Synergies Valuation

2009 2010 2011 2012

Manufacturing 0 102 205 258

Research 44 114 118 121
Development 38 98 109 111
Marketing &Distribution 38 98 101 104
Roche G&A 63 103 113 123
Genentech G&A 40 103 106 109
TOTAL 223 618 752 824

COST Synergies dependent on merger

Year 2009 2010 2011 2012
Manufacturing 0 51 103 128
Research 0 0 0 0
Development 38 98 109 111
Marketing &Distribution 38 98 101 104
Roche G&A 47 77 85 92
Genentech G&A 15 38 39 40
TOTAL 138 362 436 476
Tax@35% 48.3 126.7 152.6 166.6
PAT 89.7 235.3 283.4 309.4
Terminal Value
df@9% 0.9174312 0.84168 0.7721835 0.7084252
pv 82.293578 198.0473 218.8368 219.18676
total pv 3220.2848
no. of shares as on 2008 1052
value per share based on cost synergies 3.0611072

$89 PER SHARE

2013 AND THEREAFTER % Dependent Merger with Genentech FRIENDLY ACQUISITION/HOSTILE ACQUISITION/MERG

270 50%
125 0%
112 100%
107 100%
124 75%
113 37%
851

2013 and thereafter

135
0
112
107
93
42
489
171.15
317.85
3531.6667
0.649931386298345 0.649931
206.580691134929 2295.3396
N/HOSTILE ACQUISITION/MERGER
VAL+A1:U43UE BASEED ON LRP (GREENHILL & COMPANY)
(in millions of US dollar)
2006 2007 2008
revenues
product sales 7640 9443 10531
royalties 1354 1984 2539
contract and other 290 297 348
total revenue 9284 11724 13418

cost and expenses

cost of sales 1181 1571 1744
r&d 1773 2446 2800
marketing, selling, general and administrative 2014 2256 2405
profit sharing 1005 1080 1228
other expenses 159 142 -88
total cost and expenses 6132 7495 8089
operating income 3152 4229 5329
less:taxes 1290 1657 2004
after tax operating income 1862 2572 3325
plus: depriciation andamortization 407 492 592
less: increase/decrease in net working capital -741 894 -705
cash flow from operations 1528 3958 3212
less: capital expenditure -1214 -977 -751
free cash flow 314 2981 2461

less: charge for equity settled equity compensation 0 0 0

free cash flow after equity settled equity compensation 314 2981 2461
TERMINAL VALUE
DF@9%
PV
TOTAL PV 74906.751

EV 74906.751
DEBT VALUE( EX-5) -CP+LTD 2829
PLUS: CASH AND STMS 7000

EQUITY VALUE 79077.751

NO. OF SHARE 1052

PRICE PER SHARE 75.168965

SHARE VALUE UNDER ALTERNATIVE AGREEMENTS

LONG TERM GROWTH RATE
0% 1%
10%
DISCOUNT RATE 9%
8% PRICE PER SHARE
7%
6%

$89
 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

10868
2409
258
13535 14482.45 15496.222 16580.957 17741.624 18983.538 20312.385 21734.252 23255.65 24883.545

1285.825

6483.265 6937.0936 7422.6901 7942.2784 8498.2379 9093.1145 9729.6326 10410.707 11139.456 11919.218
2269.1428 2427.9827 2597.9415 2779.7974 2974.3833 3182.5901 3405.3714 3643.7474 3898.8097 4171.7264
4214.1223 4509.1108 4824.7486 5162.481 5523.8546 5910.5245 6324.2612 6766.9594 7240.6466 7747.4919
446.655 477.92085 511.37531 547.17158 585.47359 626.45674 670.30872 717.23033 767.43645 821.157
175.955 188.27185 201.45088 215.55244 230.64111 246.78599 264.06101 282.54528 302.32345 323.48609
4484.8223 4798.7598 5134.673 5494.1001 5878.6871 6290.1952 6730.5089 7201.6445 7705.7596 8245.1628
527.865 564.81555 604.35264 646.65732 691.92334 740.35797 792.18303 847.63584 906.97035 970.45827
3956.9573 4233.9443 4530.3204 4847.4428 5186.7638 5549.8372 5938.3258 6354.0087 6798.7893 7274.7045

0 188.27185 201.45088 215.55244 230.64111 246.78599 264.06101 282.54528 302.32345 323.48609

3956.9573 4045.6724 4328.8695 4631.8903 4956.1227 5303.0512 5674.2648 6071.4634 6496.4658 6951.2184

0.9174312 0.84168 0.7721835 0.7084252 0.6499314 0.5962673 0.5470342 0.5018663 0.4604278 0.4224108
3630.236 3405.1615 3342.6815 3281.3479 3221.1397 3162.0362 3104.0172 3047.0627 2991.1533 2936.2698

DF @ 9%
GR OF 2%

M GROWTH RATE
2% 3% 4%
PRICE PER SHARE
 GROWTH 0%,1%,2%,3%,$%,5%

CHANGE IN WC

101289.18
0.4224108 FCFF=NOPAT+D-CHANGES IN NWC-CAPEX
42785.645
EV=PV OF FCFF-DEBT-PSC-MI+CASH AND CE
VALUE BASED ON NFM (GS)
(in millions of US dollar)
2006 2007 2008 2009 2010
revenues
product sales 7640 9443 10531 10868
royalties 1354 1984 2539 2409
contract and other 290 297 348 258
total revenue 9284 11724 13418 13535 14482.45

cost and expenses

cost of sales 1181 1571 1744 1285.825
r&d 1773 2446 2800
marketing, selling, general and administrative 2014 2256 2405
profit sharing 1005 1080 1228
other expenses 159 142 -88
total cost and expenses 6132 7495 8089
operating income 3152 4229 5329 6483.265 6937.094
less:taxes 1290 1657 2004 2269.143 2427.983
after tax operating income 1862 2572 3325 4214.122 4509.111
plus: depriciation andamortization 407 492 592 446.655 477.9209
less: increase/decrease in net working capital -741 894 -705 175.955 188.2719
cash flow from operations 1528 3958 3212 4484.822 4798.76
less: capital expenditure -1214 -977 -751 527.865 564.8156
free cash flow 314 2981 2461 3956.957 4233.944

less: charge for equity settled equity compensation 0 0 0 0 188.2719

free cash flow after equity settled equity compensation 314 2981 2461 3956.957 4045.672
TERMINAL VALUE
DF@9% 0.917431 0.84168
PV 3630.236 3405.162
TOTAL PV 74906.75

EV 74906.75
DEBT VALUE( EX-5) -CP+LTD 2829
PLUS: CASH AND STMS 7000 DF @ 9%
GR OF 2%
EQUITY VALUE 79077.75

NO. OF SHARE 1052

PRICE PER SHARE 75.16897

SHARE VALUE UNDER ALTERNATIVE AGREEMENTS

LONG TERM GROWTH RATE
0 0.01 0.02 0.03
0.1
DISCOUNT RATE 0.09
0.08 PRICE PER SHARE
0.07
0.06

112-115
 2011 2012 2013 2014 2015 2016 2017 2018

15496.22 16580.96 17741.62 18983.54 20312.39 21734.25 23255.65 24883.55

7422.69 7942.278 8498.238 9093.115 9729.633 10410.71 11139.46 11919.22

2597.942 2779.797 2974.383 3182.59 3405.371 3643.747 3898.81 4171.726
4824.749 5162.481 5523.855 5910.524 6324.261 6766.959 7240.647 7747.492
511.3753 547.1716 585.4736 626.4567 670.3087 717.2303 767.4364 821.157
201.4509 215.5524 230.6411 246.786 264.061 282.5453 302.3234 323.4861
5134.673 5494.1 5878.687 6290.195 6730.509 7201.644 7705.76 8245.163
604.3526 646.6573 691.9233 740.358 792.183 847.6358 906.9703 970.4583
4530.32 4847.443 5186.764 5549.837 5938.326 6354.009 6798.789 7274.705

201.4509 215.5524 230.6411 246.786 264.061 282.5453 302.3234 323.4861

4328.869 4631.89 4956.123 5303.051 5674.265 6071.463 6496.466 6951.218
101289.2
0.772183 0.708425 0.649931 0.596267 0.547034 0.501866 0.460428 0.422411 0.422411
3342.681 3281.348 3221.14 3162.036 3104.017 3047.063 2991.153 2936.27 42785.65

0.04