Firstcall recommend Claris Lifesciences, 100 ANDAs planned for the US by 2018-19

1. CMP 242.90
Target Price 275.00
ISIN: INE562G01018
JUNE 29th
, 2015
CLARIS LIFESCIENCES LTD
Result Update (CONSOLIDATED BASIS): March Quarter 2015
BUYBUYBUYBUY
Index Details
Stock Data
Sector Pharmaceuticals
BSE Code 533288
Face Value 10.00
52wk. High / Low (Rs.) 358.00/144.00
Volume (2wk. Avg. Q.) 86000
Market Cap (Rs. in mn.) 13254.57
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A ( 15m) FY16E (12m) FY17E (12m)
Net Sales 7997.52 7629.63 8270.52
EBITDA 2417.77 2279.77 2489.33
Net Profit 1494.80 1342.19 1503.83
EPS 27.39 24.60 27.56
P/E 8.87 9.88 8.81
Shareholding Pattern (%)
1 Year Comparative Graph
CLARIS LIFESCIENCES LTD BSE SENSEX
SYNOPSIS
Claris Lifesciences Limited is a multi-business
enterprise and the Holding Company of Claris
Injectables, a wholly-owned subsidiary dealing in
Specialty Injectables business.
The company has achieved a turnover of Rs.
1579.21 million for the quarter ended 31st March
2015 as against Rs. 1368.21 million in the
corresponding quarter of the previous year.
In 31st Mar 2015, net profit stood at Rs. 104.42
million when compared to Rs. 133.43 million in 31st
Mar 2014.
EBITDA or operating profit at Rs. 373.30 million in
31st Mar 2015 against Rs. 381.21 million in the
corresponding period of last year.
The company has filed at total of 39 ANDAs in the
US, Out of Which 13 ANDAs have been approved
and another 26 are under approval.
During the quarter, the company has received
approval of a supplementary ANDA, for Fluconazole
in 100 and 200 ml Non PVC Bags, in the USA.
Claris receives Supplemental ANDA approval for
Fluconazole Injection in 50 ml PVC Bags.
The company has filed for the 1 ANDa during the
quarter, and plans to file 18 ANDAs in the US during
FY2016; this is in line with the company’s target to
have a total 100 ANDAS in the US by 2018-19.
Net Sales and PAT of the company are expected to
grow at a CAGR of 7% and 22% over CY-2013 to FY-
2017E respectively.

2. QUARTERLY HIGHLIGHTS (CONSOLIDATED BASIS)
Results updates- Quarter ended 31st March 2015,
Rs. In million Mar-15 Mar-14 % Change
Net Sales 1579.21 1368.21 15.42
Net profit 104.42 133.43 (21.74)
EPS 1.91 2.09 (8.48)
EBITDA 373.30 381.21 (2.07)
The company has achieved a turnover of Rs. 1579.21 million for the quarter ended 31st March, 2015 as against
Rs. 1368.21 million in the corresponding quarter of the previous year. In the same March quarter, net profit
stood at Rs. 104.42 million when compared to Rs. 133.43 million in prior previous year ended. EBITDA or
operating profit at Rs. 373.30 million in the March quarter ended 2015 against Rs. 381.21 million in the
corresponding period of last year. The company has reported an EPS of Rs. 1.91 for the March quarter as against
an EPS of Rs. 2.09 in the corresponding quarter of the previous year.
Break up of Expenditure
Break up of Expenditure
(Rs. In millions)
Mar-15 Mar-14 % Chng
Cost of Materials
Consumed
239.97 176.67 36%
Dep & Amortization 89.18 101.84 -12%
Employees Benefit Exp 294.23 105.85 178%
Other Expenditure 386.18 320.07 21%
Purchase of Traded
Goods
484.41 672.60 -28%

3. Latest Updates
• The company has filed at total of 39 ANDAs in the US, Out of Which 13 ANDAs have been approved and
another 26 are under approval. The total addressable market size of the 39 ANDAs is approximately US$
2000 million.
• During the quarter, the company has received approval of a supplementary ANDA, for Fluconazole in 100 and
200 ml Non PVC Bags, in the USA and now Claris receives Supplemental ANDA approval for Fluconazole
Injection in 50 ml PVC Bags.
• The company has filed for the 1 ANDa during the quarter, and plans to file 18 ANDAs in the US during
FY2016; this is in line with the company’s target to have a total 100 ANDAS in the US by 2018-19.
• On 2nd of April 2015, the Company had reached a settlement an license agreement, ending all pending
litigation with Fresenius kabi USA, Inc. with reference to the alleged infringement of a patent relating to
proposal for injection, 10 mg/ml, which is a generic version of DIPRIVAN.
• Under the terms of the settlement and license Agreement, Claris and Claris Lifisciences Inc. (USA) has been
granted approval to sell its generic version of proposal for injection beginning 15th October 2016, prior to the
1st June 2025 expiry of the patent that the basis of the litigation.
• EBIDTA margin for the 15 months of this year financial was in line with CY2013 at 30% against 31%. The
EBIDTA margins for Q1 CY15 stood at 24% as compared to 28% in the same quarter of previous year.
• Year on year is not comparable due to the 15 month financial year; the PAT margins of this financial year (15
months) were higher at 19% than the 13% margins of CY2013. PAT margins for Q1 CY15 stood at 7%.
Capacity Expansion and technology up-gradation
• The packaging automation at the plant 1 is underway for the SVP and propofol lines; this will result into an
online packaging process as well ith limited human intervention as preferred by regulatory authorities and
also strive towards higher levels of quality and compliance.
• In the line with Good Manufacturing Practice (GMP), ,the company is investing in new and revamping the
existing software, Chromeleon, LIMs, Track wise and Training Management Systems will be incorporated at
the manufacturing facilities that will gain strive towards higher levels of quality and compliance.

4. COMPANY PROFILE
Claris Lifesciences Limited is a multi-business enterprise and the Holding Company of Claris Injectables, a
wholly-owned subsidiary dealing in Specialty Injectables business, collectively “Claris”; and ‘Claris Otsuka’, a
Joint Venture with Japanese Otsuka Pharmaceutical Factory, Inc. & Mitsui & Co. Ltd. for Infusion business in India
& emerging markets. Claris manufactures and/or markets products across multiple delivery systems, markets,
and therapeutic segments including anesthesia, blood products, anti-infectives, and plasma volume expanders. A
significant majority of these products are generic drugs that are capable of being directly injected into the human
body, which are predominantly used in the treatment of critical illnesses.
The customer base primarily includes government and private hospitals, aid agencies, and nursing homes. With
emphasis on quality, technology, and innovation, a range of niche technology-driven injectable products is
offered across delivery systems such as glass bottles, vials & ampoules, and non-PVC/PVC bag.
Businesses
India Market
Claris caters across several products and categories in India. The company continuously endeavours to support
upgrade of medical care in the country with the introduction of breakthrough new products and technologies.
Claris' customer base in India includes institutions, large corporate hospitals and nursing homes. In line with its
commitment to the cause of healthcare in the country, the company remains at the forefront to adopt creative
initiatives & training methods for staying abreast with the latest industry trends.
International Market
Claris has a market presence across the globe including Regulated Markets and Emerging Markets.
The major focus in Regulated Markets is in countries like USA, UK, Australia, New Zealand, Netherlands, Italy,
Germany, Canada, South Africa, Hong Kong, Korea etc., where we have robust sales and distribution network.
Claris' long term growth and increased profitability in operations will continue with the year on year increasing
contribution from these Regulated Markets.
The presence in Emerging Markets include the regions of Asia, Africa, CIS, MEGNA (Middle East, Gulf & North
Africa), Russia, and Latin America, where the marketing strategy is to enhance the company's visibility at a global
forefront and connect with customers & business associates.
One of the critical success factors for manufacturing and marketing pharmaceutical products for international
markets is the regulatory approvals of the manufacturing unit which include US FDA, MHRA (UK), TGA
(Australia), and GCC FDCA.

5. FINANCIAL HIGHLIGHT (CONSOLIDATED BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at Dec 31, 2013 – March 31st, 2017E
As on 31-
Dec-2013A
As on 31-
Mar-2015A
As on 31 -
Mar-2016E
As on 31 –
Mar-2017E
(12m) (15m) (12m) (12m)
I. EQUITY AND LIABILITIES:
A. Shareholders’ Funds
a) Share Capital 638.18 545.68 545.68 545.68
b) Reserves and Surplus 13404.77 12621.41 12419.47 12978.34
Sub-Total-Net worth 14042.95 13167.09 12965.15 13524.02
B. Non-Current Liabilities:
a) Long-term borrowings 1268.29 2734.30 3048.74 3249.96
b) Deferred Tax Liabilities [Net] 587.82 96.71 50.29 42.75
c) Other Long Term Liabilities 0.00 0.00 0.00 0.00
d) Long Term Provisions 64.15 100.08 121.10 133.21
Sub-Total-Long term liabilities 1920.26 2931.09 3220.13 3425.91
C. Current Liabilities:
a) Short-term borrowings 1054.67 1838.79 2022.67 2156.17
b) Trade Payables 1082.88 1267.85 1381.96 1459.35
c) Other Current Liabilities 2104.50 2532.81 2735.43 2861.26
d) Short Term Provisions 903.92 100.12 42.05 21.87
Sub-Total-Current Liabilities 5145.97 5739.57 6182.11 6498.64
TOTAL-EQUITY AND LIABILITIES (A+B+C) 21109.18 21837.75 22367.39 23448.58
II. ASSETS:
D. Non-Current Assets:
a) Fixed Assets 7448.31 10770.84 11847.92 12795.76
b) Goodwill on Consolidation 0.32 0.32 0.31 0.30
c) Non Current Investments 2095.01 2023.09 2055.46 2084.24
d) Long Term Loans and Advances 1946.71 203.91 161.09 128.87
Sub-Total-Non-Current Assets 11490.35 12998.16 14064.78 15009.17
E. Current Assets:
a) Current Investments 6088.20 3316.13 2025.06 1664.65
b) Inventories 449.74 937.50 1078.13 1164.38
c) Trade Receivables 1565.13 2291.49 2566.47 2746.12
d) Cash and Bank Balances 945.94 825.66 908.23 971.80
e) Short Term Loans and Advances 453.49 1327.73 1566.72 1723.39
f) Other Current Assets 116.33 141.08 158.01 169.07
Sub-Total-Current Assets 9618.83 8839.59 8302.61 8439.41
TOTAL-ASSETS (D+E) 21109.18 21837.75 22367.39 23448.58
Note: To Change the financial year of the Company from January - December to April - March. Accordingly, the Company's
current financial year shall be for a period of fifteen months i.e. from January 01, 2014 to March 31, 2015.

6. Annual Profit & Loss Statement for the period of CY-2013 to FY-2017E
Value(Rs.in.mn) CY13A FY 15A CY16E CY17E
Description 12m 15m 12m 12m
Net Sales 6677.62 7997.52 7629.63 8270.52
Other Income 405.88 863.04 776.74 818.68
Total Income 7083.50 8860.56 8406.37 9089.20
Expenditure -4983.75 -6442.79 -6126.60 -6599.88
Operating Profit 2099.75 2417.77 2279.77 2489.33
Interest -521.95 -482.60 -448.82 -471.26
Gross profit 1577.80 1935.17 1830.96 2018.07
Depreciation -653.54 -490.48 -392.38 -415.93
Exceptional Items 150.60 0.00 0.00 0.00
Profit Before Tax 1074.86 1444.69 1438.57 1602.14
Tax -220.77 122.03 -51.79 -49.67
Profit After Tax 854.09 1566.72 1386.78 1552.47
Share of Profit & Loss of Asso -9.99 -71.92 -44.59 -50.39
Net Profit 844.10 1494.80 1342.19 1502.09
Equity capital 638.18 545.68 545.68 545.68
Reserves 13404.77 12621.41 12419.47 12978.34
Face value 10.00 10.00 10.00 10.00
EPS 13.23 27.39 24.60 27.53
Quarterly Profit & Loss Statement for the period of 30th Sept, 2014 to 30th June, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 1660.55 1826.05 1579.21 1737.13
Other income 127.94 267.77 137.84 125.43
Total Income 1788.49 2093.82 1717.05 1862.57
Expenditure -1273.06 -1360.35 -1343.75 -1426.18
Operating profit 515.43 733.47 373.30 436.38
Interest -86.07 -113.63 -104.59 -107.73
Gross profit 429.36 619.84 268.71 328.65
Depreciation -106.74 -89.56 -89.18 -90.43
Profit Before Tax 322.62 530.28 179.53 238.22
Tax -98.70 372.70 -54.51 -71.71
Profit After Tax 223.92 902.98 125.02 166.52
Share of Profit & Loss of Asso -20.23 -4.51 -20.60 -10.71
Net Profit 203.69 898.47 104.42 155.81
Equity capital 545.68 545.68 545.68 545.68
Face value 10.00 10.00 10.00 10.00
EPS 3.73 16.47 1.91 2.86

7. Ratio Analysis
Particulars CY13A (12m) FY15A (15m) FY16E (12m) FY17E (12m)
EPS (Rs.) 13.23 27.39 24.60 27.56
EBITDA Margin (%) 31.44% 30.23% 29.88% 30.10%
PBT Margin (%) 16.10% 18.06% 18.86% 19.39%
PAT Margin (%) 12.79% 19.59% 18.18% 18.79%
P/E Ratio (x) 18.36 8.87 9.88 8.81
ROE (%) 6.08% 11.90% 10.70% 11.49%
ROCE (%) 17.98% 18.29% 16.69% 17.32%
Debt Equity Ratio 0.09 0.21 0.24 0.24
EV/EBITDA (x) 4.64 4.90 5.86 5.57
Book Value (Rs.) 220.05 241.30 237.60 247.84
P/BV 1.10 1.01 1.02 0.98
Charts

8. OUTLOOK AND CONCLUSION
At the current market price of Rs. 242.90, the stock P/E ratio is at 9.88 x FY16E and 8.81 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.24.06 and
Rs.27.56 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 7% and 22% over CY-2013 to FY-2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 5.86 x for FY16E and 5.57 x for FY17E.
Price to Book Value of the stock is expected to be at 1.02 x and 0.98 x respectively for FY16E and FY17E.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.275.00 for Medium to Long term investment.
INDUSTRY OVERVIEW
The Indian pharmaceuticals market is third largest in terms of volume and thirteen largest in terms of value, as
per a pharmaceuticals sector analysis report by equity master. The market is dominated majorly by branded
generics which constitute nearly 70 to 80 per cent of the market. Considered to be a highly fragmented industry,
consolidation has increasingly become an important feature of the Indian pharmaceutical market.
The UN-backed Medicines Patents Pool has signed six sub-licences with Aurobindo, Cipla, Desano, Emcure,
Hetero Labs and Laurus Labs, allowing them to make generic anti-AIDS medicine Tenofovir Alafenamide (TAF)
for 112 developing countries.
Market Size
The Indian pharmaceutical industry is estimated to grow at 20 per cent compound annual growth rate (CAGR)
over the next five years, as per India Ratings, a Fitch Group company. Indian pharmaceutical manufacturing
facilities registered with US Food and Drug Administration (FDA) as on March 2014 was the highest at 523 for
any country outside the US.Gujarat clocked the highest growth rate in pharmaceuticals market at 22.4 per cent
during November 2014, surpassing the industry growth rate, which grew by 10.9 per cent, as per data from the
market research firm AIOCD Pharma softtech AWACS.
Investments
The drugs and pharmaceuticals sector attracted cumulative foreign direct investment (FDI) inflows worth US$
12,813.02 million between April 2000 and December 2014, according to data released by the Department of
Industrial Policy and Promotion (DIPP).

9. Some of the major investments in the Indian pharmaceutical sector are as follows:
• Stelis Biopharma has announced the ground-breaking for construction of its customised, multi-product,
biopharmaceutical manufacturing facility at Bio-Xcell Biotechnology Park in Nusajaya, Johor, Malaysia's park
and ecosystem for industrial and healthcare biotechnology at a total project investment amount of US$ 60
million.
• Pharma major Strides Arcolab has entered into a licensing agreement with US-based Gilead Sciences Inc to
manufacture and distribute the latter's low-cost Tenofovir Alafenamide (TAF) product used for HIV
treatment in developing countries. The licence to manufacture Gilead's low-cost drug extends to 112
countries.
• Apollo Hospitals Enterprise (AHEL) plans to add another 2,000 beds over the next two financial years, at a
cost of around Rs 15000.00 mn (US$ 242.57 million), as per Founder and Executive Chairman, Apollo
Hospitals.
• CDC, the UK’s development finance institution, has invested US$ 48 million in Narayana Hrudayalaya
hospitals, a multi-speciality healthcare provider. With this investment, Narayana Health will expand
affordable treatment in eastern, central and western India.
• Cadila Healthcare Ltd has announced the launch of a biosimilar for Adalimumab - the world’s largest selling
drug for rheumatoid arthritis and other auto immune disorders. The drug will be marketed under the brand
name Exemptia at one-fifth of the price for the branded version-Humira.
• Torrent Pharmaceuticals has entered into an exclusive licensing agreement with Reliance Life Sciences for
marketing three biosimilars in India — Rituximab, Adalimumab and Cetuximab.
• Piramal Enterprises Ltd has acquired US-based Coldstream Laboratories for US$ 30.6 million in an all-cash
transaction.
• Indian Immunologicals Ltd (IIL) plans to set up a new vaccine manufacturing facility in Pondicherry with an
investment of Rs 3000.00 mn (US$ 48.53 million).
• SRF Ltd has acquired Global DuPont Dymel, the pharmaceutical propellant business of DuPont, for US$ 20
million.
Government Initiatives
The Government of India has unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end
drug manufacture. It has reduced approval time for new facilities to boost investments. Further, the government
has also put in place mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing
Authority to address the issue of affordability and availability of medicines.

10. Some of the major initiatives taken by the government to promote the pharmaceutical sector in India are as
follows:
Indian and global companies have expressed 175 investment intentions worth Rs 10000.00 mn (US$ 161.78
million) in the pharmaceutical sector of Gujarat. The memorandums of understanding (MoUs) would be
signed during the Vibrant Gujarat Summit.
Telangana has proposed to set up India's largest integrated pharmaceutical city spread over 11,000 acres
near Hyderabad, complete with effluent treatment plants and a township for employees, in a bid to attract
investment of Rs 300000.00 mn (US$ 4.85 billion) in phases. Hyderabad, which is known as the bulk drug
capital of India, accounts for nearly a fifth of India's exports of drugs, which stood at Rs 900000.00 mn (US$
14.56 billion) in 2013-14.
Road Ahead
The Indian pharma market size is expected to grow to US$ 85 billion by 2020. The growth in Indian domestic
market will be on back of increasing consumer spending, rapid urbanisation, raising healthcare insurance and so
on.
Going forward, better growth in domestic sales will depend on the ability of companies to align their product
portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants
and anti-cancers are on the rise.
Moreover, the government has been taking several cost effective measures in order to bring down healthcare
expenses. Thus, governments are focusing on speedy introduction of generic drugs into the market. This too will
benefit Indian pharma companies. In addition, the thrust on rural health programmes, life saving drugs and
preventive vaccines also augurs well for the pharma companies.
Disclaimer:
This document is prepared by our research analysts and it does not constitute an offer or solicitation for the
purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.

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