INVESTMENT MANAGEMENT

ASSIGNMENT
2010-11
FUNDAMENTAL ANALYSIS OF

LIMITED

BY SANTOSH KUMAR
6TH SEM B.COM(C)
 08d0213
Introduction
CIPLA Limited

Type Public (BSE: 500087)

Industry Pharmaceuticals

Founded 1935

Headquarters Mumbai, India

Key people Y. K. Hamied (CMD),

(Chairman)

Products Pharmaceuticals and

diagnostics
Revenue 5,624.91 crore
(US$1.24 billion)
(2010)

Net income 1,082.59 crore

(US$239.25 million)
(2010)

Employees over 7,000

Website www.cipla.com
 Cipla, (BSE: 500087) is a prominent Indian pharmaceutical company, best-
known outside its home country for manufacturing low-cost anti-AIDS drugs for HIV-
positive patients in developing countries. Founded by Khwaja Abdul Hamied as The
Chemical, Industrial & Pharmaceutical Laboratories in 1935, Cipla makes drugs to treat
cardiovascular disease, arthritis, diabetes, weight control, depression and many other health
conditions, and its products are distributed in more than 180 countries worldwide.

CIPLA – India’s No.1 Pharma Company

CIPLA is now India’s No:1 Pharma Company.

Drug company Cipla maintained its top position in the domestic market for the 12 months
ended December, 2009, with a market share of 5.38 per cent — up 18 per cent over the year
and ahead of Ranbaxy Laboratories and GlaxoSmithKline (GSK).

The total domestic drug market is valued at Rs 40,051.74 crore, an increase of 17 per cent
over the previous year, according to data from drug sales tracking agency, ORG-IMS. The
agency tracks drug sales among more than 500,000 traders in the country, through stockist
data.

Cipla’s domestic market share grew 18 per cent during the year, thanks to its product basket
of 924 products, which is way ahead of Ranbaxy’s 565 and GSK’s 177 products.

Ranbaxy got a market share of 4.91 per cent and GSK had a market share of 4.35 per cent,
with a growth of 13.7 per cent and 18 per cent, respectively, in 2009.

During the period, Cipla had sales of Rs 2,155.29 crore in the domestic market, ahead of
Ranbaxy’s Rs 1,968.24 crore and GSK’s Rs 1,743.15 crore.

Cipla had overtaken Ranbaxy and GSK India to become the largest pharmaceutical company
in the domestic market for the first time in May, 2007, according to sources.
]
Piramal Healthcare, Zydus Cadila, Sun Pharma, Alkem Laboratories, Mankind, Lupin and
Aristo Pharma occupied the 4th-10th positions in ORG-IMS rankings, respectively.

Interestingly, Elder Pharma emerged as the fastest growing company in the domestic market
among the top 50 players, with a year-on-year (YoY) growth rate of 28.1 per cent over the
previous year. Elders’ growth in the domestic market is ahead of Mankind (27.9 per cent),
Wanbury ( 25.2 per cent), Piramal Healthcare (22.8 per cent), Zydus Cadila (21.2 per cent),
Sun Pharma (22.9 per cent), Micro Labs and Alembic (24.7 per cent).

Technology services
Cipla offers services like consulting, commissioning, engineering, project appraisal, quality
control, know-how transfer, support, and plant supply.
Apart from its presence in the Indian market, Cipla also has an export market and regularly
exports to more than 150 countries in regions such as North America, South American, Asia,
Europe, Middle East, Australia, and Africa. For the year ended 31 March 2007 Cipla’s
exports were worth approximately Rs. 17,500 million. Cipla is also considerably well-known
for its technological innovation and processes for which the company received know-how
royalties to the tune of Rs. 750 million during 2006-07. Cipla has been approved by
regulatory bodies such as:

 World Health Organization

 Food and Drug Administration (FDA), USA
 Therapeutic Goods Administration (TGA), Australia
 Pharmaceutical Inspection Convention (PIC), Germany
 National Institute of Pharmacy (NIP), Hungary
 The Medicines and Healthcare products Regulatory Agency (MHRA) is the UK
government agency

Cipla has recently launched i-Pill which is a single dose emergency contraceptive and has
acquired a great deal of popularity in a short span of time. Other latest launches of Cipla
include products such as Nova, Moxicip, Flomex, Fullform, Montair LC, and Imicrit.

HIV/AIDS in the developing world

Today (2007), Cipla is the world's largest manufacturer of antiretroviral drugs (ARVs) to
fight HIV/AIDS, as measured by units produced and distributed (multinational brand-name
drugs are much more expensive, so in money terms Cipla medicines are probably somewhere
down the list). Roughly 40 percent of HIV/AIDS patients undergoing antiretroviral therapy
worldwide take Cipla drugs.

Indian law from 1972 until 2005 allowed no (end-product) patents on drugs, and provided for
compulsory licensing, Cipla was able to manufacture medicines which enjoyed patent
monopoly in certain other countries (particularly those where large, multinational
pharmaceutical companies are based). By doing so, as well as by making an executive
decision not to make profits on AIDS medication, Cipla reduced the cost of providing
antiretrovirals to AIDS patients from $12,000 and beyond (monopoly prices charged by
international pharma conglomerates) down to around $300 per year. Today they are able to
do so for under $150 per patient per year. While this sum remains out of reach for many
millions of people in Third World countries, government and charitable sources often are in a
position to make up the difference for destitute patients. However, in producing generic
versions of drugs which are patent-protected, the company has provoked the ire of the
pharmaceutical companies which own the patents. Whilst Cipla has argued that the ethics of
humanitarian relief should outweigh Intellectual property considerations, brand-name
pharmaceutical companies have countered that high prices are vital to offset high Research
and development costs (though typically such companies spend far more on marketing and
administration than they do on research).

Cipla developed a three-in-one tablet called Triomune containing a fixed-dose combination

(FDC) of three ARVs (Lamivudine, stavudine and Nevirapine), something difficult elsewhere
because the three patents were held by different companies. Another popular fixed-dose
combination is produced under the name Duovir-N. This contains Lamivudine, Zidovudine
and Nevirapine. Cipla manufactures generic versions of many of the most commonly
prescribed anti-retroviral medication in the market, and is a highly capable manufacturer in
its own right. This innovation made ARVs far more accessible and easy-to-take for patients
everywhere, but particularly in poor- and middle-income countries, where the vast majority
of people on anti-retroviral therapy (ART) now take such combination pills.

Cipla is one of the first companies to register AIDS drugs under the US program PEPFAR.

and Nevirapine. Cipla manufactures generic versions of many of the most commonly
prescribed anti-retroviral medication in the market, and is a highly capable manufacturer in
its own right. This innovation made ARVs far more accessible and easy-to-take for patients
everywhere, but particularly in poor- and middle-income countries, where the vast majority
of people on anti-retroviral therapy (ART) now take such combination pills.

Cipla is one of the first companies to register AIDS drugs under the US program PEPFAR.

2007 AHF campaign

In August 2007 Cipla was confronted by a US-based group known as AIDS Healthcare
Foundation (AHF) with a well-funded campaign of full-page ads in various Indian
newspapers suggesting Cipla was pricing an AIDS drug called Viraday higher in India than in
Africa.

It soon emerged that AHF was closely associated with American pharma conglomerate
Gilead Sciences, maker of a competing drug. On September 1, 2007, The Economic Times of
Delhi wrote that:

It has now emerged that Aids Healthcare Foundation (AHF), the US-based NGO that accused
Cipla of over pricing anti-AIDS drug, Viraday, in India is part funded by American anti-
AIDS drug maker Gilead and the NGO's treasurer is a senior Gilead executive. This is largely
the reason why foreign and Indian NGOs such as Medicins Sans Frontieres (MSF), Delhi
Network of Positive People (DNP+), Indian Network of Positive People (INP+), Sahara and
others refused to be part of AHF's anti-Cipla campaign.”

Antiflu and Virenza

In December 2008, Cipla won a court case in India allowing it to manufacture a cheaper
generic version of oseltamivir, marketed by Hoffmann-La Roche (Roche) under the trade
name Tamiflu, under the Cipla tradename Antiflu. In May 2009, Cipla won approval from
the World Health Organization certifying that its drug Antiflu was as effective as Tamiflu,
and Antiflu is included in the World Health Organization list of prequalified medicinal
products.

Cipla announced that Oseltamivir 75 mg capsules marketed as `Antiflu` by the company has
been included in the World Health Organization (WHO) list of prequalified medicinal
products (PMP).

Oseltamivir is indicated for use in the treatment of influenza A (H1N1) infection commonly
known as swine flu.
Cipla also produces a generic version of zanamivir, marketed by Glaxo under the trade name
Relenza, under the Cipla tradename Virenza.

The Saudi government has recently purchased stockpiles of Antiflu in preparation for the
upcoming Hajj.

The firm announced the launch of the drug under brand name: "antiflu" on November 11,
2009 to be sold as a category X drug, strictly under prescription. The firm has already sold 2
lakh (200,000) doses to the Indian Government.

Other drugs
Cipla has a product range comprising antibiotics, anti-bacterials, anti-asthmatics,
anthelmintics, anti-ulcerants, oncology, corticosteroids, nutritional supplements and
cardiovascular drugs. The company has at least nine different prescription drugs registered
with the US FDA. Cipla is into anti-bacterial and anti-asthmatic segments and is the first
player in Asia to launch non-CFC metered dose inhaler.

Cipla’s generic HIV drug tenofovir receives USFDA approval

India’s generic major Cipla has received tentative approval for HIV drug tenofovir disoproxil
fumarate tablets, 300 mg, from United States Food and Drug Administration
(USFDA)Tenofovir disoproxil fumarate tablets are indicated for use in combination with
other antiretroviral agents for the treatment of HIV-1 infection in adults.

Cipla’s tenofovir disoproxil fumarate tablets got the approval under the President`s
Emergency Plan for AIDS Relief (PEPFAR) programme.

Tenofovir disoproxil fumarate is the patented drug of Gilead. Gilead Sciences sells tenofovir
disoproxil under the brand name Viread.

Tenofovir disoproxil fumarate is a prodrug of tenofovir which is a fumaric acid salt of bis-
isopropoxycarbonyloxymethyl ester derivative of tenofovir. In vivo tenofovir disoproxil
fumarate is converted to tenofovir, an acyclic nucleoside phosphonate (nucleotide) analog of
adenosine 5′-monophosphate.

Tenofovir exhibits activity against HIV-1 reverse transcriptase. It is indicated in combination

with other antiretroviral agents for the treatment of HIV-1 infection. Tenofovir is also
indicated for the treatment of chronic hepatitis B in adults.

Viread’s patent saga

Though Gilead has a global patent for Viread till 2018, the US Patent and Trademark Office’s
(USPTO) rejected Gilead Sciences’ patent application for the AIDS drug.

In India Cipla has been marketing a generic version of tenofovir at a cost of $700 per person
per year, for some time now. Gilead’s tenofovir costs $5,718 per patient per year in
developing countries.
To curtail this, Gilead signed license agreements with 11 Indian companies for manufacturing
and selling Viread in 95 countries, including India. The agreement signed in the year 2007
gave access to Gilead’s technology to manufacture and sell Tenofovir. Cipla, which refused
Gilead’s licensing offer, challenged Viread’s validity by filing a pre grant opposition. Cipla
argued that the grant of the patent in India will make the HIV drug unaffordable to patients
worldwide.

However, Indian firms who entered into agreements with Gilead -Matrix Laboratories,
Aurobindo Pharma, JB Chemicals, Alkem, Shasun Chemicals, Strides Acrolab, Emcure and
Hetero Drugs -continued to market the drug.

Gilead sells tenofovir alone and in combination with other drugs like Truvada and Atripla.
Taken together, the three HIV treatments generated $3.1 billion in sales last year, according
to the company reports. Viread registered sales of $359.2 million for the six months ended
June 30.

PEPFAR

The President’s Emergency Plan For AIDS Relief (PEPFAR) was aimed to fight the global
HIV/AIDS pandemic over five years (2003–2008) from United States President George W.
Bush with a commitment of $15 billion. The goals of PEPFAR include support for treatment
for 2 million HIV infected people, support for prevention of 7 million new infections, and
support for care for 10 million people infected or affected by HIV/AIDS. PEPFAR has been
called the largest health initiative ever initiated by one country to address a disease.

Cipla: A leader in anti-retrovirals

Two months ago, Cipla received approvals for two drugs namely stavudine 1 mg/ml and
levetiracetam 250 gm, 500 gm,750 from USFDA.Stavudine is used for use in combination
with other antiretroviral agents for the treatment of HIV infection in adults and children.

Levetiracetam tablets are indicated as adjunctive therapy in treatment of myoclonic seizures

in adults and adolescents from 12 years of age with juvenile myoclonic epilepsy.

It has to be recalled that the US Food and Drug Administration (FDA), issued warning letters
to Cipla following inspections in its manufacturing facility in Bangalore. US FDA has
reportedly found out nearly a dozen variations in the standard operating procedure for good
manufacturing practices (GMP) quality norms to be followed by the drug manufacturer. US
FDA has issued inspectional observations to Cipla seeking explanations for the violations.

Cipla is one of the world’s largest manufacturer of antiretroviral drugs (ARVs) to fight
HIV/AIDS. Roughly 40% of HIV/AIDS patients undergoing antiretroviral therapy worldwide
take Cipla drugs.
 Consolidated Result
Scrip Code : 500087      Company : CIPLA LTD

  Type Audited
  Date Begin 01-Apr-09
  Date End 31-Mar-10
Amount(Rs.
Description
million)
   Net Sales / Income from Operations 56,249.10
      Net Sales 53,595.20
      Other Operating Income 2,653.90
   Expenditure -44,582.70
      (Increase) / Decrease In Stock In
1,840.90
Trade & WIP
      Consumption of Raw Materials -20,330.10
      Depreciation -1,896.60
      Employees Cost -3,713.10
      Other Expenditure -14,267.20
      Purchase of Traded Goods -6,216.60
  Profit from Operations before Other
11,666.40
Income, Interest and Exceptional Items
   Other Income 881.10
  Profit before Interest and Exceptional
12,547.50
Items
   Interest -236.60
  Profit after Interest but before
12,310.90
Exceptional Items
   Exceptional Items 950.00
  Profit (+)/ Loss (-) from Ordinary
13,260.90
Activities before Tax
   Tax -2,435.00
      Current Tax -2,285.00
      Deferred Tax -150.00
  Net Profit (+)/ Loss (-) from Ordinary
10,825.90
Activities after Tax
   Extraordinary Items 0.00
  Net Profit 10,825.90
  Minority Interest 0.00
  Share of Profit & Loss of Asso 0.00
  Net Profit after Mino Inter & Share of P
10,825.90
&L
  Any Other 0.00
  Income Attributable to Consolidated 10,825.90
Group
  Cost of Investment In Sub 0.00
  Equity Capital 1,605.80
  Face Value (in Rs) 2.00
  Reserves 57,410.30
   EPS before Extraordinary items (in Rs)
   EPS after Extraordinary items (in Rs)
      Basic EPS after Extraordinary items 13.69
  Number of Public Shareholding 500,849,336
  Percentage of Public Shareholding 62.38
  Promoters and Promoter Group
Shareholding
  Pledged / Encumbered
     Number of Shares 0
     Percentage of Shares (as a % of the
total shareholding of promoter and 0.00
promoter group)
     Percentage of Shares (as a% of the
0.00
total share capital of the company)
  Non-encumbered
     Number of Shares 295,485,978
     Percentage of Shares (as a% of the
total shareholding of promoter and prom 100.00
group)
     Percentage of Shares (as a % of the
36.80
total share capital of the company)