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1 INVESTOR PRESENTATION February 2005 Cadila Healthcare Ltd.

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Presentation on theme: "1 INVESTOR PRESENTATION February 2005 Cadila Healthcare Ltd."— Presentation transcript:

1 1 INVESTOR PRESENTATION February 2005 Cadila Healthcare Ltd

2 2 Zydus Cadila- One of India’s leading integrated pharma company * Consolidated revenue for 2003-4 Ranked 5th in the domestic formulation market with 3.9% market share Foraying into the global generics markets Successful contract manufacturing JV with Altana Revenues* Rs 12.8 bn (US$290mn ), assets Rs 10.7bn (US$240mn) and market cap US$ 0.8b

3 3 1952Cadila Laboratories founded by Late Mr. Ramanbhai Patel 1995Restructured as “Zydus” Cadila after a vertical split 1998JV with Altana Pharma for Pantoprazole intermediates 2000/1Acquired 2 companies Recon, GRL and major brand Aten 2000 IPO and listing 2004US FDA approval for Moraiya plant 2004 Launched generics in French market Major historical milestones….. 2003Started operating efficiency programs- PRISM, Delta 2003Entry into French market- Zydus France SAS 2003Filed first ANDAs, started office in US 2003Merger of group companies- GRL, Recon with parent 2005Received first ANDA approvals- Atenolol, Clindamycin 2004JV/CM deals with Mayne, (Australia), Zambon (Italy)

4 4 Core business areas Research & Development Contract manufacturing Semi/non regulated markets High end APIs + intermediates Regulated generics markets Domestic dosage forms Domestic 78% Europe 15% Others 7% Revenue break up by segmentRevenue break up by region Intl formulations 6% Consumer & others 7% API Exports 16% API Domestic 3% Domestic formulation 68% Based on 1H 2004-5 sales

5 5 World class manufacturing facilities Oral dosage forms (Tablets, Capsules, Soft Gel Capsules) Injectibles (Sterile liquids and Lyophilized) Specialities- Inhalers, trans-dermal patches and vaccines Approved by USFDA, MHRA-UK, MCC-SA, ANVISA-Brazil, BFAD – Philippines, NDA Uganda, P.I.C Romania API Plant, Ankleshwar ISO 9002 & ISO 14001 certified 10 multi purpose plants API Plant, Banyan US FDA approved Formulations plant, Ahmedabad Eight state of the art plants-3 Formulations plants, 3 API plants One Agiolax plant, 1 Pantoprazole Intermediate plant Largest in India

6 6 Growth drivers for the future  Domestic business is growing steadily  Therapy focus in high growth life style segments  Continued new product launches, brand focus  In-licensing products from alliance partners  Global generics opportunity  Contract manufacturing - successful JV with Altana + new opportunities emerging  Research & Development- long term

7 7 Domestic Pharmaceutical Industry Perspective Indian Formulations Market  US $4.6bn domestic market, growing at 7.1% (ORG Oct MAT)  1% of global market by value, 10% by volume  Zydus ranks 5th ~ Rs 7.8 bn sales SOURCE : ORG/IMS. Market share increased pursuant to acquisition Zydus MS continues to rise Source : ORG (MAT, Sep-04) DomesticFormulatIonDomesticFormulatIon Rs mn 5 Life style segments drive market growth

8 8 Wide TA coverage & Top Rankings Cardiovascular Gastrointestinal Female Healthcare Respiratory Anti-infectives Pain Management Ranking 1 1 1 1 1 1 2 2 3 3 5 5 *In participative market Source:ORG-Sep (MAT) Chronic segments contribute ~half the formulations revenues Share of highly competitive anti-infective segment has been falling DomesticFormulatIonDomesticFormulatIon

9 9 Brand building capabilities  Aten now the 20 th largest brand in India  13 Zydus brands feature amongst the top 300 brands  Nucoxia “Best Launch of 2004”- from over 2100 brands  Top ten brands contribute ~ a third of formulation revenues 2001 Pantodac Novospar 2002 Penegra Levoday 2003 Mifegest Revaldo Zydus brands outgrew segment Zydus brands in top new launches DomesticFormulatIonDomesticFormulatIon

10 10 New Product launch - a major growth driver Gastrointestinals 12 Segment No. of Products Neuropsychiatry 2 Cardiovasculars 8 Antiallergics 6 Erectile Dysfunction 2 Anti-infectives 8 Pain Management 8 Antidiabetics 2 Antiasthmatics 5 Gynaecological 8 Oncology 4 Others 10 ~75 new products planned to be launched over 2004-6- a growth engine DomesticFormulatIonDomesticFormulatIon

11 11 In-licensing of alliance products  Schering AG, Berlin  10 year contract for sale and distribution of existing and new products in India  Acquired trade marks, technical know- how  Boehringer Ingelheim International,  10 year contract for manufacturing and marketing existing products, line extensions  Viatris GmbH & Co. KG, Frankfurt  Signed 10-year contract for manufacturing and marketing new respiratory device (MDPI) DomesticFormulatIonDomesticFormulatIon

12 12 + Global generics-The big opportunity for Indian pharma India’s potential opportunity in the global market is estimated to be large Zydus group’s global market strategy aligned to these opportunities RegulatedmarketsRegulatedmarkets Advantage India Process chemistry skills Vast talent pool World-class manufacturing base Lower costs Global market dynamics Growing generic markets as block busters go off patent Rising healthcare cost and govt. support to generics Outsourcing requirements

13 13 Four key strategies for the US generic market US Market share Careful product selection Mature products with low competition NDDS based Difficult-to-make (API / DF) Block buster generics Transactional excellence Strong team- experienced in US generic market Distribution tie up soon Commitment to customer service Cost excellence API and FDF facilities in India with US cGMP quality control High level of integration Attractive product basket 60 product offerings prioritised US focused regulatory groups established Focus on innovation RegulatedmarketsRegulatedmarkets

14 14 Building the US business Regulatory + R&D teams in India Bulk APIs Ankleshwar, Banyan Zydus Healthcare LLC US generic companies Segment Manufacture Marketing Distribution/Customer Generic formulations Moraiya plant Zydus Pharma- ceuticals /partner Distributors High level of vertical integration Regulatory +R&D teams in India RegulatedmarketSRegulatedmarketS

15 15 Revenue stream to commence in 2005 ANDA approvals for Atenolol, Clindamycin received Robust filings planned 7 product launches planned for 2005Large # of filings to continue RegulatedmarketsRegulatedmarkets

16 16 Strategy for Europe Countries prioritised France($ 1.4b) Italy($ 0.2b) Spain($0.3b) Niche opportunity Germany ($4.1b) UK ($1.4b) As the generic penetration is low and growth is higher High generics penetration, low growth Figures indicate current size of the generics market Europe is the second largest market in the world. Generics market is attractive as government has taken steps recently to promote generics in some countries RegulatedmarketsRegulatedmarkets

17 17 French generics market perspective Growth of ~20% expected in French genericsGenerics to drive our French business Major patent expiries in France ~40 major drugs going off patent in France during 2004-7 Aggregate current size ~3bn Euro Expected to drive ~ 20% per annum growth in the generics market

18 18 Key initiatives for France Launch of generics Launched 56 generic presentations by CY2004 Plan to boost the basket to 80-90 presentations in CY2005 Leveraging India’s low cost New product filings- regulatory team based in India Site variation opportunity (12-18 months) Relationship with pharmacists Building special relationship with pharmacists Supporting a health awareness program for the Zydus club of pharmacists

19 19 Zydus Altana JV – a benchmark in outsourcing Rs mn AlliancesAlliances 1H 2004 sales up 20% to Rs 915 mn and PAT up 25 % to Rs 732 mn 2H 2004- change to consignment sales results in loss of sales for 2 months. Q3 hit with sales down 65% and PAT down 70% y-y. Q4 set to recover. FY 2004 to be affected marginally Note:Consolidation is with one quarter lag.

20 20 In-house skills in advanced clinical studies Key R&D Initiatives Lead identification in select therapeutic areas Non-infringing process development for latest block buster drugs Develop novel drug delivery systems Discovery biology research Focus therapeutic areas include metabolic disorders (dyslipidemia, diabetes, obesity) and inflammatory disorders (arthritis, pain) Intellectual property and regulatory support Research&Deve Research&Deve

21 21 State-of-the-art R&D centre  Set up in 2000 near Ahmedabad.Rich talent pool -technical strength >230  Developed infrastructure for pre-clinical research and development  R&D expenses as % to sales increased to 5.2% for revenue expenses and 7.1% including capex, in 2003-4 Expenses for ANDAs & other regulatory filings included, leading to sharp increase in 2003-4 Research&Deve Research&Deve

22 22 Research program is on track 5 lead compounds 3 in pre-clinical stage 2 under biological testing Intellectual property - 122 patent filings in India, 31 PCT applications and 135 applications in foreign countries Process research- US patent received for a novel process and several others filed NDDS- three products with novel release systems under ANDA filings Research&Deve Research&Deve

23 23 Summary of growth drivers Short-term < 2 years Medium-term 2-5 years Long-term >5 years Capitalise on existing strengths to drive growth in domestic market Regulated generics markets – APIs and formulations in France and USA Expand business in regulated generic markets In-licensing and out-licensing Contract manufacturing, in- sourcing and leveraging on alliances Innovation- research driven (NCE and NDDS) global pharma company

24 24 Sales growth, profit growth and profit margins affected in Q3 due to lower contribution from Altana JV ( sales down 65% y-y, PAT down 70% y-y), due to change to consignment basis. R&D expenses during 9 mth 2004-5 up 30% y-y. Continued investment in strategic markets- USA, France and Brazil - inhibits profits Highlights of 9m 2004-5 consolidated results Contribution from Altana JV

25 25 Note: Consolidated numbers include JV s proportionately. Consolidated Financial Highlights Consolidated net income as per US GAAP Rs 1382 mn ( as per US GAAP reconciliation done by KPMG

26 26 Key performance ratios (consolidated 2003-4) PBIDT %Net profit % ROCE %ROE % PBIDT margin maintained in spite of higher R & D spend

27 27 One of India’s leading healthcare players, we aim to be a global research driven company by 2020. We shall achieve sales of $400mn by 2006 and We shall be a top ten global generics company with a strong R&D pipeline and sales in excess of $ 1b by 2010 Our Vision

28 28 Thank You No part of this presentation may be reproduced, quoted or circulated without prior written approval from Cadila Healthcare Ltd.. This presentation may include certain “forward looking statements”, based on current expectations, within the meaning of applicable laws and regulations. Actual results may differ and the company does not guarantee realization of these statements.The Company also disclaims any obligation to revise any forward-looking statements. The viewers may use their own judgement and are advised to make their own calculations before deciding on any matter based on the information given herein

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