Indian Market View

28th September 2018

5 Wealth Creator Pharma Companies

 Dear Investors
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Indian Market View
 1-SUN PHARMACEUTICAL INDUSTRIES
LTD. (CMP. ₹ 625.00)

NSE Symbol 524715 Market Cap (cr.) 151409.4

BSE Code SUNPHARMA Book Value ( Rs.) 163.43

Bloomberg SUNP IN Face Value ( Rs.) 1

Reuters SUN.BO ROCE 0.1024

52 Week High/ Low 678.80/434.80 ROE 0.077

Dividend yield 0.0032 PE 37.42

Sales Growth (3Yrs): -0.0111 EPS 16.85

Indian Market View

 Major Shareholder
Promoters 54.38% 60.00%
54.38%
Institutional 32.98%
Public 8.08% 50.00%
Others 4.56%

40.00%
32.98%
30.00%

20.00%

10.00% 8.08%
4.56%

0.00%
Promoters Institutional Public Others
Promoters Institutional Public Others
Indian Market View
 Business Overview
Sun Pharmaceutical Industries Limited is a pharmaceuticals company. The Company's
business segments include US Business, Indian Branded Generics Business, Emerging
Markets, Global Consumer Healthcare Business and Active Pharmaceutical Ingredients
(API). Its Rest of World segment includes Western Europe, Canada, Australia, New Zealand
and other markets. The Company offers its products to therapy areas, such as cardiology,
neuro-psychiatry, gastroenterology, anti-infective, diabetology and dermatology. The
Company's products include AB PHYLLINE, ABZORB DUSTING POWDER, ACAMPROL,
ACOSTIN 3 MIU, ACOSTIN FORTE and AB PHYLLINE SR 200. Its manufacturing units are
situated in India, the United States and Brazil, among others. Its units produce generics,
branded generics, specialty products, over-the-counter (OTC) products, anti-retroviral
(ARVs) and APIs. They also produce intermediates in a range of dosage forms, including
tablets, capsules, injectables, ointments, creams and liquids.

Indian Market View

 Growth Strategies
Create sustainable revenue streams
• Enhance share of specialty business globally
• Achieve differentiation by focussing on
technically complex products
• Focus on key markets to achieve critical mass
• Speed to market
• Ensure sustained compliance with global
regulatory standards
Business development
Balance profitability and investments • Use acquisitions to bridge critical capability and
for future portfolio gaps
• Increasing contribution of specialty and complex • Focus on access to products, technology and
market presence
products
• Ensure acquisitions yield high return on
• Direct future investments towards differentiated
investment
products
• Concentrate on payback timelines

Cost leadership

• Vertically integrated operations

• Optimise operational costs

Indian Market View

 Growth drivers of Indian pharmaceutical
market
Higher incidence of chronic diseases Good economic growth

Government’s focus on increasing

Improved healthcare solutions Higher disposable incomes the penetration of modern medicine
to India’s interiors

Increasing penetration of hospital

Greater healthcare awareness
insurance

Indian Market View

 Key Performance Indicators (Consolidated)

Net Profit after Minority Interest

8000 6964.4
6000 4539.4 4545.7
4000 3141.5
2161.6
2000
0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
Reserve & Surplus R&D Investment
37860.6 2500 2302.5 2313.8 2248.9
40000 36399.7 1955
32741.8
27800.9 2000
30000
1500 1041.8
18317.8
20000 1000
10000 500
0
0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Indian Market View
 Global generics market
The global generics market is estimated to grow at 5% CAGR for the 2017-22 period to reach US$ 104 Billion by 2022. Governments worldwide are
facing pressures of rising healthcare costs, thus emphasising on the importance of generics and their role in making pharmaceutical products affordable
to those in need. Patent expiry for branded drugs in developed markets has a bearing on the potential of generics in those markets. In the emerging
world, the branded generics markets will be driven primarily by rising per capita incomes, increasing healthcare awareness and enhanced incidence of
chronic ailments.
GLOBAL GENERICS MARKET GROWTH
120
100 104
100 95
89
81 84
80

60

40

20

0
2017 2018E 2019E 2020E 2021E 2022E
Indian Market View
 2- Cipla Limited
(CMP. ₹ 657.00)

NSE Symbol CIPLA Market Cap (cr.) 53125

BSE Code 500087 Book Value ( Rs.) 182.25

Bloomberg CIPLA IN Face Value ( Rs.) 2

Reuters CIPL. BO ROCE 8.91%

52 Week High/ Low 508.10/678.00 ROE 10.06%

Dividend yield 0.46% PE 35

Sales Growth (3Yrs): 10.13% EPS 17.85

Indian Market View
 Major Shareholder
Promoters 36.70% 45.00%
Institutional 38.59%
40.00% 38.59%
Public 17.91% 36.70%
Others 6.80% 35.00%

30.00%

25.00%

20.00% 17.91%

15.00%

10.00%
6.80%
5.00%

0.00%
Promoters Institutional Public Others
Indian Market View
 Business Overview
Cipla Limited is a holding company. The Company is a pharmaceutical company. The Company's
strategic business units include Active Pharmaceutical Ingredients (APIs), Respiratory and Cipla
Global Access. The Company's geographical segments include India, USA, South Africa and Rest
of the World. The Company manufactures metered dose inhalers, dry powder inhalers, nasal
sprays, nebulizers and a range of inhaled accessory devices. Cipla Global Access is a tender-
based institutional business that concentrates on approximately four therapy areas: human
immunodeficiency virus/acquired immuno deficiency syndrome (HIV/AIDS), malaria, multi drug-
resistant tuberculosis and reproductive health. The Company offers its products for the
therapeutic areas, including cardiovascular, children's health, dermatology and cosmetology,
diabetes, HIV/AIDS, infectious diseases and critical care, malaria, neurosciences, oncology,
ophthalmology, osteoporosis, respiratory, urology and women's health.

Indian Market View

 Key aspects impacting Cipla’s value creation
process
Cipla has identified the following six key facets of business which have a
material impact on the value creation process:
• Quality
• Access and affordability
• Operations
• Research and development
• Talent Governance
Indian Market View
 Financial Capital
Revenue From Operation EBITDA
20000 3000 2826
2480 2476
14630 15219 2133 2162
15000 13790
10173 11345 2000
10000
1000
5000

0 0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
Cash Conversion Cycle
130 127
PAT
1388 1411 125 122
1500 1360
1181 119
1006 120
1000 114 114
115
500 110
0 105
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
Indian Market View
 3- Natco Pharma Ltd
(CMP. ₹ 752.00)

NSE Symbol NATCOPHARM Market Cap (cr.) 15243

BSE Code 524816 Book Value ( Rs.) 176.33

Bloomberg NTCPH IN Face Value ( Rs.) 2

Reuters NATP.BO ROCE 41.39%

52 Week High/ Low 1061.95/698.85 ROE 29.16%

Dividend yield 1.00% PE 19.48

Sales Growth (3Yrs): 38.33% EPS 42.42

Indian Market View
 Major Shareholder
Promoters 48.38%
Institutional 30.65% Series 1
Public 17.74% 60.00%
Others 3.23%
50.00% 48.38%

40.00%
30.65%
30.00%

20.00% 17.74%

10.00%
3.23%
0.00%
Promoters Institutional Public Others
Promoters Institutional Public Others
Indian Market View
 Business Overview
Natco Pharma Limited is a pharmaceutical company. The Company is engaged in developing,
manufacturing and marketing finished dosage formulations (FDF) and active pharmaceutical
ingredients (APIs). The Company's segments include active pharmaceuticals ingredient, finished
dosage formulations, job works, pharmacy and others. The Company's product categories
include Domestic Formulations, International Formulations, API's and Blockbusters. The
Company's products include Alphalan, Bandrone, Bendit, Clokeran, Lenalid, Thioplan,
Anastronat, Capnat, Fulvenat, Kabanat, Natdox-LP, Rapact, Temonat, X-Trant, Glatimer,
Hepcinat, Natdac, Natzold, Tigi, Alprazolam, Chloroquine Phosphate, Lansoprazole, Letrozole,
Granisetron, Rizatriptan IR, Imatinib, Salmeterol Xinafoate, Sertraline Form I, Ibandronate
Sodium Monohydrate, Pantoprazole Sodium Sesquihydrate, Ondansetron Hydrochloride
(Injectable Grade), Daclatasvir and Glatiramer Acetate. The Company manufactures over 20
products under contract.

Indian Market View

Value Creation
Innovation
and R&D

Sales Planning

Material
Production
Procurement
Indian Market View
 Financial performance highlights
Revenue PAT
3000 800 696.2
2078.9 2242.4
600 486
2000
840.2 1089.7 400
1000 755.6 134.6 157.1
200 102.7
0 0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

EBITDA Net worth

1500 4000 3072.2
968.8 3000
1000 697.3
2000 1649.3
1295.7
500 196 213.1 282.3 725.9 846.1
1000
0 0
FY 14 FY 15 FY 16 FY 17 FY 18 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Indian Market View

 4-Jubilant Life Sciences Limited
(CMP. ₹ 739.00)

NSE Symbol JUBILANT Market Cap (cr.) 12074

BSE Code 530019 Book Value ( Rs.) 269.11

Bloomberg JUBILANT IN Face Value ( Rs.) 1

Reuters JULS.BO ROCE 15.97%

52 Week High/ Low 600/1039 ROE 17.16%

Dividend yield 0.41% PE 16.96

Sales Growth (3Yrs): 9.34% EPS 43.38

Indian Market View

 Major Shareholder
Promoters 50.68% 60.00%
Institutional 29.30%
Public 16.37% 50.68%
Others 3.65% 50.00%

40.00%

29.30%
30.00%

20.00% 16.37%

10.00%
3.65%

0.00%
Promoters Institutional Public Others
Indian Market View
 Business Overview
Jubilant Life Sciences Limited is an India-based pharmaceutical and life sciences company.
The Company is engaged in providing basic organic chemicals. The Company's segments
include Pharmaceuticals and Life Sciences Ingredients. The Pharmaceuticals segment
consists of generics, including active pharmaceuticals ingredients (APIs) and solid dosage
formulations; specialty pharmaceuticals (sterile products), including radiopharmaceuticals,
allergy therapy products and contract manufacturing operations of sterile injectables; drug
discovery solutions, and Indian branded pharmaceuticals. The Life Sciences Ingredients
segment includes specialty intermediates, life sciences chemicals and nutritional products.
Its geographic segments include Within India and Outside India. The Company's specialty
intermediates business deals in approximately 60 commercial products, including
Pyridines, Picolines and Cyanopyridines. Its manufacturing facilities are located in Gajraula,
Uttar Pradesh.

Indian Market View

 Financial Performance
Revenue PAT
7557.87
8000 800 642.81
5822.42 5868.7 5762.5 5886.29 575.65
6000 600
391.83
4000 400
2000 200 109.04
-57.76
0 0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 -200 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Assets
3400 3189.76
3200
2928.03 2875.32 2948.12
3000
2800 2714.54
2600
2400
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Indian Market View

 LIFE SCIENCE INGREDIENTS
SEGMENT
Revenue contribution from the Life Science Ingredients segment to Total revenue from
operations stood at 45%. During the year revenue in the segment were at ` 33,649 million
as against ` 27,076 million in FY 2017, a growth of 24% YoY. The improvement in revenue
can be attributed to gains both in volumes and in pricing.
Research & Development is the enabler of innovation and plays a vital role in developing
and adopting new technologies in the technologically intensive life sciences industry. In
Jubilant, a team of well qualified and experienced professionals in R&D centres spread
across multiple locations are specialised across the value chain of chemical research,
chemistry/ process development of advance intermediates, fine ingredients and contract
research. Our R&D centres conform to international standards and are well equipped with
world-class infrastructure managed by best-in-class manpower. Each R&D centre has
dedicated unit integrated with relevant business.

Indian Market View

 5-PIRAMAL ENTERPRISES LIMITED
(CMP. ₹ 2351.00)

NSE Symbol PEL Market Cap (cr.) 46965

BSE Code 500302 Book Value ( Rs.) 1218

Bloomberg PIEL IN Face Value ( Rs.) 2

Reuters PIRA.BO ROCE 28.33%

52 Week High/ Low 3302.55/2279.05 ROE 27.69%

Dividend yield 0.91% PE 9.88

Sales Growth (3Yrs): 27.50% EPS 262.77

Indian Market View
 Major Shareholder
60.00%
Promoters 50.77%
Institutional 31.04% 50.77%
Public 16.68% 50.00%
Others 4.51%
40.00%
31.04%
30.00%

20.00% 16.68%

10.00%
4.51%

0.00%
Promoters Institutional Public Others
Promoters Institutional Public Others
Indian Market View
 Business Overview
Piramal Enterprises Limited (PEL) is engaged in the business of pharmaceuticals, including
research and development, financial services and information management through its
subsidiaries. The Company's pharmaceutical business consists of manufacturing and sale of
own and traded bulk drugs and formulations. It operates through three segments:
Healthcare, Financial Services and Information Management. Its Healthcare segment
includes pharma solutions, critical care, consumer products and imaging. Its Financial
Services segment includes wholesale lending, alternative asset management and
investments in Shriram Group. Its Information Management segment is engaged in
Decision Resources Group (DRG). DRG's product and services portfolio consists of data and
analytics, research products and global consulting services. The Company offers its
products under brands, including Saridon, Lacto Calamine, i-pill/i-know, Polycrol, Tetmosol,
Untox, Stop AllerG and Throatsil.

Indian Market View

 Key Performance Indicators
Revenue Total Assets
15000 72683
80000
10639
10000 8547 60000 48239
6381 30980
4503 5123 40000
5000 21505 22003
20000
0 0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Market Cap
50000 44002
40000 32825
30000
15029 17885
20000
9465
10000
0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
Indian Market View
 Integrated Value-creation Model

PEL Capital Inputs

FINANCIAL CAPITAL
• Total Equity of `26,445 Cr; Total Assets of `72,683 Cr
• Raised ~`7,000 Cr through QIP of CCDs and Rights Issue during FY2018
• FS: Invested `42,168 Cr (on B/S); Equity in Loan Book and AUM business is `9,725 Cr; Invested in Shriram `4,583 Cr • Invested `7,054 Cr in Pharma; `5,000 Cr in DRG
MANUFACTURED CAPITAL
• FS: End-to-end real estate developer financing model (including housing finance); Sector agnostic corporate lending platform; 22 financial products
• Pharma: 13 global manufacturing facilities; End-to-end manufacturing capabilities for APIs and Formulations; Strong product portfolio of niche differentiated
branded generic products; Consumer product brands with presence in 4.2 Lakh outlets
• DRG: 18 global offices across North America, Europe and Asia having a range of products in four major products/ services categories
INTELLECTUAL CAPITAL
• FS: External industry/sector experts on the Investment committee; Real estate development knowledge
• Pharma: Integrated offerings across the entire drug lifecycle; Global R&D pool of 450 scientists, including 100 PhDs
• DRG: 100 Terabyte data repository, including healthcare claims, outcomes, formulary and insurance coverage;

Indian Market View

 Cont.…
HUMAN CAPITAL
• 6,843 employees worldwide
• Diversified employee base across 20 nationalities
SOCIAL & RELATIONSHIP CAPITAL
• FS: Relationship with 120+ developers
• Strong partnership with APG, Bain Capital Credit, CPPIB, Ivanhoe Cambridge (CDPQ)
• Pharma: Strong relations with Allergan and large Pharma players; serving seven of Top 10 global pharma companies, along with various other customers
• HIA: Serving 45 of Top 50 Pharma companies; 10+ years of relationships with Top 10 customers
• Esteemed institutional investors invested in PEL
NATURAL CAPITAL
• Adopted ‘CORE’ (Creating Optimal and Responsible Environment) initiative to drive sustainable development for energy usage efficiency, water conservation and
waste reuse and recycle
• Lending to renewable energy sector through the Financial Services platform

Indian Market View

 Efficient Capital Allocation
Invested 42,168 Cr (on B/S) and
7,620 Cr (off B/S) in FS
• 6-year Loan Book CAGR: 122%
• FY2018 ROE: 19%
• FY2018 GNPA ratio: 0.3%
~7,054 Cr invested in Pharma
• 7-year Revenue CAGR: 16%
• FY2018 Global Pharma EBITDA
Margin: 22%
• Eight acquisitions in last three
years
4,583 Cr invested in Shriram Group
• Around 16% annualised return on
Shriram Transport Finance and
Shriram City Union Finance

~5,000 Cr invested in Healthcare capital returned to shareholders

Insight & Analytics
• Around 20% appreciation in USD
(relative to INR) since investment
• Peers trading at attractive
valuations in US
since 2010
• Buyback of K2,508 Cr
• Annual dividends of K2,568 Cr1
and Special dividend of K604 Cr
• FY2018 Dividend Pay-out — 29%

Indian Market View

 Thank you….!!
Keep Investing….

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Indian Market View