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SUN PHARMACEUTICALS INDUSTRIES
    ECONOMY                       INDUSTRY                     COMPANY                  A
      Economic Indicators           Size and Dynamics              Competitive Position N
                                                                                        A
      Social Indicators              Industry Life Cycle           Distinctive Edge     L
      Investment Scenario           Demand Drivers                 Segmental Analysis Y
                                                                                        S
      Stock Market Analysis External Factors                       Financial Analysis   I
                                                                                        S
      Sovereign Rating              Future Outlook                Growth Prospects

                           (Presented By: Piyush Jain 26C)
Fast Facts#1: Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments
ECONOMY ANALYSIS
                                                   I. ECONOMIC INDICATORS

       GDP Growth Rate (in %)                                            CPI Index                             The Global
   12.00                                                                  (in %)                         Competitiveness Report
             9.60                                                                         14.97
   10.00
    8.00
                          9.30      8.40                    20.00                                               2010-11
                                                       5.50 15.00
    6.00                                8.40                                                      7.00   Doing Business in India
                                 6.70           6.90        10.00
    4.00                                                                3.20
                                                             5.00
    2.00                                                                                                  •    Overall rank 51st
                                                             0.00
    0.00                                                                                                      among 139 countries.




                                                                     2005
                                                                     2001
                                                                     2002
                                                                     2003
                                                                     2004

                                                                     2006
                                                                     2007
                                                                     2008
                                                                     2009
                                                                     2010
                                                                     2011
                                                                     2012
             FY     FY      FY     FY      FY   FY     FY
             07     08      09     10      11   12     13                                                 • 4th in Market Size
    • Lower GDP growth rate in FY 13                         *Data from www.inflation.eu.
      due to deficient monsoon and                           • Inflation high due to rising               • 39th in Innovation
      worsening Euro Zone outlook                              food and fuel prices
    * FY 07-12 from Ministry of Finance and                  • Resulting Higher cost of Man,              • 17th in Sound Financial
      FY 13 from CRISIL                                        Machine and Material                         Market

                    II. SOCIAL INDICATORS: HUMAN DEVELOPMENT INDEX

     • India ranks a low 134 among 187 countries in terms of HDI which assesses long-
       term progress in health, education and income indicators.(*UNDP Website)
     • Though India has been among high growth nations it fall short of HDI standard mainly
       on account of poor social indicators specifically Healthcare and Education
     HDI rank HDI                 Life expectancy at birth          Expected years of schooling               GNI per capita (USD)
       134        0.547                     65.4                               10.3                                  3,468
Fast Facts#2: Sun Pharma was listed on the main stock exchanges in India in 1994
III. INVESTMENT SCENARIO
     • AS per UNCTAD's World Investment
       Prospects Survey 2010-12, India is the
       2nd most attractive destination for FDI
     • Amount of FDI reducing due to
       slowdown and crisis in developed
       economies, Uncertain Economic Climate
       (GAAR and Retrospective Tax
       Amendmend), Policy Paralysis on reforms
                                                    *In USD Million. Hindu Business Line Feb 24, 2012.

                               IV. STOCK MARKET ANALYSIS
     • Volatile Market condition over last one
       year; witnessed periods of Bull and Bear
       runs; becoming range bound in last
       month or so
     • BSE SENSEX
       Aug 10, 2011: 17130.51
       Aug 10, 2012: 17,557.74
       High          : 18,428.61
       Low           : 15,175.08                    *BSE SENSEX Aug 10, 2011 to Aug 10, 2012 (Yahoo Finance)


                                    V. SOVEREIGN RATING
     • Standard and Poor’s & Fitch recently scaled down India’s rating credit rating outlook from
       ‘stable' (BBB+) to ‘negative' (BBB-) with a warning of a downgrade if there is no
       improvement in the fiscal situation and political climate
     • BBB- is considered as lowest investment grade by market participants.(* S&P Website)

Fast Facts#3: 1st API mfging plant was built in Panoli in 1995 to tap vast International opportunity
INDUSTRY ANALYSIS
                                   I. SIZE AND DYNAMICS
                       GLOBAL                                           INDIA
     • Global pharma market is expected to grow     •   Rank 10th  in terms of value and 3rd in
       by 5-7% and reach US$                            terms of volume
       1.1 trillion by 2014                         •   Current Size US$ 12.3 Million
     • US pharma market will reach anywhere             expected to touch US$ 74 Million in
       between US$ 320 and 350 billion by               sales by 2020
       2015 & European markets to reach up to       •   Branded generic forms 70-80% of
       US$ 160 billion by 2015                          market
     • Pharmerging countries will contribute        •   Formulations market valued at Rs.
       28% to global market spending by 2015;           48,200 crore (CAGR 14-15%)
       expected to double their spending on         •   Exports branded generics in large
       medicines to $285-315 billion by 2015,           volumes, which are expected to grow at
       compared with $151 billion in 2010               a CAGR of 21-23% during 2009-2014
     •   IMS Health                                 * Sun Pharma Annual Report 2010-11, India Brand
                                                      Equity Forum (www.ibef.org), ICRA Report


                                 II. INDUSTRY LIFE CYCLE
     • Indian Pharmaceutical Industry is growing
       at 14% per annum (* Planning Commission)
     • Industry Life cycle depicts the relation
       between sales volume of industry and
       maturity level of industry
     • In terms of Industry Life Cycle it is in
       Growth stage

Fast Facts#4: In 1997, headquarters shifted to Mumbai, India's commercial capital.
III. DEMAND DRIVERS
     Rising Household       Increasing Prevalence        Improving Healthcare        Rising Penetration
      Income Levels          of Lifestyle Related           Infrastructure/          in Smaller Towns
                                   Diseases                Delivery Systems           and Rural Areas

                                       IV. EXTERNAL FACTORS
                   TECHNOLOGY                              SOCIAL CHANGES AND DEMOGRAPHY
       • Quality of the filings have to be                • Increasing per capita income and standard
         significantly    improved      for    Complex      living of people expanding market for Pharma
         Molecules, Non-orals and Para IV/FTFs              companies
         forming increasing share of their pipeline       • Changing lifestyle and demography giving push
       • Patent expiration also poses a challenge to        to chronic segments like cardiovascular,
         improve technical capabilities                     anti-diabetic, neurology, psychiatry


               FOREIGN INFLUENCES                                       GOVERNMENT
       • Effect on domestic Industry: MNCs have           • Increasing focus by Governments to reduce
         become aggressive with launch of product           healthcare costs continue to exert pressure
         patent regime & strong growth prospects            on innovator companies which supports
         making industry highly competitive                 outsourcing to low-cost nations
       • Opportunity in Foreign Market: In US             • Indian Budget 2012-13: Excise Duty
         (With ~$100 billion worth patent expiries          increased to 6% from 5% on formulations and
         over the next 5 years), Europe (Price              to 12% from 10% on bulk drugs; Impact
         Erosion is a concern though) and Japan             neutral since companies are likely to pass
         (Generic concentration to be increased to          hikes to consumers
         30% from 23% in 2012)

                                         V. FUTURE OUTLOOK
     FAVOURABLE Benefitting from healthy growth in the domestic formulations business and
      steady growth expected in the U.S/Europe generics space on back of patent expiries

Fast Facts#5: 1ST International acquisition with an initial of $7.5 million in Caraco, Detroit
COMPANY ANALYSIS
                                                 I. COMPETITIVE POSITION
    • 5th Largest Indian Pharma Company by prescription sales               (IMS ORG Stockist Audit, March. 2012)

                                                     II. DISTINCTIVE EDGE
    • Integrated Product Development: Vertically integrated network across four
      continents enabling high quality, low cost and a quick market entry across the
      geographies
    • Market Leadership: In Seven Therapy Segment largely in the fast-growing chronic
      segments
    • Revenue Growth: Over the past five years, the company’s revenues growth at a CAGR
      of 19.1% ahead of the underlying market growth
    • Success with Acquisition: Successful turnaround of 16 high potential yet under
      performing businesses

                                                 III. SEGMENTAL ANALYSIS
    International           APIs,
    Generics, 14%            7%
                                                         DIVERSIFIED            Others,               Neuro-
                                                                                                    Psychiatry,
                                    India Branded
                                                           PRESENCE              27%
                                                                                                       28%
                                    Generics , 36%          ACROSS
                                                          COUNTRIES
                                                             AND             Gastroente
                         US                                CHRONIC             rology,             Cardiology,
                                                                                15%                   19%
                    Formulations,                          SEGMENT
                        43%
                                                                             Diabetolog
                                                                               y, 11%

Fast Facts# Acquired Taro Pharmaceuticals in sept 2010 doubling US business esp in Dermatology
           6:
IV. FINANCIAL ANALYSIS

           STRONG EBITDA MARGIN                        HEALTHY R&D/SALES RATIO

                                                        8.50%

                                                                            6.60%
                                                                 7.80%

                                                                                         5.80%
                                                                                                   5.60%




                                                    2007-08   2008-09    2009-10    2010-11       2011-12



        FAVOURABLE FINANCIAL LEVERAGE                 BALANCED STAKEHOLDER VALUE

                  07-    08-    09-    10-    11-               07-      08-       09-      10-       11-
                  08     09     10     11     12                08       09        10       11        12

       DEBT/EQ    .03    .03    .02    .04    .02     ROCE      35.5     31.5      19.5     23.6     30.4

        Diluted   14.4   17.6   13     17.5   25      RONW      38.3     30.2      18.2      21      23.9
       EPS (Rs)


                                      V. GROWTH PROSPECTS
    • Looking to enhance its presence in other markets especially Europe, Latin America,
      Russia and CIS
    • As on December 2011, the company had 389 ANDA filings with 148 pending approval
Fast Facts#7:Mfging Plants 23; Employees 12000; Research Centre 4; International Sales 60%

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Eic analysis sun pharma

  • 1. SUN PHARMACEUTICALS INDUSTRIES ECONOMY INDUSTRY COMPANY A Economic Indicators Size and Dynamics Competitive Position N A Social Indicators Industry Life Cycle Distinctive Edge L Investment Scenario Demand Drivers Segmental Analysis Y S Stock Market Analysis External Factors Financial Analysis I S Sovereign Rating Future Outlook Growth Prospects (Presented By: Piyush Jain 26C) Fast Facts#1: Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments
  • 2. ECONOMY ANALYSIS I. ECONOMIC INDICATORS GDP Growth Rate (in %) CPI Index The Global 12.00 (in %) Competitiveness Report 9.60 14.97 10.00 8.00 9.30 8.40 20.00 2010-11 5.50 15.00 6.00 8.40 7.00 Doing Business in India 6.70 6.90 10.00 4.00 3.20 5.00 2.00 • Overall rank 51st 0.00 0.00 among 139 countries. 2005 2001 2002 2003 2004 2006 2007 2008 2009 2010 2011 2012 FY FY FY FY FY FY FY 07 08 09 10 11 12 13 • 4th in Market Size • Lower GDP growth rate in FY 13 *Data from www.inflation.eu. due to deficient monsoon and • Inflation high due to rising • 39th in Innovation worsening Euro Zone outlook food and fuel prices * FY 07-12 from Ministry of Finance and • Resulting Higher cost of Man, • 17th in Sound Financial FY 13 from CRISIL Machine and Material Market II. SOCIAL INDICATORS: HUMAN DEVELOPMENT INDEX • India ranks a low 134 among 187 countries in terms of HDI which assesses long- term progress in health, education and income indicators.(*UNDP Website) • Though India has been among high growth nations it fall short of HDI standard mainly on account of poor social indicators specifically Healthcare and Education HDI rank HDI Life expectancy at birth Expected years of schooling GNI per capita (USD) 134 0.547 65.4 10.3 3,468 Fast Facts#2: Sun Pharma was listed on the main stock exchanges in India in 1994
  • 3. III. INVESTMENT SCENARIO • AS per UNCTAD's World Investment Prospects Survey 2010-12, India is the 2nd most attractive destination for FDI • Amount of FDI reducing due to slowdown and crisis in developed economies, Uncertain Economic Climate (GAAR and Retrospective Tax Amendmend), Policy Paralysis on reforms *In USD Million. Hindu Business Line Feb 24, 2012. IV. STOCK MARKET ANALYSIS • Volatile Market condition over last one year; witnessed periods of Bull and Bear runs; becoming range bound in last month or so • BSE SENSEX Aug 10, 2011: 17130.51 Aug 10, 2012: 17,557.74 High : 18,428.61 Low : 15,175.08 *BSE SENSEX Aug 10, 2011 to Aug 10, 2012 (Yahoo Finance) V. SOVEREIGN RATING • Standard and Poor’s & Fitch recently scaled down India’s rating credit rating outlook from ‘stable' (BBB+) to ‘negative' (BBB-) with a warning of a downgrade if there is no improvement in the fiscal situation and political climate • BBB- is considered as lowest investment grade by market participants.(* S&P Website) Fast Facts#3: 1st API mfging plant was built in Panoli in 1995 to tap vast International opportunity
  • 4. INDUSTRY ANALYSIS I. SIZE AND DYNAMICS GLOBAL INDIA • Global pharma market is expected to grow • Rank 10th in terms of value and 3rd in by 5-7% and reach US$ terms of volume 1.1 trillion by 2014 • Current Size US$ 12.3 Million • US pharma market will reach anywhere expected to touch US$ 74 Million in between US$ 320 and 350 billion by sales by 2020 2015 & European markets to reach up to • Branded generic forms 70-80% of US$ 160 billion by 2015 market • Pharmerging countries will contribute • Formulations market valued at Rs. 28% to global market spending by 2015; 48,200 crore (CAGR 14-15%) expected to double their spending on • Exports branded generics in large medicines to $285-315 billion by 2015, volumes, which are expected to grow at compared with $151 billion in 2010 a CAGR of 21-23% during 2009-2014 • IMS Health * Sun Pharma Annual Report 2010-11, India Brand Equity Forum (www.ibef.org), ICRA Report II. INDUSTRY LIFE CYCLE • Indian Pharmaceutical Industry is growing at 14% per annum (* Planning Commission) • Industry Life cycle depicts the relation between sales volume of industry and maturity level of industry • In terms of Industry Life Cycle it is in Growth stage Fast Facts#4: In 1997, headquarters shifted to Mumbai, India's commercial capital.
  • 5. III. DEMAND DRIVERS Rising Household Increasing Prevalence Improving Healthcare Rising Penetration Income Levels of Lifestyle Related Infrastructure/ in Smaller Towns Diseases Delivery Systems and Rural Areas IV. EXTERNAL FACTORS TECHNOLOGY SOCIAL CHANGES AND DEMOGRAPHY • Quality of the filings have to be • Increasing per capita income and standard significantly improved for Complex living of people expanding market for Pharma Molecules, Non-orals and Para IV/FTFs companies forming increasing share of their pipeline • Changing lifestyle and demography giving push • Patent expiration also poses a challenge to to chronic segments like cardiovascular, improve technical capabilities anti-diabetic, neurology, psychiatry FOREIGN INFLUENCES GOVERNMENT • Effect on domestic Industry: MNCs have • Increasing focus by Governments to reduce become aggressive with launch of product healthcare costs continue to exert pressure patent regime & strong growth prospects on innovator companies which supports making industry highly competitive outsourcing to low-cost nations • Opportunity in Foreign Market: In US • Indian Budget 2012-13: Excise Duty (With ~$100 billion worth patent expiries increased to 6% from 5% on formulations and over the next 5 years), Europe (Price to 12% from 10% on bulk drugs; Impact Erosion is a concern though) and Japan neutral since companies are likely to pass (Generic concentration to be increased to hikes to consumers 30% from 23% in 2012) V. FUTURE OUTLOOK FAVOURABLE Benefitting from healthy growth in the domestic formulations business and steady growth expected in the U.S/Europe generics space on back of patent expiries Fast Facts#5: 1ST International acquisition with an initial of $7.5 million in Caraco, Detroit
  • 6. COMPANY ANALYSIS I. COMPETITIVE POSITION • 5th Largest Indian Pharma Company by prescription sales (IMS ORG Stockist Audit, March. 2012) II. DISTINCTIVE EDGE • Integrated Product Development: Vertically integrated network across four continents enabling high quality, low cost and a quick market entry across the geographies • Market Leadership: In Seven Therapy Segment largely in the fast-growing chronic segments • Revenue Growth: Over the past five years, the company’s revenues growth at a CAGR of 19.1% ahead of the underlying market growth • Success with Acquisition: Successful turnaround of 16 high potential yet under performing businesses III. SEGMENTAL ANALYSIS International APIs, Generics, 14% 7% DIVERSIFIED Others, Neuro- Psychiatry, India Branded PRESENCE 27% 28% Generics , 36% ACROSS COUNTRIES AND Gastroente US CHRONIC rology, Cardiology, 15% 19% Formulations, SEGMENT 43% Diabetolog y, 11% Fast Facts# Acquired Taro Pharmaceuticals in sept 2010 doubling US business esp in Dermatology 6:
  • 7. IV. FINANCIAL ANALYSIS STRONG EBITDA MARGIN HEALTHY R&D/SALES RATIO 8.50% 6.60% 7.80% 5.80% 5.60% 2007-08 2008-09 2009-10 2010-11 2011-12 FAVOURABLE FINANCIAL LEVERAGE BALANCED STAKEHOLDER VALUE 07- 08- 09- 10- 11- 07- 08- 09- 10- 11- 08 09 10 11 12 08 09 10 11 12 DEBT/EQ .03 .03 .02 .04 .02 ROCE 35.5 31.5 19.5 23.6 30.4 Diluted 14.4 17.6 13 17.5 25 RONW 38.3 30.2 18.2 21 23.9 EPS (Rs) V. GROWTH PROSPECTS • Looking to enhance its presence in other markets especially Europe, Latin America, Russia and CIS • As on December 2011, the company had 389 ANDA filings with 148 pending approval Fast Facts#7:Mfging Plants 23; Employees 12000; Research Centre 4; International Sales 60%