creating lasting value investor presentation- may 2011

Creating Lasting ValueInvestor Presentation- May 2011

Creating Lasting Value - Investor Presentation 2

DisclaimerExcept 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.


Agenda

RevenueComposition

1

Strategy &Approach

History &Profile

Growth

Key Acquisitions

BusinessOperations

GeographiesAPI, FinishedDosage &Manufacturing

Research &Development

Management & Governance

Financials

23

45


Agenda

RevenueComposition

1

Strategy &Approach

History &Profile

Growth

Key Acquisitions

BusinessOperations




Financials

23

45


45%

30%12%

13%

Revenue Composition

IndiaBranded Generics5 Year CAGR 22%

US Generics5 Year CAGR 33%

APIs5 Year CAGR 19%

International BrandedGenerics (ex-US)

5 Year CAGR 43%

Finished Dosage sales 87%5 year CAGR 27%

International sales 53%5 year CAGR 34%

2009-10 Annual sales : Rs 39,815 million5 Year CAGR 26%


Proforma Revenue Composition (with Taro)2009-10 Proforma Annual sales : $ 1.27 billion

44%

32%

10%

14%

International Formulation (ex-US)

APIs

IndiaBranded Generics

US Generics


Creating Value, Continuously…

1983

Began with 5 products

1993

First Research CentreSPARC, Baroda

1994

IPO - Rs. 550 Mn raised

1995

First API Plant Panoli

1997

$7.5Mn invested in Caraco

2004

USD 350mnFCCB raised

2007

Demergerof innovative R&D to SPARC

6 Key operating subsidiaries10,000+ Employees

Invested Rs. 20 billion in Research

More than 60% of sales from international markets (including Taro)

Sun Pharma Today

‘83 ‘11

23 Manufacturing facilities in 4 Continents

PART OF

2010

Acquired Taro

2011

JV for Emerging Markets


Agenda

RevenueComposition

1

Strategy &Approach

History &Profile

Growth

Key Acquisitions

BusinessOperations




Financials

23

45


Strategy and Approach

Create sustainable revenue streams

• Focus: Chronic therapies

• Differentiation: Technically complex products

• Speed to market

Seek cost leadership

• 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


Growing SteadilyConsistent top-line and bottom-line growth; continuing the trend despite increasing size

Net Sales Net Profit(Figures in Rs million)

4,300

835

050

00

95-96 96-97 97-98 98-99 99-00

01,000

39,986

13,511

050

,000

05-06 06-07 07-08 08-09 09-10

020,000

11,853

3,962

01

5,0

00

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

04

,00

0


Sustained ProfitabilitySuperior business modelMargins consistently higher than peers*

Sun PharmaRange of other Top 10 Pharma Cos. AverageGross 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

Net Margin

34%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

05-06 06-07 07-08 08-09 09-10

EBITDA Margin

31%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

05-06 06-07 07-08 08-09 09-10

Gross Margin

73%

40%

50%

60%

70%

80%

90%

05-06 06-07 07-08 08-09 09-10


Successful At AcquisitionsAcquired 16 high potential yet under-performing businesses*; successful turnarounds

Net Sales (MINR) Operating Margin(%) Operating Profit (MINR)

0

2,000

4,000

6,000

8,000

10,000

95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-040

9

18

27

36

45

8 Early Acquisitions


Key Acquisitions & RationaleYear Acquisition Country Rationale

2010Acquired Taro Pharmaceutical Industries Ltd.

IsraelDermatology & Topical ProductManufacturing Plant at Israel & Canada

2009Caraco acquired some products of Forest’s Inwood business

US Increased generic product offerings

2008Acquired 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

2000Merged 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

1997Merged Tamilnadu Dadha Pharmaceuticals Ltd (TDPL)

Chennai, IndiaGynecology and oncology brands; API and dosage form plant

1996 Acquired MJ Pharma Halol, IndiaDosage form plant (now USFDA approved)

1996 Acquired Gujarat LykaAnkleshwar, India

API plant

1996Bulk Drug plant from Knoll Pharma

Ahmednagar, India

API plant (now USFDA approved)


Agenda

RevenueComposition

1

Strategy &Approach

History &Profile

Growth

Key Acquisitions

BusinessOperations




Financials

23

45


India Branded Generics : Strong Base

• Market Share : 4.4%*

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

Neuro-Psychiatry27%

Cardiology19%

Diabetology11%

Gastroenterology 14%

Gynecology & Urology- 7%

Musculo-Skeletal & Pain- 5%

Antiasthamatic & Antiallergic- 5%

Opthalmology- 4%Others8%

Therapywise Break-up

* As per AWACS


Relentless Customer Focus

1999 Market Share indexed to 100 for all companies

Therapy focused marketing

• 2,600+ sales representatives covering 130,000 specialist doctors

Strong increase in prescription and sales market share

50

100

150

200

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Sun Cipla Ranbaxy Nicholas Cadila DRL


Therapy Focused Marketing Delivering promotional message to specialty customers.

Cardiology, DiabetologyGastroenterology, Orthopedics

Oncology

Rheumatology, Dermatology

Asthma, COPD

Interventional Cardiology

Fertility, Gynecology,Urology

Psychiatry, Neurology GynecologyOphthalmology


Preferred Choice of Doctors

Our Top 10 BrandsLeadership in key therapeutic areas*Specialist Oct '04 Oct ‘10

Psychiatrists 1 1

Neurologists 1 1

Cardiologists 3 1

Orthopaedic 3 1

Ophthalmologists 2 1

Gastroenterologists 1 1

Diabetologists 3 2

Nephrologists 5 2

Consulting Physicians

6 3

Chest Physicians 6 4

Gynaecologists 10 6

Urologists 8 8

Oncologists 9 9

ENT Specialists 7 20

Brand Name

Therapy area

PantocidProton pump inhibitor/ antiulcerant

Glucored Group

Oral antidiabetic

Susten Women's healthcare

AztorCVS, cholesterol reducing agent

Pantocid-DProton pump inhibitor/ antiulcerant

Gemer Oral antidiabetic

Strocit CNS, stroke

Repace Group

CVS, Hypertension

Encorate chrono

CNS, epilepsy

Clopilet CVS, anticlotting agent

*Ranks based on prescription share


US GenericsIntegrated generic manufacturer with flexibility for manufacture onshore / offshore

The 76% owned US generics subsidiary, markets own and Sun Pharma ANDAs

Sun Pharmaceutical

Industries, Inc. (SPI)

Caraco Pharmaceutical Laboratories Ltd.

A wholly owned subsidiary of Sun Pharma in US

ApprovalsTherapy wise summary

As on Dec-10

Taro Pharmaceutical Industries Ltd.

The 66% owned subsidiary of Sun PharmaEndocine, 1

Gastro, 1

Respiratory, 1

Urology, 2

Other, 2

Antibiotic, 3

Cough / Cold, 6

Metabolism, 7

Oncology, 12

Allergy, 13

Pain, 15

CVS, 20

CNS, 49

Skin, 88


ANDA Pipeline : Significant ramp upProducts Filed and Approved Status

As of Dec 10, ANDAs for 149

products await approval

(including 20 tentative

approvals)

92 Products pending(with 12 tentative approval)

Sun Pharma

29 Products pending (with 4 tentative approval)

Caraco

Taro28 Products pending (with 4 tentative approval)

(Taro numbers added for Dec 2010)

4059

95

142

177

207

369

15 20 2953

6984

220

0

50

100

150

200

250

300

350

400

Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Dec-10

Cumulative Products Filed Cumulative Products Approved


US Generics

• Valproic Acid Soln

• Levetiracetam Injection

• Lithium Carbonate Tablets

• Tamsulosin HCl Capsules

• Venlafaxine HCL Tablets

• Diltiazem HCL ER Capsule

• Galantamine HCL ER capsule

13 ANDA Approvals in last 1 year

• Bupropion HCL ER Tablets

• Alprazolam Tablets USP

• Azelastine HCL Ophthalmic Solution

• Atomoxetine HCL Capsules

• Desloratidine Tablets

• Galantamine HCL ER Capsules


Caraco Update

• Though Company has made significant progress towards regaining FDA compliance Caraco estimates that it will not be in a position to commence manufacturing of first two products in near term as indicated earlier

• Caraco Announces Merger Agreement with Sun Pharma; Public Shareholders to Receive $5.25 Cash per Share


Europe Generic Markets

Plan to enter key markets

• Working on complex generic products, including injectables

• Filings from Indian site

An API and Finished Dosage

manufacturing site in Hungary

with controlled substance

capacity

Focus Countries


International Branded Generic Markets

Less Regulated Markets

• Product basket width and technology based products as growth drivers

Replicating the speciality template• 41 countries

• 600 strong local sales force promotes brands to doctors

CIS Countries

China

Sri Lanka

Map Not to Scale

Mexico

South AfricaOther Markets

Focus Markets

Brazil

Myanmar


Leveraging through Partnerships

• Sun Pharma and Merck establish Joint Venture for Emerging Markets• JV to bring new combinations and formulations of

incrementally innovative, branded generics.

• Use SPARC Proprietary Delivery Technologies

• Equally representation in JV for Sun Pharma & Merck

• JV to use partners infrastructure for development, manufacturing, regulatory and commercialization.


Speciality API

High Margin Regulated Markets

•Business largely with end users in regulated markets

•Over 160 speciality APIs across 8 plants

Strong regulatory capability

• 201 DMF / CEP filed

• 123 approved

(Including Taro)


Strong Regulatory CapabilityInternational level quality processes and documentation

85

127

148

201

37

7784

123

0

40

80

120

160

200

240

Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10

DMF/CEP Filed DMF/CEP Approved


Integrated product dev and manufacturing network

28

Vertically integrated network across four continents enabling high quality, low cost and a quick market entry across the geographies

Halol

AnkleshwarPanoli

DadraSilvassa

Karkhadi

Bangladesh PlantAhmednagar

Maduranthakam

Sikkim PlantJammu

Tiszavasvari(Hungary)

Goiânia (Brazil)

Iztapalapa(Mexico)

Israel

API and Formulations API Formulations

Global networked facilities are FDA, EMEA, TGA approved

Ontario (Canada)

CranburyBryan

Tennessee

Detroit

Taro PharmaceuticalsSun Pharma


Finished Dosage Manufacturing

15 Manufacturing sites worldwide

• India : 6, US : 3, Canada : 1

• Capacities available for a variety of finished dosage

Tablets / Capsules

Semisolids

Liquids

Suppository

Injectables / Sterile

Vials Dry powder

Ampoules Eye drops

Pre-filled Syringes MDI

Gels Aerosols

Lyophilized Units


API Manufacturing

8 World class locations with all sites ISO 14001, ISO 9002 approved• India : 5, Israel : 1, US : 1,

Hungary : 1 Over 25 API processes scaled up annually

APIKey Plants

Panoli & Ahmednagar (both India)

• International regulatory approvals: USFDA, European

• Stand alone units for peptides, anti-cancer, steroids, sex hormones

Hungary & Tennessee (US)

• Controlled substances manufacture


Agenda

RevenueComposition

1

Strategy &Approach

History &Profile

Growth

Key Acquisitions

BusinessOperations




Financials

23

45


Research and Development• Generic R&D spend around 6% of net

sales

• Strong research teams in generics, finished dosage development, biological support, chemistry

• 4 R&D centers with about 800 scientists

Mumbai

Balancing the risk

Medium term Drug delivery systems

Immediate termANDA, DMF, Products for India

Baroda


Agenda

RevenueComposition

1

Strategy &Approach

History &Profile

Growth

Key Acquisitions

BusinessOperations




Financials

23

45


Corporate Governance

Our philosophy on corporate governance

envisages working towards high levels of

transparency, accountability and consistent

value systems across all facets of operations

Committee chaired by Keki Mistry comprises Hasmukh Shah and S. Mohanchand Dadha

Audit CommitteeEminent Independent Directors

Hasmukh Shah Chairman Gujarat GasFormer Chairman and Managing Director, IPCL

Keki Mistry

Vice Chairman and CEO, HDFC

S. Mohanchand Dadha Former Chairman & Managing Director, TDPL

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


Agenda

RevenueComposition

1

Strategy &Approach

History &Profile

Growth

Key Acquisitions

BusinessOperations




Financials

23

45


Shareholding Patternas on Dec 31, 2010

• Rs 1,000 Invested in the 1994 IPO is currently worth more than Rs. 187,747

• Earned dividend of Rs. 5,000

Mutual Funds3%

Promoter and promoter group64%

Bodies Corporate5%

Individuals and Others5%

Financial Inst / Banks4%

FIIs / Foreign Banks19%


FinancialsMarket Capitalisation Rs. 457 billion / USD 10.25 billion* Figures in Rs million

*Exchange Rate : 1 USD = Rs 44.65

2005-06 2006-07 2007-08 2008-09 2009-10P&L Summary

Net Sales 16,368 21,359 33,565 42,723 39,986 Gross Profit 11,492 15,592 26,344 34,154 29,008 EBITDA 4,914 6,724 15,511 18,639 12,475 Net Profit 5,733 7,843 14,869 18,177 13,511 R&D Spend 2,014 2,787 2,859 3,320 2,468 Fully Diluted EPS (Rs.) 27.7 38.9 71.8 87.8 62.2

BS SummaryShareholders Funds 15,902 27,728 49,915 70,449 78,289 Loan Funds 18,745 11,144 1,436 1,789 1,712 Net Fixed Assets 8,977 10,122 11,040 16,196 16,776 Investments 3,541 2,543 7,560 18,595 30,664 Cash and Bank Balances 15,324 13,802 12,389 16,690 6,073 Inventory 5,117 6,645 7,723 9,757 10,739 Sundry Debtors 3,609 6,789 14,177 8,811 11,748 Sundry Creditors 1,110 968 2,393 2,543 2,349

Cash Flow SummaryNet Cash from Operating Activities 1,852 2,395 5,050 21,651 7,933 Net Cash used in Asset Creation Activities 3,387 2,000 1,995 5,900 2,752


Financial Ratios

2005-06 2006-07 2007-08 2008-09 2009-10Growth (% )

Net Sales 38.1 30.5 57.1 27.3 (6.4) Gross Profit 33.3 35.7 69.0 29.6 (15.1) EBITDA 17.9 36.8 130.7 20.2 (33.1) Net Profit 44.7 36.8 89.6 22.2 (25.7)

Margins (% )Gross Margin 70.2 73.0 78.5 79.9 72.5 EBITDA Margin (%) 30.0 31.5 46.2 43.6 31.2 Net Margin 35.0 36.7 44.3 42.5 33.8

Return (% )Return on Average Capital Employed 18.7 22.7 35.5 31.5 18.6 Return on Average Net Worth 45.6 37.0 38.3 30.2 18.2

OthersDebt / Equity 1.18 0.40 0.03 0.03 0.02 Fully Diluted EPS (Rs) 27.7 38.9 71.8 87.8 65.2

R&D Spend % of Net Sales 12.3 13.0 8.5 7.8 6.2 Revenue 9.4 11.4 8.1 7.3 5.8 Capital 2.9 1.6 0.4 0.5 0.4


Key Financials Q3 FY11

Q3 FY11 Q3 FY10 CHANGE 9m FY11 9m FY10 CHANGE FY0910Net Sales 16,010.7 10,208.6 56.8% 43,708.4 29,936.2 46.0% 40,081.4 Gross Profit 11,686.8 7,351.3 59.0% 32,233.4 21,619.5 49.1% 29,103.2

Gross Margin 73.0% 72.0% 73.7% 72.2% 72.6% EBITDA 4,405.3 3,684.1 19.6% 15,235.4 9,443.0 61.3% 12,681.8

EBITDA Margin 27.5% 36.1% 34.9% 31.5% 31.6% Net Profit 3,501.6 3,389.5 3.3% 14,181.2 9,566.0 48.2% 13,510.7

Net margin 21.9% 33.2% 32.4% 32.0% 33.7% R&D 990.4 514.6 92.5% 2,329.8 1,906.8 22.2% 2,468.1

R&D as % of Net Sales 6.2% 5.0% 5.3% 6.4% 6.2% EPS (Diluted) INR 3.4 3.3 3.3% 13.7 9.2 48.2% 13.0


For updates and specific queries, please visit www.sunpharma.com or feel free to contactUday BaldotaTel : +91 22 6645 5645, Ext 605Tel Direct : +91 22 66455605Mobile : +91 98670 [email protected]

Mira DesaiTel : +91 22 6645 5645, Ext 606Tel Direct : +91 22 66455606Mobile : +91 98219 [email protected]

© 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.

creating lasting value investor presentation- may 2011

Documents

forwardlooking statements

finished dosage

market risks

number of risks

manufacturing api

revenue composition2009

baroda1994ipo rs

employeesinvested rs