Ranbaxy Laboratories Limited

Company Profile
Publication Date: 30 Apr 2010

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TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 SWOT Analysis.....................................................................................................5

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Ranbaxy Laboratories Limited

Company Overview

COMPANY OVERVIEW
Ranbaxy Laboratories (Ranbaxy) is an India-based company. The company, with its subsidiaries, operates as an integrated international pharmaceuticals organization with businesses encompassing the value chain in the marketing, production and distribution of pharmaceuticals products. The company operates in India, Europe, North America and Asia Pacific. It is headquartered in Gurgaon, India and employs 12,995 people.The company recorded revenues of INR75,970.4 million (approximately $1,570.3 million) during the financial year (FY) ended December 2009, an increase of 2.5% over FY2008. The operating profit of the company was INR11,991 million (approximately $247.9 million) during FY2009, compared to an operating loss of INR2,626.3 (approximately $54.3 million) in FY2008. The net profit was INR2,964.9 million (approximately $61.3 million) in FY2009, compared to a net loss of INR9,512.1 (approximately $196.6 million) in FY2008. * Calculated using the constant currency conversion rate of INR1 = $0.02067 for the financial year ended December 2009

KEY FACTS
Head Office Ranbaxy Laboratories Limited Plot 90 Sector 32 Gurgaon 122001 Haryana IND 91 124 4135000 91 124 4135001 http://www.ranbaxy.com

Phone Fax Web Address

Revenue / turnover 75,970.4 (INR Mn) Financial Year End Employees Bombay Stock Exchange Ticker National Stock Exchange of India Ticker December 12,995 500359 RANBAXY

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SWOT Analysis

SWOT ANALYSIS
Ranbaxy operates as an integrated international pharmaceuticals organization with businesses encompassing the value chain in the marketing, production and distribution of pharmaceuticals products. Addressing a large number of therapeutic areas provides competitive advantage to the company. However, competition from generic drug manufacturers is likely to put a strain on revenues. Strengths Addressing large number of therapeutic areas providing competitive advantage Strong integration with Daiichi Sankyo contributing towards growth Growing global pharmaceutical business imparting revenue stability Strong presence in diverse geographic markets mitigating business risk Opportunities Growing Japanese pharmaceutical market to open up new opportunities Aging world population likely to increase demand for medicines Anticipated growth in the Indian generic industry to boost up growth Weaknesses Manufacturing deficiencies hamper reputation

Threats Increasing competition from generic drug manufacturers likely to strain revenues Declining number of branded drugs to target may affect growth

Strengths

Addressing large number of therapeutic areas providing competitive advantage The company focuses on a wide range of therapeutic areas which insulates the business risk and provides the company y an edge over its competitors. The company offers active pharmaceuticals ingredients (API) and intermediate, generics, drug discovery and consumer health care products. The company's products are divided into two general areas: dosage forms and API. The company offers therapeutics for orthopedics, pain management, gastrointestinal disorders, nutritionals, multivitamins, cardiovasculars, dermatologicals and central nervous system disorders. Its API division offers about 50 products covering a wide therapeutic range such as cardio vasculars, anti infectives, anti ulcerants, anti diabetics, anti depressants, anti virals and others.

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SWOT Analysis

The company's broad product portfolio helps in achieving financial stability and also insulates the company fro its competitors. Strong integration with Daiichi Sankyo contributing towards growth The company has derived great synergies from the acquisition by Daiichi Sankyo and has enabled it to generate positive operating results. Ranbaxy has introduced Daiichi Sankyo's innovator products in some markets, starting with India. Ranbaxy gains as its product portfolio gets widened, while Daiichi Sankyo gets a launch pad in those markets where it is not present. In April 2009, Ranbaxy began marketing Daiichi Sankyo's flagship product, Olmesartan (Olvance), in India. In addition, both the companies have announced partnerships in Romania, Mexico and Africa. The synergies derived by the company enable it to strengthen its operational capabilities and generate positive operating results. Growing global pharmaceutical business imparting revenue stability The companys growing pharmaceutical business adds up to the financial growth of the company. The company recorded revenues of INR75,970.4 million (approximately $1,570.3 million) during the financial year (FY) ended December 2009, an increase of 2.5% over FY2008. In the US market, Ranbaxy launched three First-To-File (FTF) products during the year, Sumatriptan, Valacyclovir and Oxcarbazepine Suspension. In Europe, the company launched six new products. In addition, a new Dosage Forms facility was set up in the Special Economic Zone, at Mohali (Punjab, India). The new commercial facility has a capacity of 2 Bn tablets and 500 Mn capsules per annum. This facility will cater to the developed markets of the US and the EU. The company also filed the first ANDA was filed from the site, for the US market. Five more Marketing Authorisation Applications (MAAs) were filed in the EU, in 2009. The company also invested in its manufacturing facilities at Ohm Laboratories, US, to significantly enhance manufacturing capacities in 2010. The strong growth witnessed in the pharmaceutical business imparts financial stability to the company and strengthens its hold in the market. Strong presence in diverse geographic markets mitigating business risk Ranbaxy generates strong revenues from diversified global markets. The company has strong presence in both developed and emerging markets. It has a presence in 23 of the top 25 pharmaceutical markets of the world. The company has a global footprint in 46 countries, world-class manufacturing facilities in 7 countries and serves customers in over 125 countries. It derived 25.5% of its total revenues from India in the FY2008, 20.9% from the European market, 25.8% from North America, 9.1% from Asia Pacific and 18.6% from other regions.

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SWOT Analysis

Strong presence in geographically diverse markets shields Ranbaxy from risks associated with adverse economic and political developments in particular geographic region and increases its growth opportunities.

Weaknesses

Manufacturing deficiencies hamper reputation The FDA barred the import of more than 30 generic medicines from Ranbaxy because of manufacturing deficiencies at its plants in Dewas and Paonta Sahib in India. Due to the FDA probe, Ranbaxy's share price plunged 8% in May 2009. In addition, Ranbaxy voluntarily recalled Nitrofurantoin (Monohydrate/Macrocrystals) Capsules in the US in May 2009. The non-conforming product was found to increase the incidence of local non-serious gastrointestinal adverse events such as nausea and vomiting. The product recalls could lead to a decline in the confidence of the customers on the company and affect its profit margins.

Opportunities

Growing Japanese pharmaceutical market to open up new opportunities Japan is the world's second largest pharmaceutical market. The companys acquisition by Daiichi Sankyo would provide it ample opportunities to tap the large generalizing Japanese market. The Japanese pharmaceuticals market grew by 2.5% in 2009 to reach a value of $66.9 billion. By 2014, the Japanese pharmaceuticals market is forecast to have a value of $74.2 billion, an increase of 11% since 2009. In addition, Japan leads the Asia-Pacific pharmaceuticals market, accounting for 53.8% of the market's value. The companys expanding presence in the Japanese market will also scale up the company's innovation to stay in the intense competitive market. The ageing Japanese population and increasing healthcare expenditure has prompted the Japanese government to take remedial steps in promoting the use of generic drugs. This augurs well for generic manufacturers and will support Ranbaxy's business expansion plans in Japan. The positive trends prevailing in the pharmaceutical market in Japan is likely to provide the company ample opportunities to increase its revenue generating capabilities. Aging world population likely to increase demand for medicines The populations of more and more countries are aging rapidly as a result of declining fertility and increasing longevity. Between 2005 and 2050, half of the increase in the world population will be

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SWOT Analysis

accounted for by a rise in the population aged 60 years or over. Furthermore, in the more developed regions, the population aged 60 or over is expected to nearly double from 245 million in 2005 to 406 million in 2050. Due to the increasing life expectancy especially in the western markets, by the year 2050, the population over 60 years of age is expected to climb to 1.8 billion, or 35% of the total population. The aging of the population across the globe would drive the demand for medicines, which could provide more opportunities to grow its revenues. Anticipated growth in the Indian generic industry to boost up growth A boost for the Indian generic industry is expected from the significant number of blockbuster branded products, especially first-line therapies that will lose patent protection in the next five years in the US. Approximately 49 such products will be affected by the end of 2013, including Topamax, Effexor XR, Lipitor, Plavix and Cymbalta. Indian companies are becoming increasingly active in the US market. in the years 2002, 2003 and 2004, the FDA approved 21, 26 and 25 ANDAs respectively for Indian pharmaceutical companies and their US subsidiaries. However, in 2005, the number increased to 52 and has been increasing year-on-year since, to reach 134 in 2008. In the first quarter of 2009, Indian companies had achieved 50 ANDA approvals, suggesting the pace is still increasing. The companys strong hold in India is likely drive high operating revenues for the company in the years to come.

Threats

Increasing competition from generic drug manufacturers likely to strain revenues Ranbaxy is the largest Indian generics company in terms of revenue, by a considerable degree. Consolidation between competitors could, however, close the gap, removing Ranbaxy's scale advantage. Moreover, multi national companies such as Novartis, Pfizer and Mylan are aggressively penetrating the Indian market through increasing their stake in their Indian subsidiaries. At the global stage, Ranbaxy is vulnerable to the vagaries of the generic market, and so to competition from bigger and/or better-connected companies, such as Sandoz, a subsidiary of the much larger pharmaceutical company Novartis, and Teva. Declining number of branded drugs to target may affect growth The growth of innovator drug companies is essentially limited only by their ability to discover and develop new products. In contrast, generic drugs can only be launched as fast as branded products lose patent protection (through expiry or challenges). The long-term success of generic drug companies therefore depends upon the ongoing performance of the innovators. In this way, the erosion of branded drug sales and their related profits due to generic competition potentially reduces

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SWOT Analysis

the supply of new growth for generics companies in years to come. As the growth in branded sales slows further and potentially declines beyond 2013, the outlook for the generics industry will dampen.

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