Eic analysis sun pharma

1. Fast Facts#
SUN PHARMACEUTICALS INDUSTRIES
ECONOMY INDUSTRY COMPANY
(Presented By: Piyush Jain 26C)
Economic Indicators
Social Indicators
Investment Scenario
Stock Market Analysis
Sovereign Rating
Competitive Position
Financial Analysis
Growth Prospects
1: Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments
Industry Life Cycle
Demand Drivers
External Factors
Future Outlook
Size and Dynamics
A
N
A
L
Y
S
I
S

Distinctive Edge
Segmental Analysis

2. Fast Facts# 2: Sun Pharma was listed on the main stock exchanges in India in 1994
ECONOMY ANALYSIS
I. ECONOMIC INDICATORS
II. SOCIAL INDICATORS: HUMAN DEVELOPMENT INDEX
9.60
9.30
6.70
8.40
8.40
6.90
5.50
0.00
2.00
4.00
6.00
8.00
10.00
12.00
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
GDP Growth Rate (in %)
•Lower GDP growth rate in FY 13
due to deficient monsoon and
worsening Euro Zone outlook
* FY 07-12 from Ministry of Finance and
FY 13 from CRISIL
The Global
Competitiveness Report
2010-11
Doing Business in India
• Overall rank 51
st

among 139 countries.

•4
th
in Market Size

•39
th
in Innovation

•17
th
in Sound Financial
Market
3.20
14.97
7.00
0.00
5.00
10.00
15.00
20.00
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

CPI Index
(in %)
*Data from www.inflation.eu.
•Inflation high due to rising
food and fuel prices
•Resulting Higher cost of Man,
Machine and Material
•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 rankHDI Life expectancy at birth Expected years of schooling GNI per capita (USD)
1340.547 65.4 10.3 3,468

3. Fast Facts# 3: 1st API mfging plant was built in Panoli in 1995 to tap vast International opportunity
III. INVESTMENT SCENARIO
IV. STOCK MARKET ANALYSIS
V. SOVEREIGN RATING
•AS per UNCTAD's World Investment
Prospects Survey 2010-12, India is the
2
nd
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
*BSE SENSEX Aug 10, 2011 to Aug 10, 2012 (Yahoo Finance)
*In USD Million. Hindu Business Line Feb 24, 2012.
•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
•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)

4. Fast Facts# 4: In 1997, headquarters shifted to Mumbai, India's commercial capital.
INDUSTRY ANALYSIS
I. SIZE AND DYNAMICS
GLOBAL
•Global pharma market is expected to grow
by 5-7% and reach US$
1.1 trillion by 2014
•US pharma market will reach anywhere
between US$ 320 and 350 billion by
2015 & European markets to reach up to
US$ 160 billion by 2015
•Pharmerging countries will contribute
28% to global market spending by 2015;
expected to double their spending on
medicines to $285-315 billion by 2015,
compared with $151 billion in 2010
•IMS Health

INDIA
•Rank 10
th
in terms of value and 3
rd
in
terms of volume
•Current Size US$ 12.3 Million
expected to touch US$ 74 Million in
sales by 2020
•Branded generic forms 70-80% of
market
•Formulations market valued at Rs.
48,200 crore (CAGR 14-15%)
•Exports branded generics in large
volumes, which are expected to grow at
a CAGR of 21-23% during 2009-2014
* 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

5. Fast Facts# 5: 1
ST
International acquisition with an initial of $7.5 million in Caraco, Detroit
III. DEMAND DRIVERS
IV. EXTERNAL FACTORS
V. FUTURE OUTLOOK
Rising Household
Income Levels

Increasing Prevalence
of Lifestyle Related
Diseases
Improving Healthcare
Infrastructure/
Delivery Systems
Rising Penetration
in Smaller Towns
and Rural Areas
TECHNOLOGY
•Quality of the filings have to be
significantly improved for Complex
Molecules, Non-orals and Para IV/FTFs
forming increasing share of their pipeline
•Patent expiration also poses a challenge to
improve technical capabilities
GOVERNMENT
•Increasing focus by Governments to reduce
healthcare costs continue to exert pressure
on innovator companies which supports
outsourcing to low-cost nations
•Indian Budget 2012-13: Excise Duty
increased to 6% from 5% on formulations and
to 12% from 10% on bulk drugs; Impact
neutral since companies are likely to pass
hikes to consumers

SOCIAL CHANGES AND DEMOGRAPHY
•Increasing per capita income and standard
living of people expanding market for Pharma
companies
•Changing lifestyle and demography giving push
to chronic segments like cardiovascular,
anti-diabetic, neurology, psychiatry
FOREIGN INFLUENCES
•Effect on domestic Industry: MNCs have
become aggressive with launch of product
patent regime & strong growth prospects
making industry highly competitive
•Opportunity in Foreign Market: In US
(With ~$100 billion worth patent expiries
over the next 5 years), Europe (Price
Erosion is a concern though) and Japan
(Generic concentration to be increased to
30% from 23% in 2012)
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

6. Fast Facts# 6: Acquired Taro Pharmaceuticals in sept 2010 doubling US business esp in Dermatology
COMPANY ANALYSIS
I. COMPETITIVE POSITION
•5
th
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 India Branded
Generics , 36%
US
Formulations,
43%
International
Generics, 14%
APIs,
7%
DIVERSIFIED
PRESENCE
ACROSS
COUNTRIES
AND
CHRONIC
SEGMENT Neuro-
Psychiatry,
28%
Cardiology,
19%
Diabetolog
y, 11%
Gastroente
rology,
15%
Others,
27%

7. Fast Facts# 7:Mfging Plants 23; Employees 12000; Research Centre 4; International Sales 60%
IV. FINANCIAL ANALYSIS
V. GROWTH PROSPECTS
STRONG EBITDA MARGIN HEALTHY R&D/SALES RATIO
FAVOURABLE FINANCIAL LEVERAGE BALANCED STAKEHOLDER VALUE 8.50%
7.80%
6.60%
5.80%
5.60%
2007-082008-092009-102010-112011-12
07-
08
08-
09
09-
10
10-
11
11-
12
DEBT/EQ .03 .03 .02 .04 .02
Diluted
EPS (Rs)
14.4 17.6 13 17.5 25
07-
08
08-
09
09-
10
10-
11
11-
12
ROCE 35.5 31.5 19.5 23.6 30.4
RONW 38.3 30.2 18.2 21 23.9
•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