of the Company and be kept informed of the Company's compliance with relevant laws, rules and regulations. In

22

the event that the implication of law is not clear, the course of action chosen must be supported by eminent legal counsel whose opinion should be documented. 5. Rightful use of the Companys assets. All the assets of the Company both tangible and intangible shall be employed for the purpose of conducting the business for which they are duly authorized. None of the assets of the Company should be misused or diverted for personal purpose.

6. Cost consciousness All the directors and senior management employees of the Company should strive for optimum utilization of available resources. They shall exercise care to ensure that costs are reasonable and there is no wastage. It shall be their duty to avoid ostentation in Company expenditure.

7. Confidential information All directors and senior management employees shall ensure that any confidential information gained in their official capacity is not utilized for personal profit or for the advantage of any other person. They shall not provide any information either formally or informally to the press or to any other publicity media unless specifically authorized to do so. They shall adhere to the provisions of SEBI (Prohibition of Insider Trading) Regulations,1992.

8. Relationships with Suppliers and Customers The directors and senior management employees of the Company during the course of interaction with suppliers and customers shall neither receive nor offer or make, directly and indirectly, any illegal payments, remuneration, gifts, donations or comparable benefits which are intended or perceived to obtain business or uncompetitive favours for the conduct of its business. However, this is not intended to include gifts of customary nature.

9. Interaction with Media

23

The directors and senior management employees other than the designated spokespersons shall not engage with any member of press and media in matters concerning the Company. In such cases, they should direct the request to the designated spokespersons.

10. Safety and Environment The directors and senior management employees shall follow all prescribed safety and environment-related norms.

SUSTAINABILITY Sustainability is an integral part of Ciplas business strategy. We believe in the responsible management of our growth. This goes hand in hand with caring for the environment and improving the quality of life for society at large. Caring for Health, Safety and Environment Occupational Health, Safety and Environment (HSE) initiatives are an important part of our business activities. All our facilities maintain high standards of occupational HSE practises and most of them are certified for ISO 14001 and OHSAS 18001 standards. We also have a defined environmental strategy that focuses on reducing our carbon footprint by saving energy, and following water and waste management procedures. We were among the first companies to manufacture CFC-free inhalers a good 10 years before the Montreal Protocol January 2010 deadline. Some of our continuous efforts to upgrade HSE standards:

Establishing well-equipped facilities and safety laboratories. Conducting regular safety training programmes, including those on behavioral safety to increase safety awareness at all working levels.

Celebrating Safety Week, Fire Service Day and Electrical Safety Day to create awareness and motivate employees. Villagers and school children living around the Companys plants across India also participate in such programmes.

Conducting a green drive programme of mass tree plantation to celebrate World Environment Day and Earth Day.

Maintaining a modern, well-equipped effluent treatment plant at all our manufacturing facilities. Treated water from these zero discharge facilities is used for maintaining green belts around the factory premises.

24

Corporate Social Responsibility Being a good corporate citizen is an integral part of our core value - caring for life.

The Cipla Palliative Care and Training Centre in Pune continues to provide holistic care to terminally ill cancer patients and their families free of charge. Till now the Centre has given treatment, comfort and solace to more than 7,700 patients. The focus of the Cipla Palliative Care Centre is to reach out to more cancer patients who need Palliative Care and to integrate Palliative medicine with curative therapy.

We extend support to Manavya, a Pune-based organization which runs a home for children with HIV infection. Manavya operates a mobile dispensary in villages on the outskirts of Pune and it is fully funded by the company.

On the occasion of Ciplas Platinum Jubilee in 2010, we set up the Cipla Foundation by contributing a sum of Rs. 5 crore. The Foundation aims to provide care and financial support to people in need of healthcare and education in India.

In a humanitarian effort to support cancer patients and relieve their burden, we made a breakthrough in reducing the prices of cancer drugs, thus making world-class medicines accessible to patients in India.

We work closely with several reputed non-profit organizations such as Drugs for Neglected Diseases Initiative, Medecins Sans Frontieres and the Clinton Foundation in order to make drugs for malaria, HIV/AIDS and several neglected diseases, available at affordable prices. We also provide medicines to treat over a million poor, aged patients in slums and villages through non-profit organizations. In addition, we support several health, educational and welfare activities in communities surrounding the companys factories, both directly and through our Charitable Trusts, by providing healthcare education, improvement of community infrastructure, scholarships, etc. This is part of our commitment to improve the quality of life for these communities

LEADERS IN DRUG DELIVERY Cipla's Research & Development (R&D) is focused towards developing new products, improving existing products as well as drug delivery systems and expanding product applications. Hundreds of scientists work on all facets of pharmaceutical development and technology. In-house R&D forms the backbone of our operations. With almost 5-6% of the company turnover being invested towards R&D each year, our strategy focuses on:

Developing new drug formulations for existing and newer drug substances.

25

Improving processes for existing API and formulation products. Developing new drug delivery systems for existing and newer active drug substances, as well as newer medical devices, mainly in the area of respiratory medicine.

Tie-ups with independent research teams to develop new products. Strengthening our intellectual property, including the patenting of new products, drug delivery systems and medical devices, mainly in the area of respiratory medicine.

Conducting clinical and bio-equivalence studies for obtaining regulatory approvals for new products and services.

In addition, for our international business, our R&D team works with our strategic partners to file Drug Master Files (DMFs) and Abbreviated New Drug Applications (ANDAs) in the US, and seek marketing authorizations in Europe and file product registrations in other jurisdictions. We have earned a name for maintaining world-class quality across all our manufacturing units, products and services. We have consistently introduced more than 40 products annually, over the last decade.

We have been granted about 100 patents. Patent filing includes drug substances, drug products, platform technologies, IP on polymorphs and crystallinity, and medical devices.

139 DMFs, 87 registered ANDAs and 25 ANDAs under review in the US. About 1000 DMFs for a total of 101 APIs; 49 COS approved. Over 700 marketing authorizations in Europe. Over 10,000 product registrations globally. 49 products pre-qualified by World Health Organization (WHO). Supported 2 NDA filings for our partners and have 16 NDAs of our own.

We also leverage our R&D efforts to provide our customers with technical dossiers, plant layouts for pharmaceutical product manufacturing, development of processes and regulatory batches.

Cipla's pool of Innovation

Cipla has over 2000 products in 65 therapeutic categories available in over 40 dosage forms, including:

26

Liposome Injection Microsphere Injection Topical Delivery System Inhalation Technology:

o Metered-Dose Inhaler o Dry Powder Inhaler & Respiratory Solutions

Nasal Drug Delivery Ophthalmic Solutions Pre-filled Syringe Hormone Injection Nanotechnology Melt Extrusion & Hot Melt Granulation Particle Engineering

API DEVELOPMENT
Cipla was among the first Indian companies to develop and manufacture Active Pharmaceutical Ingredients (APIs), the vital raw material for making the drug products. Thus helping lay the foundation for the pharmaceutical industry in India. Today, we manufacture over 200 generic APIs. This formidable portfolio covers a broad spectrum of therapeutic categories, reaching out to over 170 countries around the world. We meet stringent international standards of quality to deliver API. Thats the Cipla benchmark. We have three API manufacturing plants in India, located at Patalganga, Kurkumbh and Bengaluru which rank among the best in the world. Approved by major international regulatory agencies, they are capable of producing synthetic high potency APIs in grams and tonnes. To meet the increasing demand for APIs in the future, we are multiplying our efforts and gearing up to deliver uncompromising quality and customized solutions.

27

FORMULATION DEVELOPMENT

Formulation Research and Development in Cipla is accomplished by experienced scientists, technicians and chemists. The team specializes in creating alternate and patentable processes for generic formulations. It is equipped to conduct the following processes for formulation development:

Product and process optimization Analytical method development Analytical method validation Evaluation and techno-marketing studies Technology transfer

Our scientists, with pre-formulation insight and proficient knowledge in pharmaceutical ingredients, are equipped to create the best combination of materials and manufacturing methods. The R&D facility is geared toward development of technologically challenging products. Over the years, the Cipla R&D innovation team has created several distinctive technology-based products which improve patient convenience and compliance. Some examples of such Value-added generics include dispersible tablets, orally dissolving films, candy lozenges, multi-layered tablets, etc. Our strong R&D focus has resulted in around 100 Patents being granted on drug substances, drug products and devices. We strive to develop cost-effective, high-quality formulations to make the life of the patient better.

RESPIRATORY DEVICES

Another expression of Ciplas continuing commitment to respiratory care is the unique range of devices we have developed over the years, for every age and every stage of asthma and COPD. In fact, we have the worlds largest range of inhaled medication and devices.

28

Our R&D has the expertise to modify and optimize both the device and the formulations to create the most favourable combination, keeping in mind the patients needs and convenience. The spectrum of inhaler devices and drug/device combinations available today has helped millions of people breathe better.

Highlights of Ciplas devices

Transparent Rotahaler1 The worlds first transparent dry powder inhaler Revolizer Novel single-dose capsule dry powder inhaler Multi-haler Multi-dose dry powder inhaler Autohaler2 First breath-actuated metered dose inhaler in India Zerostat and Zerostat VT Non-static spacers Babymask and Infantmask For delivery of inhaled medications to young children Nasal sprays A variety of nasal sprays for treatment of nasal allergy

The widest range of Dry Powder Inhaler devices Our DPIs have been developed to ensure consistent dose delivery through patient-friendly devices Rotacaps and Multi-halers comprising the actives and a high grade excipient. The Rotahaler, launched in 1996, heralded the era of patient-friendly inhalation therapy. Transparent, simple to use, and with consistency of dose, it has transformed the lives of millions of asthmatics. The Revolizer is a new generation, patient-friendly dry powder inhaler, exclusively developed by Cipla. It is probably the easiest device to use. The patient simply opens the Revolizer, inserts the Rotacap, shuts the device and inhales. It provides accurate dosing, even at low inspiratory flow rates. A revolution in inhalation therapy indeed.

The Multi-haler is a multiple dose dry powder inhaler device with an inbuilt dose counter. It disperses individual pre-metered doses from a blister and needs just a single step for use. A simple action of sliding the mouthpiece cover punctures a blister to release the drug powder, which is then inhaled through the mouthpiece. It gives precise and consistent dosing. The range of Metered-Dose Inhaler devices Cipla MDIs are designed to deliver accurate and consistent dosing by using the most sophisticated metered dose valves, canisters and actuators.

29

The Autohaler is a new advance in MDI therapy. It is a unique Breath-Actuated Inhaler (BAI) and overcomes the key problem of the MDI, which is co-ordination of actuation with inhalation. It can be activated at low inspiratory flow rates and can be easily used by children and by those who suffer airflow obstruction and arthritis. Cipla is the first company in the world to market combination therapy through the Autohaler.

Range of Spacers and related devices Spacers (sometimes also called holding chambers) are devices that hold the medication for a few seconds after it has been released from the MDI. They overcome the co-ordination problem and also slow down the aerosol spray before it reaches the mouth, thus allowing the propellants to evaporate and larger particles to settle in the spacer. This reduces the incidence of oral thrush and the amount of drug that is swallowed, thus minimizing side-effects.

The Zerostat Spacer is a static-free, non-transparent spacer without a valve. Being static-free it results in much higher drug deposition and enhances the effectiveness of MDI therapy. The Zerostat VT Spacer is a unique transparent, static-free spacer with a valve. It ensures that more quantity of the drug reaches the lungs following inhalation, with the result that patients receive a high and consistent quantity of medication, dose after dose. The Babymask and Infant mask make it easy to deliver inhaled medicines to young children using an inhaler and a spacer device. It is made of comfortable, soft, clear silicon and is reusable. It fits snugly and is also equipped with an exhalation vent for easy breathing. The Huf Puf Kit consists of a Zerostat VT Spacer attached to a Babymask and can be used with any Cipla MDI. It is easy-to-use with no need to dismantle and re-assemble the kit every time. It has an attractive and childfriendly pack and is convenient to carry. All our devices have obtained CE certification and help the world breathe better.

PLATFORM TECHNOLOGIES
Cipla has made strategic investments in common platform technologies such as sustained release and combination products, and in key platforms to enhance drug delivery system capabilities. These technologies

30

enhance the drugs safety and its efficacy by a targeted therapy approach. In some instances, the convenience of patients is an important factor.

The strategic aim is to formulate differentiated products that overcome the key challenges of conventional drug delivery systems and add value to current products.

QUALITY & APPROVALS

Cipla has 34 manufacturing facilities across India. We have dedicated plants for the technologically-challenging formulations such as Oncology products, Hormones, Metered-Dose Inhalers (MDIs), Beta-Lactams, Cytotoxic, Injectables and Cephalosporins. Our manufacturing plants and processes are seen as among the most sophisticated in the world. They roll out world-class products in over 65 therapeutic categories.

We use state-of-the-art technology, the most stringent operating procedures, a highly motivated and technically competent team, highest standards of safety practices and environmentally green and clean processes.

We have earned a name for ourselves worldwide for adhering to the highest standards of quality and have received approvals from various Ministries of Health and major international Regulatory Agencies.

US FDA WHO - Geneva MHRA - UK TGA - Australia SUKL - Slovak Republic APVMA - Australia MCC - South Africa PIC - Germany Danish Medical Agency INVIMA - Colombia NDA - Uganda ANVISA Brazil

31

CAPACITIES

Annual Manufacturing Capacities Products Tablets and Capsules Aerosols Pmdi Respules Lyophilised Injections Pre-filled Syringes Form Fill Seal Eye Drops UNIMS Oral Liquids APIs Capacity 18 Billion units 100 Million units 400 Million units 20 Million units 45 Million units 75 Million units 60 Million units 35 Million units 800 Tons

Key therapies
Childrens health
Cipla believes the child is the most important person in the universe of healthcare, and has unique needs which are different from that of adults. We are committed to addressing not just their needs, but also those of their parents. Thats why we make sure that our pediatric formulations are gentle on the system, our bottles are double-sealed, droppers are easy-to-use and the asthma kit is child-friendlyWe go the extra mile and develop medicines that are critical in pediatric care. We manufacture pediatric products in various child-friendly formulations like syrups, suspension, dispersible tablets, orally disintegrating tablets, sprinkles, granules etc.

32

For rare diseases like Thalassemia, we make Deferiprone, the worlds first oral iron chelator and Deferasirox. For pediatric HIV, we specially created the worlds first triple drug combination (Nevirapine + Stavudine + Lamivudine) in dispersible form. We are also working on a range of dispersible/sprinkle antiretrovirals in pediatric strengths to make the treatment easy for children.

Diabetes
Cipla has played a significant role in diabetes treatment and control and has developed a range of anti-diabetic drugs for the management and control of diabetes and the treatment of complications that arise due to it. Besides, our doctor and patient services are aimed at creating greater awareness to fight the disease.

Some of our highlights:

We have several products as single and combination pills to treat diabetes: Metformin, a single drug, Metformin plus Glimepiride, a dual combination and Metformin plus Glimepiride plus Pioglitazone, a triple drug combination.

We also have drugs to manage diabetic complications like Atorvastatin and Fenofibrate for high cholesterol, Pregabalin for painful diabetic neuropathy and Cilostazol for intermittent claudication.

Physical activity is one of the key factors in controlling glucose levels. We have made considerable efforts to educate patients about the importance of exercise in diabetes management. One of our unique tools is an exercise reminder on the flap of each pack.

We conduct several clinics where we regularly carry out the screening of patients for early diagnosis of diabetes and its complications.

We provide valuable services to the medical fraternity - the latest medical updates, CMEs, workshops and conferences conducted in collaboration with international scientific organizations.

In our fight against diabetes we are committed to introduce new drugs and patient services that focus on better management of this disease. HIV/AIDS Cipla has been committed to the cause of HIV/AIDS for over two decades. In our crusade against the disease, we have developed over 15 single and combination medicines that revolutionized HIV therapy, not just in India but across the world in 2001, we introduced the worlds first ever recommended 3-in-1 fixed dose combination (Stavudine + Lamivudine + Nevirapine) to fight AIDS. It was made available at less than $1 per day compared to over $12,000 per patient per year prevailing in most countries throughout the world. It lifted the death

33

sentence from millions across the developing world. We have also done pioneering work in pediatric HIV and addressed the needs of every kind of HIV patient, from pregnant mothers to babies and from children to adults.

Not surprising that today around 1 million patients in the world are on our antiretrovirals, and with regular therapy they can live for years and lead a near normal life. Besides, our world class scientific resources and educational platforms are helping physicians across India and the world manage the disease effectively. We have even given our support to the development and dissemination of guidelines for the medical community in India. Malaria It has always been our mission to reach out whenever there is a need. Thats why we are committed to fighting malaria, one of the worlds most dreaded diseases. It is a leading cause of death due to limited availability of anti-malarial drugs and accurate diagnosis. Our fight against malaria goes back to World War II when we made quinine available to soldiers fighting in the eastern part of India. In the 1960s and 1970s, the incidence of malaria in India came down dramatically due to Government initiatives which used insecticides to kill the mosquito which carries the parasite that causes malaria. However, the mosquito developed resistance to insecticides and the malaria parasite to chloroquine. In order to counter this, we relaunched quinine, one of the most potent and effective anti-malaria drugs. Since then, we have made a significant contribution of antimalarial products, not just to India, but to the world. We are one of the largest suppliers of anti-malarial drugs in the world. Womens health Ciplas commitment to womens health began in 1979, with the launch of Clominphene citrate for infertility in women. Over the years, we have developed an entire range of products dedicated to help women across age groups lead more fulfilling lives. From managing polycystic ovarian syndrome to maintenance of early pregnancy, from preventing post-partum haemorrhage to hormonal treatment, to helping menopausal problemswe have medication for every stage of a womans life. We export our womens health products to several countries globally. We have honoured womanhood with an iconic statue of the mother and child at our state-of-the-art Goa manufacturing facility. Because we believe that if we have happy and healthy women, we can have a happy and healthy world. Partnering Collaboration The core of our international business is strategic alliances for product development, registration and distribution of our products. In addition, we also maintain long-standing relationships with non-government organizations and institutions globally. Our international business continues to be a major revenue driver for the company. Our overseas sales have consistently grown and represent almost 53% of our total income. In order to

34

meet the increasing demand, we are continuously expanding and modernizing our Manufacturing and Research & Development facilities. We collaborate with others in industry, academia, government and non-government organizations and healthcare providers as a strategy to develop a diversified global business, and deliver more products of value through:

Joint ventures in Manufacturing & Technology Marketing and Distribution collaborations Know-how transfer Products, Process, New Developments Quality Management Turnkey Projects GMP Training Plant Engineering Contract Manufacturing Consulting

Locations
We are one of the largest exporters of pharmaceutical products from India, exporting API and formulation products to over 170 countries. This includes the U.S., Canada and countries in Europe, Africa, Australasia, Latin America and the Middle East. Licensing Out-Licensing: We have unique technologically challenging products across various therapy areas available for licensing. To ensure the products reach patients worldwide, we believe in out-licensing products to companies which have commercialization strengths in their markets. This helps not only in developing longlasting relationships but also strong brands. We work in 6 different areas, namely: In-Licensing: We continuously strive to ensure the widest reach possible and are backed up with a 8000+ strong sales force in the country. We are committed to reaching out to every geographical boundary in India, the list of which includes:

Metros and mini-metros Secondary towns Interiors and micro-interiors

35

Health centres (PHC/BPHC/CHC) Government and corporate hospitals Medical colleges & institutions Hospitals for Railways/CIL/BHEL/SAIL/Air India Rural markets

We also possess the widest range of specialties, and as part of our massive reach, we cater to various categories of doctors and allied health professionals like:

Consultants, HODs, Professors Post Graduates MBBS /non-MBBS (BUMS/BHMS etc ) Rural doctors Paramedical personnel Pharmacists

Doctor services
We reach out to over 5,00,000 doctors in India with quality medicines, unique support services and educational programmes across 18 therapeutic categories. We have been at the forefront of helping doctors keep abreast with the latest developments in medicine through CMEs, seminars, lectures by international experts and by providing them with innovative and patient-friendly products. We also have a dedicated website for medical professionals. We cater to all levels of doctors, from post-graduates to family care physicians to specialists. Some of our key services:

Professional updates through conferences and seminars by world-renowned scientists and doctors. CME programmes with professional bodies and academic centres. www.ciplamed.com, an exclusive online resource for the medical fraternity - with eCME webcasts, up-todate news of therapies, mobile applications and more...

Cross talks between doctors of various therapies. Camps and clinics for improving diagnosis and adherence in patients. Breathe free Care and Educators to assist the doctor in counseling patients with asthma, AR and COPD.

Patient education

36

We believe that its not enough to make affordable world-class medication. To really make a difference, patients should be well informed about the nature of their illness and the treatment. Thats why we work closely with the doctor community - to dispel myths regarding the disease, raise awareness, provide educational materialso that patients can improve their lifestyle, take their medication properly, and lead a better quality of life. Some exemplary patient services by Cipla:

Dedicated educational material for asthma, HIV/AIDS, diabetes, heart disease, blood pressure, prostate, hormonal problems... Unique, easy-to-understand multimedia tools films, booklets and posters on various ailments written by our in-house medical team, in 9 different Indian languages (besides English), to help patients understand their health problems better.

Breathefree a special support programme for those with asthma. Besides having a dedicated patient education website, www.breathefree.com, we also employ Breathe free Care and Educators to assist the doctor in counseling and training patients on using their inhalers and other devices correctly.

Patient-friendly packaging with easy instructions and simple icons to motivate the patient to complete the full therapy. Usage of new media For example, sms campaigns to remind patients not to forget their dose.

These are just some examples of our care and commitment towards patients.

Human resource development is recognized as the assets of any organization at all ranks. It is
for the reason that considerable attention is given to Human Resource Development. The development programmers aimed at motivation and enhancing efficiency at all levels. Cipla supplies its cheap anti-AIDS drug to more than 35 countries, mainly in Africa. In March it was named by World Health Organization as one of the preferred suppliers of Anti- AIDS drugs. Cipla is aggressively expanding its therapeutic reach in high margin segment of cardiovascular, diabetic, anti asthma inhalers and central nervous system to boost domestic sales. With marketing joint ventures in all major markets of Europe, Australia, Africa, South East Asia, China and US. The company comes with modern drugs at a comparatively lower price in the domestic market

PERFORMANCE REVIEW

37

Sales for the year crossed Rs. 23,250 million recording an impressive 18% growth over the previous year. This was achieved despite depressed sales in 4th q., mainly on account of confusion related to the implementation of value added tax and the heavy of excise duty on the MRP of formulation. Cipla maintained its leadership in the domestic market, retaining its no.1 rank in the ORG IMS rating (Retail store audit MAT March, 2005).Exports grew by 30%, exceeding Rs. 10,500 million. Both active pharmaceutical ingredients (APIs) and formulations contributed to the growth in business in the international market. Overseas business now forms 45% Of the Companys total turnover. The company received the express pharmacy pulse award for overall performance and jointly the best exporter award. The Companys strategic alliances with its international marketing partners progressed as envisioned. The overall net profit of the company at Rs 4096 million grew by 33%. This was mainly on account of improved product mix, optimization of resources and higher non-operating income.

NEW PRODUCTS The company yet again took a head in the introduction of many new products and APIs in the country. Some of the formulation has unique distinction of being the first in the world in their respective therapeutic class. These were;

Dove (titropium and formoterol inhaler and rotacaps) long lasting combination bronchodilator for COPD. Douvir E kit (lumivudine, zidovudine and efavirenz tablets) Noval triple drug fixed dose combination kit for HIV/AIDS. Duonase (azelastine and fluticasone nasal spray) New steroid-decongestant combination spray for allergic rhinitis. Levovil (levosalbutamol inhaler, rotacaps, tablets and syrup) The first chiral salbutamol bronchodilator for asthma in these dosage forms. Mucinac (n-acetylcysteine affervascent tablets) Mucolytic antioxident. Seroflo Multi-Haler ( salmeterol and fluticasone). The first single action multi-dose dry powder inhaler (DPT) for asthma and COPD.

Voltanec (aceclofenac and beta-cyclodextrin tablets) Fast acting non-sterodial anti-inflammatory drug

38

INTERNAL CONTROL SYSTEMS

The companys internal control procedures are designed to keep pace with the organizations growth in size and complexity of operations. These measures ensure compliance with various policies, practices and status. Ciplas internal audit team carry out extensive audits accords across all functional areas, throughout the year and submit their reports of the Audit committees of the Board of Directors.

HUMAN RESOURCES
In keeping with its policy of enhancing the individuals growth potential within the framework of corporate goals, training of technical and marketing personnel continued to receive maximum attention. The Director records their appreciation of the support and contribution of all employees towards the growth of the company. Particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956 from past of this report. Any shareholder interested in obtaining a copy may write to the company secretary at the Registered office of the company.

OPPORTUNITIES
INTERNATIONAL MARKETS
Exports will be the thrust area for growth in the near future. The company is well geared to meet this objective with its state-of-the-art. Manufacturing facilities at Goa , Kurkumbh, Patalganga and now of Baddi. Ciplas products are registered in over 150 countries. Strategic alliances with various partners in the regulated and other market will contribute to future growth

OTHER WELFARE ACTIVITIES

The Company also continued to support education and community welfare, directly and through its charitable trusts. The Company provided medicines to treat over a million poor, aged patients in slums and villages

39

through Helpage India as part of its social responsibility initiative. The Company also provided free medicines to the tsunami-affected in India and Sri Lanka.

SHARE CAPITAL
Pursuant to the Scheme of Arrangement sanctioned by the Bombay High Court vide its Order dated 11th June 2004 and consequent to the approval already granted by the members under Section 81(1A) of the Companies Act, 1956 the Company has allotted 8488 Equity Shares of Rs.2 each on 10th September 2004. These shares have been listed on The Stock Exchange, Mumbai (BSE) and National Stock Exchange of India Limited (NSE

Organizational Structure
Cipla has incorporated a unique, flat organization structure that seems to work for them. Brother, MK Hamied, looks after marketing and his cousin Amar Lulla heads the finance division, while YK Hamied is responsible for Cipla's overall vision and strategy. Stories about Hamied the workaholic are legendary. Managers at Cipla say that whenever he is inIndia, he is in office by seven in the morning, looking at new products in the laboratories. Hamied is basically a scientist by nature. Apart from driving Cipla's international growth heis actively involved with his 200-people strong R&D division. Employees at Cipla are very well paid. His chemists with PhD's make about $10,000 (Rs480, 000) a year, a good salary in India. The lowest-paid of his 3,500 employees makes about $2,400 (Rs115, 200) a year. Hamied may be generous with employees but it does not mean that he is not aware of costs .In fact the reason he manages to charge less for all his drugs is because he is a shrewd cost cutter, and keeps his overheads low.

40

Product & Services

Cipla has the largest product basket among all the pharmaceutical players in India ranging from prescription to OTC to animal health, besides a big kitty for active pharmaceutical ingredients (APIs) or bulk drugs. Prescription Amoebicides/Antiprotozoals, Anabolic steroids, Anaesthetics, Analgesics/Antipyretics,A nt aci ds , Ant hel m i nt i cs , Ant i-i nfl am m at or y dru gs , Ant i -TB dru gs, An t i acne dru gs, Antiallergic Anti alzheimer drugs, Antiasthma drugs, Antibiotics and Anti bacterials Anticancer drugs etc. OTC Ciplas over-the-counter drugs portfolio comprises the following segments Analgesics Oral, Artificial Sweetener, Calcium, Preparations, Child Care, Cold & Flu, drugs,

41

C ons t i pat i on, C osmet i cs & S ki n C are, Dent al C are & O ral H ygi en e, Di a rrhoe a, Food Supple ments, Indigestion, Infant Food, Medicated Plasters, Medicated Shampoos, Veterinaryetc. Ciplas animal health care products division has four sections dedicated for equine, poultry, animals, livestock animal products, apart from Herbal Specialities. Active Pharmaceutical Ingredients (API) Cipla is one of the biggest exporter of low-cost, high quality APIs across the world. Major bulk drugs and intermediates manufactured by Cipla are:

Adefovi r Di pi vox yl , Al bendaz ol e US P , Al but erol S ul fat e, A l endronat e S odi um .3H2O, Alpra zolam, Amlodipine Besylate, Anastrazole, Atorvastatin, Aripiprazole, Azelastine HCletc.

Animal Health Care Products: These include: aqua products, equine products, poultry products,
products for companion animals, and products for livestock animals. Flavour & Fragrance: Cipla manufactures a wide range of flavours, which are used in foods and beverages, fruit juices, baked goods, and oral hygiene products. Cipla fragrances have wide ranging applications such as in personal care products, laundry detergents and room fresheners.

Exports
Cipla exports raw materials, intermediates, prescription drugs, OTC (Over the Counter) products and veterinary products to more than 160 countries including the U.S. and a number of countries in Europe, Africa, Australia, Latin America and the Middle East. Cipla shipped products worth more than Rs.10, 500 million last year. Cipla also offers technology for products and processes. Cipla's manufacturing facilities have been approved by: Food and Drug Administration (FDA), USA; Medicines and Healthcare products Regulatory Agency (MHRA), UK; Therapeutic Goods Administration (TGA), Australia Medicines ControlC o u n c i l ( M C C ) , S o u t h A f r i c a ; N a t i o n a l I n s t i t u t e o f P h a r m a c y ( N I P ) , H u n g a r , Pharmaceutical Inspection Convention (PIC), Germany; World Health Organization (WHO); Department of Health, Canada State Institute for the Control of Drugs, Slovak Republic and ANVISA, Brazil. Cipla keeps the steady momentum of growth with an overall growth of more than

42

57% in income from operations for the quarter ended March 2006. Currently, we are one of the largest exporters of pharmaceutical products in India, exporting APIs and form ul at i on product s t o m ore t han 160 c ount ri es i ncl udi ng t he U.S ., and a num ber

o f count ri es i n Euro pe, Afri c a, Aust ral i a, Lat i n Am eri c a an d t he Mi ddl e East . Bot h t heinte rnational as well as the domestic business have recorded a growth of more than 56% and63% respectively, in the last quarter. All the major segments including anti -asthmatics, cardiovascular and anti-biotics/ bacterials segments have shown good performance in the domestic market. In the exports markets, antiretroviral, anti-malarial, anti-asthmatics, anti-depressants and cardiovascular segments have performed well. Cipla has filed 658 DMFs (Drug Master File) and 71 ANDAs (Abbreviated New Drug Application). The company has globally also and

secured 170 marketing authorizations in Europe 4,000

product registrations

7000 pending approvals and Exports grew by 37% Accounts for 50% of total sales; API (active pharmaceutical ingredients) exports grew by 120%

43

CHAPTER-3 ANAYLYSIS AND DISCUSSION

Profit & Loss Of Cipla Ltd.
(

Rs in Cr) Mar' 09

Mar' 13 Income : Operating Income Expenses Material Consumed Manufacturing Expenses Personnel Expenses Selling Expenses Adminstrative Expenses Expenses Capitalised Cost Of Sales Operating Profit Other Recurring Income Adjusted PBDIT Financial Expenses Depreciation 3,149.40 286.44 969.28 0.00 1,678.16 0.00 6,083.28 2,119.14 229.13 2,348.27 33.38 303.03 8,202.42

Mar' 12

Mar' 11

Mar' 10

6,977.50

6,319.35

5,605.69

5,234.29

2,915.19 447.74 644.79 464.87 907.19 0.00 5,379.78 1,597.72 79.45 1,677.17 12.13 261.08

2,960.16 434.50 464.20 385.53 793.64 0.00 5,038.03 1,281.32 90.67 1,371.99 10.87 228.86

2,503.45 351.82 318.87 326.48 724.14 0.00 4,224.76 1,380.93 94.21 1,475.14 28.30 165.25

2,399.56 354.36 271.33 375.59 588.61 0.00 3,989.45 1,244.84 90.05 1,334.89 52.23 151.79

44

Other Write offs Adjusted PBT Tax Charges Adjusted PAT Non Recurring Items Other Non Cash adjustments Reported Net Profit Earnigs Before Appropriation Equity Dividend Preference Dividend Dividend Tax Retained Earnings

0.00 2,011.86 504.75 1,507.11 0.00 0.00 1,507.11 4,617.37 160.58 0.00 27.29 4,429.50

0.00 1,403.96 297.50 1,106.46 17.05 0.45 1,123.96 3,421.89 160.58 0.00 26.05 3,235.26

0.00 1,132.26 191.00 941.26 19.13 0.00 960.39 2,659.46 224.81 0.00 36.72 2,397.93

0.00 1,281.59 243.50 1,038.09 31.50 11.90 1,081.49 2,036.32 160.58 0.00 26.67 1,849.07

0.00 1,130.87 124.50 1,006.37 -229.56 0.00 776.81 1,286.71 155.46 0.00 26.42 1,104.83

Balance Sheet Of Cipla Ltd.

(Rs in Cr)

Mar' 13 SOURCES OF FUNDS Owners' Fund Equity Share Capital Share Application Money Peference Share Capital Reserves & Surplus 160.58 0.00 0.00 8,708.94

Mar' 12

Mar' 11

Mar' 10

Mar' 09

160.58 0.00 0.00 7,380.73

160.58 0.00 0.00 6,443.40

160.58 0.00 0.00 5,744.54

155.46 0.00 0.00 4,186.32

45

Loan Funds Secured Loans Unsecured Loans Total USES OF FUNDS Fixed Assets Gross Block Less: Revaluation Reserve Less: Accumulated Depreciation Net Block Capital Work-in-progress Investments Net Current Assets Current Assets, Loans & Advances Less : Current Liabilities & Provisions Total Net Current Assets Miscellaneous Expenses not written Total 5,122.76 1,657.88 3,464.88 0.00 9,835.33 4,535.25 1,431.31 3,103.94 0.00 7,553.51 6,022.56 2,659.59 3,362.97 0.00 7,045.37 5,483.42 2,524.77 2,958.65 0.00 5,910.19 4,419.57 1,568.71 2,850.86 0.00 5,282.02 4,994.16 0.00 1,565.52 3,428.64 339.99 2,601.82 4,298.18 8.97 1,295.52 2,993.69 420.73 1,035.15 3,929.00 8.97 1,060.98 2,859.05 253.07 570.28 2,895.44 8.97 884.27 2,002.20 684.24 265.10 2,693.29 8.97 700.80 1,983.52 366.32 81.32 9.49 956.32 9,835.33 10.00 2.20 7,553.51 2.95 438.44 7,045.37 0.41 4.66 5,910.19 2.79 937.45 5,282.02

46

Note Book Value of Unqouted Investment Market Value of Qouted Investment Contingent liabilities Number of Equity shares outstanding (in Lacs) 2,601.82 0.00 3,154.68 8,029.21 1,034.79 0.00 608.80 8,029.21 570.28 0.00 478.26 8,029.21 265.10 0.00 423.87 8,029.21 81.32 0.00 730.75 7,772.91

Shareholding Pattern (As on 30/06/2012):

The company has an equity capital base of Rs. 60.2 cr. and the face value of share is Rs. 2 The market capitalization as on Sept 04, 2012 was Rs. 20738.36 cr. The promoters are holding 39.38% stake in the company. The free float available in the market is 60.62%.

Share

holding 30/06/2012

31/03/2012

31/12/2011

pattern as on : No. Shares Promoter's holding Indian Promoters Foreign Promoters Sub total 139365360 17.93 166742687 21.45 306108047 39.38 139365360 17.93 166742687 21.45 306108047 39.38 139365360 17.93 166742687 21.45 306108047 39.38 Of % No. Of % No. Of % Holding

Holding Shares

Holding Shares

Non promoter's holding Institutional investors

47

Banks Fin. Inst. and 100475671 12.93 Insurance FII's Sub total Other investors Private Bodies NRI's/OCB's/Foreign 26780056 Others Others Sub total General public Grand total 7607146 55082604 0.98 7.09 3.45 Corporate 20695402 2.66 115218568 14.82 248022118 31.91

107813087 13.87

108399554 13.95

104147633 13.40 247225415 31.81

104603014 13.46 245200726 31.55

16638521

2.14

15889637

2.04

26890755

3.46

26886776

3.46

8908066 52437342

1.15 6.75

8645766 51422179

1.11 6.62

168078588 21.62 777291357 100.00

171520553 22.07 777291357 100.00

174560405 22.46 777291357 100.00

Marketing
Cipla follows an excellent marketing strategy. Strategic Tie-Ups

Cipla has set up a wholly owned subsidiary, Cipla FZE situated at Jebel Ai Free Zone in Dubai, United Arab Emirates. This is the part of strategy to explore the growing markets in Middle East countries through exports. Cipla entered agreement with Pentech Pharma of USA for marketing a range of generic products for American market. Pentech is involved in developing therapies for lifestyle and quality of life conditions. This will further boost its export performance. Low-risk business model :

48

Robust partnership model CIPLA has entered into global tie-ups with various generic players (like Watson, Mylan, Barr and Ivax) for supplying its generic products. This strategy enables Cipla to leverage local market knowledge of its partners and utilize its own R&D, product development, and manufacturing skills. Cipla's offer to sell anti- aids drugs at one-third the price to developing countries like South Africa or any other country. The questions were raised against the strategy the company follows but Cipla is not committing any illegal or unethical act as it is entitled to sell anti- aids drugs in any country that does not have the requisite patent protection. Cipla is not using pirated technology since India does not have a product patent regime. Therefore, Cipla has the right to develop and reverse engineer any pharmaceutical product not protected by the country's laws. Therefore, the issue is whether Cipla is selling its products below its costs or is it able to sell cheaply because it has noti ncurred an y rese arch and d evel opm e nt (R &D) ex penses l i ke m ul t i nat i onal s incur i ndev el opi ng dru gs . C i pl a is ent i t l ed to "m ake ha y whi l e t he sun shi nes', in ot her

words , capitalize on a sympathetic patent law in India, but keeping in mind that after 2010.

MARKETING ANALYSIS
With approximately 150 APIs and more than 1,600 formulation products in its portfolio, Cipla offers a wide range of products across several major therapeutic categories. Not dependent on any particular product with no single product accounting for more than 2% of the total income in FY09. Therapeutic categories served include anti-asthma, anti-inflammatory, cardiac, anti-retroviral, anti-cancer, eye/ear preparations, dermatology, anti-ulcerant, anti-malaria and critical care. Product range covers most dosage forms including solids, liquids, In jectables, ophthalmic preparations, topical preparations, nasal preparations, inhalers and devices, rectal preparations and buccal preparations .

49

9. Market Condition:

BSE 1 week Price Gain Loss 269.85 / -0.87% 2 week 258.85 3.34% 1 month 281.95 -5.13% 3 month 231.60 15.5% 6 month 192.05 39.29% 9 month 183.45 45.82% 1 year 236.50 13.11%

NSE 1 week Price Gain Loss 269.15 / -24.37% 2 week 258.15 -21.15% 1 month 282.85 -28.04% 3 month 232.55 -12.47% 6 month 192.50 5.74% 9 month 183.45 10.96% 1 year 236.25 -13.84%

50

Recent News
: 1.CIPLA had a research alliance with a Bangalore-based biotech company Avesthagen, to develop bio therapeutic products. CIPLA has terminated its marketing agreement wi t h Avest ha gen and i s l ooki ng at s el l i ng i t s 5.8% st ake i n t he Ban gal o re -b ased company. Cipla terminated the agreement due to Avesthagens alleged failure to meet targets. Under the agreement, Avesthagen was supposed to develop the bio similar products and Cipla would have used its strong marketing force to commercialize and
Market it. Cipla was, however, not happy with the progress of Avesthagens research. The Mumbai-based generics major is, however, clear that it wants a presence in the bio similar space and is close to finalizing a deal with a Chinese partner. Cipla is keen on partnering with a Chinese player for its bio similar venture since the Chinese are strong in this space. The products will be developed in China and manufactured in I n d i a . C i p l a s t e rm i n at i o n o f i t s a g r e em e n t w i t h A v e s t h a g e n h as r e s u l t e d i n t h e biotech company going it alone in the Indian market.

2.C IP LA pl ans t o r ai se R s 1,500 cr. ei t he r b y i ssui n g for ei gn curren c y conv ert i bl e bonds or t hrough gl ob al de posi t or y r ecei pt s (G DR s) t o cl ear i t s de bt as wel l as finance its capital expenditure. Addressing the shareholders at the companys annual general meeting, chairman and MD YK Hamied said the pharma company has debt of Rs 800 cr. and plans to invest Rs 500-600 cr. in the next two years. Cipla is so far the only company to manufacture generic versions of both Tamiflu and Relenza. Reports say that if the virus mutates, it could wipe out half the wo rlds population The Companys version of

51

Tamiflu, \ Antiflu, is the only generic anti-viral drug approved b y t he W HO. Aft er t aki ng a hi t of R s 228 cr. i n for ex l osses l ast ye ar, C i pl a has changed its hedging policy. The company is now hedging all its loans and covering al l net e x port s on a m ont hl y basi s. Thi s i s due t o t he fl uct uat i on i n t he cu rrenc y market.

SWOT ANALYSIS
STRENGTHS
Ranks #2 in the retail prescription market in India; 18 brands that feature among the top-300 brands; Large basket of 1,500 formulations Cipla has a voluminous product portfolio containing more than 200brands some of which are the leading brands in their respective category The company has excellent process R&D skills which are considered to beone of the best in the country The Company has excellent distribution network. Has a strong employee force of over 16,000 Cipla has developed good positive image by providing support to cancer patients by issuing drugs at low cost Excellence in product design and performance.

WEAKNESSES
Impact of IPR regime. It is not present in CRAMS and Biopharmaceutical segment which are thebest projected segment in the industry. Inadequate definition of customer for the product. Ambiguous service policies. Overlapping channels.

52

Lack of quantitative goals. Too many levels of reporting in the organizational setup. Lack of top management involving in new product of development.

OPPORTUNITIES
Biotherapeutics A new and promising area; Agreement with Avesthagen; and Venturing towards areas of cardiology and anti-cancer. It can venture into Alzheimers disease medication They can use Viramune generic to achieve higher growth. Increased investment in the budding markets, to push expansion in the global economy

THREATS
Constant price rises in the Indian country is taking its toll and compounding the problem The Indian Rupee depreciated as compared to the US Dollar Fluctuations in currency exchange rates have a noteworthy impact on the Companys operations and financial results. The foreign players will pose a major threat to the company Partnership related and Potential de-rating

CONCLUSION
Total sale of hypertension drugs in the gurgaon region:( company sale) 10 lakh/- Average monthly (With the growth rate of 23% annually.)

53

INTERPRETATION OF MARKET SHARE OF CIPLA IN VARIOUS MOLECULESThis part of the project report is about the market share of Cipla in Various molecules in total allotted area. The market share of different products is calculated with help of conducted survey i.e. according to retailers responses towards their sale and knowledge. All the responses given by all the surveyed customers are taken together and the average of their responses are taken and according to that the market share of different products along with Ciplas products are calculated .. The several molecules likes- telmesontom and olmesontom, in this molecules ciplas market share is very low in compare to other rivals and the reason behind it that the advertisement doing by the company is very less..in case of other molecules company have a good market share on the basis of his good image.. Mainly company focuses on the high class customers.that also observed during study.

FINDINGS AND SUGGESTIONS FINDINGS

1. Cipla has highest market share in the most of Various molecules, which are considered for study in Gurgaon city. 2. The company is providing superior quality products and more value for money than its competitors. 3. Sales of Ciplas products are more in urban areas than rural areas. 4. Company is not focusing on small customers, which are present in Gurgaon interior can be future customers and still are not tapped by company.

SUGGESTIONS
1. There is a customer care center and it has to cover a large area, so there is a need for sub-dealers under the customer care center so that the products can reach to the customers faster.

54

2. Company should distribute its catalogue more and more, so that its products are more informative. 3. The representatives should be given frequent response for solving the problem. 4. If something found wrong or damaged, it should replace frequently. There should be no delay from company side. 5. Company should quickly replace material, which is unsold foe a long time. 6. The number of retailers in Gurgaon interior is to be looked with importance as there are large numbers of small customers but they are still to be tapped. 7. The representatives of the company should give more frequent visits to the places. The representatives should take the opportunity to have the scheduled visits to the customers.

REFERENCES
www.economictimes.com www.wikipedia.com www.scribd.com www.cipla.com www.slideshare.com