Transcript Document
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Investor Presentation October 2005
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Safe Harbour Statement
Materials and information provided during this presentation may contain ‘forward-looking statements’. These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties which could cause actual outcomes and results to differ materially from these statements.
Risks and uncertainties include general industry and market conditions, and general domestic and international economic conditions such as interest rate and currency exchange fluctuations. Risks and uncertainties particularly apply with respect to product-related forward-looking statements.
Product risks and uncertainties include, but are not limited, to technological advances and patents attained by competitors, challenges inherent in new product development, including completion of clinical trials; claims and concerns about product safety and efficacy; obtaining regulatory approvals; domestic and foreign healthcare reforms; trends toward managed care and healthcare cost containment, and governmental laws and regulations affecting domestic and foreign operations.
Also, for products that are approved, there are manufacturing and marketing risks and uncertainties, which include, but are not limited, to inability to build production capacity to meet demand, unavailability of raw materials, and failure to gain market acceptance.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
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Agenda
Pharmaceutical Industry Overview Lupin – A Differentiated Business Model Financial Overview Business Strategy and Investment Highlights
Pharmaceutical Industry Overview
Global Pharmaceutical Industry Overview
Estimated to be a US$550 billion market in 2004 (including estimated unaudited pharmaceutical sales) Market expected to grow at a rate of 7% to 9% Regulated markets account for almost 90% of the market in terms of revenue North America is the single largest market accounting for approx. 50% of global sales and is expected to grow at a CAGR of 10% EU was the fastest growing market, growing at a CAGR of 26% in the period 2002 – 2004
Emerging Trends Global Pharmaceutical Sales*
525 450 375 300 225 150 75
401
48 11 47 91 204
466
55 14 52 115 230
518
59 9 58 144 248 North America 2002 EU Japan 2003 Rest of Europe 2004 Rest of World Source: IMS World Review (Industry Sales based on Audited Numbers)
Key Generic Drug Markets
Growing importance of generics in regulated markets Pressure from healthcare providers and insurance companies to reduce healthcare costs driving usage of generic drugs Increasing patent expirations driving generic drug availability Legislative changes such as the enactment of the Hatch-Waxman act and changes to the Medicare Act in the US providing a major boost Stringent testing requirements and declining R&D productivity has led to limited new drug pipeline Increasing pressure on big pharmaceutical companies to enhance new drug pipeline
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France Italy Japan UK Germany India US
1.9
2.5
3.3
4.1
5.3
5.7
5.0
10.0
15.0
US$ Bn 20.0
The generic drugs market which is expected to grow at 10%-12% over the next few years is a key growth area for emerging pharmaceutical manufacturers
24.8
25.0
30.0
Factors driving the Indian Pharmaceutical Industry
Indian Pharmaceutical Market Overview
Approximately US$5 bn in 2004 with exports accounting for an additional US$2.5 bn Amongst top 4 markets by volume globally Strong branded generics market Market growing at a rate 6%-8% as a result of growing awareness, increasing penetration & increasing affordability Emerging segments such as CNS, diabetes etc. growing at 15-20% + Introduction of product patents in India in 2005 are expected to lead to a greater emphasis on drug discovery and development
Generic Exports and API Outsourcing
India is well positioned to target generic exports and API outsourcing opportunities in the regulated markets
Skilled work force with strong chemistry skills Significant and sustainable cost advantage over international peers Good understanding of the regulatory framework India has largest number of US FDA approved plants outside the US Largest number of DMF filings outside US Indian companies are among the leading players participating in Para IV challenges
R&D Outsourcing
Skilled work force at competitive costs Significant progress in development of pharma & R&D infrastructure over last 5 years Focus on early stage processes for NCEs, NDDS, clinical trials, process re-engineering and dedicated manufacturing
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A combination of strong chemistry skills, regulatory capabilities and quality manufacturing has positioned India favorably to capitalize on the global pharmaceutical opportunity
Lupin – A Differentiated Business Model
Business Overview
Globally accredited manufacturing facilities Strong R&D Focus 14 ANDAs, 15 DMFs, 4 COS, 2 E-DMFs filed in FY2005 Four NCE molecules in clinical stage R&D spend in FY2005 – US$18 mm Focused on US, EU, Australia, Japan, India, China and CIS Share in Revenues from America & Europe increased from 10% in FY2001 to 24% in FY2005 Among the top 6 pharmaceutical companies in India Leading global player in anti-TB & Cephalosporins Strong position in prils and emerging global player in statins Employs 4,259 people Home to 260 scientists
6 Therapeutic Mix - FY 2005 CVS 21% Cephs 43% Anti-TB 24% Others 12% Geographical Mix - FY2005 Others 2% America & Europe 24% India 53% South East Asia 21%
Product Profile - API & Intermediates
Proven process chemistry as well as fermentation skills Major therapeutic focus areas: anti-TB, cephalosporins (both orals and injectables), prils and statins Quality and cost leadership Relationship Driven model
Product
Ethambutol Rifampicin Pyrazinamide
Going Forward
Extending global dominance across a wider portfolio Increasing strategic partnerships / alliances Reap benefits of new and expanded capacities 7ACCA 7ADCA Lisinopril
Therapeutic Segment
Anti-TB
Global Rank
1 Anti-TB Anti-TB Cephalosporin Intermediate Cephalosporin Intermediate Cardiovascular 1 1 2 1 1
Amongst the top 2 globally in each area of focus
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Product Profile - Finished Dosages
US Specialty
Focus on $ 7 Bn pediatric market thru a dedicated sales force Foundation laid with the launch of Suprax ® showing an increasing Rx trend Co-promotion with Cornerstone BioPharma for Suprax ® with focus on primary care physicians Looking at justifiable brand acquisitions and in licensing opportunities Positioning to market other products from own NDDS platform
US Generics
Fast building a pipeline of finished products for the US market ~50 products in current pipeline with brand value of +$ 60 Bn 7 ANDA approved till date, 12 pending approval $756 mn Ceftriaxone launched in July 2005 with Baxter Healthcare and Henry Schein API supply to Baxter Healthcare for Premix Frozen 7 products planned for launch in FY 2006 Target = +15 ANDA filings every year Target = +25 product basket by FY 2008
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Success Strategy: Focus generic opportunities in regulated markets
Product Profile - Finished Dosages
India
Portfolio of over 80 finished products with focus on anti-TB, anti-infectives, NSAIDS cardiovasculars and diabetes 20 brands in the 'Top 3' of their respective product segments Business growing at a rate of 9% as against 2% growth in the overall industry
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18 new products launched in 2005 including anti-Asthma 1350 strong field force for marketing Marketing divisions with specific therapeutic focus Extending reach to access rural markets thru brand building Partnership business model in EU with own setup in select markets +350 EOIs received till date Plan to file 8-12 dossiers in FY 2006 Entering Japanese generic market thru alliances Co-operation agreement with Kyowa Pharma signed for multiple products Consolidating presence in CIS market by introducing more products
Other Markets
Fast building a pipeline of finished products for the other markets with strong R&D focus Entering the Australian market with value added generics through alliances
Success Strategy: Strong R&D focus with broad market specific product offering
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US / EU Product Development
Filings till date Approvals till date Target filings in FY06 Target launches in FY06 Products under development Target filings going forward per year
US
19 7 +15 7 25-30 +15
EU
8-12 0 8-12 6-8
Globally Accredited Facilities
Ankleshwar Tarapur Pune Goa Mandideep Aurangabad Manufacturing Research Center LOCATION PRODUCTS APPROVALS
Mandideep, Madhya Pradesh Cephalosporins Prils USFDA, UK MHRA, TGA USFDA Tarapur, Maharashtra Rifampicin Lovastatin USFDA, UK MHRA Ankleshwar, Gujarat Aurangabad, Maharashtra Verna, Goa Pune, Maharashtra Ethambutol Intermediates Rifampicin Pyazinamide Ethambutol Lisinopril Non cephalosporin Oral Formulations R&D USFDA USFDA WHO, MCC (South Africa) WHO, MCC (South Africa) WHO, MCC (South Africa) WHO, MCC (South Africa) USFDA
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Strong Research & Development Focus
Process NDDS
Proven abilities in process chemistry and fermentation Ability to develop products with high technology barriers 30 DMF and 75 EDMFs filed
ANDA
19 ANDAs filed,7 approved including $756mn Ceftriaxone Broad range of filings with wide therapeutic coverage
12 Process ANDA NDDS NCE
First licensing deal signed for anti infective product Three patented platforms for delivery systems Two products launched in India
NCE
Anti-migraine and anti-psoriasis (herbal) in Phase IIa trials Anti -tb and anti-psoriasis (chemical) in phase I trials Anti-diabetes and anti-bacterial in pre-clinical stages
Experienced Management Team
NAME
Desh Bandhu Gupta, Ph.D
Kamal K Sharma, Ph.D
Satish Khanna
POSITION
Chairman Managing Director Group President, API
BRIEF PROFILE
Founded the company in 1968 Started his career teaching chemistry at Birla Institute of Science and Technology, Pilani, Rajashthan Experience of more than three decades at a range of senior management positions managing projects, corporate development and general management in the pharmaceuticals and chemicals industries Strengthened Lupin's API business and secured the company's position among top manufacturers, globally Rich experience of more than 25 years in leading companies including Mitsu Industries, Tata Chemicals and Union Carbide Vinita Gupta Sharma President, Lupin Pharmaceuticals Inc, US Has led Lupin's foray in the advanced markets of the US and Europe and in cementing alliances with global majors Himadri Sen, Ph.D
Shakti Chakraborty Vinod Dhawan Divakar Kaza President, Pharma research Spearheading Lupin's drive for NDDS, ANDA and patent fillings Has worked with leading Indian and global pharma companies in the areas of pharma research, technology development and transfer and manufacturing support President, India Region Formulations President--Business Development President, Human Resources Has driven Lupin's entry in the lifestyle segments Experience of more than three decades with leading pharmaceutical companies like Wockhardt, Aristo Pharma Heads the AAMLA region, responsible for the development of Lupin ’ s business strategy for these markets. Has worked with Ranbaxy in their international business Responsible for developing HR management strategy and align it with overall business strategy of the company Brings along with him rich business experience of about 2 decades in organizations like Wipro, General Electric etc Indrajit Banerjee Harish Narula Nilesh Gupta President, Finance & Planning President Corporate Affairs Exec VP, IPMG Responsible for the finance, IT and planning functions and align it with overall business strategy of the company Rich experience of more than 2 decades in organizations like Indal, Lucent Technologies Heads the company ’ s business initiatives in the CIS region Supports the businesses through various Embassies and trade Associations Responsible for driving product identification for the advanced markets identifying in-licensing and out-licensing opportunities
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Financial Overview
Financial Profile
14 Revenues
280 260 240 220 200 180 160 140
160 175 214 268
6.0
FY2003 FY2004 FY2004 FY2004
EBITDA / Interest Coverage 5.4
5.0
4.0
2.9
2.9
3.0
2.3
2.0
1.0
FY2003 FY2004 FY2004 FY2004
271
FY2005
5.3
FY2005
Net Income
25.0
22.0
19.0
16.0
13.0
10.0
13.8
16.6
17.6
22.7
19.4
2.5
2.0
1.5
1.0
0.5
FY2003 FY2004 FY2004
Debt / Equity
FY2004 FY2005
1.8
2.0
1.7
0.8
0.9
FY2003 FY2004 FY2004 FY2004 FY2005
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Regulated Markets Driving Growth
(US$ Millions) Income Statement Data
Revenue EBITDA EBIT Interest PBT PAT
Key Ratios
EBITDA Margins PAT Margins EBITDA/ Interest
Quarter Ended June 30 2004 2005 YOY Growth
69.3
9.4
7.6
1.6
6.0
4.7
14.2% 7.1% 5.8x
83.7
17.1
15.0
1.5
13.5
9.9
21.2% 12.3% 11.5x
20.8% 81.4% 97.2% (8.2%) 125.8% 109.1% -
Key Highlights
Revenue increased by 21% Export Revenue increased by 30% Buoyant off-take in regulated market with sales increasing by 84% to US$16.7 mm Finished dosage increases by 143% API revenue increased by 59% Suprax Revenue touched US$3.9 mm Profit margins improved substantially with reduction in costs
Business Strategy and Investment Highlights
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Business Strategy
Continued growth of Anti-TB and Cephalosporin Business Strong Corporate Governance Sustainable Growth Strengthen Presence in Lifestyle Drugs Penetrate Regulated Markets Broad Basing the Product Basket ANDA, NDDS and NCE
Investment Highlights
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