Transcript Creating Lasting Value

Creating Lasting Value
Investor Presentation – August 2010
Sun Pharmaceutical Industries Limited
Corporate Office: Acme Plaza, Andheri Kurla Road, Andheri (E), Mumbai - 400 059.
Tel: 91-22-66969696 ▪ Fax: 91-22- 28212010 ▪ www.sunpharma.com
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 forwardlooking 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.
Creating Lasting Value - Investor Presentation
2
Agenda
5
4
3
2
1
Revenue
Composition
History &
Profile
Business
Operations
Strategy &
Approach
Growth
Key
Acquisitions
Research &
Development
Management
& Governance
Financials
Geographies
API, Finished
Dosage &
Manufacturing
Creating Lasting Value - Investor Presentation
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Agenda
5
4
3
2
1
Revenue
Composition
History &
Profile
Business
Operations
Strategy &
Approach
Growth
Key
Acquisitions
Research &
Development
Management
& Governance
Financials
Geographies
API, Finished
Dosage &
Manufacturing
Creating Lasting Value - Investor Presentation
4
Revenue Composition
2009-10 Annual sales : Rs 40,761 million
5 Year CAGR 26%
India
Branded Generics
45%
APIs
5 Year CAGR 19%
5 Year CAGR 22%
13%
12%
30%
US Generics
International Branded
Generics (ex-US)
5 Year CAGR 33%
5 Year CAGR 43%
Finished Dosage
sales
87%
5 year CAGR 27%
Creating Lasting Value - Investor Presentation
International
sales
53%
5 year CAGR 34%
5
Creating Value, Continuously…
‘83
‘10
1995
1983
2004
Began with
5 products
First API
Plant Panoli
1993
First Research Centre
SPARC, Baroda
USD 350mn
FCCB raised
1997
2007
Demerger
of innovative
R&D to SPARC
1994
$7.5Mn invested
in Caraco
Sun Pharma Today
5 Key operating
subsidiaries
8,000+ Employees
IPO - Rs. 550 Mn
raised
2010
The performance continues
PART OF
Invested Rs. 17 billion
in Research
19 Manufacturing facilities
in 4 Continents
More than 50% of sales from international markets
Creating Lasting Value - Investor Presentation
6
Key Operating Subsidiaries
Sun Pharmaceutical Industries Limited
Caraco Pharmaceutical
Laboratories
Develops, manufactures, market
and distributes generic and
private label pharmaceuticals
and markets them throughout
the United States.
Sun Pharmaceutical
Industries, Inc. (SPI)
US based wholly owned subsidiary
of Sun Pharmaceutical Industries
Limited, India.
Sun Pharmaceutical
(Bangladesh)
Owns and operates a pharmaceutical factory and
makes pharmaceutical products that are sold in
the local market.
Chattem
Chemicals, Inc.
Narcotic
raw
material
importer and manufacturer
of controlled substances
with a facility in Tennessee,
US
Alkaloida Chemical
Co. Exclusive Group Ltd
ICN Hungary acquired in 2005, now renamed;
one of the few units worldwide, authorized to
make controlled substances
Creating Lasting Value - Investor Presentation
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Agenda
5
4
3
2
1
Revenue
Composition
History &
Profile
Business
Operations
Strategy &
Approach
Growth
Key
Acquisitions
Research &
Development
Management
& Governance
Financials
Geographies
API, Finished
Dosage &
Manufacturing
Creating Lasting Value - Investor Presentation
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Strategy and Approach
Create sustainable
revenue streams
Seek cost leadership
• Focus: Chronic therapies
• Differentiation: Technically
complex products
• Speed to market
• 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
Creating Lasting Value - Investor Presentation
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Growing Steadily
0
96-97 97-98 98-99 99-00 00-01
55,000
15,000
18,177
11,853
0
42,723
0
00-01 01-02 02-03 03-04 04-05
20,000
5,435
3,962
4,500
1,352
1,500
6,000
Consistent top-line and bottom-line growth;
continuing the trend despite increasing size
0
04-05 05-06 06-07 07-08 08-09
0
(Figures in Rs million)
Net Sales
Creating Lasting Value - Investor Presentation
Net Profit
10
Sustained Profitability
Superior business model
Margins consistently higher than peers*
85%
Gross Margin
80%
80%
70%
60%
50%
EBITDA Margin
44%
50%
40%
40%
30%
30%
20%
20%
10%
10%
0%
0%
-10%
-10%
Net Margin
43%
50%
40%
-20%
04-05
05-06
06-07
07-08
08-09
04-05
05-06
06-07
Sun Pharma
07-08
08-09
-20%
04-05
05-06
06-07
Range of other Top 10 Pharma Cos.
07-08
08-09
Average
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
Creating Lasting Value - Investor Presentation
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Successful At Acquisitions
Acquired 14 high potential yet under-performing businesses*; successful
turnarounds
10,000
45
8 Early Acquisitions
8,000
36
6,000
27
4,000
18
2,000
9
0
95-96
96-97
97-98
Net Sales (MINR)
98-99
99-00
00-01
Operating Margin(%)
Creating Lasting Value - Investor Presentation
01-02
02-03
03-04
0
Operating Profit (MINR)
12
Key Acquisitions & Rationale
Year
Acquisition
Country
Rationale
2009
Caraco acquired some products of
Forest’s Inwood business
US
Increased generic product offerings
2008
Acquired 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
2000
Merged 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
1997
Merged Tamilnadu Dadha
Pharmaceuticals Ltd (TDPL)
Chennai, India
Gynecology and oncology brands; API and
dosage form plant
1996
Acquired MJ Pharma
Halol, India
Dosage form plant (now USFDA approved)
1996
Acquired Gujarat Lyka
Ankleshwar, India
API plant
1996
Bulk Drug plant from Knoll Pharma
Ahmednagar, India
API plant (now USFDA approved)
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Agenda
5
4
3
2
1
Revenue
Composition
History &
Profile
Business
Operations
Strategy &
Approach
Growth
Key
Acquisitions
Research &
Development
Management
& Governance
Financials
Geographies
API, Finished
Dosage &
Manufacturing
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India Branded Generics : Strong Base
•
Market Share – 3.7%
•
Leadership in chronic
segment;
Top 3 in over 50% of
more than 500 brands
Therapywise Break-up
Opthalmology - 4%
Others
8%
Antiasthamatic &
Antiallergic - 5%
Neuro-Psychiatry
27%
Musculo-Skeletal
& Pain - 5%
Gynecology &
Urology - 7%
Gastroenterology
14%
Cardiology
19%
Diabetology
11%
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Relentless Customer Focus
Strong increase in
prescription and
sales market share
Therapy focused marketing
• 2,500+ sales representatives
covering 130,000 specialist doctors
200
150
100
50
1999
2000
Sun
2001
2002
Cipla
2003
2004
Ranbaxy
2005
2006
Nicholas
2007
Cadila
2008
2009
DRL
1998 Market Share indexed to 100 for all companies
Creating Lasting Value - Investor Presentation
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Therapy Focused Marketing
Delivering promotional message to specialty customers.
Gastroenterology,
Orthopedics
Cardiology, Diabetology
Oncology
Ophthalmology
Psychiatry, Neurology
Gynecology
Rheumatology,
Dermatology
Asthma,
COPD
Interventional
Cardiology
Creating Lasting Value - Investor Presentation
Fertility, Gynecology,
Urology
17
Preferred Choice of Doctors
Leadership in key therapeutic areas*
Specialist
Oct '04
Oct '09
Psychiatrists
1
1
Neurologists
1
1
Cardiologists
3
1
Orthopaedic
3
Ophthalmologists
Our Top 10 Brands
Brand Name
Therapy area
Glucored Group Oral antidiabetic
Pantocid
Proton pump inhibitor/
antiulcerant
1
Susten
Women's healthcare
2
1
Aztor
Gastroenterologists
1
2
CVS, cholesterol reducing
agent
Diabetologists
3
2
Strocit
CNS, stroke
Chest Physicians
6
4
Repace Group
CVS, Hypertension
Nephrologists
5
4
Gemer
Oral antidiabetic
Consulting Physicians
6
4
Gynaecologists
10
4
Encorate
chrono
CNS, epilepsy
Oncologists
9
6
Urologists
8
8
ENT Specialists
7
16
*Ranks based on prescription share
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US Generics
Integrated generic manufacturer
with flexibility for manufacture
onshore / offshore
Approvals
Therapy wise summary
CNS, 32
CVS, 13
Caraco Pharmaceutical
Laboratories Ltd.
The 76% owned US generics subsidiary,
markets own and Sun Pharma ANDAs
Oncology, 11
Pain, 11
Metabolism, 7
Cough / Cold, 6
Allergy, 6
Antibiotic, 2
Sun Pharmaceutical
Industries, Inc. (SPI)
Urology, 1
Gastro, 1
Endocine, 1
A wholly owned subsidiary of
Sun Pharma in US
As on June-10
Creating Lasting Value - Investor Presentation
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ANDA Pipeline : Significant ramp up
Products Filed and Approved Status
250
211
207
As of June 10, ANDAs for 120
products await approval
(including 11 tentative approvals)
200
177
142
150
Sun Pharma
95
100
69
59
91
84
91 Products pending
(with 7 tentative approval)
53
50
20
Caraco
29 Products pending
(with 4 tentative approval)
29
0
Mar-06
Mar-07
Mar-08
Cumulative Products Filed
Mar-09
Mar-10
Jun-10
Cumulative Products Approved
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US Generics
18 ANDA Approvals in last 1 year
• Bicalutamide Tablets
• Carbidopa Levodopa OD Tablets
• Oxaliplatin for Injection
• Sumatriptan Succinate Tablets
• Caffeine Citrate Injection
• Caffeine Citrate Oral Solution
• Ketorolac Tromethamine Opthalmic
• Cetrizine HCl Syrup (RX)
• Nicardipine HCl Injection
• Ergocalciferol Capsule
• Promethazine HCL with Codeine Syrup
• Bupropion HCL ER Tablets
• Valproic Acid Soln
• Alprazolam Tablets USP
• Levetiracetam Injection
• Memantine HCL Tablets
• Lithium Carbonate Tablets
• Azelastine HCL Ophthalmic Solution
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Caraco Update
•
Update on FDA action
• On June 24, 2010, FDA notified Caraco that its protocol for third party cGMP
certification, detailing the activities to be conducted by the cGMP experts, was
acceptable
• On June 25, 2010, FDA released certain previously seized raw materials which had
been opened solely for the purpose of sampling
Creating Lasting Value - Investor Presentation
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Europe Generic Markets
Plan to enter key markets
• Working on complex generic
products, including injectables
• Filings from Indian site
Acquired an API and Finished Dosage
manufacturing company in Hungary
with controlled substance capacity
Creating Lasting Value - Investor Presentation
Focus Countries
23
International Branded Generic Markets
Less Regulated Markets
Replicating the speciality template
• Product basket width and
technology based products as
growth drivers
• 40 countries
• 550 strong local sales force promotes
brands to doctors
CIS Countries
China
Myanmar
Mexico
Brazil
Map Not to Scale
Sri Lanka
South Africa
Focus Markets
Other Markets
Creating Lasting Value - Investor Presentation
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Speciality API
High Margin Regulated Markets
Strong regulatory capability
• Business largely with end users in
regulated markets
• Over 160 speciality APIs across 8 plants
• 157 DMF / CEP filed
• 90 approved
Creating Lasting Value - Investor Presentation
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Strong Regulatory Capability
International level quality processes and documentation
157
160
141
120
92
80
80
83
40
90
42
33
0
Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10
DMF/CEP Filed
DMF/CEP Approved
Creating Lasting Value - Investor Presentation
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Manufacturing Locations
Plants across four continents enables us to compete with a tight
handle on cost and time to market across the geographies
Americas
India
Detroit
Bryan
Cranbury
Tennessee
Iztapalapa
(Mexico)
Jammu
Sikkim Plant
Halol
Ankleshwar
Bangladesh
Plant
Karkhadi
Panoli
Silvassa Dadra
Goiânia
(Brazil)
Ahmednagar
Europe
Maduranthakam
Tiszavasvari
(Hungary)
API and Formulations
Creating Lasting Value - Investor Presentation
API
Formulations
27
Finished Dosage Manufacturing
13 Manufacturing sites
worldwide
• India : 6, US : 3
• Over 750,000 sq. ft. area
• Capacities available for a variety of
finished dosage
Tablets /
Capsules
Injectables / Sterile
Vials
Dry powder
Semisolids
Ampoules
Eye drops
Pre-filled Syringes
MDI
Gels
Aerosols
Liquids
Suppository
Lyophilized Units
Creating Lasting Value - Investor Presentation
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API Manufacturing
8 World class locations with all sites
ISO 14001, ISO 9002 approved
• India : 6, US : 1, Hungary : 1
• Reactor capacity 1200 KL with over
650,000 sq ft area
Panoli & Ahmednagar
(both India)
• International regulatory
approvals: USFDA, European
API
Key Plants
Over 25 API processes
scaled up annually
Hungary &
Tennessee (US)
• Controlled substances
manufacture
• Stand alone units for
peptides, anti-cancer,
steroids, sex hormones
Creating Lasting Value - Investor Presentation
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Agenda
5
4
3
2
1
Revenue
Composition
History &
Profile
Business
Operations
Strategy &
Approach
Growth
Key
Acquisitions
Research &
Development
Management
& Governance
Financials
Geographies
API, Finished
Dosage &
Manufacturing
Creating Lasting Value - Investor Presentation
30
Research and Development
•
Generic R&D spend around 8% of net sales
•
Strong research teams in generics, finished
dosage development, biological support,
chemistry
•
2 R&D centers with about 600 scientists
Immediate term
ANDA, DMF, Products for India
Balancing
the risk
Mumbai
Medium term
Drug delivery systems
Baroda
Creating Lasting Value - Investor Presentation
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R&D Infrastructure
Baroda
Mumbai
• 16 acre campus with nearly
330,000 sq. ft research area
• 50,000 Sq. ft research campus
• Develops Dosage forms and
generics for US, Europe
World-class equipment for instrumental, chemical and
microbiological analysis; Equipment include: NMR, XRD,
LC-MS/MS, HPLCs etc.
Formulation
Development
State of the art
research Labs
Organic Synthesis
Analytical Method
Development
Clinical Research
Pharmacokinetics
Creating Lasting Value - Investor Presentation
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Agenda
5
4
3
2
1
Revenue
Composition
History &
Profile
Business
Operations
Strategy &
Approach
Growth
Key
Acquisitions
Research &
Development
Management
& Governance
Financials
Geographies
API, Finished
Dosage &
Manufacturing
Creating Lasting Value - Investor Presentation
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Corporate Governance
Our philosophy on corporate governance envisages
working towards high levels of transparency,
accountability and consistent value systems across
all facets of operations
Eminent Independent Directors
Hasmukh Shah
Chairman Gujarat Gas
Former Chairman and
Managing Director, IPCL
Ashwin Dani
Vice Chairman and
Managing Director,
Asian Paints Ltd.
Audit Committee
Keki Mistry
Vice Chairman and
CEO, HDFC
S. Mohanchand
Dadha
Committee chaired by Keki Mistry
comprises Hasmukh Shah and
S. Mohanchand Dadha
Former Chairman &
Managing Director, TDPL
Creating Lasting Value - Investor Presentation
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Agenda
5
4
3
2
1
Revenue
Composition
History &
Profile
Business
Operations
Strategy &
Approach
Growth
Key
Acquisitions
Research &
Development
Management
& Governance
Financials
Geographies
API, Finished
Dosage &
Manufacturing
Creating Lasting Value - Investor Presentation
35
Shareholding Pattern
as on July 31, 2010
Individuals and Others 6%
Bodies Corporate 5%
Financial Inst / Banks 3%
• Rs 1,000 Invested in
the 1994 IPO is
currently worth more
than Rs. 155,000
• Earned dividend of
Rs. 4,000
Mutual Funds 3%
FIIs / Foreign Banks
20%
Promoter and
promoter group
63%
Creating Lasting Value - Investor Presentation
36
Financials
Market Capitalisation Rs. 372 billion / USD 7.9 billion*
Figures in Rs million
2005-06
2006-07
2007-08
2008-09
2009-10
P&L Summary
Net Sales
Gross Profit
EBITDA
Net Profit
R&D Spend
Fully Diluted EPS (Rs.)
16,368
11,492
4,914
5,733
2,014
27.7
21,359
15,592
6,724
7,843
2,787
38.9
33,565
26,344
15,511
14,869
2,859
71.8
42,723
34,154
18,639
18,177
3,320
87.8
39,986
29,008
12,475
13,511
2,468
62.2
BS Summary
Shareholders Funds
Loan Funds
Net Fixed Assets
Investments
Cash and Bank Balances
Inventory
Sundry Debtors
Sundry Creditors
15,902
18,745
8,977
3,541
15,324
5,117
3,609
1,110
27,728
11,144
10,122
2,543
13,802
6,645
6,789
968
49,915
1,436
11,040
7,560
12,389
7,723
14,177
2,393
70,449
1,789
16,196
18,595
16,690
9,757
8,811
2,543
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
1,852
3,387
2,395
2,000
5,050
1,995
21,651
5,900
N.A.
N.A.
Cash Flow Summary
Net Cash from Operating Activities
Net Cash used in Asset Creation Activities
*Exchange Rate : 1 USD = Rs 46.63
Creating Lasting Value - Investor Presentation
37
Financial Ratios
2005-06
Growth (%)
Net Sales
Gross Profit
EBITDA
Net Profit
Margins (%)
Gross Margin
EBITDA Margin (%)
Net Margin
Return (%)
Return on Average Capital Employed
Return on Average Net Worth
Others
Debt / Equity
Fully Diluted EPS (Rs)
R&D Spend % of Net Sales
Revenue
Capital
2006-07
2007-08 2008-09
2009-10
38.1
33.3
17.9
44.7
30.5
35.7
36.8
36.8
57.1
69.0
130.7
89.6
27.3
29.6
20.2
22.2
(6.4)
(15.1)
(33.1)
(25.7)
70.2
30.0
35.0
73.0
31.5
36.7
78.5
46.2
44.3
79.9
43.6
42.5
72.5
31.2
33.8
18.7
45.6
22.7
37.0
35.5
38.3
31.5
30.2
N.A.
N.A.
1.18
27.7
12.3
9.4
2.9
0.40
38.9
13.0
11.4
1.6
0.03
71.8
8.5
8.1
0.4
0.03
87.8
7.8
7.3
0.5
N.A.
65.2
6.2
5.8
0.4
Creating Lasting Value - Investor Presentation
38
Financials Q1 FY11
Q1 FY11
Net Sales
13,997.0
Gross Profit
10,640.3
Gross Margin
76%
EBITDA
6,159.7
EBITDA Margin
44%
Net Profit
5,643.2
Net margin
40%
R&D
577.8
R&D as % of Net Sales
4%
EPS (Diluted) INR
27.2
Q1 FY10 CHANGE
7,875.9
78%
5,274.2
102%
67%
1,285.9
379%
16%
1,638.4
244%
21%
771.0
(25%)
10%
7.9
244%
Creating Lasting Value - Investor Presentation
FY010
39,986.2
29,008.0
73%
12,475.1
31%
13,510.8
34%
2,631.2
7%
65.2
39
Update on Taro
•
Taro’s audited financials for 2007, 2008 and 2009 still pending
•
Guggenheim Securities, appointed by Taro, approached Sun Pharma and made a
highly conditional offer on behalf of institutional investors, to buy out Sun stake
in Taro at $15 per share
• Sun rejected the offer
• Sun has filed a case in the Israeli court challenging the appointment of Guggenheim on
the grounds of it being in violation of Israeli laws dealing with “related party
transactions”
•
In July 2010 United States District Court for the Southern District of New York
dismissed in its entirety the complaint filed by Taro seeking to block the Tender
Offer by Sun’s subsidiary, Alkaloida to purchase all outstanding Ordinary Shares
of Taro
• Court also rejected Taro's request for discovery, remarking that Taro had not explained
any purpose that discovery would serve
• Taro has filed an amended complaint
Creating Lasting Value - Investor Presentation
40
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For updates and specific queries, please visit www.sunpharma.com
or feel free to contact
Uday Baldota
Tel : +91 22 6645 5645, Ext 605
Tel Direct : +91 22 66455605
Mobile : +91 98670 10529
[email protected]
Mira Desai
Tel : +91 22 6645 5645, Ext 606
Tel Direct : +91 22 66455606
Mobile : +91 98219 23797
[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
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herein are the trademarks or registered trademarks of their respective owners.
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