NAME: CHIRAG RAJESH SHAH

REGISTRATION NUMBER: WRO 0288468

INDUSTRY NAME: PHARMACEUTICAL INDUSTRY

CENTRE ADDRESS: SAILEE INTERNATIONAL SCHOOL,

MHB COLONY,

BORIVALI (WEST).

BRANCH: BORIVALI

BATCH TIME: 8.00am TO 12.00 pm

ROLL NO.: 19

ROOM: LAB 1

MONTH OF TRAINING: OCTOBER 2008

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

1

INDEX

TOPICS

1 History of Pharmaceutical Industries 3

2 History of Ranbaxy 6

3 Community Healthcare 11

4 Manufacturing Facilities 13

5 Corporate Profile 14

6 Research and Development 17

7 Business Development and Partnership 20

8 Worldwide Operations 21

9 Operations in India 22

10 Financial Analysis 25

11 Board Of Directors 33

12 Executive Team 34

13 Corporate Social Responsibility 36

14 Work Environment 37

15 Anti HIV/AIDS Project 41

16 Anti Malaria Project 43

17 Ranbaxy Science Foundation 45

18 Ranbaxy and Daiichi Sankyo Deal 46

19 Future Prospects 48

2

History of Pharmaceutical Industries

The earliest drugstores date back to the Middle Ages. The first known drugstore was opened by

Arabian pharmacists in Baghdad in 754, and many more soon began operating throughout the

medieval Islamic world and eventually medieval Europe. By the 19th century, many of the drug

stores in Europe and North America had eventually developed into larger pharmaceutical

companies.

Most of today's major pharmaceutical companies were founded in the late 19th and early 20th

centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-

manufactured and distributed. Switzerland, Germany and Italy had particularly strong industries,

with the UK, US, Belgium and the Netherlands following suit.

Legislation was enacted to test and approve drugs and to require appropriate labeling.

Prescription and nonprescription drugs became legally distinguished from one another as the

pharmaceutical industry matured. The industry got underway in earnest from the 1950s, due to

the development of systematic scientific approaches, understanding of human biology (including

DNA) and sophisticated manufacturing techniques.

Numerous new drugs were developed during the 1950s and mass-produced and marketed

through the 1960s. These included the first oral contraceptive, "The Pill", Cortisone, blood-

pressure drugs and other heart medications. MAO Inhibitors, chlorpromazine (Thorazine),

Haldol (Haloperidol) and the tranquilizers ushered in the age of psychiatric medication. Valium

(diazepam), discovered in 1960, was marketed from 1963 and rapidly became the most

prescribed drug in history, prior to controversy over dependency and habituation.

Attempts were made to increase regulation and to limit financial links between companies and

prescribing physicians, including by the relatively new US FDA. Such calls increased in the

1960s after the thalidomide tragedy came to light, in which the use of a new tranquilizer in

pregnant women caused severe birth defects. In 1964, the World Medical Association issued its

Declaration of Helsinki, which set standards for clinical research and demanded that subjects

give their informed consent before enrolling in an experiment. Pharmaceutical companies

became required to prove efficacy in clinical trials before marketing drugs.

3

Cancer drugs were a feature of the 1970s. From 1978, India took over as the primary center of

pharmaceutical production without patent protection.

The industry remained relatively small scale until the 1970s when it began to expand at a greater

rate. Legislation allowing for strong patents, to cover both the process of manufacture and the

specific products, came in to force in most countries. By the mid-1980s, small biotechnology

firms were struggling for survival, which led to the formation of mutually beneficial partnerships

with large pharmaceutical companies and a host of corporate buyouts of the smaller firms.

Pharmaceutical manufacturing became concentrated, with a few large companies holding a

dominant position throughout the world and with a few companies producing medicines within

each country.

The pharmaceutical industry entered the 1980s pressured by economics and a host of new

regulations, both safety and environmental, but also transformed by new DNA chemistries and

new technologies for analysis and computation. Drugs for heart disease and for AIDS were a

feature of the 1980s, involving challenges to regulatory bodies and a faster approval process.

Managed care and Health maintenance organizations (HMOs) spread during the 1980s as part of

an effort to contain rising medical costs, and the development of preventative and maintenance

medications became more important. A new business atmosphere became institutionalized in the

1990s, characterized by mergers and takeovers, and by a dramatic increase in the use of contract

research organizations for clinical development and even for basic R&D. The pharmaceutical

industry confronted a new business climate and new regulations, born in part from dealing with

world market forces and protests by activists in developing countries. Animal Rights activism

was also a problem.

Marketing changed dramatically in the 1990s, partly because of a new consumerism. The

Internet made possible the direct purchase of medicines by drug consumers and of raw materials

by drug producers, transforming the nature of business. In the US, Direct-to-consumer

advertising proliferated on radio and TV because of new FDA regulations in 1997 that

liberalized requirements for the presentation of risks. The new antidepressants, the SSRIs,

notably Fluoxetine (Prozac), rapidly became bestsellers and marketed for additional disorders.

4

Drug development progressed from a hit-and-miss approach to rational drug discovery in both

laboratory design and natural-product surveys. Demand for nutritional supplements and so-called

alternative medicines created new opportunities and increased competition in the industry.

Controversies emerged around adverse effects, notably regarding Vioxx in the US, and

marketing tactics. Pharmaceutical companies became increasingly accused of disease mongering

or over-medicalizing personal or social problems.

There are now more than 200 major pharmaceutical companies, jointly said to be more profitable

than almost any other industry, and employing more political lobbyists than any other industry.

Advances in biotechnology and the human genome project promise ever more sophisticated, and

possibly more individualized, medications.

History

5

When we set out on our way in 1961, little did we realize the impact we would make on the

Indian and global pharmaceutical industry.

Take a look at how Ranbaxy has grown through the decades......

1961

Company Incorporated.

1973

Ranbaxy goes Public.

A multipurpose chemical plant is setup for the manufacture of APIs at Mohali in India.

1977

Ranbaxy’s first joint venture in Lagos (Nigeria) is setup.

1983

A modern dosage forms facility at Dewas (MP) in India goes on stream.

1985

Ranbaxy Research Foundation is established.

Stancare, Ranbaxy’s second pharmaceutical marketing division, starts functioning.

1987

Production start-up at the modern API’s plant at Toansa (Punjab) makes Ranbaxy the

country’s largest manufacturer of antibiotics/antibacterial.

1988

Ranbaxy’s Toansa plant gets US FDA approval.

1990

Ranbaxy is granted its first US patent, for Doxycyline.

6

1991

New state-of-the-art facility for Cephalosporins set up at Mohali.

1992

Company enters into an agreement with Eli Lilly & Co of USA for setting up a Joint

Venture in India to market select Lilly products.

1993

Company enters into an agreement to setup a Joint Venture in China Ranbaxy

(Guangzhou China) limited.

Ranbaxy enunciates its corporate mission ‘To become a Research based International

Pharmaceutical Company.’

1994

The new Research Centre at Gurgaon, (near Delhi), becomes fully operational.

Established Regional Headquarters in UK and USA.

The Fermentation pilot plant at Paonta Sahib is commissioned.

Ranbaxy’s GDR listed in Luxembourg Stock Exchange.

1995

Acquisition of Ohm Laboratories, a manufacturing facility in the US .Inauguration of

FDA approved state-of the art new manufacturing wing, at Ranbaxy’s US subsidiary

Ohm Laboratories Inc.

1997

Ranbaxy Laboratories Limited crosses a sales turnover of Rs 10,000 million, with its

exports reaching an all time high of Rs 5,000 million.

1998

7

Ranbaxy enters USA, world’s largest pharmaceuticals market, with products under its

own name.

Ranbaxy filed its first Investigational New Drug (IND) application with the Drugs

Controller General of India (DCGI) for approvals to conduct Phase 1 Clinical Trials.

1999

Clinical Trials for its NCE commence.

Bayer AG, Germany and Ranbaxy sign an agreement where Bayer obtains exclusive

development and worldwide marketing rights to an oral once daily formulation of

Ciprofloxacin, originally developed by Ranbaxy.

2000

Ranbaxy files its Second IND Application in India.

Ranbaxy acquires Bayer’s Generics business (trading under the name of Basics) in

Germany.

Ranbaxy forays into Brazil, the largest pharmaceutical market in South America.

2001

Ranbaxy took a significant step forward in Vietnam by initiating the setting up of a new

manufacturing facility.

Ranbaxy USA crosses sales of US $ 100 million, fastest growing company in the US.

2002

Ranbaxy files its third IND application in India.

Ranbaxy launched Cefuroxime Axetil post approval from USFDA for 125mg, 250mg,

500mg Tablets, first approval granted to any generic company for this product.

2003

Ranbaxy receives The Economic Times Awards for Corporate Excellence for ‘The

Company of the Year, 2002-2003.’

Ranbaxy and Glaxo Smithkline Plc (GSK) enter into a global alliance for drug discovery

and development.

8

Ranbaxy’s first NCE in the respiratory segment successfully completes Phase 1 clinical

trials and steps into Phase 2.

Ranbaxy files its fourth IND application in India.

Ranbaxy launched the first branded product Sotret (Isotretinonin) for 10mg, 20mg and

40mg capsules in USA.

2004

Ranbaxy began operations in France as a Top 10 generic company, after acquiring a

wholly-owned subsidiary RPG (Aventis) SA.

The company joined the elite club of Billion Dollar Companies, achieving global sales of

US$ 1 Bn (on MAT basis) in February 2004.

Ranbaxy made its first Anti-retroviral (ARV) filling with the US FDA under US

President’s Emergency Plan for AIDS Relief (PEPFAR).

RBx 11160, an Anti-malarial molecule being developed in collaboration with Medicines

for Malaria Venture (MMV) successfully completed Phase 1 studies. Subsequent to

filling of an Investigational New Drug (IND) application in UK and India.

2005

Ranbaxy’s Antimalarial molecule successfully completes Proof of Concept Phase 2a

studies.

Ranbaxy launches operations in Canada.

9

Ranbaxy’s joint venture with Nippon Chemiphar in Japan (Nihon Pharmaceutical

Industry Limited) launches-Vogseal for diabetes, the first product of the joint venture.

Ranbaxy acquires generic product portfolio from EFARMES of Spain.

Ranbaxy receives India’s first approval from USFDA for an Anti Retroviral (ARV) drug

under the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR).

Ranbaxy opens its third state of the art R&D facility in Gurgaon campus to focus on NCE

discovery research. H.E. Dr. A.P.J. Abdul Kalam, the President of India, inaugurated the

facility in Aug 05.

2006

Ranbaxy acquires Be Tabs pharmaceuticals, the 5 th largest generic company in South

Africa for US $ 70 Mn.

Ranbaxy successfully invalidates Pfizer’s 995 Lipitor U.S. Patent.

Ranbaxy obtains US FDA approval for Simvastatin 80mg tablets with 180 day

exclusivity.

Ranbaxy acquires unbranded generic business of GSK in Italy & Spain.

Ranbaxy acquires Terapia, largest independent generic pharma company in Romania for

US $ 324 Mn.

Ranbaxy places US$ 440 Mn FCCB (Foreign Currency Convertible Bonds) issue, the

largest in healthcare segment in India.

Ranbaxy enters into a strategic alliance with Zenotech for its basket of oncology products

to be marketed under the Ranbaxy brand in various global markets.

Community Healthcare

Profile

Ranbaxy has a strong element of Corporate Social Responsibility inscribed in its values

and its concern for the society extends well beyond its business motives.

The company does not view success and achievements in terms of commercial gains only but

10

firmly believes that corporate social responsibility is the key for providing a deep symbiotic

relationship that exists between the company and the environment it functions. Over two decades

ago, in 1979, in the wake of grim health scenario of India, Ranbaxy realized the urgency to reach

out to those who had little or no access even to basic health care and instituted ‘Ranbaxy Rural

Development Trust’.

The main objective of the programme was to deliver primary health care to the underserved and

underprivileged section of the society to achieve positive health for them and thus to contribute

to the national objective ‘Health For All’. As the scope of the programme and company’s

commitment grew, in 1994, a professionally managed, nonprofit, independent body ‘Ranbaxy

Community Health Care Society’ (RCHS) was established against the backdrop of full moral and

financial support of the company.

Mission & Values

Community Participation

It was recognized that over 70 percent of the deliveries in RCHS service areas were conducted at

home by either untrained or improperly trained ‘dais'. On one hand, lack of skills was causing

many neo-natal deaths while on the other these ‘dais' acted as counselors to pregnant women and

enjoyed easy accessibility and acceptability. Thus, as a strategy, two-phase intervention was

11

planned where the RCHS Medical officers were trained to train the ‘dais' in the first phase and

training of ‘dais' from the community was done in the second phase.

RCHS has established community based local groups like health committees, women groups and

other interactive groups like “dais”, “anganwari” workers, volunteers, adolescents and breast-

feeding support groups to promote community involvement and self-sustainability.

Scientific Approach

RCHS firmly believes in a focused and integrated approach to the basic issues of health care that

are elementary and directly responsible for the state of community health in RCHS service areas.

With a view to plan future strategies for need based interventions, RCHS regularly monitors and

records all vital events such as live births, infant deaths, maternal deaths and abortions etc. For

example, the main causes of infant and maternal mortality as identified in RCHS areas are Low

Birth Weight, Diarrhoea, Pneumonia, Birth Asphyxia, Hypothermia, Anaemia in pregnancy

including obstetrical causes like Sepsis or Haemorrhage. Special attention is given to promote

ORS in Diarrhoea and early diagnosis and appropriate treatment of Pneumonia. Focussed work

with precise risk groups like pregnant women, lactating mothers, newly married eligible couples

and adolescent girls to prevent low birth weight and anaemia in pregnancy, including referral

services for dealing with obstetrical emergencies are some of the steps taken in order to bring

down the infant and maternal mortality rates in RCHS areas.

Road ahead...

In the future there are plans to develop more need-based programs with emphasis on educating

and empowering communities through knowledge, access to information and provision of quality

services. The aim remains to improve their quality of life and achieve sustainable human

development.

Manufacturing Facilities

An organizations’ capabilities and intent are strongly reflected in the product it manufactures. In

other words, the manufacturing competencies and facilities echo truly, the R&D extent and the

ability to implement it for the best of the market it targets.

12

RANBAXY® possesses the manufacturing strengths that have established it as a producer of

world-class generics, branded generics and a major supplier of its range of Active

Pharmaceutical Ingredients for pharmaceutical products of companies worldwide.

Ranbaxy has world-class manufacturing facilities in 11 countries namely Brazil, China,

Ireland, India, Japan, Malaysia, Nigeria, Romania, South Africa, USA and Vietnam. Its

overseas facilities are designed to cater to the requirements of the local regulatory bodies of that

country while the Indian facilities meet the requirements of all International Regulatory

Agencies. Some of the agencies such as MCA-UK, MCC-South Africa, FDA-USA and TGA-

Australia, have audited and approved Ranbaxy’s manufacturing facilities for the compliance

with international Good Manufacturing Practices and have registered its products for safety,

quality and efficacy.

Corporate Profile

Ranbaxy Laboratories Limited, India's largest pharmaceutical company, is an integrated,

research based, international pharmaceutical company, producing a wide range of quality,

affordable generic medicines, trusted by healthcare professionals and patients across

geographies. The Company is ranked amongst the top ten global generic companies and has a

13

presence in 23 of the top 25 pharma markets of the world. The Company with a global footprint

in 49 countries, world-class manufacturing facilities in 11 and a diverse product portfolio, is

rapidly moving towards global leadership, riding on its success in the world’s emerging and

developed markets.

Financials

Ranbaxy was incorporated in 1961 and went public in 1973. For the year 2007, the Company's

Global Sales at US$ 1,619 Mn reflected a growth of 21%. Profit after Tax at US$ 190 Mn

registered an increase of 67% over the previous year.

The Company has a balanced mix of revenues from developed and emerging markets and is well

positioned to leverage the growth potential offered by these markets. For the year 2007, North

America, the Company's largest market contributed sales of US$ 419 Mn, contributing 26% of

total sales followed by Europe garnering US$ 365 Mn. The Company’s business in Asia was led

by a strong performance in India that clocked sales of US$ 301 Mn with market leadership

backed by its strong brand-building skills.

Strategy

Ranbaxy is focused on increasing the momentum in the generics business in its key markets

through organic and inorganic growth routes. It continues to evaluate acquisition opportunities in

India, emerging and developed markets to accentuate its business and competitiveness. The

Company’s growth is well spread across geographies with near equal focus on developed and

emerging markets. Ranbaxy has entered into new speciality therapeutic segments like Bio-

similars, Oncology, Peptides and Limuses. These new growth areas will add significant depth to

its existing product pipeline.

R&D

Ranbaxy is among the few Indian pharmaceutical companies in India to have initiated its

research program in the late 70’s. To support its global ambition, a first of its kind world class

R&D centre was commissioned in 1994. Today, the Company’s multi-disciplinary R&D centre

14

at Gurgaon, in India, houses dedicated facilities for generics research and innovative research.

The Company’s robust R&D environment for both drug discovery & development reflects the

Company’s commitment to be a leader in the generics space and offer value added formulations

based on its Novel Drug Delivery System (NDDS) and New Chemical Entity (NCE) research

outcomes.

The new drug research areas at Ranbaxy include anti-infectives, inflammatory / respiratory,

metabolic diseases, oncology, urology and anti-malaria. Presently, the Company has 8-10

programs comprising one anti-malaria molecule in Phase-II clinical trials. The Company has two

programs in Phase I and the remaining in the pre-clinical stage. This includes a collaborative

research program with GSK.

The company's NDDS focus is mainly on the development of NDA/ANDAs of oral controlled-

release products for the regulated markets. The Company’s first significant international success

using the NDDS technology platform came in September 1999, when Ranbaxy out-licensed its

first once-a-day formulation to a multinational company.

Vision & Aspirations

The Company is driven by its vision to achieve significant business in proprietary prescription

products by 2012 with a strong presence in developed markets. It aspires to be amongst the Top

5 global generic players and aims at achieving global sales of US $5 Bn by 2012.

People

The Company’s business philosophy based on delivering value to its stakeholders constantly

inspires its people to innovate, achieve excellence and set new global benchmarks. Driven by its

vision to become a global leader the Company reinvents itself to achieve sustained growth and

leadership.

15

Driven by the passion of its over 12,000 strong multicultural workforce comprising 50

nationalities, Ranbaxy continues to aggressively pursue its mission to become a Research-based

International Pharmaceutical Company and attain a true global leadership position.

Research & Development

Ranbaxy views its R&D capabilities as a vital component of its business strategy that will

provide the company with a sustainable, long-term competitive advantage. The company today

has a pool of 1,200 scientists who are engaged in path-breaking research.

16

The robust R&D environment within the company for both drug discovery & development

reflects the Company's commitment to be a leader in the generics space and offer value added

formulations based on the Company's Novel Drug Delivery System (NDDS) and New Chemical

Entity (NCE) research outcomes.

NOVEL DRUG DELIVERY SYSTEMS (NDDS)

The NDDS research at Ranbaxy focuses on maximizing the overall therapeutic and commercial

value of commonly prescribed pharmaceutical formulations by enhancing their performance and

reducing their adverse event profile. Such innovation also helps to improve the overall patient

convenience and compliance.

The company's NDDS focus is mainly on the development of New Drug Applications (NDA) /

Abbreviated New Drug Applications (ANDAs) of oral controlled- release products for the

regulated markets. The Company's first significant international success using the NDDS

technology platform came in September 1999, when Ranbaxy licensed its once-a-day

Ciprofloxacin formulation on a worldwide basis to a multinational Company.

Ranbaxy's in-house NDDS programs are primarily focused on the oral segment. Inhalation

(patented devices) and trans-dermal (patented adhesive polymers) programs are also being

pursued through collaborations.

In the oral NDDS space, Ranbaxy has already developed four platform technologies namely

Gastro Retentive, Modified Matrix, Multiparticulate and AeroGel. Several products leveraging

these technologies have been successfully developed.

NEW DRUG DISCOVERY RESEARCH (NDDR)

The Company’s NDDR program focuses on select therapeutic segments of Infectious diseases,

Metabolic diseases, Inflammatory/ Respiratory disease and Oncology. Presently, the Company

has 8-10 programs in the area of NDDR including one NCE in Phase-II clinical trials.

17

Arterolane, our potential Anti-malarial candidate is currently undergoing Phase IIb studies (dose

range finding studies) in Africa, Thailand and India.

The Company’s potential drug candidate for Dyslipidemia RBx 10558, has been successfully

out-licensed to Pharmaceutical Product Development Inc. (PPD), a leading global Contract

Research Organization for clinical development for further development.

The Company is also profiling DPP-IV Inhibitors (Di-Peptidyl Peptidase IV Inhibitors) for Type-

2-diabetes, a selective Phosphodiesterase 4-b inhibitor for COPD and Asthma, and a novel

antibiotic antibacterial for Community Acquired Respiratory Tract Infection.

The Company continues to forge ahead with its various research alliances, in order to expedite its

Drug Discovery program.

Significant progress has been made on two research programs, one each in the Anti-infective and

Respiratory segments, which are being pursued with GlaxoSmithKline (GSK). Consequently,

Ranbaxy and GSK have expanded the original agreement and Ranbaxy now has the

responsibility for advancing the selected compounds to ‘proof of concept’ in man, whereby total

milestone payments, excluding royalties, could exceed over US $ 100 Mn.

Under an alliance with a leading academic institution in India, a number of medicinal plants are

being evaluated as potential sources for novel pharmaceutical agents. The Company also has

collaborative research projects with other academic institutions in India in the area of

Respiratory and Infectious disease.

R&D INFRASTRUCTURE

Ranbaxy is among the few Indian pharmaceutical companies in India to have recognized the

importance of Research & Development (R&D) and invested early in it. The first research

activity at Ranbaxy was initiated way back in the year 1973. Later when Ranbaxy drew its

ambitious global plans, it embarked on R&D in a significant way by establishing its first R&D

centre in 1994.

18

Ranbaxy today has state-of-the-art multi-disciplinary centre at Gurgaon (near New Delhi) in

India, with dedicated facilities for generics research and innovative research.

The prowess of Indian scientists is widely acknowledged today and it is believed that the cost of

developing a new drug in India can be one third to one fifth of doing the same, in the developed

world. It is a long term objective of Ranbaxy to build a proprietary prescriptions business, based

on its prowess in NDDS and NCE research.

Business Development & Partnerships

Ranbaxy Laboratories Limited, India's largest pharmaceutical company,

headquartered in India, is an integrated, research based, international pharmaceutical company,

producing a wide range of quality, affordable generic medicines, trusted by healthcare

professionals and patients across geographies. It is ranked amongst the top ten generic companies

worldwide. The Company has manufacturing operations in 11 countries with a ground presence

in 49 countries and its products are available in over 125 countries. The Company is driven by its

19

ambition to achieve US $5 Bn Sales by 2012 and be amongst the top five generic players

worldwide. To translate these objectives into reality and to optimize value creation, the Company

has adopted a multi-pronged strategy. Acquisition of generic brands overseas, strong emphasis

on brand marketing in the US and Europe, entering high potential new markets with value added

product offerings, are the major thrust areas. Successful business development transactions form

a key component of it's business strategy. In each of their partnerships, Ranbaxy strive to build

enduring, mutually beneficial relationships that can produce positive results for both parties.

The company is interested in sales and marketing partnerships and product acquisition

opportunities in all the markets where they operate. They are exploring opportunities through

Licensing and Alliances to draw maximum value from such arrangements. They continue to

evaluate opportunities to add to our product basket, enhance our therapeutic presence and expand

their distribution reach.

The Company is also interested in building winning drug discovery and development collaborations in the

following therapeutic areas:

  Anti-infectives

  Inflammation & Respiratory

  Metabolic Diseases

  Oncology

In addition, the company has active R&D programs in oral controlled release drug delivery

systems and is looking for suitable partnerships. They are also actively evaluating options for

acquiring new technology platforms to develop differentiated high margin products.

Worldwide Operations

Global Pharma Companies are experiencing an ever changing landscape ripe with challenges and

opportunities. In this challenging environment Ranbaxy is enhancing its reach leveraging its

competitive advantages to become a top global player.

Driven by innovation and speed to market we focus on delivering world-class generics at an

affordable price. Our unwavering determination to achieve excellence leads us to new global

20

benchmarks. Our people have consistently risen above all challenges maximized opportunities

and positioned Ranbaxy as a leader in the global generics space.

Ranbaxy’s global footprint extends to 49 countries embracing different locales and cultures to form a family

of 51 nationalities with an intellectual pool of some of the best minds in the world.

Ranbaxy Operations in India

  Ranbaxy is one of the leading pharma Companies in India commanding a market share of

5.07%. (Source: ORG-IMS, March, 2007). The Company has clocked sales of USD 286 Mn

(2006) registering a growth of over 17%. Growing ahead of the market the Company has

enhanced its competitive position in the domestic market through its focused approach. The

Company’s business has been realigned to its customer groups and investments have been

made in high growth segments. These efforts have resulted in strengthening its Chronic

franchise (Life Style led) as well as has reinforced its leading position in the Acute segment.

 

21

In the NDDS segment, Ranbaxy is the market leader with 7.9% market share and its NDDS

product portfolio contributes to about 9% of its total turnover. Its product portfolio spans across

Acute & Chronic Business covering Anti-infectives, Nutritionals, Gastro-intestinals, Pain

Management ( Acute) Cardiovasculars, Dermatologicals, Central Nervous Systems

(Chronic)segments.

Company’s India operations are a dominant force in a number of participating therapeutic

segments, for example Anti-infectives, Statins, Dermatology and Pain Management Operations

are structured into 9 Strategic Business Units. A publicly listed company, Ranbaxy India is also

a member of IPA (Indian Pharmaceutical Alliance) & OPPI (Organization of Pharmaceutical

Producers of India).

Amongst the pharmaceutical companies in India, Ranbaxy has the largest R&D budget with an

R&D spend of over US $ 100Mn

Ranbaxy views its R&D capabilities as a vital component of its business strategy that will

provide the company with a sustainable, long-term competitive advantage. The company today

has a pool of 1,200 scientists who are engaged in path-breaking research.

The robust R&D environment within the company for both drug discovery & development and

for generics is designed to bring into sharper focus, the unique needs of both equally.

Ranbaxy's endeavour is to be a leader in the generics space and also to build a strong

proprietary prescriptions business based on the Company's NDDS and NCE (New Chemical

Entity) research outcomes.

       

Key Strengths

 

Leadership in Novel Drug Delivery System (NDDS) products, which offer value-added

differentiation over conventional products. Key brands include Cifran OD (Ciprofloxacin),

Zanocin OD (Ofloxacin) & Sporidex AF (Cephalexin)

 

22

 

Strong brand building capabilities, reflected in the fact that 20 brands feature in the “Top-300

brands of the Industry” list. The leading 5 brands are Sporidex (Cephalexin), Cifran

(Ciprofloxacin), Mox (Amoxycillin), Zanocin (Ofloxacin) & Volini (Diclofenac)  

 

A well-built customer interface, with one of the highest customer coverage across India, and

an excellent franchise with both Generalists & Specialists. This is proven by Ranbaxy India’s

Corporate Image being perceived as ‘Best-in-Class’ by customers (source: AC Nielsen ORG

MARG Report, June 2004)

 

 

Great emphasis is placed on Knowledge Management and Medico-marketing initiatives

such as Advisory Board Meetings, Post Marketing Surveillance Studies and Continuous

Medical Education programs. These have resulted in an excellent customer relationship with

the medical fraternity. More than 2000 interface programs (Symposia, CME’s) are conducted

and about 20 Clinical Papers published annually

 

 With a futuristic approach, the India operations attempts to capitalize on the fast- emerging,

high-growth segments with innovative products and services: 

    - Biological formulations such as Verorab (Rabies Vaccine) and Vaxigrip (Flu Vaccine),

which require competencies to propagate the newer concepts in the market place. These

products are being in-licensed or taken on Co-promotion from Sanofi Pastuer

- High end anti-infectives such as Cilanem (Imipenem+Cilastatin) & Faronem (Faropenem)

have been launched for the first time in India. Ranbaxy is championing the concept of

Penems/ Carbapenmens , locally

-Dry Power & Metered Dose Inhalers have been launched in the Respiratory segment. All

Metered Dose Inhalers are HFA based formulations, environment friendly inhalers. It is

for the first time in India, that a company has launched its entire HFA propellant based MDI

range. The world’s first novel product, Osovair (Formoterol + Ciclesonide) inhalation

capsules has been introduced in the Indian market.

- Anti-diabetic franchise has been further consolidated with launch of Insucare (Insulin)

with an innovative delivery mechanism - “Controlled Insulin Logistics” This ensures that

the cold chain, vital for product efficacy, is maintained.

 

23

- A slew of products have been launched in the Dermatology segment: Suncross (Sunscreen

lotion), Sotret (Isotretnoin), Eflora (Eflornithine)

At a Glance

  Team Size About 2,500 persons

Overall Market SizeUS $ 6.2 Bn

(Source: IMS-ORG MAT March, 2007)

Ranbaxy Market Share5.07%

(Source: IMS-ORG MAT March MAT, 2007)

Ranbaxy Sales US $ 260 Mn

Total No. of Molecules

Ranbaxy + Local tie

ups

Market formulations based on more than 200 molecules (including

Fixed Dose Combinations)

Lead Molecules

Cephalexin (Sporidex), Ciprofloxacin (Cifran), Amoxycillin (Mox),

Ofloxacin (Zanocin), Atorvastatin (Storvas), Ceftriaxone (Oframax),

Cefpodoxime (Cepodem), Co-amoxyclav (Moxclav), Cilanem

(Imipenem+Cilastatin), Volini (Diclofenac combination), Silverex

(Silver Sulphadizine), Cepodem (Cefpodoxime), Verorab (Rabies

vaccine)

Balance Sheet (Rs crore)

  Dec ' 07 Dec ' 06 Dec ' 05 Dec ' 04 Dec ' 03Sources of fundsOwner's fund Equity share capital 186.54 186.34 186.22 185.89 185.54Share application money 1.18 0.88 0.28 2.83 1.99Preference share capital - - - - -Reserves & surplus 2,350.68 2,162.79 2,190.80 2,320.79 2,134.24

24

Loan fundsSecured loans 365.07 224.29 353.49 133.37 30.49Unsecured loans 3,137.96 2,954.31 676.31 2.49 3.76Total 6,041.42 5,528.61 3,407.10 2,645.38 2,356.03Uses of funds Fixed assets Gross block 2,261.48 2,133.57 1,799.32 1,402.79 1,141.79Less : revaluation reserve - - - - -Less : accumulated depreciation 791.96 699.54 599.35 525.21 435.27Net block 1,469.52 1,434.03 1,199.97 877.58 706.52Capital work-in-progress 327.42 301.88 432.84 264.16 84.27Investments 3,237.55 2,679.95 762.78 679.07 337.50Net current assets Current assets, loans & advances 2,922.42 2,620.99 2,409.08 2,366.89 2,471.43Less : current liabilities & provisions 1,915.49 1,508.24 1,397.56 1,542.33 1,243.69Total net current assets 1,006.93 1,112.76 1,011.52 824.57 1,227.74Miscellaneous expenses not written - - - - -Total 6,041.42 5,528.61 3,407.10 2,645.38 2,356.03Notes: Book value of unquoted investments 3,106.69 2,659.94 762.77 679.07 337.50Market value of quoted investments 280.46 14.27 0.01 0.01 0.01Contingent liabilities 201.00 159.40 202.40 307.95 179.70Number of equity shares outstanding (Lacs) 3730.71 3726.87 3724.42 1858.91 1855.44

Profit & Loss Account

(Rs crore)

  Dec ' 07 Dec ' 06 Dec ' 05 Dec ' 04 Dec ' 03Income: Operating income  4,293.02 4,165.12 3,640.50 3,791.28 3,816.95Expenses  Material consumed  1,820.51 1,663.53 1,536.59 1,483.86 1,480.68Manufacturing expenses  172.95 160.22 136.64 131.35 101.83Personnel expenses 420.04 328.45 298.38 324.01 244.17Selling expenses 601.76 540.91 536.28 530.92 513.07Administrative expenses 877.79 839.94 950.11 692.44 561.68Expenses capitalized - - - - -Cost of sales 3,893.06 3,533.06 3,458.00 3,162.60 2,901.43

25

Operating profit 399.97 632.06 182.49 628.69 915.51Other recurring income 17.18 30.33 23.46 28.13 18.60Adjusted PBDIT 417.15 662.39 205.95 656.82 934.12Financial expenses 93.43 58.44 26.41 10.98 8.08Depreciation  118.73 106.75 101.33 81.85 69.67Other write offs - - - - -Adjusted PBT 204.99 497.20 78.20 563.99 856.37Tax charges  156.69 62.43 -22.34 99.87 161.59Adjusted PAT   48.30   434.77   100.54   464.13   694.78Non recurring items 533.95 -58.98 98.79 36.65 97.69Other non cash adjustments 35.46 19.34 12.72 26.74 2.30Reported net profit 617.72 395.13 212.04 527.52 794.77Earnings before appropriation 664.84 451.16 439.05 884.54 1,013.98Equity dividend 317.15 316.89 316.67 316.26 315.63Preference dividend - - - - -Dividend tax 53.90 44.44 44.41 44.04 40.44Retained earnings 293.78 89.82 77.97 524.24 657.90

Cash flow(Rs crore)

  Dec ' 07 Dec ' 06 Dec ' 05 Dec ' 04 Dec ' 03

Profit before tax 774.41 442.98 190.13 628.34 926.39

Net cashflow-operating activity 685.77 315.49 107.32 411.47 978.77

Net cash used in investing activity -708.18 -2,103.74 -562.77 -740.47 -179.02

Net cash used in fin. activity 132.19 1,739.65 536.15 -249.82 -289.11

Net inc/dec in cash and equivlnt 109.78 -48.60 80.70 -578.82 510.65

Cash and equivalnt begin of year 62.36 110.96 30.25 609.07 98.43

Cash and equivalnt end of year 172.14 62.36 110.96 30.25 609.07

26

Listing of Securities

The Equity Shares of the company are listed on the Bombay Stock

Exchange Ltd. (Traded in 'A' Group) and The National Stock Exchange of

India Ltd. (included in Nifty). Global Depository Shares are listed on The

Luxembourg Stock Exchange.

S.No. Name of stock Exchange(s) Stock Code 

1 Bombay Stock Exchange Ltd. 500359 

2 National Stock Exchange of India Ltd  RANBAXY 

3 Luxemburg Stock Exchange (Global Depository

Shares)

Ratios (Rs crore)

  Dec ' 07 Dec ' 06 Dec ' 05 Dec ' 04 Dec ' 03

Per share ratios 

Adjusted EPS (Rs)  1.29 11.67 2.70 24.97 37.45

Adjusted cash EPS (Rs)  4.48 14.53 5.42 29.37 41.20

Reported EPS (Rs)  16.56 10.21 5.69 28.38 42.84

Reported cash EPS (Rs)  19.74 13.08 8.41 32.78 46.59

Dividend per share    8.50   8.50   8.50   17.00   17.00

Operating profit per share (Rs)    10.72   16.96   4.90   33.82   49.34

Book value (excl rev res) per share (Rs)  68.01 63.03 63.82 134.85 125.03

27

Book value (incl rev res) per share (Rs.)    68.01   63.03   63.82   134.85   125.03

Net operating income per share (Rs)  115.07 111.76 97.75 203.95 205.72

Free reserves per share (Rs)    62.52   57.48   58.26   123.60   113.71

Profitability ratios 

Operating margin (%)    9.31   15.17   5.01   16.58   23.98

Gross profit margin (%)    6.55   12.61   2.22   14.42   22.16

Net profit margin (%)    14.33   9.07   5.78   13.81   20.72

Adjusted cash margin (%)    3.87   12.90   5.50   14.29   19.93

Adjusted return on net worth (%)    1.90   18.50   4.22   18.51   29.94

Reported return on net worth (%)    24.34   16.19   8.92   21.04   34.26

Return on long term funds (%)    6.19   12.23   4.11   22.91   37.20

Leverage ratios 

Long term debt / Equity    0.89   0.93   0.06   -   -

Total debt/equity    1.38   1.35   0.43   0.05   0.01

Owners fund as % of total source    42.00   42.49   69.77   94.85   98.54

Fixed assets turnover ratio    2.08   2.12   2.21   2.98   3.57

Liquidity ratios 

Current ratio    1.53   1.74   1.72   1.53   1.99

Current ratio (inc. st loans)    0.83   0.96   0.92   1.31   1.89

Quick ratio    0.96   1.03   0.98   0.91   1.40

Inventory turnover ratio    4.67   4.66   4.42   4.61   5.92

Payout ratios 

Dividend payout ratio (net profit)    60.06   94.95   170.28   68.30   44.80

Dividend payout ratio (cash profit)    50.38   74.15   115.22   59.12   41.19

Earning retention ratio    -668.18   16.89   -259.14   22.38   48.75

Cash earnings retention ratio    -122.14   33.28   -78.86   34.01   53.43

Coverage ratios 

Adjusted cash flow time total debt    20.97   5.87   5.10   0.24   0.04

Financial charges coverage ratio    4.46   11.33   7.80   59.82   115.59

28

Fin. charges cov.ratio (post tax)    8.88   9.34   12.87   56.50   107.97

Component ratios 

Material cost component (% earnings)    43.35   41.01   43.05   41.32   39.43

Selling cost Component    14.01   12.98   14.73   14.00   13.44

Exports as percent of total sales    61.98   66.16   64.76   66.30   67.04

Import comp. in raw mat. consumed    51.63   55.17   54.67   54.42   44.34

Long term assets / total Assets    0.62   0.61   0.48   0.41   0.29

Bonus component in equity capital (%)    78.72   78.80   78.85   78.99   79.14

Share Holding Pattern

Share holding pattern as on : 30/09/2008 30/06/2008 31/03/2008Face value 5.00 5.00 5.00

No. Of Shares % Holding No. Of Shares % Holding No. Of Shares % HoldingPromoter's holding

Indian Promoters 129936214 34.74 129936214 34.81 129936214 34.82Sub total 129936214 34.74 129936214 34.81 129936214 34.82

Non promoter's holdingInstitutional investors

Banks Fin. Inst. and Insurance 40123979 10.73 71420489 19.14 75761248 20.30FII's 26579648 7.11 63675811 17.06 66966811 17.95Sub total 71298326 19.06 148406060 39.76 154041184 41.28

Other investorsPrivate Corporate Bodies 108748543 29.07 14706142 3.94 8731394 2.34

29

NRI's/OCB's/Foreign Others 1206920 0.32 1408747 0.38 1373110 0.37Others 5573262 1.49 8828489 2.37 9917328 2.66Sub total 115528725 30.88 24943378 6.68 20021832 5.37General public 57306523 15.32 69952218 18.74 69154429 18.53Grand total 374069788 100.00 373237870 100.00 373153659 100.00

Bonus Announcement

Year Month Ratio Ex Bonus Date2002 Jul 3:5 01/10/20021998 Nov 1:1 01/12/19981993 Sep 1:2 23/04/19931993 Mar 1:2 23/04/19931991 Sep 2:3 18/10/19911988 Jul 2:5 -1980 Jun 1:1 -

Shares Related Data

Share Capital:

420,369,753 Equity Shares of Rs. 5/- each.

Dividend

Year Month Dividend (%)2008 Mar 1202007 Oct 502007 Mar 1202006 Oct 502006 Apr 1202005 Oct 502005 Apr 1202004 Oct 502004 Apr 1202003 Sep 502003 Apr 100

30

2002 Aug 502002 Apr 1002001 Apr 752000 Mar 501999 Dec 251999 Apr 281999 Jan 231998 Jun 781997 Jun 581997 Jan 23

Market Price Data

Last 12 month's 'High' / 'Low' rates quoted at Bombay/National Stock Exchanges:

Month

Bombay Stock

Exchange

National Stock

Exchange

(High) (Low) (High) (Low)

Nov-07 490.00 376.00 457.85 370.05

Dec-07 428.50 385.00 449.95 360.40

Jan-08 433.00 299.90 432.95 297.05

Feb-08 458.00 349.95 457.25 349.40

Mar-08 473.25 418.00 473.80 418.00

Apr-08 501.00 436.00 502.00 435.90

May-08 534.55 456.95 535.00 459.50

Jun-08 613.70 492.35 660.00 456.25

Jul-08 556.50 402.50 549.55 403.10

Aug-08 542.45 448.80 542.00 484.00

Sep-08 513.00 241.25 514.00 240.30

Oct-08 306.00 164.30 306.80 163.50

31

Board of Directors

At the helm of the entire operations is the experience and able direction of the people who make it all happen. Ranbaxy acknowledges their inspiring stewardship and indefatigable work.

 

 

Board of Directors

Left to Right : Mr. Ramesh L Adige, Mr. Sunil Godhwani, Dr P S Joshi, Mr. Vivek Bharat Ram, Dr Brian W Tempest, Mr. Gurcharan Das, Mr. Atul Sobti, Mr. Harpal Singh, Mr. Malvinder Mohan Singh,

Mr. Surendra Daulet-Singh, Mr. Ravi Mehrotra, Mr. Shivinder Mohan Singh, Mr. Vinay K Kaul, Mr. Vivek Mehra

Mr. Harpal Singh, Non-executive Chairman

Dr. Brian W. Tempest

32

Mr. Malvinder Mohan Singh

Mr. Atul Sobti

Mr. Ramesh L. Adige

Mr. Vinay. K. Kaul

Mr. Shivinder Mohan Singh

Dr. P. S. Joshi

Mr. Surendera Daulet-Singh

Mr. Vivek Bharat Ram

Mr. Vivek Mehra

Mr. Gurcharan Das

Mr. Ravi Mehrotra

Mr. Sunil Godhwani

Executive Team

The Executive Committee is an apex body at Ranbaxy, that oversees Company's global

functioning. The group deliberates on important Company issues steering it in the right direction.

The Committee ensures that all decisions are taken in the best interest of the organization. This

forum brings in different perspectives on a subject. Issues are discussed, analyzed and concluded

through exchange of ideas, reflecting the Company's philosophy of participative management. It

also facilitates the Company's compliance with the best standards of Corporate Governance.

Mr. Malvinder Mohan

Singh

Mr. Atul Sobti

Chief Operating Officer

Mr. Ramesh L. Adige

Executive Director,

33

CEO & Managing Director Corporate Affairs & Global

Corporate Communications

Mr. Dipak Chattaraj

President – Corporate

Development

Dr. Himadri Sen

President R&D (Generics &

NDDS)

Dr. Pradip Bhatnagar

Senior Vice President - New

Drug Discover Research

Mr. Jay Deshmukh

Senior Vice President -

Intellectual Property

Mr. Satish Chawla

Vice President - Global

Internal Audit

Mr. Bhagwat Yagnik

Vice President - Global

Human Resources

34

Corporate Social Responsibility

As a global leader in pharmaceuticals the company takes pride not only in providing

products that enable people to live healthier and fuller lives, but also in giving back to the

society. At Ranbaxy, Corporate Social Responsibility and concern for Environment, Health and

Safety are a part of the corporate DNA.

The Companies CSR commitment is a manifestation of our determination to improve the

quality of life for the community at large. Over the years Ranbaxy has ensured that its

environmental footprints are minimal. The concern for environmental safety is superseded only

by their commitment to enhance employee and community safety.

Being an innovation led pharmaceutical company; They encourage scientific Endeavour’s

through Ranbaxy Science Foundation that offers annual Research Awards aimed at recognizing

and rewarding excellence in original research work.

Environment, Health and Safety 

35

Ranbaxy is fully committed to achieve Environment, Health & Safety (EHS) excellence

and conduct its activities in the most responsible manner. Over the years, importance of EHS has

been stressed and extensively promoted as a corporate culture within Ranbaxy. It is also clearly

reflected and well defined into Ranbaxy’s value statements of “Managing our operations with

high concern for safety and environment” and “Be a responsible corporate citizen”.

Thinking and working responsibly so that the employees, the community at large, and

the environment including the natural resources, are protected leaving minimal environmental

footprints, is integral to Ranbaxy’s EHS philosophy. On the road to EHS excellence, Ranbaxy

has adopted a top down approach and embraced the principles and codes of best EHS practices

into its redefined world class EHS Management System.

Work Environment

Autonomy and entrepreneurship: We believe in providing autonomy to our employees and let

them discover their potential while working for Ranbaxy. Individuals are given responsibility

quite early in their careers and their actions impact the business. This has helped in fostering a

culture of entrepreneurship within the organisation that we are extremely proud of.

Creativity and Innovation: Supporting this entrepreneurial culture is the spirit of innovation

and creativity. You do not need to be part of Research and Development to bring about

innovations. Creativity is promoted in every part of the organisation. Genuine mistakes are

considered as part of learning and calculated risk taking is encouraged.

Diversity: Ranbaxy is an equal opportunity employer and that gets reflected in the rich and

diverse workforce. This diversity provides us the strength to reach out to the world and touch the

lives of millions of people in different parts of the globe. We value the diversity that exists

within our employees and leverage this to bring about synergy within the organisation. Ranbaxy

workforce of over 11,000 people is represented by 51 nationalities with approximately 26%

constituting foreign nationals.

36

Employee Development

Employees represent what a company stands for. The value an organisation produces is

unequivocally linked to collective efforts of its people. We at Ranbaxy realize that the growth of

the company can be sustained through the continuous development of people who contribute to

the business success. Hence we focus our attention to harness the innate potential each individual

brings to the organisation.

Identifying Potential

While the initial years in the career of a Ranbaxy manager is used in developing the professional

skills, the focus changes as a person moves to the middle management level. Here leadership

potential becomes critical. We have a robust process of identifying potential in individuals. Each

of our middle level managers goes through a process that clearly identifies their strengths,

development areas and aspirations for the future. This is supported by a structured process of

development, which includes movement within the organisation.

Building Leaders Across the Organisation

We believe that every individual can be a leader and leadership is not a domain of the people at

the top. Accordingly the Ranbaxy Leadership Model focuses on strengthening the leadership

qualities across the organisation and quite early in the individual's career. The Model prepares

individuals first to deal with 'the self' and then with 'others'. As the manager matures, the model

facilitates the individual to become a business leader by understanding and appreciating the

multiple facets of business. Finally managers of Ranbaxy are prepared to lead and drive change -

an ultimate test of a person's leadership skills.

37

In addition, as an employee of Ranbaxy, you can expect to be trained in the latest developments

in your respective field of functional excellence. Our Strategic Learning Partners support the

development initiatives at Ranbaxy and are themselves leading names / institutions in the world

of people development.

The Management Trainee Programme

The Management Trainee Programme is a perfect example of our commitment towards

developing and nurturing young talent. Ranbaxy recruits the best minds from Business Schools

and prepares them for the challenges of business.

Each of the Management Trainee, irrespective of their discipline, gets an opportunity to work

and get exposed in Sales, R&D and Manufacturing. They also work on live business projects in

their own area of specialization. Projects are also undertaken in cross-functional area to build a

holistic understanding of business. To prepare the trainees for global challenges each person has

to undertake an extensive ten-week assignment away from their home country. This helps in

developing a global mindset in the trainees.

A committee specially constituted for their development evaluates the work of the management

trainees. The committee members coach and mentor them during the training period and prepare

them for the challenges of a regular job.

Employees Views

“Having joined Ranbaxy in 1990 as a management trainee, it has been a truly exciting &

wonderful journey for me. The dynamism & foresight displayed by the Top management and its

ability to take on new challenges and risks constantly creates several opportunities in the

company and the company has never been shy of offering those opportunities to its managers

regardless of their age and experience. My own career so far has taken me to several markets

including India, China, and almost all the Latin American markets.

In fact, ‘Entrepreneurial drive’ and ‘Passion for excellence’ are greatly valued in Ranbaxy.

38

Ranbaxy takes continuous development of its human resources extremely seriously and sponsors

its managers all over the world to the top rung institutions for training and development. I have

been sponsored to IIM-B, IIFT, Wharton School of Business and several other development

workshops held in-house and by consulting companies.”

By - Ravi Soni

       B.Pharm., MBA

       Date of Joining: June 1st, 1990

       Job title at the time of joining: Management Trainee

       Current Title: Country Manager-Mexico

“I joined Ranbaxy in year 2003, and it has been an exciting journey so far. My immediate

objective is to ensure Spain and Portugal become important contributors to Ranbaxy's global

business targets. Its a great Company to work for as its growing fast and is committed to Quality

and R&D efforts. Its a cocktail that gaurantees success"

By - Joan Escofet

       Country Head, Spain

"I have been with the Company since 2002. Europe has a lean organization and our key strength

here is the people. They are open to change and are willing to take on many new roles and

responsibilities. The best thing about Ranbaxy is the energy and the ambition of its people"

By - Nicola Cairns

       HR Manager, Europe

39

Anti HIV/AIDS Project

Ranbaxy comprehensive anti-HIV portfolio comprises Bio-Equivalent Anti-Retrovirals

(ARVs) and Anti-Infectives for Opportunistic infections

Ranbaxy, in its endeavor to make ARVs accessible to patients around the world, is leveraging its

global network of offices, affiliates, joint ventures and alliances. With Ranbaxy products being

marketed in over 125 countries and ground operations in 49 countries, Ranbaxy provides pre &

post sales support to institutions, NGOs, and Ministries of Health, making Ranbaxy ARVs

available in their respective treatment programs Several humanitarian and government

programmes have sourced ARVs from Ranbaxy. Some of them being MoH-Nigeria, MSF in

various countries, MDM-Cambodia, MEDS in Kenya, etc. In Zambia, the Ministry of Health has

lauded Ranbaxy's initiative in making available quality ARVs at reasonable prices in that

country. In Latin America, Ranbaxy's ARVs have been registered in Brazil, Peru, Venezuela and

Guatemala among other countries. In South East Asia, ARVs are being marketed in Vietnam,

Cambodia and Myanmar already. Besides, regulatory filings are on in several countries in these

regions.

40

Encouraged by the positive response to its efforts to make quality anti-HIV generics, Ranbaxy is

committed to working on all possible fronts and seeking partnerships to improve access to these

medicines.

Ranbaxy offers a complete basket of pharmaceuticals for several first line HAART regimens.

The current portfolio is the largest range of bio-equivalent generic ARVs available from a single

company. These products are manufactured at Ranbaxy's WHO prequalified and USFDA

approved facilities.

Several Ranbaxy ARVs approved by USFDA and WHO

First Asian pharmaceutical company to get approval for a generic ARV from USFDA

Over 250 approvals of ARVs across 40 countries, with 130 more in pipeline

Only company using both WHO & USFDA approved API supplier

Bioequivalence studies conducted at leading CROs in North America

All ARVs comply with Zone IV and Zone II stability requirements

Leading supplier of ARVs to global NGOs, Institutions & Government programs

Ranbaxy's ARVs have catered to treatment programs in over 50 countries globally

Ranbaxy's quality FDCs reduce pill burden and improve patient compliance

41

Anti Malaria Project

Ranbaxy's Anti-Malaria collaborative research program on Track

Ranbaxy has been working on the anti-malaria collaborative research project since May 2003.

Although antimalarial drugs have a large market, it is a market with very limited resources.

Together with the challenges of drug resistance, poor health systems, lack of affordable, safe and

convenient treatment options, malaria treatment represents one of the largest unmet medical

needs. Ranbaxy collaborated with Medicines for Malaria Venture to develop the synthetic

peroxide antimalarial drug in order to address this unmet need.

This novel antimalarial drug, RBx 11160 made headlines in Nature magazine in August 2004, as

a promising agent to treat uncomplicated malaria. The production of RBx 11160 is not dependent

on the availability of agricultural resources (from which the current Artemisinin drugs are

derived), giving it a clear advantage in product scale-up and cost.

Ranbaxy is committed to developing a drug that is not only safe and effective, but also

affordable to people in India, Africa and other disease endemic countries. Arterolane, the

42

potential antimalarial candidate is currently undergoing Phase II b studies (dose range finding

studies) in Africa, Thailand and India.

Ranbaxy- meeting an unmet need in the neglected disease segment

Ranbaxy Laboratories Limited, the largest pharmaceutical company in India, and presently

ranked among the top ten global generics companies, is building its capacity as a research-based

healthcare company. Based in a malaria endemic country, Ranbaxy deeply identifies with the

continuing crisis that pandemics like malaria are causing in developing countries. The Company

has therefore committed its expertise in R&D to work towards a breakthrough in the treatment of

this important disease.

Challenges in development of new treatment for malaria

Between 1975 and 1999, only four of the almost 1,400 new drugs developed worldwide were

antimalarial, and all were at least in part the products of publicly funded research

Significant R & D effort and funding required to develop new treatments

Returns on the R & D investment are lacking- as the purchasers of the treatment are the

poorest countries around the world. Low cost is essential to ensure wide-spread up-take

Distribution of the treatment is difficult due to the remoteness of the areas in which the

disease is most prevalent and poor health systems in malaria endemic countries

Background

Malaria is one of the most persistent and deadly diseases, claiming the lives of more than one

million people every year. The majority of its victims are children under the age of five and

pregnant women in developing countries.

Malaria is a major public health problem in more than 90 countries inhabited by more than 2.4

billion people – 40% of the world’s population. The disease is estimated to kill a child every 30

seconds and to cause up to 600 million new infections worldwide annually.

Though the majority of the cases and approximately 90% of the malaria deaths are found in sub-

Saharan Africa, the disease is now increasing in Asia and Latin America.

43

Concerns in the Existing Treatments for Malaria

There are more people dying of malaria today than 30 years ago. The main cause of the

resurgence is drug resistance.

Rising resistance to antimalarial drugs

Universal Chloroquine resistance to Plasmodium falciparum

Development of resistance not only compromises the efficacy of existing antimalarial drugs

but also threatens to pre-maturely terminate the useful therapeutic life of new antimalarial

drugs

Lack of effective, affordable and appropriate treatment options

Ranbaxy Science Foundation

Ranbaxy Laboratories Limited incorporated Ranbaxy Research Foundation in 1985 and was later

reconstituted as a separate society as Ranbaxy Science Foundation and registered under the

Societies Act in May 1994. with an implicit mission of giving impetus to research activity and

help in reviving India’s great scientific tradition. The Foundation instituted Ranbaxy Research

Awards to recognize original outstanding contributions in the fields of Medical and

Pharmaceutical Sciences. Every year the Foundation invites nominations for 4 awards – 3

Awards for Rs. 1,00,000/- each in the fields of Medical Sciences in Basic. Applied and Clinical

and 1 Awards of Rs. 1,00,000/- in the field of Pharmaceutical Sciences. So far 104 scientists

have been honoured by the Foundation.

Ranbaxy Science foundation (RSF) is a non profit organization dedicated to promote scientific

endeavours in the country by encouraging and rewarding and channeling national and

international knowledge and expertise on subjects connected with treatment of diseases afflicting

mankind. To achieve these objectives, the Foundation conducts Round Table Conferences on

topics concerning public health and symposia on topics at the cutting edge of research in medical

sciences to explore the latest in the selected area of specialty and its potential application for the

benefit of mankind.

44

Being committed to recognizing and furthering excellence, the Foundation has also initiated

“Research Scholarship Awards for the Young Scientists” with an aim to stimulate their interest

in research.

Late Prof. V. Ramalingaswami, was the founder Chairman of the Foundation.

Dr. Nitya Anand a renowned pharmaceutical scientist is currently the Chairman of the Ranbaxy

Science Foundation.

RANBAXY AND DAIICHI SANKYO

SUCCESSFULLY COMPLETE LANDMARK DEAL

 

Ranbaxy Laboratories Limited (NSE/BSE: Ranbaxy/500359) (“Ranbaxy”) and Daiichi Sankyo

Company Limited (TSE: 4568.JP) (“Daiichi Sankyo”) today announced the successful closure of

their transformational deal with the execution of the final transfer of the remaining equity shares of

45

the Singh family, in Ranbaxy. Pursuant to this, Daiichi Sankyo has now acquired 63.92% of the

equity share capital of Ranbaxy comprising 268,711,323 shares as under:

Particulars Number of Shares

Acquisition of Shares under Open Offer 92,519,126

Allotment of Shares on Preferential basis 46,258,063

Acquisition of Shares from the Singh family 129,934,134 

Mr. Takashi Shoda, President & CEO of Daiichi Sankyo said, “We are pleased to announce that all

the planned transactions of this landmark deal have been successfully completed. We are

determined to work with Ranbaxy to realize sustainable growth.”

Mr. Malvinder Mohan Singh, CEO & MD, Ranbaxy, said, “We are pleased that the deal has been

closed successfully. This puts us well on the path to create a hybrid business model that will unlock

the strengths of both companies to bring unprecedented value to all stakeholders.”

Ranbaxy earlier had received an amount of Rs. 3,585 crores (USD 736 Million) from Daiichi

Sankyo for the preferential issue of equity shares and warrants. This will be used to further drive the

Company’s growth through organic and inorganic means while also retiring some debt at an

appropriate time.

Continuing to operate as an independent & autonomous Company, Ranbaxy will work closely with

Daiichi Sankyo to explore and optimise the growth opportunities across the pharmaceutical value

chain.

About Daiichi Sankyo Company, Limited

Daiichi Sankyo Company, Limited was established in 2005 through the merger of two leading

Japanese pharmaceutical companies. This integration created a more robust organization that allows

46

for continuous development of novel drugs that enrich the quality of life for patients around the

world. A central focus of Daiichi Sankyo’s research and development are thrombotic disorders,

malignant neoplasm, diabetes mellitus, and autoimmune disorders. Equally important to the

company are hypertension, hyperlipidemia or atherosclerosis and bacterial infections. For more

information, visit www.daiichisankyo.com.

About Ranbaxy Laboratories Limited

Ranbaxy Laboratories Limited, India's largest pharmaceutical company, is an integrated, research

based, international pharmaceutical company producing a wide range of quality, affordable generic

medicines, trusted by healthcare professionals and patients across geographies. Ranbaxy’s

continued focus on R&D has resulted in several approvals in developed markets and significant

progress in New Drug Discovery Research. The Company’s foray into Novel Drug Delivery

Systems has led to proprietary "platform technologies," resulting in a number of products under

development. The Company is serving its customers in over 125 countries and has an expanding

international portfolio of affiliates, joint ventures and alliances, ground operations in 49 countries

and manufacturing operations in 11 countries.

Future Prospects

With its presence in 26 of the top 28 pharma markets in the world, Ranbaxy can be said as true

Indian global company which aims to be amongst the top five global generic companies with a

turnover of US$5bn by 2012. Our estimate of 22% EPS CAGR (CY07-10E) is largely on the

back of 18% growth in core profits and earnings visibility till 2010. At the current market price,

the stock is trading at 13x its estimated CY09 EPS. Considering 20 FTFs and the possible

demerger of its NCE division, the stock looks an attractive buy.

Large upsides from Para 4/ FTFs

47

The recent approval from USFDA to market the generic Imitrex (to be launched in 2008 in the

name of Sumatriptan Succinate Tablets for the treatment of Migraine with a market size of US$

857 million) and the out of court settlement for generic Valtrex (launched in 2009 as

Valycyclovir, Herpes, US$1.3 billion market) generic Flomax(2010, Tamsulosin for Urology,

market size US$1.2bn) generic Lipitor (2010, Atorvastalin, cholesterol, US$8.5bn), becomes the

four FTFs from 2008 to 2010.

Other FTF products on the Para IV opportunities

Company sources say 20 such opportunities are in the pipeline valued at a total market of

US$26billion at innovator prices. Counting on the company’s strong litigation skills, they will

continue to enjoy the upside from the 180 day exclusivity for most of the generics.

Presence in Global Biopharmaceuticals– a US$65bn market

With the acquisition of Zenotech whose pipeline address one third of the above market, Ranbaxy

has got an entry into the bio-similars and Oncology market where major drugs in the injectibles

oncology space are going off patent. In the short term, they plan to enter the emerging markets

with bio-similars and then Europe and eventually to US.

Aggressive growth targets

The company targets a turnover of UD$ 5 billion by 2012 through a mix of organic and

inorganic routs. By getting into more complex therapeutic segments, monetizing their Para IV

opportunities, targeting First-to-Launch positions in complex and speciality injectibles such as

Penems, Limuses etc with a potential of over US$3 bn and with cost reduction to the tune of US$

20-25mn per year to boost bottom lines, the company is close to achieving the targets.

Valuations

We have valued Ranbaxy using Discounted Cash Flow analysis, to arrive at a target price of Rs

590 per share. At this price of 590, the stock will trade at a P/E of 22.7x of CY08E earnings

without taking in the upsides from the Para 4 opportunities. At the current market price, the stock

is trading at 13x its estimated CY09 EPS. Considering 20 FTFs and the possible demerger of its

NCE division, the stock looks an attractive buy.

mn 2007 2008E 2009E 2010E

48

Sales 65904 77767 91765 107365

Growth 10 18 18 17

Operating Profit 9981 13609 16518 18252

OPM 15 18 18 17

Net Profit 7901 9718 11662 13994

Margin (%) 11 12.50 12.71 13.03

EPS (Rs) 21 26 31 38

ROE (%) 27 30 30 30

P/E 19 16 13 11

Investment Rationale

Strong Guidance

The top management under MD& CEO Malvinder Sing is very upbeat about future growth

prospects. For 2008, 18%-20% growth in topline based on core base business between emerging

and developed countries without factor in the upsides from FTFs and EBITDA margins to touch

18% with strong expansions. PAT growth to be in line with 20-25%.

Hiving off its R&D (NCE-NDDR) unit

Ranbaxy plans to hive off its new molecule research division into a separate entity with effect

from Jan 2008. The NDDS and generics research would continue to be part of the main

company, while innovative research will get a renewed thrust due to the hive off. There are

around 15 odd compounds in the Drug Discovery Operations which are at various stages of

development. Of these, the lead compound anti-malaria drug has successfully completed the

phase II trials and the company is now planning to conduct the advanced phase II trials of the

combination form of the drug.

GSK alliance to add value to R&D

In line with the agreement signed in 2003, Ranbaxy has another multi-year alliance with GSK.

Under the agreement, GSK will provide targets & chemical leads to Ranbaxy who will in turn do

49

lead optimization and animal tests. Afterwards GSK will take the potential drug through human

trials. If it is finally launched, GSK will have exclusive rights to sell it in significant markets like

the US, Europe and Japan, while in India it will co-market the drug with Ranbaxy. The Indian

company may also co-promote the drug in the US and Europe with GSK's prior consent. Now

there is a strong basket of products in this alliance.

Company Description

Ranbaxy Laboratories Limited is India’s largest pharma company with a market share of 5.07%

in an overall market size of US$6.2bn with total sales of over INR 65 bn. The company has

presence in 125 countries with ground operations in 49 countries and manufacturing facilities in

11 countries but India is their hub for raw material. It aims to be amongst the top five global

generic companies in the world focusing on R&D, inorganic growth and generics by developing

medicines which are accessible to all. The number one spender of R&D across industries in

India, nearly 10% of their products on the Indian markets is based on their own R&D. The only

Indian company in Japanese market, more than 80% of their sales are from overseas markets.

Looking at a strong mix between emerging markets and developed as emerging markets provide

consistent growth and sustained profits, the share of emerging markets were 54% of global sales

for the company.

Industry Description

The pharma industry is poised for a growth unseen in the past. While major markets will witness

lower sales and income on the back of substantial number of patent expirations and consequent

intense generic competition, emerging markets like India offers excellent opportunities on

CRAM, generics, R&D to name a few. For the first time, US, world's largest pharmaceutical

market, is expected to record lowest growth of 5 per cent in sales during 2008. Pharmaceutical

sales in Japan, the second largest market, are also predicted to grow just one to two per cent this

year. To quote an example, Pfizer Inc., world's largest pharmaceutical corporation, will take the

worst hit when the patent of its US$13bn cholesterol drug, Lipitor, expires in 2010. And there is

no blockbuster in the pipeline for Pfizer to make up for such a massive loss in sales as

50

Torcetrapib, cholesterol lowering drug, failed during clinical trials. With changing regulations,

consolidation moves, government induced changes in select markets, patent litigations in the

generic space; there is a lot more activity to be seen in the pharma sector.

51