Investor Presentation 1
Creating Lasting ValueCreating Lasting Value
Investor PresentationInvestor PresentationJune 2009June 2009
Investor Presentation / 2
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 forward-looking 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.
Investor Presentation / 3
45%
35%
9%
11%
Revenue Composition 2008-09 Annual sales : Rs 43,751 million, 5 year CAGR 33%
India Branded Generics
5 year CAGR 28%
US Generics5 year CAGR 47%
International (ex-US)Generics5 year CAGR 42%
2008-09 Consolidated
Finished Dosage sales 89%5 year CAGR 35%
International sales 53%5 year CAGR 43%
API5 year CAGR 20%
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Strategy and Approach
Create sustainable revenue streamsFocus : Chronic therapiesDifferentiation : Technically complex productsSpeed to market
Seek cost leadershipVertical integration : Development through
Manufacturing (API and Finished Dosage) to Marketing
Optimise operational costs Balance profitability and investments for future
Acquisitions yielding high ROIDevelopment of complex generics
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Growing Steadily
Prior to 01-02 Standalone; rest consolidated
Revenue doubles and Net profit triples in 4 years;
continuing the trend despite increasing size
1,706
5,435
11,853
42,723
4911,352
3,962
18,177
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09
Net Sales (CAGR 35%) Net Profit (CAGR 42%)
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Sustained ProfitabilitySuperior business model
Margins consistently higher than peers *
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
GrossMargin
gap
NetMargin
gap
EBITDAMargin
gap
80%
62%
44%
11%
43%
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2004-05 2005-06 2006-07 2007-08 2008-09
Gross Margin (Sun) Gross Margin (Other top 10)EBITDA Margin (Sun) EBITDA Margin (Other top 10)Net Margin (Sun) Net Margin (Other top 10)
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Successful At Acquisitions
Acquired 14 high potential yet under-performing businesses*; successful turnarounds
* Includes companies, plants or brands
95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-040
1,0002,0003,0004,0005,0006,0007,0008,0009,000
10,000
0
5
10
15
20
25
30
35
40
45
Net Sales (MINR) Operating Profit (MINR) Operating Margin(%)
8 early acquisitions
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Business Operations
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India Branded Generics : Strong Base
Market share 3.5% Leadership in chronic segment; top 3 in over 50%
of more than 450 brands No “blockbuster” risk : Top 10 brands contribute
26% of sales
Neuro-Psychiatry28%
Cardiology20%Diabetology
11%
Gastroenterology8%
Gynecology &Urology,7%
Musculo-Skeletal & Pain, 6%
Others14%
Antiasthamatic & Antiallergic, 2%
Opthalmology,4%
Anti-Cancer,0%
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Relentless Customer Focus
Therapy focused marketing by 2500 sales representatives covering 125,000 specialist doctors
Strong increase in prescription and sales market share
1998 Market Share indexed to 100 for all companies
Ranks based on prescription shareSPECIALITY 1998 Current
Psychiatrist 1 1Neurologist 1 1Cardiologist 5 1Ophthalmologist NA 1Diabetologist 6 1Orthopaedicians 31 1Gastro-enterologist 6 2Nephrologist NA 4Oncologist 20 6Cons Physician 8 5Chest Physicians 16 4Gynaecologist NA 6
60
100
140
180
220
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Sun Cipla Ranbaxy Nicholas Cadila DRL
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US Generics : The highest priority market
Integrated generic manufacturer with flexibility for manufacture onshore / offshore
Caraco, the 76% owned US generics subsidiary, markets own and Sun Pharma ANDAs
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As of Mar 09, ANDAs for 108 products await approval (including 7 tentative approvals) 83 products from Sun Pharma (with 3 tentative approval) 25 products from Caraco (with 4 tentative approval)
ANDA Pipeline : Significant ramp up
59
95
179
2029
71
40
142
15
53
-
20
40
60
80
100
120
140
160
180
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
Cumulative Products Filed Cumulative Products Approved
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Europe Generic Markets
Plan to enter key marketsWorking on complex generic products, including
injectablesFilings from Indian site
Acquired an API and Finished Dosage manufacturing company in Hungary with controlled substance capacity
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International Branded Generic Markets
Less Regulated Markets Product basket width and technology based
products as growths Replicating the speciality template
30 countries, 1600 products registered and 1000 awaiting registration
400 strong local sales force promotes brands to doctors
Focus countries / regions : CIS, China, South-east Asia, South Africa, Brazil, Mexico
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Speciality API
High Margin Regulated Markets Business largely with end users in regulated
marketsOver 150 speciality APIs across 7 plants
Strong regulatory capability129 DMF / CEP approved or awaiting approval
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Finished Dosage Manufacturing
10 manufacturing sites compliant with international regulatory standardsIndia : 5, US : 3Over 750,000 sq. ft. areaCapacities available for a variety of finished dosage
Tablets / Capsules LiquidsSemisolids Suppository
Vials Dry powderAmpoules Eye drops
Pre-filled syringes MDIGels Aerosols
Lyophilized units
Injectables / Sterile
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API Manufacturing
8 World class locations with all sites ISO 14001, ISO 9002 approvedIndia : 6, US : 1, Hungary : 1Reactor capacity 1200 KL with over 650,000 sq ft
area
Over 25 API processes scaled up annually Panoli and Ahmednagar (both India)
International regulatory approvals: USFDA, EuropeanStand alone units for peptides, anticancers, steroids
sex hormones
Hungary & Tennessee (US)Controlled substances manufacture
Investor Presentation 18
Research & Development
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Research and Development
Generic R&D spend around 8% of net sales Strong research teams in generics, finished
dosage development, biological support, chemistry
Balancing the risk Immediate term : ANDA, DMF, Products for IndiaMedium term : Drug delivery systems
2 R&D centers with over 500 scientists
Investor Presentation 20
Financial Highlights
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Financials
Consolidated*Exchange Rate, 1 USD = Rs. 51
Market capitalisation Rs. 250 billion / USD 5 billion*
Rs million
2004-05 2005-06 2006-07 2007-08 2008-09
P&L Summary
Net Sales 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
BS Summary
Shareholders Funds 11,307 15,902 27,728 49,915 NA
Loan Funds 18,230 18,745 11,144 1,436 NA
Net Fixed Assets 6,213 8,977 10,122 11,040 NA
Investments 6,485 3,541 2,543 6,565 NA
Net Current Assets 16,360 23,006 26,843 33,995 NA
Cash Flow Summary
Net Cash from Operating Activities 3,754 1,852 2,395 5,048 NA
Net Cash used in Asset Creation Activities 1,666 3,387 2,000 1,995 NA
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Financial Ratios2004-05 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
EBITDA 5.9 17.9 36.8 130.7 20.2
Net Profit 25.5 44.7 36.8 89.6 22.2
Margins (% )
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 (% )
Return on Average Capital Employed 20.0 18.5 22.4 33.0 NA
Return on Average Net Worth 48.6 45.6 37.0 38.3 NA
Others
Debt / Equity 1.61 1.18 0.40 0.03 NA
Fully Diluted EPS (Rs) 20.7 27.7 38.9 71.8 87.8
R&D Spend % of Net Sales 12.0 12.3 13.0 8.9 7.8
Revenue 8.5 9.4 11.4 8.5 0.5
Capital 3.5 2.9 1.6 0.4 7.3
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Guidance for FY10
Sales to grow by 13-15%, at constant exchange rates
R&D Spend at 7-8% of Net Sales File ANDAs for 30 products Capex at Rs. 1.7 billion
Investor Presentation 24
Thank you
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In addition to Company data, data from IMS – ORG, CMARC, Stock Exchanges and industry publications has been used for this presentation.
Uday BaldotaTel : +91 22 6645 5645, Ext 605Tel Direct : +91 22 66455605Mobile : +91 98670 [email protected]
Mira DesaiTel : +91 22 6645 5645, Ext 606
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