GROWTH OPPORTUNITIES IN PHARMACEUTICAL SECTOR

Presented by Gayatri Limbachiya A-1O Priyam Mhashilkar A-23 Pallavi Edakhe A-6 Sheetal Pawar A-31 Ashwin Soni A-47 Farhan Siddiqui A-45 Akhlaque Shaikh A-54

INTRODUCTION
The Pharmaceutical Industry in India is one of the largest in the world

By 2015 it is expected to reach top 10 in the world beating Brazil, Mexico, South Korea and Turkey

The estimated worth of the Indian Pharmaceutical Industry is US$ 20 billion

Almost most 70% of the domestic demand for bulk drugs is catered by the Indian Pharma Industry

 The growth rate of the industry is 13% per year Healthcare grew from 4 per cent of average household income in 1995 to 7 per cent in 2005 and is expected to grow to 13 per cent by 2025

 The Indian Pharmaceutical Industry is one of the biggest producers of the active pharmaceutical ingredients (API) in the international arena Indian bulk drug industry will expand at an annual growth rate of 21 percent to reach $16.91 billion by 2014.

Around 40% of the total pharmaceutical produce is exported 55% of the total exports constitute of formulations and the other 45% comprises of bulk drugs There are approximately 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).

PHARMA INDUSTRY STUCTURE

 Active Pharmaceutical Ingredients (APIs) examples Orchid Chemicals, Elder Pharma etc. Formulations examples Sun Pharma, Cipla, Dr. Reddys etc. Contract Research and Manufacturing Services (CRAMS) Examples include companies like Divis Labs, Jubilant Life Sciences etc.

Export from India March -2011

CHANGING FOCUS IN CRAMS Contract research is increasing at the rate of 25% per year CRAMS sector to the level of $7.6 billion by 2012 from $3.8 billion a year ago

Contract Research Organizations(CROs) provides services including drug discovery, new product development, formulation, pre-clinical trial The main factors for the growth of the CRAMS High Number of USFDA and UKMHRA approved plants Well-developed chemistry skills Low production & R&Dcost

Under WTOs TRIPS Agreement(2005), Developing countries to provide product patents on pharmaceuticals. India decided to enforce a product patent regime since 2005, which banned copying and selling of patented drugs launched after 1995. This gave them confidence to take on global generic companies and went ahead to acquire numerous overseas units to enter newer markets

Biosimilars
48% of global revenues of the top 100 drug will be from biomolecules by 2016 Biggest product could be Humira rheumatoid arthritis drug in 2020 Patented Biologicals costlier demand less, Companies keen on Biosimilar

Challenges
Tougher to produce Manufacturing processes cant be altered cost of developing a biosimilar higher than chemical generics

Biosimilars in India
15 epoetin, 4 insulin also other Anti Cancer Biosimilars Market estimated with CAGR 30%+ Success Story: Dr Reddy's Reditux, biosimilar

of Roche's cancer drug Rituxan

Mergers

Alliance and Partnership

Research Co Develop Drugs buy or in-license molecules Manufacturing cost advantage highest number USFDA-approved plants outside US

Innovation Drives Pharmaceuticals Business

Stratified Medicine
the move from mass market therapy to specialized therapies to treat smaller groups of patients Companies with great science and deep pockets are developing high tech compounds. Pfizers Xalkori (crizotinib)

Convergence Of Drug Device

opportunity to combine the biological and/or biomechanical properties of drugs and devices e.g. direct in situ delivery of therapeutic agents

It requires a highly specialized marketing and sales

Reviving Dormant Compounds

a major growth opportunity lay in revisiting dormant compounds some companies are re-evaluating and revisiting them

opportunities in reviewing data, reviewing all aspects of past clinical data

 E.g. Thalidomide approved by the Federal Drug Administration for treatment of leprosy

Embracing Change In Organization

a shift in mind set hence in behaviours is needed in order to redefine success daring to propose and implement stepwise new ways of working, of competing should be part of a firms DNA.

CHALLENGES
delivering affordable health care to India's billion-plus people the regulatory environment to create access to a reasonable quality health care for all

FUTURE PROJECTIONS

Divis laboratory Limited

Introduction
Established in the year 1990 Headquarters and Registered Office at Hyderabad four multi-purpose manufacturing facilities with all support infrastructure like Utilities, environment management and safety systems.

Fundamentals and strength

As a Prime fundamental, focused on developing new processes for the production of Active Pharma Ingredients (APIs) & Intermediates.

Complete turnkey solutions to the domestic Indian pharmaceutical industry. With 5 years of experience, expertise and a proven track-record of helping many companies with its turn-key and consulting strengths,

 It undertakes custom manufacture of APIs and advanced Intermediates offering a competitive advantage to its clients over the entire life cycle of the products.
Transparency in operation Great benefit from Divis Research Center gives clients the advantage to concentrate on actual invention

Invested heavily in knowledge, equipment and manpower to expand in technology area which is sophisticated, challenging and rewarding. Currently, Divis is a major manufacturer of protected aminoacids.

Stock Analysis
Q1 Net profit up 67% Y-o-Y to Rs167 cr

Q4 net profit up 24% Y-o-Y to Rs 216 cr

Key financial indicators

Financial Ratios
Net Profit ratio : 28.57 % Expense Ratio : 63% Current ratio : 3.181

Return on Asset : 25 %

About Sun Pharma

Established by Mr. Dilip Shanghvi in 1983 in Kolkata 57% sales (US). fourth largest pharma company in India

The company markets over 200 generics, with another 150 awaiting approval from the USFDA.

Manufacturing is across 23 locations

Canada U.S Mexico Brail Isral

 A planned acquisition of Israeli Taro Pharmaceuticals initiated in March 2007 completed in Sept 2010. Acquisition via Alkaloida Sun's subsidiaries has stake in Taro to 66.5 per cent as per the deal

Proposes acquiring remaining stake (33.5%) in Oct 2011

Sun Pharma to acquire Taro, to pay $367m for 33.5% stake

1 Not interested in taking over Wockhardt: Sun Pharma 2 Lupin's acquisition agenda for the future

With Sun Pharma-Merck striking JV, why is SPARC shining?

The good, the bad & the ugly of Q4 earnings(12% increase442 cr)

8 Sun Pharma to acquire Taro, to pay $367m for 33.5% 6 Wockhardt to stake conclude nutrition business sale by 2012 7 Wockhardt to conclude nutrition business sale by 2012

Financial Analysis
5000

4500
4000 3500 3000

PAT
2500 2000 1500 1000 500 0 2010 2011 2012 Operating Profit Income

Highlights

Reasons
Sales in India were Rs. 19,334 million, down 6%.
Caraco, Sun pharmas 75% us-base subsidiary

Stopped manufacturing operations from June 2009

Total Income
5,000.00

4,500.00

4,000.00

3,500.00

3,000.00

2,500.00

Total Income

2,000.00

1,500.00

1,000.00

500.00

0.00 2010 2011 2012

R&D
900 800 700 600 500 400 300 200

R&D

100
0 2010 2011 2012

R&D
Creating new molecules 537 products Developed APIs in cost effective manner Anticancer ,steroid Generic formulation (nasal sprays , dose inhaler )

 Initiated exports to Europe for the first time received 11 product approvals in Europe up to March 2010. Received approvals for eight APIs from various regulatory authorities; this took the total regulated market-approved APIs to 89 out of 155

Net Block
1200

1000

800

600

Net Block

400

200

0 2010 2011 2012

Earning Per Share (Rs)

50 45 40 35 30 25

Earning Per Share (Rs)

20
15 10 5 0 2010 2011 2012

COMPANY ANALYSIS: DRL

 Company was founded by Dr. Anji Reddy.

Pharmaceutical company global generics segment, API segment and proprietary products segment. Reddys manufactures and markets pharmaceuticals in India and overseas. a wide range of

Co. has 190 medications, 60 API for drug manufacture, diagnostic kits and biotechnology products. 1st pharma company from Asia (except Japan) to be listed on NYSE.

DRL and Beta pharma acquisition

DRL acquire 100% equity of the German drug major.

Benefits to DRL DRL immediately got access to the generic market of germany. 66% market in Europe was held by Germany. DRL gained strategic presence in EU. There was not much liability linked to this acquisition. Stock market, Jan 16, 06 1030, Feb 16,06 1260.
Synergy Distribution Manufacturing Pipeline Branding Presence Size

DRLs acquisition of GSK's penicillin facility in US

Completed the acquisition of Glaxosmithkline (GSK) oral penicillin facility in US on Nov10. The buy was in line with its strategy to scale up its generic business in North America. It also brought an opportunity to explore additional synergy with its business. Dr Reddys scrip gained 2.93% to end at Rs 1680 on BSE.

DRL and Merck Serono announce collaboration to develop and commercialize Biosimilars
DRL has been pioneer in Biosimilar space as launched 4 Biosimilar molecules till date. The partnership with Merck Sereno expands DRLs presence in the Biosimilar space select emerging markets and enables partnership globally. With FDA guidance, any significant player in the field will need strong biologics, development, manufacturing and commercialization capabilities. Merck Serenos & DRLs Joint expertise in these fields makes for a powerful global partnership.

DRL to acquire Octoplus pharma

DRL announced to acquire Octopus pharma, a service based pharmaceutical company of Netherlands for 27.39 million in cash on 22 October, 2012. DRL offered to acquire 100% of the issued and outstanding shares of octopus with a premium of 30%. DRL already got commitment from over 50% of share holders of Octoplus. Deal would help expand the companys expertise and scientific capabilities as DRL is aiming to build a research base in Leiden (Netherlands).

DRLs New molecule

DRLs stock surged about 4% on announcement of encouraging phase III trials of an anti diabetic drug and tie up for manufacturing obesity management drug, Orlistat. DRL and its research partner, Rheoscience announced that the initial trials of phase III stage of its anti diabetic compound, Balaglitazone is effective in reduction of HbA1c. HbA1c test is carried out to test blood sugar levels and it is the first Indian molecule to reach this stage. The company will have to prove the superiority of its molecule over Pioglitazone, a $3 billion drug launched a decade ago in trial, if it is to have a commercial launch which is estimated to be 1 year from now. DRL is in a tie up with Indian Bio technology company Transgene Biotek to manufacture and market Orlistat, an obesity management drug. The market size from obesity management drugs accounts for $2 billion worldwide.

Molecule

Takeda filed patent infringement suit

Global pharma major Takeda Pharmaceuticals Ltd. had filed a patent infringement suit in New york court over the latters efforts to manufacture generic version of acid reflux treatment drug Dexilant (Dexlansoprazole) in April 2011. According to Takeda, the 2 patents which it alleged Dr. Reddy infringed would expire in June 2020 & August 2026.

Fuji film & Dr. Reddy - JV

Crosses USD 2bn in revenues

Expands R&D centre in cambridge, UK

Key Financial Trends

Key Financial Highlights

Rs in crore

Balance Sheet of Dr Reddys Laboratories

Mar 2012 12 mths Mar 2011 12 mths Mar 2010 12 mths Rs Cr Reserves Net worth Net Block Total Assets 6,633.00 6,717.80 1,896.80 8,251.20 5,935.60 6,020.20 1,691.00 7,465.00 5,830.20 5,914.60 1,315.60 6,477.80

Ratios

Mar 12

Mar 11

Mar 10

Mar 12

Mar 11

Mar 10

Financial

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