56 slides from Sun Pharmaceutical Industries's investor presentation, August 2016
Slide 1: Creating Lasting Value
Creating Lasting Value Investor Presentation – August 2016 NSE:SUNPHARMA | BSE:524715 | Bloomberg:SUNP IN | Reuters:SUN.BO WWW.SUNPHARMA.COM
Slide 2: Disclaimer
Disclaimer Except for the historical information contained herein, statements in this presentation and the subsequent discussions, which include words or phrases such as “will”, “aim”, “will likely result”, “would”, “believe”, “may”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “pl
Slide 3: Contents
Contents 1 Sun Pharma at a glance 2 Long-term Strategy 3 Global Specialty Initiatives 4 Revenue Composition, History & Acquisition Track Record 5 Business Operations, R&D, Manufacturing 6 Corporate Governance 7 Financials – P&L, Balance Sheet, Cash Flows & Ratios 8 Key Milestones Targeted © Sun Phar
Slide 4: Sun Pharma at a glance
Sun Pharma at a glance 5th Largest Global Specialty Generic Company US • Ranked 5th in US* / Largest Indian Pharma Company in US India • No. 1 Pharma Company in India Emerging Markets • Largest Indian Pharma Company in Emerging Markets Europe • Expanding presence in Europe Manufacturing Footprint •
Slide 5: World's 5th Largest Specialty Generic Pharma Co
World’s 5th Largest Specialty Generic Pharma Co 2015 Worldwide Generic Sales (US$ in billions) Teva 8.9 Novartis 8.5 Mylan 8.1 Allergan 6.6 Sun Pharma 4.6 Fresenius 3.0 Aspen Pharmacare 2.4 Sanofi 2.2 Lupin 2.0 Dr Reddy's 2.0 Hospira 1.9 Aurobindo 1.8 Endo International 1.7 Cipla 1.6 Apotex 1.5 Sour
Slide 6: Sun Pharma today
Sun Pharma today US Formulations India Branded Generics 5th largest generics company in US* with one of the No.1 ranked with 12 classes of doctor categories largest ANDAs pipeline (150 ANDAs awaiting approval) Leading position in high growth chronic therapies Presence in generics, Specialty and bran
Slide 7: Driving Long Term Growth
Driving Long Term Growth • Vertically integrated operations • Enhance share of specialty business globally • Optimize operational costs • Achieve differentiation by focusing on technically complex products • Focus on key markets – achieve critical mass • Speed to market • Ensure sustained compliance
Slide 8: Our Specialty Initiatives
Our Specialty Initiatives • In-licensed Tildrakizumab (a monoclonal antibody targeting IL-23) from MSD for treating chronic plaque psoriasis- Positive results from Phase-3 clinical trials declared in May’16 • Acquired Dusa Pharma in US – Access to patented drug-device combination useful for Ramping
Slide 9: Highly Diversified Revenue Base
Highly Diversified Revenue Base Emerging Markets 13% Western Europe & Other Markets # 8% India Branded Formulations 26% API & Others FY16 Sales 5% USD 4.3 billion US Formulations 48% # Includes Western Europe, Canada, Australia & New Zealand, Japan and other markets. © Sun Pharmaceutical Industries
Slide 10: Impressive Track Record of Growth
Impressive Track Record of Growth (All Figures in USD Million) 4240 1192 825 398 Adjusted 428 1256 Net Sales EBITDA Net Profit CAGR 111 CAGR 129 CAGR 370 122 27% 33 27% 30 25% FY01 FY06 FY11 FY16 FY01 FY06 FY11 FY16 FY01 FY06 FY11 FY16 1035 517 0.3 426 524 0.2 Operating Free Cash Adjusted Cash Flow
Slide 11: Consistent profitability and returns
Consistent profitability and returns Gross Margin # EBITDA Margin Net Margin (adjusted) 83% 44% 45% 35% 82% 41% 32% 32% 80% 75% 77% 29% 28% 18% 19% FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 ROCE ROE Market Cap (USD Bn) 27% 27% 31% 35 24% 30 26% 24% 15% 19% 19% 20 15%
Slide 12: Sustained Profitability Vs. Peers
Sustained Profitability Vs. Peers Superior business model Margins consistently higher than peers# Gross Margin EBITDA Margin Net Margin 83% 82% 80% 77% 45% 35% 44% 33% 75% 32% 32% 75% 41% 34% 19% 67% 18% 28% 14% 14% 13% 14% 29% 12% 63% 62% 62% 61% 7% 60% 22% 23% 20% 20% 19% 19% FY11 FY12 FY13 FY14 F
Slide 13: Creating Value, Continuously…
Creating Value, Continuously… Licensing agreement with Almirall for Began with 5 Acquired URL Acquired Ranbaxy Tildrakizumab IPO - Rs. 550 Mn Acquired Dusa products Acquired Taro Pharma raised in Europe for Psoriasis Year 1983 1993 1994 1997 2010 2011 2012 2013 2014 2015 2016 Market Cap (US$ Bn) as
Slide 14: Key Deals & Rationale
Key Deals & Rationale Year Deals Country Rationale Licensing agreement with Almirall for 2016 Europe Strengthening the distribution of Tildrakizumab in Europe Tildrakizumab for Psoriasis 2016 Acquired 14 brands from Novartis Japan Entry into Japan Distribution agreement with Distribution services ag
Slide 15: Successful track record of turning around acquisitions
Successful track record of turning around acquisitions ROCE 24% 25% 26% 27% 38% 37% 18% 34% 18% 24% 27% 15% 15% 5,000 8 Early Acquisitions 4 Acquisitions Recent Acquisitions 4,500 Taro 4,000 Assets of: Dusa URL 3,500 Bryan Ranbaxy Hungary InSite Vision 3,000 Able Labs 2,500 Chattem 2,000 1,500 1,000
Slide 16: US Business
US Business 48% of Revenues © Sun Pharmaceutical Industries Limited. All Rights Reserved. 16
Slide 17: US Business at a glance
US Business at a glance 5th Largest Pharma Company in the US Generics Market * • Largest generic dermatology company and 3rd largest branded Dermatology Segment dermatology company in the US • Wide basket of 567 ANDAs filed & 417 approved ANDAs across Comprehensive Portfolio multiple therapies • 150
Slide 18: US Business - Significant Ramp-up in Sales
US Business - Significant Ramp-up in Sales Sales in USD Million 2,244 2,066 Key Milestones in US • Entry in US through Caraco FY98 acquisition 1,620 FY98-FY10 • Ramp-up in US business • Launched many complex generics FY08 onwards & few FTFs 1,132 • Acquired Taro Pharma – Entry into FY10 dermatology
Slide 19: ANDA Pipeline - Significant ramp up
ANDA Pipeline - Significant ramp up ANDAs Filed and Approved 417 ANDA Approvals by Therapeutic Area 597 567 100 99 478 449 438 417 397 377 344 62 311 250 44 225 207 30 26 21 84 13 12 10 Gastro Allergy Antibiotic CNS CVS Metabolism Other Skin Pain Oncology FY10 FY11 FY12 FY13 FY14 FY15 Jun-16 Cumulat
Slide 20: India Branded Generic Business
India Branded Generic Business 26% of Revenues © Sun Pharmaceutical Industries Limited. All Rights Reserved. 20
Slide 21: India Business at a glance
India Business at a glance No. 1 in India • No. 1 ranked with 8.7% market share Market Position** • Growth of 11% inline with average industry growth of 11% Prescription Ranking## • No. 1 ranked by prescriptions with 12 different classes of doctors Chronic Segment • Market leader in the chronic segm
Slide 22: Largest Pharma Company in India
Largest Pharma Company in India (Market Share) Last 12 Months of Branded Generic Sales in India as of June 2016 (US$ in mn) 1,365 Sun Pharma - 8.7% 974 Abbott - 6.2% 776 Cipla - 5.0% 662 Zydus + Biochem - 4.2% 598 Mankind - 3.8% 536 Alkem + Cachet + Indchemie -3.4% 524 Lupin - 3.4% 505 Glaxo - 3.2%
Slide 23: India Business – Sales ramp-up
India Business – Sales ramp-up Leadership in chronic segment; Strong positioning in acute segment 30 brands in top 300 brands of country Sales in USD Million Therapeutic Revenue Break-up 1,090 1,109 Others Opthalmology 2% 6% Cardiology Respiratory 4% 18% Vitamins / Minerals / Nutrients, 4% Gynaecolo
Slide 24: Strong Customer Focus Drives Market Share Gains
Strong Customer Focus Drives Market Share Gains Therapy focused marketing Strong increase in market share • 9,200+ sales representatives • Sun pharma market share has consistently increased from 2.1% in 2000 to 8.0% in • Covering over 600,000* doctors 2016 (IMS Data for June’16) * Does not exclude o
Slide 25: Leadership in key therapeutic areas
Leadership in key therapeutic areas* Number 1 Ranking with 12 Doctor Categories* Prescription Ranking Specialist June ‘15 June ‘16 Psychiatrists 1 1 Neurologists 1 1 Cardiologists 1 1 Orthopaedic 1 1 Ophthalmologists 1 1 Gastroenterologists 1 1 Nephrologists 1 1 Diabetologists 1 1 Consulting Physici
Slide 26: Best-in-class field force productivity
Best-in-class field force productivity Sales Per Representative (USD ‘000) Field Force Productivity FY10 – FY14 numbers exclude Ranbaxy * FY15 & FY16 numbers include the impact of Ranbaxy merger Sun 232 • USD 119,323 / MR Pharma 202 186 182 Industry • USD 89,972 / MR Average* 150 * Based on brokerag
Slide 27: Emerging Markets
Emerging Markets 13% of Revenues © Sun Pharmaceutical Industries Limited. All Rights Reserved. 27
Slide 28: Emerging Markets Business at a glance
Emerging Markets Business at a glance Largest Indian Company in Emerging Markets Global footprint • Presence in over 100 markets • Brazil, Mexico, Russia, Romania, South Africa and complementary Focus Markets & affiliated markets Product Portfolio • Extensive basket of branded products Customer Focu
Slide 29: Western Europe, Canada, ANZ & Other Markets
Western Europe, Canada, ANZ & Other Markets 8% of Revenues © Sun Pharmaceutical Industries Limited. All Rights Reserved. 29
Slide 30: Western Europe & Other Markets at a glance
Western Europe & Other Markets at a glance Amongst the leading Indian Companies • Across all major markets in Western Europe, Canada, A&NZ and Market Presence few other markets • Expanding basket of products including injectables and hospital Product Portfolio products as well as products for retail
Slide 31: Global Consumer Healthcare Business
Global Consumer Healthcare Business © Sun Pharmaceutical Industries Limited. All Rights Reserved. 31
Slide 32: Global Consumer Healthcare Business at a glance
Global Consumer Healthcare Business at a glance An Attractive Opportunity India • Amongst the top 10 consumer healthcare companies Global Presence • Operates in about 20 countries • 4 core markets viz., India, Russia, Romania, and Nigeria Market Focus • 4 growth markets viz., Ukraine, Poland, South
Slide 33: Active Pharmaceutical Ingredients (API) Business
Active Pharmaceutical Ingredients (API) Business 5% of Revenues © Sun Pharmaceutical Industries Limited. All Rights Reserved. 33
Slide 34: API Business
API Business Backward Integration – Strategic Importance • Backward integration provides cost competitiveness and supply Strategic Importance reliability Customers • Large generic and innovator companies Product Portfolio • Approximately 300 APIs Pipeline Development • Approx. 20 APIs scaled up annu
Slide 35: Research & Development
Research & Development © Sun Pharmaceutical Industries Limited. All Rights Reserved. 35
Slide 36: Research & Development
Research & Development Cumulative R&D Spend of over USD 1.4 billion till date • R&D spend at 8.3% of Net Sales for FY16* R&D Spend • Strong cash flows & large scale to support R&D investments • Strong research teams in generics, finished dosage development, Capabilities biological support, chemistry
Slide 37: R&D Investments
R&D Investments R&D Expenditure Filings and Approvals 5.6% 5.8% 5.6% 6.3% 6.5% 7.2% 8.3% ANDA DMF/CEP Patents 352 567 426 1074 320 417 768 302 173 130 93 73 52 FY10 FY11 FY12 FY13 FY14 FY15* FY16* Filed Approved Filed Approved Filed Granted R&D Expenses (USD Mn) R&D Exp (% of Net Sales) FY09 – FY14
Slide 38: Global Manufacturing Presence
Global Manufacturing Presence © Sun Pharmaceutical Industries Limited. All Rights Reserved. 38
Slide 39: Global Manufacturing Presence
Global Manufacturing Presence World Class Manufacturing Infrastructure • 47 manufacturing facilities across India, the Americas, Asia, Africa, Extensive Global Footprint Australia and Europe • Vertically integrated network across six continents enabling high Integrated Network quality, low cost and
Slide 40: Global Manufacturing Footprint
Global Manufacturing Footprint Tiszavasvari Haifa (Hungury) (Israel) Ontario (Canada) Casablanca (Morocco) Cashel (Ireland) (US) Cluj (Romania) New Jersey(US) Billerica, MA Giza, (Egypt) Lagos (Nigeria) Kuala Lumpur Tennessee (Malaysia) Be-Tabs, South Africa) Rio de Bangladesh Plant Cranbury Janeiro
Slide 41: Finished Dosage Manufacturing
Finished Dosage Manufacturing 33 Finished dosage manufacturing sites • India : 15, US : 4 • Canada, Brazil, Mexico, Hungary , Israel, Bangladesh, Ireland, South Africa, Malaysia, Romania, Brazil, Morocco, Egypt and Nigeria : 1 each • Capacities available for a variety of finished dosages Orals Injec
Slide 42: API Manufacturing
API Manufacturing 14 API manufacturing locations • India : 9, Australia : 2, Israel : 1, US : 1, Hungary : 1 Panoli & Ahmednagar Australia, Hungary & (both India) Tennessee (US) • International regulatory approvals: USFDA, API • Controlled substances European Key Plants manufacture • Stand alone uni
Slide 43: Corporate Governance
Corporate Governance Our philosophy on corporate governance envisages working towards high levels of transparency, accountability and consistent value systems across all facets of operations Chairman Independent Directors & Members of Audit Committee Israel Makov Ashwin Dani Keki Mistry Former Presi
Slide 44: Financials
Financials © Sun Pharmaceutical Industries Limited. All Rights Reserved. 44
Slide 45: Financials
Financials Market Capitalisation Rs. 2,000 billion / US$ 30 billion ( All Figures in USD. Mn ) FY12 YoY FY13 YoY FY14 YoY FY15* YoY FY16* YoY P&L Summary Net Sales 1,672 33% 2,067 24% 2,649 28% 4,457 68% 4,240 -5% Gross Profit 1,330 42% 1,685 27% 2,189 30% 3,354 53% 3,249 -3% EBITDA 679 59% 903 33%
Slide 46: Sales Break-up
Sales Break-up In USD Million In INR Billion Gross 81 114 162 275 280 2,099 2,682 4,502 4,278 Sales 175 11 15 225 Full year consolidation 992 for URL & Dusa 61 57 878 URL & Dusa part- consolidation 135 8 316 Taro 19 135 2244 Consolidatio 137 2066 140 8 281 15 1620 6 98 1132 11 62 35 1090 1109 67 73
Slide 47: EBITDA Trend
EBITDA Trend In USD Billion Net 1.3 1.7 2.1 2.6 4.5 4.3 Sales % of Net Sales 21% 19% 17% 26% 25% 24% 14% 13% 15% 14% 17% 17% 25% Key drivers include Taro, generic 24% 24% Doxil, Doxycycline & other low 26% competition products in US 30% 31% 41% 44% 44% Impact of Ranbaxy acquisition 34% 29% 28% FY11
Slide 48: Cash Flow
Cash Flow Net Cash From Operating Activities (USD Mn) Free Cash Flow (USD Mn) 536 518 1,035 505 462 919 655 318 617 467 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 All numbers above exclude Ranbaxy financials © Sun Pharmaceutical Industries Limited. All Rights Reserved. 48
Slide 49: Financial Ratios
Financial Ratios FY12 FY13 FY14 FY15* FY16* Growth (%) Net Sales 33.2 23.6 28.1 68.2 (4.9) Gross Profit 42.3 26.7 29.9 53.2 (3.1) EBITDA 58.6 32.9 30.5 7.2 (5.6) Net Profit 39.3 (1.1) (5.2) 42.8 (2.9) Net Profit (Adjusted) 39.3 18.2 # 42.8 # (16.6) # 5.6 # Margins (%) Gross Margin 79.5 81.5 82.6 75.
Slide 50: Key Financials Q1 FY17
Key Financials Q1 FY17 ( All Figures in USD Mn ) Q1 FY17 Q1 FY16 CHANGE Net Sales 1,197 1,030 16% Gross Profit 921 763 21% Gross Margin 77% 74% EBITDA 401 242 66% EBITDA Margin 34% 23% Net Profit 304 88 247% Net margin 25% 9% Net Profit (Adjusted) 304 196 55% Net margin (Adjusted) 25% 19% R&D 79 81
Slide 51: Sales Breakup Q1 FY16
Sales Breakup Q1 FY16 ( All Figures in USD. Mn ) Q1 FY17 Q1 FY16 CHANGE Formulation India 277 272 2% US 609 488 25% Emerging Markets 154 133 16% ROW 84 91 -7% Sub-total 1,124 984 14% Bulk 70 43 64% Others 3 3 -19% Gross Sales 1,197 1,030 16% US Formulations 23% 26% India Branded Generics Emerging Ma
Slide 52: Key Milestones targeted for future
Key Milestones targeted for future • Enhance share of specialty/branded business US • Continue to focus on complex generics and high entry barrier segments Business • Ensure broad product offering to customers across multiple dosage forms • Gain critical mass in key therapeutic segments • Improve pr
Slide 53: Key Milestones targeted for future
Key Milestones targeted for future Global Consumer • Maintain leadership in existing markets through focus on innovative solutions • Enhance presence in high growth markets Healthcare • Develop more products through expanded R&D team for global markets R&D • Focus on developing complex products acro
Slide 54: FY17 Guidance
FY17 Guidance Consolidated Revenues • To grow by 8-10% over FY16 R&D Investments • Approximately 9% of revenues to be invested in R&D • Target US$ 300 million in synergy benefits from the Ranbaxy Ranbaxy Integration Synergy acquisition by FY18 Investing for Future • Invest in R&D and in building the
Slide 55: Sun Pharma at a glance
Sun Pharma at a glance 5th Largest Global Specialty Generic Company US • Ranked 5th in US* / Largest Indian Pharma Company in US India • No. 1 Pharma Company in India Emerging Markets • Largest Indian Pharma Company in Emerging Markets Europe • Expanding presence in Europe Manufacturing Footprint •
Slide 56: Thank You
Thank You! For more information please contact: Investors: Media: Nimish Desai Frederick Castro Thank You Tel : +91 22 4324 4324, Ext 2778 Tel : +91 22 4324 4324, Ext 2777 Tel Direct +91 22 43242778 Tel Direct : +91 22 43242777 Mobile : +91 98203 30182 Mobile : +91 99206 65176 nimish.desai@sunpharma