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EXECUTIVE SUMMARY

This report has been made keeping in mind the Indian Pharmaceuticalindustry, its growth rate as compared to the global PharmaceuticalIndustry. 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 mostadvanced among the developing countries.The Indian Pharmaceutical sector is highly fragmented with more than20,000 registered units. It has expanded drastically in the last twodecades. The leading 250 pharmaceutical companies control 70% ofthe market with market leader holding nearly 7% of the market share.It is an extremely fragmented market with severe price competitionand government price control.Then, we look at the market and growth scenario of Pharmaceuticalcompanies in India which brings us to research on MATRIX PHARMA

LABS.

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PHARMACEUTICAL INDUSTRY PROFILE

The pharmaceutical industry develops, produces, and marketsdrugs licensed for use as medications. Pharmaceutical companies candeal in generic and/or brand medications. They are subject to a variety

of laws and regulations regarding the patenting, testing and marketingof drugs. The main aim of a particular Pharmaceutical Industry is todevelop research and distribute drugs in order to provide health carefor the people in the society. The Pharmaceutical Industry like otherindustries is subjected to follow certain rules and regulations. ThePharmaceutical Industry needs to follow rules about patent,marketing as well as testing of drugs that are scheduled to come tothe market as medicines. Since the inauguration of the PharmaceuticalIndustry in the 19th century, it has covered a long way and now it hasbecome one of the most influential and successful industry in the worldwith both controversy and praise on its part. PharmaceuticalIndustry is very much dependent upon the developments anddiscoveries that are made to search new types of drugs and also tosearch for new kind of medicines. One can also see differences withinthe industry regarding the same drug or report and differentcompanies within the Pharmaceutical Industry look to follow differentpaths for the same thing.

Drug Discovery and Drug Innovation are two very aspects in thePharmaceutical Industry:

Drug Discovery: Drug Discovery is a process through which potentialdrugs are designed or discovered. It has been observed in the pastthat most of the drugs were invented by means of isolating the activecomponent from remedies which are traditional in nature or throughanother kind of discovery known as serendipitous discovery.

Drug Development: This process is taken forward after the discoveryis done and a thing is identified as a potential drug. The developmenttakes place immediately after that as the component is turned into amedicine. So this is also considered as a very important process andhas great importance in the Pharmaceutical Industry.

For the first time ever, in 2006, global spending on prescription drugstopped $643 billion, even as growth slowed somewhat in Europe andNorth America. The United States accounts for almost half of theglobal pharmaceutical market, with $289 billion in annual salesfollowed by the EU and Japan. Emerging markets such as China,

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Russia, South Korea and Mexico outpaced that market, growing a huge81 percent.

US profit growth was maintained even whilst other top industries sawslowed or no growth. Despite this, the pharmaceutical industry is

and has been for years the most profitable of all businesses in theU.S. In the annual Fortune 500 survey, the pharmaceutical industrytopped the list of the most profitable industries, with a return of 17%on revenue.

Revenue

Rank 2008Company Country

Total Revenues

(USD millions)

Healthcare R&D

2008

(USD millions)

Net

200

(US

1 Pfizer [3] (with Wyeth [4] ) U.S. 71,130 11,318 14,2 Johnson & Johnson U.S. 61,095 NA 10,

3 GlaxoSmithKlineUnitedKingdom

45,447 6,373 10,

4 Bayer[5] Germany 44,664 3,770 6,4

5 HoffmannLa Roche Switzerland 40,315 NA 8,1

6 Sanofi-Aventis France 39,997 NA 7,2

7 Novartis Switzerland 39,800 NA 11,

8 AstraZeneca UK/Sweden 29,559 NA 5,9

9 Abbott Laboratories [6] U.S. 29,527 2,688 4,8

10 Merck & Co. U.S. 23,850 4,678 7,8

11 Bristol-Myers Squibb U.S. 19,977 NA 2,112 Eli Lilly and Company U.S. 18,634 NA9 2,9

13 Amgen U.S. 14,268 3,366 2,9

14 Boehringer Ingelheim Germany 13,284 1,977 2,1

15 Baxter International U.S. 10,378 614 1,3

The Indian Pharmaceutical Industry today is the front runner of

Indias science-based industries with wide ranging capabilities in thecomplex field of drug manufacture and technology. A highly organizedsector, the Indian Pharmaceutical Industry is estimated to be worth $4.5 billion, growing at about 8 to 9 percent annually. It ranks veryhigh in the third world, in terms of technology, quality and range ofmedicines manufactured. From simple headache pills to sophisticatedantibiotics and complex cardiac compounds, almost every type ofmedicine is now made indigenously.

http://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-2%23cite_note-2http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-2%23cite_note-2http://en.wikipedia.org/wiki/Wyethhttp://en.wikipedia.org/wiki/Wyethhttp://en.wikipedia.org/wiki/Wyethhttp://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-3%23cite_note-3http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-3%23cite_note-3http://en.wikipedia.org/wiki/Johnson_%26_Johnsonhttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Bayerhttp://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-4%23cite_note-4http://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Hoffmann%E2%80%93La_Rochehttp://en.wikipedia.org/wiki/Sanofi-Aventishttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Novartishttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/AstraZenecahttp://en.wikipedia.org/wiki/Abbott_Laboratorieshttp://en.wikipedia.org/wiki/Abbott_Laboratorieshttp://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-5%23cite_note-5http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-5%23cite_note-5http://en.wikipedia.org/wiki/Merck_%26_Co.http://en.wikipedia.org/wiki/Bristol-Myers_Squibbhttp://en.wikipedia.org/wiki/Eli_Lilly_and_Companyhttp://en.wikipedia.org/wiki/Amgenhttp://en.wikipedia.org/wiki/Boehringer_Ingelheimhttp://en.wikipedia.org/wiki/Baxter_Internationalhttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-2%23cite_note-2http://en.wikipedia.org/wiki/Wyethhttp://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-3%23cite_note-3http://en.wikipedia.org/wiki/Johnson_%26_Johnsonhttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Bayerhttp://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-4%23cite_note-4http://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Hoffmann%E2%80%93La_Rochehttp://en.wikipedia.org/wiki/Sanofi-Aventishttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Novartishttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/AstraZenecahttp://en.wikipedia.org/wiki/Abbott_Laboratorieshttp://en.wikipedia.org/wiki/List_of_pharmaceutical_companies#cite_note-5%23cite_note-5http://en.wikipedia.org/wiki/Merck_%26_Co.http://en.wikipedia.org/wiki/Bristol-Myers_Squibbhttp://en.wikipedia.org/wiki/Eli_Lilly_and_Companyhttp://en.wikipedia.org/wiki/Amgenhttp://en.wikipedia.org/wiki/Boehringer_Ingelheimhttp://en.wikipedia.org/wiki/Baxter_International

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Indian Pharmaceutical Industry plays a key role in promoting andsustaining development in the vital field of medicines, boasts of qualityproducers and many units approved by regulatory authorities in USAand UK. International companies associated with this sector havestimulated, assisted and spearheaded this dynamic development in thepast 53 years and helped to put India on the pharmaceutical map ofthe world.

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Strides Arcolab

IPCA Laboratories Alembic

Amrutanjan Virchow Laboratories

Polydrug Laboratories Dr. Reddy?s Laboratories Aurobindo Pharma

Jubilant Organosys Astrazeneca Pharma Divis Laboratories

Merck Ltd. Astrazen Pharma

Abbott India Aventis Pharma Limited

Glenmark Pharmaceutical Ltd.

Clarion Drugs Blue Cross Laboratories

Intas Pharmaceuticals Limited Lincoln Pharmaceuticals Ltd

Matrix Laboratories

ADVANTAGE INDIA

Competent workforce: India has a pool of personnel with highmanagerial and technical competence as also skilled workforce. It has

an educated work force and English is commonly used. Professionalservices are easily available.

Cost-effective chemical synthesis: Its track record of development,particularly in the area of improved cost-beneficial chemical synthesisfor various drug molecules is excellent. It provides a wide variety ofbulk drugs and exports sophisticated bulk drugs.

Legal & Financial Framework: India has a 60 year old democracyand hence has a solid legal framework and strong financial markets.

There is already an established international industry and businesscommunity.

Information & Technology: It has a good network of world-classeducational institutions and established strengths in InformationTechnology.

Globalization: The country is committed to a free market economy

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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 internationalpharmaceutical industry is finding great opportunities in India. The

process of consolidation, which has become a generalized phenomenonin the world pharmaceutical industry, has started taking place in India.

CURRENT SCENARIO

THE GROWTH SCENARIO

India's US$ 4.1 billion pharmaceutical industry is growing at the rateof 14 percent per year. It is one of the largest and most advancedamong the developing countries.

Over 20,000 registered pharmaceutical manufacturers exist in thecountry. The domestic pharmaceuticals industry output is expected toexceed Rs260 billion in the financial year 2002, which accounts formerely 1.3% of the global pharmaceutical sector. Of this, bulk drugswill account for Rs 54 bn (21%) and formulations, the remaining Rs210 bn (79%).

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BREAK UP O

FORMULATIONS

79%

In financial year 2001, imports were Rs 20 bn while exports were Rs87bn.

MARKET SHARE

The leading 250 pharmaceutical companies control 70% of themarket with market leader holding nearly 7% of the

market share. It is an extremely fragmented market withsevere price competition and government price control.

The global pharmaceutical market is forecast to grow to $929billion in 2012, an equivalent compound annual growth rate(CAGR) of 5.5% over the next five years.

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In 2007 the leading therapy areas by sales were CNS with16.5% share and cardiovascular with 15.4%.

Four of the top 10 products in 2007 are forecast to increasesales over the next five years.

The US retail pharmaceutical market grew to $206 billion butgrowth rates fell due to loss of patent protection on someblockbusters

France, Germany and the UK together accounted for almost 50%of all European pharmaceutical sales in 2007.

The top 100 blockbuster drugs generated sales of $252.5 billion,accounting for 35.5% of the total pharmaceutical market.

The leading blockbuster by increased sales revenues in 2007 wasthe blood agent product Plavix (clopidogrel bisulfate), marketedby Sanofi-Aventis and Bristol-Myers Squibb.

There were a total of 61 companies generating pharmaceuticalsales in excess of $1 billion in 2007

COMPANY PROFILE

MATRIX PHARMA LABS

Matrix Laboratories Limited is a public limited company listed on themajor stock exchanges in India and is engaged in the manufacture ofActive Pharmaceutical Ingredients (APIs) and Solid Oral Dosage Forms.The development and manufacture of quality intermediates, bulkactives have been critical to our success in delivering innovative andaffordable products for both the domestic as well as internationalmarkets.

With about 2000 employees, including over 200 R&D scientists, Matrixconducts research & development, and manufacture products at thecompany's cGMP facilities located near Hyderabad and Visakhapatnam,India. The company's Solid Oral Dosage Forms facility is located nearNashik, about 150 km from Mumbai.

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The company's focus on Quality, Safety, Environment andOccupational Health is pronounced and some of its plants are approvedby regulatory agencies such as US-FDA, EDQM -EU, TGA (Australia)and some of the largest multinational pharmaceutical companies.

At Matrix our core values are Mutual Respect, Attitude, Teamwork,Responsibility, Innovation and Excellence. Our commitment is tocreate a profitable enterprise with due respect to stakeholders interest,corporate governance and social responsibilities.

List of Active Pharmaceutical Ingredients

Anti Bacterials

Ciprofloxacin - CAS No : [ 85721-33-1 ]

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Gatifloxacin - CAS No : [ 112811-59-3 ]

Norfloxacin - CAS No : [ 70458-96-7 ]

Levofloxacin Hemihydrate - CAS No : [ 100986-85-4]

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Moxifloxacin HCL - CAS No : [ 151096-09-2]

Clarithromycin - CAS No : [ 81103-11-9]

Manufacturing Facilities

Matrix Laboratories has manufacturing facilities at four locations in andaround Hyderabad and Visakhapatnam, India, manufacturing a widerange ofActive Pharmaceutical Ingredients. The company's SolidOral Dosage Forms facility is located near Nashik, about 150 kmfrom Mumbai. All the manufacturing facilities in India have beendesigned to meet the requirements of Drug Regulatory Agencies. Allour facilities are US-FDA approved. The facilities also have ISO 9000,ISO 14000 Certifications.

Reaction Capabilities

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AlkylationsMetal Hydride ReactionsFriedal-Crafts AcylationNitrationChlorosulphonation

HalogenationN - Bu Li ReactionsAzide ReactionsHoffmann ReactionOxidationsGrig Nard ReactionsCyanationsReductionsIron/HclRaney NickelPalladiumVitrideSodium BorohydrideSodium DithionateZn/NaohDiborane

API Facilities Hyderabad

- Pashamylaram

- Jeedimetla

- Kazipally

Visakhapatnam

- Vizianagaram

Quality Policy

We at Matrix Laboratories Limited are committed to meet and by farexceed our customers requirements through well documented QualityManagement Systems.

To us, Quality means "a synthesis of world guidelines,Pharmacopoeial requirements, industry standards, laws and

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regulations governing the manufacture of Active PharmaceuticalIngredients and Intermediates".

We strive for continuous improvement in everything we do throughactive involvement of our employees, customers and suppliers.

Quality Assurance

Matrix plants are designed to facilitate world-class manufacture ofquality products. Towards this objective, we have set up

manufacturing facilities and established quality management systems,as per cGMP guidelines to meet the requirements of drug regulatoryagencies worldwide.

We assure quality of our products by regularly inspecting the facilities,systems and procedures to meet the current GMP norms. Theemployees are trained periodically on GMP requirements.

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At Matrix, one of our core values is our commitment towardsEnvironment, Health & Safety measures. We provide proper in-houseeducation and training with an objective to in calculate in everymember of the organization, a sincere appreciation for Environmental,Safety & Health concerns.

We provide a safe, accident free operation at our facilities and identifypotential hazards before the manufacturing process begins. Allmanufacturing and R&D locations are subjected to a detailed safetyaudit and risk assessment exercise. The company organizes Safety day

week and Clean and Green environment day at all its manufacturingunits.

We strive to prevent pollution of land, atmosphere and water and arecommitted to reduce, recycle and re-use all resources for conservationand waste reduction, wherever feasible. To monitor and continuouslyimprove our Environmental Management Systems, our employees aretrained regarding health hazards; whether it is in handling materials,operating various processes, or waste generation and effluenttreatment. We provide personal protective clothing and devices to ouremployees to protect people from product and process, and productfrom people. All employees go through a pre-employment medicalexamination and thereafter, periodical medical check-ups.

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RECOMMENDATIONS

STEPS TO STRENGTHEN THE INDUSTRYIndian companies need to attain the right product-mix forsustained future growth. Core competencies will play an importantrole in determining the future of many Indian pharmaceuticalcompanies in the post product-patent regime after 2005. Indiancompanies, in an effort to consolidate their position, will have toincreasingly look at merger and acquisition options of eithercompanies or products. This would help them to offset loss of newproduct options, improve their R&D efforts and improve distribution topenetrate markets.

Research and development has always taken the back seatamongst Indian pharmaceutical companies. In order to staycompetitive in the future, Indian companies will have to refocus andinvest heavily in R&D.

The Indian pharmaceutical industry also needs to take advantage ofthe recent advances in biotechnology and information

technology.

CONCLUSION

The future of the industry will be determined by

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how well it markets its products to several regions anddistributes risks,

its forward and backward integration capabilities,

its R&D,

its consolidation through mergers and acquisitions,

co-marketing and licensing agreements.