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Creating
Lasting
ValueInvestor Presentation - November
2013BSE:524715 • NSE:SUNPHARMABloomberg: SUNP@IN • Reuters: SUN.BOwww.sunpharma.com
DisclaimerExcept for the historical information contained and the subsequent discussions, which include
herein, statements in thiswords or phrases such as
presentation“will”, “aim”, “anticipate”,
“will likely result”, “would”,“estimate”, “intend”, “plan”,
“believe”, “may”,
“expect”,
“will continue”,“contemplate”, “seek
to”,“future”, “objective”, “goal”,“likely
”,“project”, “should”,
“potential”,
“will pursue”
and
similar
expressions
orvariations of such expressions may constituteforward-looking statements involve a number of that could cause actual results to differ materially
"forward-looking statements". Theserisks, uncertainties and other factors from those suggested by the forward-
looking statements. These risks and uncertainties include, but are not limited to ourability to successfully implement our strategy, our growth and expansion plans, obtain regulatory approvals, our provisioning policies, technological changes, investment andbusiness income, cash flow projections, our exposure torisks. Sun Pharmaceutical Industries Limited does not update forward-looking statements to reflect events or thereof.
market risks as well as otherundertake any obligation to circumstances after the date
2Creating Lasting Value - Investor Presentation
Agenda
54
32 Managemen
t& Governance
1Research &DevelopmentBusiness
OperationsStrategy &Approach
FinancialsRevenue
CompositionGrowth
GeographiesAPI, Finished Dosage & Manufacturing
HistoryProfile
&KeyAcquisitions
3Creating Lasting Value - Investor Presentation
Agenda
54
32 Managemen
t& Governance
1Research &DevelopmentBusiness
OperationsStrategy &Approach
FinancialsRevenue
CompositionGrowth
GeographiesAPI, Finished Dosage & Manufacturing
HistoryProfile
&KeyAcquisitions
4Creating Lasting Value - Investor Presentation
Revenue Composition2012-13 Annual Gross
Sales : Rs
114,087
million5 Yea
rCAGR
27%InternationalGenerics5 Year CAGR 47%
13%54%
APIs5 Year CAGR 17%
7%
US Formulations5 Year CAGR 34%
IndiaBranded Generics5 Year CAGR 15%
26%
Finished Dosage
Internationalsale
s93% sale
s72%
5 year CAGR 28%
5 year CAGR 34% 5
ed
Creating
Value,
Continuously…
‘14
1995
1983
2004
2010
2012Began
with5 products Acquired
DusaFirst APIPlant Panoli
USD 350mnFCCB raised
1997
2013Acquire
dTaro
1993
2007 201
11994
Acquired URLPharma
$7.5Mn investin Caraco
First Research Centre
SPARC, Baroda Demergerof innovativeR&D to SPARC
JV for EmergingMarkets
JV for OcularTherapy
IPO - Rs. 550 MnraisedSun Pharma
Today
6Creating Lasting Value - Investor Presentation
PART OF
14,000+ Invested Rs. 35 billion 26 Manufacturing facilities
More than 70% of sales from international markets
Employees in Research in 4 Continents
‘83
Agenda
54
32 Managemen
t& Governance
1Research &DevelopmentBusiness
OperationsStrategy &Approach
FinancialsRevenue
CompositionGrowth
GeographiesAPI, Finished Dosage & Manufacturing
HistoryProfile
&KeyAcquisitions
7Creating Lasting Value - Investor Presentation
Se•
•
Strategy and
Approach
Create sustainablerevenue streams
ek cost leadership
• Focus: ChronictherapiesDifferentiation: Technically complex products
Vertical integration :Development through Manufacturing (API and Finished Dosage) to Marketing
•
Optimize
operational
costs
• Speed
to market
Balance profitability
andinvestments for
future• Acquisitions yielding high ROI• Development of complex generics
8Creating Lasting Value - Investor Presentation
Growing Steadilytop-line and bottom-line growth;
Consistent (Figures in Rs
billion)continuing
the
trend despite
increasing
size
112.3
97-98 02-03 07-08 12-13
97-98 02-03
07-08
12-13
97-98
02-03
07-08
12-13 9
33.6
8.32.5
15.5
2.80.6
Net Sales
EBITDA 49.1 Net Profit 30.1
14.9
2.50.5
07-08 08-09 09-10 10-11 11-12
Sustained ProfitabilitySuperior business modelMargins consistently
higher
than peers*
Gross
Margin
EBITDA
Margin
Net
Margin60
%90%
32 %40%
80%
20%
70%
0%60%
50% -20%
40% -40% 08-09 09-10 10-
1111-12 12-13
08-09 09-10 10-11 11-12
12-13
Sun Pharma
Range of other Top 10 Pharma Cos.
Average
Gross margin= (Net Sales – Material Cost) / Net Sales * 100•Other top 10 Indian Pharma company include Aurobindo,, Cadila Healthcare,•Cipla, DRL, Glenmark, Ipca, Lupin, Ranbaxy, Torrent and Wockhardt.
10
82%32
-
60%
44 %
40%
20%
0%
-20%08-09 09-10 10-11 11-12 12-13
Successful At AcquisitionsAcquired 16 high potential
yet
under-performing
businesses*;successf
ulturnarounds
10,000
45
8,000
36
6,000
27
4,000
18
2,000
9
0 095-96
96-97
97-98
98-99
99-00
00-01
01-02
02-03
03-04
Net Sales (MINR)
Operating Margin(%)
Operating Profit (MINR)
11Creating Lasting Value - Investor Presentation
8 Early Acquisitions
Key
Deals & Rationale
2013
Acquired URL’s generic business
US Adds 107
to US portfolio
products
2011
100% ownership of Caraco
US Privatizationbased combinations productsAcquired Taro
PharmaceuticalIndustries Ltd.
Dermatology & Topical ProductManufacturing Plant at Israel & Canada201
0IsraelUS Increased generic product
offeringsForest’s Inwood business Import registration with DEA, API
Plantapproved by DEA in Tennessee, US
2008
Acquired Chattem Chemicals, Inc.
Tennessee, US
2005
Formulation plant in Bryan
Ohio, US
Dosage form plant (Ohio, US)
1998
Brands from Natco
India
Respiratory brands
Merged Tamilnadu DadhaPharmaceuticals Ltd (TDPL)
Gynecology and oncology brands; APIand dosage form plant
1997
Chennai, India
approved) 12Creating Lasting Value - Investor
Presentation
1996 Acquired MJ Pharma Halol, India Dosage form plant (now USFDA
1997 Acquired Caraco Detroit, US Dosage form Plant
2005 Acquired ICN Hungary Hungary API and dosage form plant (Hungary)
2005 Assets of Able labs New Jersey, US Dosage form plant (NJ, US) and IP
2009 Caraco acquired some products of
2011 Formation of Sun-MSD JV Emerging Markets Develop and commercialize technology
2012 Acquired DUSA Pharma, Inc. US Access to branded derma product
Year Deals Country Rationale2013 Formation of Sun-Intrexon JV US JV for ocular therapies
Agenda
54
32 Managemen
t& Governance
1Research &DevelopmentBusiness
OperationsStrategy &Approach
FinancialsRevenue
CompositionGrowth
GeographiesAPI, Finished Dosage & Manufacturing
HistoryProfile
&KeyAcquisitions
13Creating Lasting Value - Investor Presentation
India Branded Generics
: Strong
Base
• Market Share :5.2%* 26
%• Leadership inchronic segment;Top 3 in over 50% ofmore
than
500
brands
Cardiology
* As per AIOCD AWACS –Sept’13
14Creating Lasting Value - Investor Presentation
Others 7 % Neuro-Psychiatry
Opthalmology 5 %
Antiasthamatic & Antiallergic 4 %
Musculo-Skeletal& Pain 5 %
Gynecology & Urology 8%
Gastroenterology
14 %
Diabetology 20 %
11 %
Relentless CustomerTherapy focused marketing
FocusStrong increasein marke
tshare
• 4,000+ sales representativescoverin
g140,000
specialist
doctors
200
150
100
50200
0Cipl
a
2001
2002
2003 2004
2005 2006
2007DRL
2008
2009
2010
2011
2012
IpcaRanbaxy
Sun Cadila
Lupin
Torrent
Wockhardt
Year 2000 Market Share indexed to 100 for all companies
15Creating Lasting Value - Investor Presentation
Therapy Focused MarketingDelivering
promotionalmessage
to specialty customers.
Gastroenterology, Orthopedics
Cardiology, Diabetology
Psychiatry, Neurology
Ophthalmology
Rheumatology,Dermatology
Asthma,COPD
Oncology
Gynecology
Fertility, Gynecology,Urology
16Creating Lasting Value - Investor Presentation
Preferred Choice of DoctorsLeadership
in keytherapeutic areas*
Top 10 Brands contribute 20%of India
Sales
Psychiatrists
1 1Proton pump inhibitor/antiulcerant
Neurologists
1 1 PantocidCardiologis
ts1 1 Geme
rOral antidiabeticOrthopaed
ic1 1
CVS, cholesterol reducingagent
Aztor Ophthalmologists 1 1
Gastroenterologists 2 1 Proton pump inhibitor/Pantocid-
D antiulcerant Nephrologists
4 1Susten
Women's healthcare
Diabetologists
2 3 Chest Physicians 4 5 Glucore
d Oral antidiabetic Group Consulting
Physicians3 5
Levipil
CNS
Gynaecologists
4 7 Dermatologists 14 9 Istame
tAntidiabetic Oncologists 5 10 Rozav
elCVSUrologist
s8 12
Clopilet
CVS, anticlotting agent*Ranks based on prescription share
Source-Strategic Marketing Solutions and Research Centre (SMSRC) Pvt. Ltd.Creating Lasting Value - Investor Presentation
17
Brand Name Therapy areaSpecialist June ‘10 June ‘13
US GenericsIntegrated generic manufacturer with flexibility for manufacture onshore / offshore
ApprovalsTherapy wise summary
Caraco PharmaceuticalLaboratories Ltd.
Skin, 94
CNS, 82The 100% owned US generics subsidiary,markets own and Sun Pharma ANDAs
CVS, 41
Sun PharmaceuticalIndustries, Inc. (SPI)
Pain, 28
Other, 28
A wholly owned subsidiary of Sun Pharma inUS
Taro PharmaceuticalIndustries Ltd.
Allergy, 21
Oncology, 18
Metabolism, 10
The 66% owned subsidiary of Sun Pharma Cough / Cold, 6
Urology, 5URL Pharma. Inc.
A wholly owned subsidiary of Caraco in US
As on 30-Sept-2013
18Creating Lasting Value - Investor Presentation
ANDA Pipeline : Significant
ramp upProduct
sFiled
and Approved
Status
As of Sept’13, ANDAs for 130products await approval(including 15 tentative approvals)
463449
377 Sun Pharma86 Products pending(with 10 tentative approvals)Caraco & URL25 Products pending(with 4 tentative approvals)Taro19 Products pending(with 1 tentative approvals)
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Sep-13
Cumulative Products Filed Cumulative Products Approved
(Taro numbers added since Mar 2011 & URL numbers added since Mar 2013 )Creating Lasting Value - Investor Presentation 19
333
397
311250
207 225177
8469
Europe Generic Markets
Focused key markets• Working on complex
genericproducts, including injectables• Filings from Indian site
Focus CountriesAn API and Finished
Dosagecontrolled substance capacity
20Creating Lasting Value - Investor Presentation
manufacturing site in Hungary with
International Branded Generic Markets
Replicating the speciality pipeline
Semi Regulated Markets
Product basket width and technologybased products as growth drivers
• 45 countries
• 866 strong local sales forcepromotes brands to
doctors
CIS Countries
ChinaMexic
oMyanmar
Brazil
Sri Lanka
Focus MarketsOther Markets
South AfricaMap Not to
Scale21Creating Lasting Value - Investor
Presentation
Leveraging through Partnership
• Sun Pharma and Merck establish a Joint Venture for Emerging Markets excluding IndiaJV to bring new combinations and formulations of incrementally innovative branded generics to marketOpportunity to use SPARC Proprietary Delivery TechnologiesEqual representation in JV for Sun Pharma & MerckJV to use partners infrastructure for development, manufacturing, regulatory and commercialization.
•
••
• Sun Pharma and Intrexon Form Joint Venture to Develop New ClassTherapeutics for Ocular diseases for global marketsPipeline of potential Ocular therapies to help millions worldwide suffering from blinding diseasesEqual representation in JV for Sun Pharma and Intrexon. Both partners to share funding and revenues from the joint venture.
of
•
•
22Creating Lasting Value - Investor Presentation
Speciality API
Strong regulatory
capability
High Margin Regulated Markets
• 247 DMF / CEP
filed
• Business largely with end users inregulated markets • 172
approved• Over
170
speciality
APIs across
8 plants (includin
gTaro)
23Creating Lasting Value - Investor Presentation
Strong Regulatory CapabilityInternational level quality processes and documentation
24723
922520
6
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Sep-13
DMF/CEP Filed
DMF/CEP
Approved
24
172168154155127133
8981
Iztapalapa
Integrated product dev and manufacturingnetworkVertically integrated network across four continents enabling high quality,
lowcost and a quick market entry across
the
geographies
Tiszavasvari(Hungary)
Ontario (Canada)Detroi
t Wilmington M.A.Auror
aJammu
Sikkim Plant
CranburyBrya
n Philadelphia
Israel
Tennessee Bangladesh
PlantAhmednagar(Mexico
) Maduranthakam
Goiânia(Brazil)
Halol
Ankleshwar
KarkhadiPanoli
Silvassa
Sun Pharma
Taro Pharmaceuticals
API and Formulations
API Formulations
Global networked facilities are FDA, EMEA, TGA approved
Creating Lasting Value - Investor Presentation
25
Finished Dosage Manufacturing
17 Manufacturing sitesworldwide••
India : 5, US : 6Canada, Brazil, Mexico, Hungary , Israel, Bangladesh : 1 each• Capacities available
fora variety
offinished
dosage
26Creating Lasting Value - Investor Presentation
Tablets / CapsulesSemisolids
Liquids
Suppository
Injectables / SterileVials Dry powderAmpoules Eye dropsPre-filled Syringes
MDIGels AerosolsLyophilized Units
API Manufacturing
8 World class locations with all sitesISO 14001, ISO 9002
approved
• India : 5, Israel : 1, US :
1, Hungary :
1Over 25 API processesscaled up annually
Hungary &Tennessee (US)
Panoli & Ahmednagar(both India) API
Key Plant
s
• International regulatoryapprovals: USFDA, European
• Stand alone units for peptides, anti-cancer, steroids, sex hormones
• Controlled substances
manufacture
27Creating Lasting Value - Investor Presentation
Agenda
54
32 Managemen
t& Governance
1Research &DevelopmentBusiness
OperationsStrategy &Approach
FinancialsRevenue
CompositionGrowth
GeographiesAPI, Finished Dosage & Manufacturing
HistoryProfile
&KeyAcquisitions
28Creating Lasting Value - Investor Presentation
Research and Development••
Generic R&D spend around 6% of net salesStrong research teams in generics, finished dosage development, biological support, chemistry• 4 R&D centers with over 900
scientists
Immediate term
Medium termDrug delivery systems
BalancingANDA
,DMF,
Products
for India the
risk
29Creating Lasting Value - Investor Presentation
Baroda
Mumbai
Agenda
54
32 Managemen
t& Governance
1Research &DevelopmentBusiness
OperationsStrategy &Approach
FinancialsRevenue
CompositionGrowth
GeographiesAPI, Finished Dosage & Manufacturing
HistoryProfile
&KeyAcquisitions
30Creating Lasting Value - Investor Presentation
Corporate
Governance
ChairmanSun Pharma
IndependentDirectors
AuditCommittee
31Creating Lasting Value - Investor Presentation
S. MohanchandDadhaFormer Chairman & Managing Director, TDPL
Ashwin Dani Vice Chairman and Managing Director, Asian Paints Ltd.
Committee chaired by Keki Mistry comprises Hasmukh Shah and S. M. Dadha
Hasmukh Shah Chairman Gujarat Gas & FormerChairman And MD, IPCL
Keki Mistry Vice Chairman And CEO, HDFC
Israel MakovFormer President& CEO of TevaPharma. Industries Ltd.
Our philosophy on corporate governance envisages working towards high levels of transparency, accountability and consistent value systems across all facets of operations
Shareholding Patternas on Sept 30, 2013
Individuals and others5 %
Bodies Corporate 5 %Financial Inst
/Banks2%
Mutual Funds 1 %
FIIs /Foreign Banks
23 %
Promoter and promoter group64 %
32Creating Lasting Value - Investor Presentation
• Total shares outstanding : 2,071 million• Total free float (shares) : 746 million• Average daily trading volume (12 months) : 1.3 million
• Rs 1,000 Invested in
the 1994 IPO is currently worth
more than Rs. 523,000
FinancialsMarket Capitalisation
Rs. 1,261 billion / US$ 20.5 billion* Figures in Rs million
Gross Profit
34,154
29,096
42,577
63,644
91,592
Net Profit
18,177
13,511
18,161
26,567
29,830
R&D Spend
3,320
2,631
3,313
4,449
7,042
Loan Funds
1,789
1,712
3,651
2,650
1,982
Investments
18,595
31,664
22,298
22,129
24,116
Inventory
9,757
10,739
14,895
20,870
25,778
Sundry Creditors
2,543
3,194
6,454
9,927
13,579
*Exchange Rate :US$1 = Rs 61.41 (As on
31 Oct 2013)# Adjusted for Rs 5.83 bn provision related to generic Protonix
settlementfor the year 2012-13.
33Creating Lasting Value - Investor Presentation
Sundry Debtors 8,811 11,748 11,049 20,787 27,108
Cash and Bank Balances 16,690 5,089 22,046 33,672 40,587
Net Fixed Assets 16,196 16,776 27,568 32,742 50,771
BS SummaryShareholders Funds 70,449 78,289 94,833 122,358 150,147
Net Profit (Adjusted) 18,177 13,511 18,161 26,567 #
35,666
EBITDA 18,639 13,628 19,518 32,507 49,063
2008-09 2009-10 2010-11 2011-12 2012-13P&L Summary
Net Sales 42,723 40,075 57,229 80,057 112,389
Financial
Ratios
Gross Profit
29.6
(14.8)
46.3
49.5
43.9
Net Profit
22.2
(25.7)
34.4
46.3
13.2
EBITDA Margin (%)
43.6
34.0
34.1
40.6
43.7
#Net Margin (Adjusted)
42.5
33.7
31.7
33.2
32.0
Return on Average Net Worth
30.2
18.2
21.0
24.5
22.1
Fully Diluted EPS (Rs) Post bonus
8.8 6.5 8.8 12.8
14.5
Capital
0.5 0.4 0.4 0.5 0.4
# Adjusted for Rs 5.83 bn provision related to generic Protonix settlement for the year 2012-13.
34Creating Lasting Value - Investor Presentation
Fully Diluted EPS (Rs) Post bonus (Adjusted) 8.8 6.5 8.8 12.8 # 17.3R&D Spend % of Net Sales 7.8 6.6 5.8 5.6 6.3Revenue 7.3 6.2 5.4 5.1
5.9
OthersDebt / Equity 0.03 0.02 0.04 0.02 0.01
Return (%)Return on Average Capital Employed 31.5 19.5 23.6 30.3 35.7
Net Margin 42.5 33.7 31.7 33.2 26.8
Net Profit (Adjusted) 22.2 (25.7) 34.4 46.3 # 35.2Margins (%)Gross Margin 79.9 72.6 74.4 79.5 81.5
EBITDA 20.2 (26.9) 43.2 66.5 50.9
2008-09 2009-10 2010-11 2011-12 2012-13Growth (%)
Net Sales 27.3 (6.2) 42.8 39.9 40.4
Key
Financials
Q2& H1FY14 Figures in Rs
million
83%33,590
81%23,853
326% -92%
# Adjusted for Rs 25.17 bn provision related to generic Protonix settlement for Q1 FY14* Adjusted for Rs 5.83 bn provision related to generic Protonix settlement for the year 2012-13. 35Creating Lasting Value - Investor
Presentation
Q2 FY14 Q2 FY13 CHANGE H1 FY14 H1 FY13 CHANGE FY13Net Sales 41,921 26,572 58% 76,74
253,154
44% 112,389Gross Profit
Gross MarginEBITDA
EBITDA Margin
33,91781%
18,28344%
21,68782%
11,68544%
56%
56%
63,485 43,245 47% 91,592
41%81%
49,06344%44% 45%
Net Profit 13,623 3,196 326% 862 11,152
-92% 29,830Net margin 32% 12% 1% 21% 27%
Net Profit (Adjusted) 13,623 * 9,032 51% # 26,036 * 16,987 53% * 35,666Net margin
(Adjusted) R&D
R&D as % of Net Sales
EPS (Diluted) INREPS (Diluted) INR
(Adjusted)
32%2,231
5%6.66.6
34%1,450
5%1.54.4
34% 32% 32%
54% 4,280 2,843 51% 7,042
6% 5% 6%0.4
12.65.48.2
14.417.251% 53%
Sales
Breakup Figures in Rs
million
36Creating Lasting Value - Investor Presentation
Q2 FY14 Q2 FY13 CHANGE H1 FY14 H1 FY13 CHANGE FY13Formulation
India US ROW
Sub-total
BulkOthers
9,495
25,880
4,924
40,2982,117
(20)
8,099
13,301
3,726
25,1251,758
125
17% 17,981 13,975 29% 29,65795% 46,194 28,712 61% 61,53832% 9,431 7,392 28% 15,271
47%8%
-91%
106,4667,549
73
60%20%
-116%
73,6064,045
14
50,0793,760
143Gross Sales 42,395 27,008 57% 77,665 53,982 44% 114,088
Recent Developments• Sun Pharma and Intrexon Form Joint Venture to Develop New
Class ofTherapeutics for Ocular Diseases• Pipeline of Potential Ocular Therapies to Help Millions Worldwide
Suffering fromBlinding Diseases• Sun Pharma settled the pending patent litigation in US regarding
genericProtonix with Wyeth & Altana Pharma AG. Sun Pharma will pay a lump-sum US$ 550 million as a part of settlement.
Received US FDA approval for generic Prandin. Sun to enjoy 180-day exclusivity by virtue of its FTF status.
Recent Acquisitions URL acquisition– Expands product offering in US through
addition of 107 products
DUSA acquisition– Gives access to branded dermatology product in US DUSA & URL acquisitions strengthen our presence in the US - focus
on growing these acquired businesses and enhancing their profitability
•
•
37Creating Lasting Value - Investor Presentation
Revised Guidance for FY14• Sales growth guidance: Revised to 25% compared to
previousguidance of 18-20% overR&D : 6-8% of salesCapex : Rs 8 bn
FY13. Guidance
at constant
exchange
rate•
•• ANDA
sfor 25product
sto befile
d
38Creating Lasting Value - Investor Presentation
© 2010 Sun Pharmaceutical Industries Limited., All Rights Reserved.
“SUN Pharma”, The Sun Pharmaceutical Industries Logo are trademarks of Sun Pharmaceutical Industries Limited.
In addition to Company data, data from IMS – ORG, CMARC, Stock Exchanges and industry publications has been used for this presentation.This material was used during an oral presentation; it is not a complete record of the discussion. This work may not be used, sold, transferred,
adapted, abridged,copied or reproduced in whole on or in part in any manner or form or in any media without the prior written consent. All product names and
company names and logos mentioned herein are the trademarks or registered trademarks of their respective owners. 39Creating Lasting Value - Investor Presentation
For updates and specific queries, please visit www.sunpharma.com
or feel free to contactNimish Desai Mira DesaiTel : +91 22 6645 5645, Ext 5717 Tel : +91 22 6645 5645, Ext 5606Tel Direct : +91 22 66455717 Tel Direct : +91 22 66455606Mobile : +91 98203 30182 Mobile : +91 98219 23797 nimish.desai@sunpharma.com mira.desai@sunpharma.com
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