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Creating Lasting Value

Investor Presentation Feb 2010

Sun Pharmaceutical Industries Limited


Corporate Office: Acme Plaza, Andheri Kurla Road, Andheri (E), Mumbai - 400 059.

Tel: 91-22-66969696 Fax: 91-22- 28212010 www.sunpharma.com

Disclaimer
Except for the historical information contained herein, statements in this presentation
and the subsequent discussions, which include words or phrases such as will, aim,
will likely result, would, believe, may, expect, will continue, anticipate,
estimate, intend, plan, contemplate, seek to, future, objective, goal,
likely, project, should, potential, will pursue and similar expressions or
variations of such expressions may constitute "forward-looking statements". These
forward-looking statements involve a number of risks, uncertainties and other factors
that could cause actual results to differ materially from those suggested by the forwardlooking statements. These risks and uncertainties include, but are not limited to our

ability to successfully implement our strategy, our growth and expansion plans, obtain
regulatory approvals, our provisioning policies, technological changes, investment and
business income, cash flow projections, our exposure to market risks as well as other
risks. Sun Pharmaceutical Industries Limited does not undertake any obligation to update

forward-looking statements to reflect events or circumstances after the date thereof.

Creating Lasting Value - Investor Presentation

Agenda
5
4
3
2
1
Revenue
Composition

History &
Profile

Business
Operations

Strategy &
Approach

Growth
Key
Acquisitions

Research &
Development

Management
& Governance
Financials

Geographies
API, Finished
Dosage &
Manufacturing

Creating Lasting Value - Investor Presentation

Agenda
5
4
3
2
1
Revenue
Composition

History &
Profile

Business
Operations

Strategy &
Approach

Growth
Key
Acquisitions

Research &
Development

Management
& Governance
Financials

Geographies
API, Finished
Dosage &
Manufacturing

Creating Lasting Value - Investor Presentation

Revenue Composition
2008-09 Annual sales : Rs 43,751 million
5 Year CAGR 32%

India
Branded Generics

45%
APIs
5 Year CAGR 20%

5 Year CAGR 25%

11%
9%

35%
US Generics

International Branded
Generics (ex-US)

5 Year CAGR 47%

5 Year CAGR 42%

Finished Dosage
sales
89%
5 year CAGR 34%
Creating Lasting Value - Investor Presentation

International
sales
53%

5 year CAGR 43%


5

Creating Value, Continuously


83

10
1995

1983

2004
Began with
5 products

First API
Plant Panoli

1993

First Research Centre


SPARC, Baroda

Sun Pharma Today

5 Key operating
subsidiaries
8,000+ Employees

USD 350mn
FCCB raised
1997

1994

Demerger
of innovative
R&D to SPARC

Went Global,
$7.5Mn invested
in Caraco

IPO - Rs. 550 Mn


raised
Invested Rs. 17 billion
in Research

2007

2010
The performance continues

PART OF

19 Manufacturing facilities
in 4 Continents

More than 50% of sales from international markets


Creating Lasting Value - Investor Presentation

Key Operating Subsidiaries


Sun Pharmaceutical Industries Limited

Caraco Pharmaceutical
Laboratories
Develops, manufactures, market
and distributes generic and
private label pharmaceuticals
and markets them throughout
the United States.

Sun Pharmaceutical
Industries, Inc. (SPI)
US based wholly owned subsidiary
of Sun Pharmaceutical Industries
Limited, India.

Sun Pharmaceutical
(Bangladesh)
Owns and operates a pharmaceutical factory and
makes pharmaceutical products that are sold in
the local market.

Chattem
Chemicals, Inc.
Narcotic
raw
material
importer and manufacturer
of controlled substances
with a facility in Tennessee,
US

Alkaloida Chemical
Co. Exclusive Group Ltd
ICN Hungary acquired in 2005, now renamed;
one of the few units worldwide, authorized to
make controlled substances

Creating Lasting Value - Investor Presentation

Agenda
5
4
3
2
1
Revenue
Composition

History &
Profile

Business
Operations

Strategy &
Approach

Growth
Key
Acquisitions

Research &
Development

Management
& Governance
Financials

Geographies
API, Finished
Dosage &
Manufacturing

Creating Lasting Value - Investor Presentation

Strategy and Approach


Create sustainable
revenue streams

Seek cost leadership

Focus: Chronic therapies


Differentiation: Technically
complex products
Speed to market

Vertical integration :
Development through
Manufacturing (API and
Finished Dosage) to Marketing
Optimize operational costs

Balance profitability and


investments for future
Acquisitions yielding high ROI
Development of complex generics

Creating Lasting Value - Investor Presentation

Growing Steadily

96-97 97-98 98-99 99-00 00-01

55,000

15,000

18,177

11,853

42,723

00-01 01-02 02-03 03-04 04-05

20,000

5,435

3,962

4,500

1,352

1,500

6,000

Consistent top-line and bottom-line growth;


continuing the trend despite increasing size

04-05 05-06 06-07 07-08 08-09

(Figures in Rs million)

Net Sales
Creating Lasting Value - Investor Presentation

Net Profit
10

Sustained Profitability
Superior business model
Margins consistently higher than peers*
85%

Gross Margin
80%

80%

70%

60%

50%

EBITDA Margin
44%

50%

40%

40%

30%

30%

20%

20%

10%

10%

0%

0%

-10%

-10%

Net Margin
43%

50%

40%

-20%
04-05

05-06

06-07

07-08

08-09

04-05

05-06

06-07

Sun Pharma

07-08

08-09

-20%

04-05

05-06

06-07

Range of other Top 10 Pharma Cos.

07-08

08-09

Average

Gross margin= (Net Sales Material Cost) / Net Sales * 100


* Other top 10 Indian Pharma companies include Ranbaxy, DRL, Cipla, Piramal Healthcare, Lupin,
Wockhardt, Cadila, Aurobindo, Glenmark and Torrent

Creating Lasting Value - Investor Presentation

11

Successful At Acquisitions
Acquired 14 high potential yet under-performing businesses*; successful
turnarounds
10,000

45

8 Early Acquisitions
8,000

36

6,000

27

4,000

18

2,000

95-96

96-97

97-98

Net Sales (MINR)

98-99

99-00

00-01

Operating Margin(%)

Creating Lasting Value - Investor Presentation

01-02

02-03

03-04

Operating Profit (MINR)

12

Key Acquisitions & Rationale


Year

Acquisition

Country

Rationale

2008

Caraco acquired some products of


Forests Inwood business

US

Increased generic product offerings

2008

Acquired Chattem Chemicals, Inc.

Tennessee, US

Import registration with DEA, API Plant


approved by DEA in Tennessee, US

2005

Assets of Able labs

New Jersey, US

Dosage form plant (NJ, US) and IP

2005

Formulation plant in Bryan

Ohio, US

Dosage form plant (Ohio, US)

2005

Acquired ICN Hungary

Hungary

API and dosage form plant (Hungary)

2004

Womens Health Brands

US

Brands in womens health (US)

2004

Merged Phlox Pharma

Baroda, India

API Plant

2000

Merged Pradeep Drug


Company Ltd (PDCL)

Chennai, India

API Plant

1999

Merged Milmet Labs

India

Ophthalmology brands

1998

Brands from Natco

India

Respiratory brands

1997

Acquired Caraco

Detroit, US

Dosage form Plant

1997

Merged Tamilnadu Dadha


Pharmaceuticals Ltd (TDPL)

Chennai, India

Gynecology and oncology brands; API and


dosage form plant

1996

Acquired MJ Pharma

Halol, India

Dosage form plant (now USFDA approved)

1996

Acquired Gujarat Lyka

Ankleshwar, India

API plant

1996

Bulk Drug plant from Knoll Pharma

Ahmednagar, India

API plant (now USFDA approved)

Creating Lasting Value - Investor Presentation

13

Agenda
5
4
3
2
1
Revenue
Composition

History &
Profile

Business
Operations

Strategy &
Approach

Growth
Key
Acquisitions

Research &
Development

Management
& Governance
Financials

Geographies
API, Finished
Dosage &
Manufacturing

Creating Lasting Value - Investor Presentation

14

India Branded Generics : Strong Base

Market Share 3.6%

Leadership in chronic
segment;
Top 3 in over 50% of more
than 500 brands

Therapywise Break-up
Ophthalmology - 4%

Others
10%

Antiasthamatic &
Antiallergic 4%

Neuro-Psychiatry
29%

Musculo-Skeletal
& Pain - 4%
Gynaecology &
Urology - 7%

Gastroenterology
11%
Diabetology
11%

Creating Lasting Value - Investor Presentation

Cardiology
20%

15

Relentless Customer Focus


Strong increase in
prescription and
sales market share

Therapy focused marketing


2,500+ sales representatives
covering 130,000 specialist doctors
260

220

180

140

100

60
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Sun

Cipla

Ranbaxy

Nicholas

Cadila

DRL

1998 Market Share indexed to 100 for all companies


Creating Lasting Value - Investor Presentation

16

Therapy Focused Marketing

Delivering promotional message to specialty customers.

Gastroenterology,
Orthopedics

Cardiology, Diabetology

Oncology

Ophthalmology

Psychiatry, Neurology

Gynecology

Rheumatology,
Dermatology

Asthma,
COPD

Interventional
Cardiology

Creating Lasting Value - Investor Presentation

Fertility, Gynecology,
Urology

17

Well diversified growth

Growth not dependent solely on launch of new products

Over 60% of growth from products launched prior to 2005


80%

60%

40%

20%

0%
Dr Reddy's

Lupin

Cipla

Piramal

Ranbaxy

Cadila

Sun

(20%)
Source: ORG IMS, Nomura Research
Creating Lasting Value - Investor Presentation

18

No Blockbuster Risk

Top 10 brands contribute 21% of sales

Top 50 brands contribute 55% of sales growth


100%

80%

60%

40%

20%

0%
Ranbaxy

Dr Reddy's

Source: ORG IMS, Nomura Research

Cipla

Cadila

Other products

Piramal

Sun

Lupin

Top 50 products

Creating Lasting Value - Investor Presentation

19

Preferred Choice of Doctors


Leadership in key therapeutic areas*
Specialist

Oct '04

Oct '09

Psychiatrists

Neurologists

Cardiologists

Orthopaedic

Ophthalmologists
Gastroenterologists

Our Top 10 Brands


Brand Name

Therapy area

Glucored

Oral antidiabetic

Pantocid

Proton pump inhibitor/


antiulcerant

Susten

Women's healthcare

Aztor

CVS, cholesterol reducing


agent

Pantocid-D

Proton pump imhibitor/


antiulcerant

Strocit

CNS, stroke

Repace

CVS, Hypertension

Diabetologists

Chest Physicians

Nephrologists

Consulting Physicians

Gynaecologists

10

Gemer

Oral antidiabetic

Oncologists

Urologists

Encorate
chrono

CNS, epilepsy

ENT Specialists

16

Repace H

CVS, Hypertension

*Ranks based on prescription share


Creating Lasting Value - Investor Presentation

20

US Generics
Integrated generic manufacturer
with flexibility for manufacture
onshore / offshore

Approvals
Therapy wise summary
CNS, 29
Pain, 14

Caraco Pharmaceutical
Laboratories Ltd.
The 76% owned US generics subsidiary,
markets own and Sun Pharma ANDAs

CVS, 13
Oncology, 10
Antibiotic, 2
Allergy, 2
Urology, 1

Sun Pharmaceutical
Industries, Inc. (SPI)
A wholly owned subsidiary of
Sun Pharma in US

Gastro, 2
Endocine, 1

As on Dec-09

Creating Lasting Value - Investor Presentation

21

ANDA Pipeline : Significant ramp up


Products Filed and Approved Status
200

191
176

150

As of Dec 09, ANDAs for 108


products await approval
(including 12 tentative approvals)

142

95

100

83
69
59
50

53

Sun Pharma
81 Products pending
(with 8 tentative approval)

40
15

20

29

0
Mar-05

Mar-06

Mar-07

Cumulative Products Filed

Mar-08

Mar-09

Dec-09

Caraco
27 Products pending
(with 4 tentative approval)

Cumulative Products Approved

Creating Lasting Value - Investor Presentation

22

US Generics
16 ANDA Approvals in last 12 months
Bethanechol Chloride Tabs

Nicardipine HCl Injection

Bicalutamide Tablets

Oxaliplatin for Injection

Caffeine Citrate Injection

Oxycodone HCl Tabs

Caffeine Citrate Oral Solution

Promethazine HCl Oral Solution

Carbidopa Levodopa OD Tablets

Quinapril Tablets USP

Cetrizine HCl Syrup (RX)

Sumatriptan Succinate Tablets

Ketorolac Tromethamine Opthalmic

Topiramate Tablets

Leuprolide acetate Injection

Vecuronium Bromide for Injection

Creating Lasting Value - Investor Presentation

23

Caraco Update
In Oct 2009, Caraco submitted a work plan to FDA for remedial actions
Additional details and clarifications submitted on January 14, 2010

In 2QFY10, Caraco reduced its workforce by 430 employees for an


indefinite period to align its expenses with the cessation of its
manufacturing operations
Has recalled some of these employees in its efforts to restart manufacturing
activities

Caraco has transferred certain of its owned products to additional


alternate manufacturing sites; would allow it regain revenues from those
products

Creating Lasting Value - Investor Presentation

24

Europe Generic Markets


Plan to enter key markets
Working on complex generic
products, including injectables
Filings from Indian site

Acquired an API and Finished Dosage


manufacturing company in Hungary
with controlled substance capacity

Creating Lasting Value - Investor Presentation

Focus Countries

25

International Branded Generic Markets


Less Regulated Markets

Replicating the speciality template

Product basket width and


technology based products as
growth drivers

30+ countries, 1600 products registered


and 1000 awaiting registration
400 strong local sales force promotes
brands to doctors
CIS Countries

China
Myanmar

Mexico
Brazil

Map Not to Scale

Sri Lanka

South Africa

Focus Markets
Other Markets

Creating Lasting Value - Investor Presentation

26

Speciality API
High Margin Regulated Markets

Strong regulatory capability

Business largely with end users in


regulated markets
Over 160 speciality APIs across 8 plants

148 DMF / CEP filed


84 approved

Creating Lasting Value - Investor Presentation

27

Strong Regulatory Capability


International level quality processes and documentation
148

150
133

100

90
75

81

84

50
40
33

0
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09
DMF/CEP Filed

DMF/CEP Approved

Creating Lasting Value - Investor Presentation

28

Manufacturing Locations
Plants across four continents enables us to compete with a tight
handle on cost and time to market across the geographies
Americas

India

Detroit
Bryan
Cranbury
Tennessee
Iztapalapa
(Mexico)

Jammu
Sikkim Plant
Halol
Ankleshwar

Bangladesh
Plant

Karkhadi

Panoli
Silvassa Dadra

Goinia
(Brazil)

Ahmednagar

Europe

Maduranthakam

Tiszavasvari
(Hungary)

API and Formulations


Creating Lasting Value - Investor Presentation

API

Formulations
29

Finished Dosage Manufacturing


13 Manufacturing sites
worldwide
India : 6, US : 3
Over 750,000 sq. ft. area
Capacities available for a variety of
finished dosage

Tablets /
Capsules

Injectables / Sterile
Vials

Dry powder

Semisolids

Ampoules

Eye drops

Pre-filled Syringes

MDI

Gels

Aerosols

Liquids
Suppository

Lyophilized Units

Creating Lasting Value - Investor Presentation

30

API Manufacturing
8 World class locations with all sites
ISO 14001, ISO 9002 approved
India : 6, US : 1, Hungary : 1
Reactor capacity 1200 KL with over
650,000 sq ft area

Panoli & Ahmednagar


(both India)
International regulatory
approvals: USFDA, European

API

Key Plants

Over 25 API processes


scaled up annually

Hungary &
Tennessee (US)
Controlled substances
manufacture

Stand alone units for


peptides, anti-cancer,
steroids, sex hormones

Creating Lasting Value - Investor Presentation

31

Agenda
5
4
3
2
1
Revenue
Composition

History &
Profile

Business
Operations

Strategy &
Approach

Growth
Key
Acquisitions

Research &
Development

Management
& Governance
Financials

Geographies
API, Finished
Dosage &
Manufacturing

Creating Lasting Value - Investor Presentation

32

Research and Development

Generic R&D spend around 8% of net sales

Strong research teams in generics, finished


dosage development, biological support,
chemistry

2 R&D centers with about 600 scientists

Immediate term
ANDA, DMF, Products for India

Balancing
the risk

Mumbai

Medium term
Drug delivery systems

Baroda

Creating Lasting Value - Investor Presentation

33

R&D Infrastructure
Baroda

Mumbai

16 acre campus with nearly


330,000 sq. ft research area

50,000 Sq. ft research campus


Develops Dosage forms and
generics for US, Europe

World-class equipment for instrumental, chemical and


microbiological analysis; Equipment include: NMR, XRD,
LC-MS/MS, HPLCs etc.
Formulation
Development

State of the art


research Labs

Organic Synthesis

Analytical Method
Development
Clinical Research

Pharmacokinetics

Creating Lasting Value - Investor Presentation

34

Agenda
5
4
3
2
1
Revenue
Composition

History &
Profile

Business
Operations

Strategy &
Approach

Growth
Key
Acquisitions

Research &
Development

Management
& Governance
Financials

Geographies
API, Finished
Dosage &
Manufacturing

Creating Lasting Value - Investor Presentation

35

Corporate Governance
Our philosophy on corporate governance envisages
working towards high levels of transparency,
accountability and consistent value systems across
all facets of operations
Eminent Independent Directors
Hasmukh Shah
Chairman Gujarat Gas
Former Chairman and
Managing Director, IPCL

Ashwin Dani
Vice Chairman and
Managing Director,
Asian Paints Ltd.

Audit Committee

Keki Mistry
Vice Chairman and
CEO, HDFC

S. Mohanchand
Dadha

Committee chaired by Keki Mistry


comprises Hasmukh Shah and
S. Mohanchand Dadha

Former Chairman &


Managing Director, TDPL

Creating Lasting Value - Investor Presentation

36

Agenda
5
4
3
2
1
Revenue
Composition

History &
Profile

Business
Operations

Strategy &
Approach

Growth
Key
Acquisitions

Research &
Development

Management
& Governance
Financials

Geographies
API, Finished
Dosage &
Manufacturing

Creating Lasting Value - Investor Presentation

37

Shareholding Pattern
as on Dec 31, 2009
Individuals and Others 6%
Bodies Corporate 5%
Financial Inst / Banks 3%

Rs 1,000 Invested in
the 1994 IPO is
currently worth more
than Rs. 120,000
Earned dividend of
Rs. 4,000

Mutual Funds 3%

FIIs / Foreign Banks


19%
Promoter and
promoter group
64%

Creating Lasting Value - Investor Presentation

38

Financials

Market capitalisation Rs. 312 billion / USD 6.7 billion*

Figures in Rs million

2004-05

2005-06

2006-07

2007-08

2008-09

11,853

16,368

21,359

33,565

42,723

Gross Profit

8,619

11,492

15,592

26,344

34,154

EBITDA

4,167

4,914

6,724

15,511

18,639

Net Profit

3,962

5,733

7,843

14,869

18,177

R&D Spend

1,428

2,014

2,787

2,990

3,320

20.7

27.7

38.9

71.8

87.8

Shareholders Funds

11,307

15,902

27,728

49,915

70,449

Loan Funds

18,230

18,745

11,144

1,436

1,789

Net Fixed Assets

6,213

8,977

10,122

11,040

16,196

Investments

6,485

3,541

2,543

7,560

18,595

11,809

15,324

13,802

12,389

16,690

Inventories

3,173

5,117

6,645

7,723

9,757

Sundry Debtors

2,511

3,609

6,789

14,177

8,811

Sundry Creditors

1,063

1,110

968

2,393

2,543

Net Cash from Operating Activities

3,754

1,852

2,395

5,048

21,651

Net Cash used in Asset Creation Activities

1,666

3,387

2,000

1,995

5,900

P&L Summary
Net Sales

Fully Diluted EPS (Rs.)


BS Summary

Cash and Bank Balances

Cash Flow Summary

*Exchange Rate : 1 USD = Rs 46.37

Creating Lasting Value - Investor Presentation

39

Financial Ratios
2004-05

2005-06

2006-07

2007-08

2008-09

Growth (%)
Net Sales

25.5

38.1

30.5

57.1

27.3

Gross Profit

22.2

33.3

35.7

69.0

29.6

5.9

17.9

36.8

130.7

20.2

25.5

44.7

36.8

89.6

22.2

Gross Margin

72.7

70.2

73.0

78.5

79.9

EBITDA Margin (%)

35.2

30.0

31.5

46.2

43.6

Net Margin

33.4

35.0

36.7

44.3

42.5

Return on Average Capital Employed

20.1

18.7

22.7

35.5

31.5

Return on Average Net Worth

48.6

45.6

37.0

38.3

30.2

Debt / Equity

1.61

1.18

0.40

0.03

0.03

R&D Spend % of Net Sales

12.0

12.3

13.0

8.9

7.8

8.5

9.4

11.4

8.5

7.3

0.4

0.5

EBITDA
Net Profit
Margins (%)

Return (%)

Others

Revenue
Capital

3.5

2.9

Creating Lasting Value - Investor Presentation

1.6

40

Q3 and 9m FY10 Update


Figures in Rs million

Net Sales
Gross Profit

Gross Margin
EBITDA

EBITDA Margin
Net Profit

Net margin
R&D

R&D as % of Net Sales


EPS (Diluted) INR

Q3 FY10

Q3 FY09

Change

9m FY10

9m FY09

Change

FY 0809

10,208.6

9,182.8

11.2%

29,936.2

22,196.1

(4.6%)

42,723.0

7,351.3

7,410.2

(0.8%)

21,619.5

24,975.8

(13.4%)

34,154.2

72.0%

80.7%

72.2%

79.6%

3,684.1

4,134.3

9,443.0

14,893.3

36.1%

45.0%

31.5%

47.5%

3,389.5

4,086.4

9,566.0

14,228.5

33.2%

44.5%

32.0%

45.3%

514.6

945.7

1,906

2,572.0

5.0%

10.3%

6.4%

8.2%

16.4

19.7

46.2

68.7

(10.9%)
(17.1%)
(45.6%)
(17.1%)

79.9%
(36.6%)

18,638.8

43.6%
(32.8%)

18,177.3

42.5%
(25.9%)

3,320.4

7.8%
(32.8%)

87.8

International sales are 46% and India sales at 54% of total sales

Creating Lasting Value - Investor Presentation

41

Taro Update
Background

Taro sent Sun Pharma a notice for purported termination of the merger agreement
saying US $10.25 per share, was too low in view of the dramatic turnaround

Sun Pharmas cash injections of approx. $60 million last year was a major factor,
otherwise Taro would have virtually negative cash

Latest

75% of Taro shareholders who are not identified with either Levitt family or Sun
objected to the continued control of the Company by the Levitt family and its
representatives on the Board in the 31 Dec 2009 AGM
Despite this, the entire Board was re-elected on account of the voting majority of the Levitts
Shareholders voted decisively against the election of Taros external director

Prior to the AGM, Sun Pharma exercised its warrant to purchase 3,787,500 ordinary
share of Taro
Taro refused to issue such shares

Supreme Court judgment related to the temporary injunction & STO litigation is
awaited
Creating Lasting Value - Investor Presentation

42

For updates and specific queries, please visit www.sunpharma.com


or feel free to contact
Uday Baldota
Tel : +91 22 6645 5645, Ext 605
Tel Direct : +91 22 66455605
Mobile : +91 98670 10529
uday.baldota@sunpharma.com

Mira Desai
Tel : +91 22 6645 5645, Ext 606
Tel Direct : +91 22 66455606
Mobile : +91 98219 23797
mira.desai@sunpharma.com

2010 Sun Pharmaceutical Industries Limited., All Rights Reserved.


SUN Pharma, The Sun Pharmaceutical Industries Logo are trademarks of Sun Pharmaceutical Industries Limited.
In addition to Company data, data from IMS ORG, CMARC, Stock Exchanges and industry publications has been used for this presentation.
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Creating Lasting Value - Investor Presentation

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