201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69 1

Stock details

Shareholding pattern as on 30th June 2010

RESEARCH ANALYSTS

ANSHUMAN JAIN DIVYA KANT anshuman.jain@inventuregrowth.com divya.kant@inventuregrowth.com

BSE Code 532331

NSE Symbol AJANTPHARM

Bloomberg Code AJP IN

CMP (`) 239.60

Market Capitalization (` in Crs) 282.48

Face Value (`) 10.00

Book Value (`) 150.16

52 Wk High (BSE) ` 273.65 (07 Sep ,2010)

52 Wk Low (BSE) ` 87.35 (03 Nov,2009)

Target Price (`) 380

Time Horizon 12-18 Months

Ajanta Pharma Ltd - APL “BUY” 01st Nov, 2010

mailto:anshuman.jain@inventuregrowth.com� mailto:divya.kant@inventuregrowth.com�

201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69 2

Company Profile….

Ajanta Pharma is a specialty pharmaceutical company headquartered in Mumbai engaged in the

development, manufacture and commercialization of pharmaceutical products. Its products are sold and

marketed in over 52 countries through an established presence across Africa, Asia, Latin America and

the CIS countries. APL is in the process of formulating products to be able to file product dossiers in the

regulated markets.

Ajanta operates with 5 state-of-the art manufacturing facilities that produce high quality pharmaceutical

products. It focuses on commercializing unique generic products and pioneering synergistic

combination products in the therapeutic areas of anti- malarial, cardiology, dermatology,

gastroenterology, musculoskeletal, ophthalmology and respiratory disorders.

APL has an advanced Research & Development Centre for API synthesis and finished formulations of

different dosage forms. It focuses on specialty segments in India and simultaneous opening of new

international markets have been the key growth drivers for them over the years.

APL is also engaged in contract research for leading multinational pharmaceutical companies

Manufacturing Facilities

APL operates 5 state-of-the-art manufacturing facilities comprising of 4 within India and 1 in Mauritius.

The manufacturing facility located at Paithan, India is approved by the US FDA, health authorities of Brazil and Colombia.

The company uses its proprietary technology and synergistic manufacturing platforms to produce high quality products efficiently and produces a comprehensive range of dosage formulations of allopathic drugs including tablets, capsules, ointments, injections and powders.

APL is regularly upgrading its manufacturing units in order cater to the growing marketing needs & is in the process of expanding its manufacturing scope with more facilities and capacity enhancements in the existing plants.

201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69 3

Research & Development….

Ajanta Pharma has a Research and Development division which is a vital component of business strategy that will provide a long-term competitive advantage. Its R&D facility Advent has more than 150 diligent and committed scientists working on different dosage forms ranging from topical creams, ophthalmological preparations, nasal sprays and dry powder inhalers etc.

PL R&D hub covers an area of 30,000 sq feet (2,800 sq meters) and is fully equipped with modern amenities and technology for accessing reference material, environmental monitoring, data collection & analysis, record keeping and archiving.

Major Brands…..

Ajanta Pharma’s expertise covers a broad spectrum of products targeting various diseases. Some of its major brands targeting diseases are

1. Anti-Malarials (Artefan – Artemether & Lumefentrine) 2. Cardiology (Met XL – Metoprolol Succinate) 3. Dermatology (Melacare – Hydroquinone, Tretinoin, Mometasone) 4. Gastroenterology (Lafutax – Lafutidine) 5. Musculoskeletal (Feburic – Febuxostat) 6. Ophthalmology (Unibrom – Bromfenac) 7. Respiratory (Fivasa – Fluticasone Furoate Nasal Spray)

APL also has a significant global presence in the Male Erectile Dysfunction (MED) segment through its key brand ‘KAMAGRA’ and equally strong equity in anti-malarial segment through ‘ARTEFAN’ where it was the first branded generic to get WHO pre-qualified.

201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69 4

Pharma Industry Overview

India as a Global Destination….

The Indian pharmaceutical industry is currently the third largest in the world in terms of volume and

stands 14th in terms of value .The total turnover of India's pharmaceuticals industry between September

2008 and September 2009 was US$ 21.04 billion. Of this the domestic market was worth US$ 12.26

billion. Source: The Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers (Jul, 2010)

Further the increasing population of the higher-income group in India will open a potential US$ 8

billion market for multinational companies selling costly drugs by 2015. Besides the domestic pharma

market is estimated to touch US$ 20 billion by 2015, making India a lucrative destination for clinical

trials for global giants.

(Source: Pharma Industry Study, Ernst & Young)

The pharmaceuticals industry in India will grow by over 100 %over the next two years i.e. FY10 –

FY12

There has been an increase in sales of all types of medicines, particularly anti-biotic, will zoom up in the

coming years.

Currently the pharmaceutical industry is currently growing at the rate of 12 %, but this will accelerate

soon. The sale of all types of medicines in the country stands at US$ 9.61 billion, which is expected to

reach around US$ 19.22 billion by 2012.

Source: All India Organization of Chemists and Druggists (AIOCD)

India tops the world in exporting generic medicines worth US$ 11 billion and currently, the Indian

pharmaceutical industry is one of the worlds largest and most developed

(Source: The Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers)

India will join the league of top 10 global pharmaceuticals markets in terms of sales by 2020 with the

total value reaching US$ 50 billion.

Source: Price water house Coopers (PWC)

201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69 5

Government Initiatives….

 100 per cent foreign direct investment (FDI) is allowed under the automatic route in the drugs and pharmaceuticals sector including those involving use of recombinant technology. (DIPP)

 The Government plans to set up a US$ 639.56 million venture capital (VC) fund to give a boost to drug discovery and strengthen the pharma infrastructure in the country

 The GOI has prepared “Pharma Vision 2020" for making India one of the leading destinations for end-to-end drug discovery and innovation and for that purpose provides requisite support by way of world class infrastructure, internationally competitive scientific manpower for pharma research and development (R&D), venture fund for research in the public and private domain and such other measures.

 The Drugs and Pharmaceuticals Manufacturers Association has received an in-principle approval for its proposed special economic zone (SEZ) for pharmaceuticals, bulk drugs, active pharmaceutical ingredients (APIs) and formulations to be located at Nakkapalli mandal in Visakhapatnam district

 The government has offered tax breaks to the pharmaceutical sector. Units are eligible for weighted tax deduction at 150 per cent for the research and development (R&D) expenditure incurred

Source: IBEF

APL Mapping the Complete Pharmaceuticals Value Chain….

201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69 6

FINANCIAL HIGHLIGHTS FY06 TO FY10 (STANDALONE)…….

Fig in Cr

 Total Income ~ CAGR growth 16 %  PAT ~ CAGR growth 30 %

Q1FY11- Stellar Performance……..

Fig in Cr

Particulars Q1FY11 Q1FY10 % Change. Sales 98.29 84.53 16

OPM % 18.17 18.18 -

PBDT 13.77 10.41 31

PBT 8.59 6.13 40

NP 6.98 4.37 60

201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69 7

International Presence……

Nearly 60% of total sales of the company come from international markets. In international markets, the company sells its products through its own team of sales representatives. It has a dedicated chain of salesmen which ensures its brands reach the dealers

APL has healthy presence in various regions across the globe

201, Viraj Tower, Near Land mark Building, Western Express Highway, Andheri (E), Mumbai-69 8

Risks ….

 The company’s Joint Venture Turkmenderman Ajanta Pharma Limited though continued its operations in FY10 its performance had been much below expectations. However it would be mitigated co