Investor Presentation | April 2015

BSE CODE : 524558 | NSE SYMBOL : NEULANDLAB | BLOOMBERG: NLL:IN |

REUTERS: NEUL.NS

© 2015 – Neuland Laboratories Limited. All Rights Reserved | www.neulandlabs.com

Safe Harbour

Except for the historical information contained herein, statements in this presentation and the
subsequent discussions, which include words or phrases such as "will", "aim", "will likely
result", "would", "believe", "may", "expect", "will continue", "anticipate", "estimate", "intend",
"plan", "contemplate", seek to", "future", "objective", "goal", "likely", "project", "should",
"potential", "will pursue", and similar expressions of such expressions may constitute "forward-
looking statements", These forward looking statements involve a number of risks, uncertainties
and other factors that could cause actual results to differ materially from those suggested by the
forward-looking statements. These risks and uncertainties include, but are not limited to our
ability to successfully implement our strategy, our growth and expansion plans, obtain
regulatory approvals, our provisioning policies, technological changes, investment and business
income, cash flow projections, our exposure to market risks as well as other risks. The
Company does not undertake any obligation to update forward-looking statements to reflect
events or circumstances after the date thereof.

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 Company Information

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Company Overview

30+ 75+ 78 80+ 400+ 1500+

Years of Products Mn USD Countries of Regulatory Experienced
excellence developed Revenue for business Filings professionals
FY 14 including
scientists

• Headquartered in Hyderabad, India with two overseas office in USA and Japan
• Two Business verticals : APIs and Custom Manufacturing Solutions(CMS)
• Two manufacturing facilities with collective capacity of 525 KL
• One ~3400sqm Research and development center with 180+ scientists and 60 hoods, as part of Neuland
Pharma Research Pvt. Limited, an affiliate of NLL
• Presence in 10 diverse therapeutic categories including cardiovascular ,central nervous systems , anti-
invectives, anti-asthmatics , anti-fungal , anti-ulcerants and anti-spasmodic
• Over 75% revenues by exports and regulated markets contributing bulk of it

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 The Journey

2018
2015
Diversified DPM mix
2014 Product Mix
(DPM)
High value niche Model
2011
strategy Shift
launched
Large
2004 portfolio of
APIs
USA Operation
1997
2007

1994 First FDA

1986 Audit Japan Operation
Strategic Manufacturing deal
Neuland goes with Mitsubishi group
public
First API sale of
1984 salbutamol

Incorporated Multiple audits passed with no failures

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Board and Key Management
M.Sc. from Andhra University, Post Graduate Diploma in Technology – IIT Kharagpur
Dr. D. R. Rao Ph.D. in Organic Chemistry -University of Notre Dame, U.S.A.
Chairman and Managing Has held senior positions in R & D, production and quality assurance at Glaxo India
Director & Promoter Member of Royal Society of Chemistry

Mechanical Engineer D Sucheth Rao

MBA in Corporate Finance - University of Notre Dame, U.S.A.
Executive Director &
Earlier Production Group Leader in Cummins Inc. U.S.A.
Chief Executive Officer

D Saharsh Rao Engineering Graduate

Director & President – Masters in MIS - Weatherhead School of Management, Cleveland, OHR
MBA - University of North Carolina, U.S.A.
Contract Research

Previous experience:
Managing Director and Executive Vice-Chairman at Glaxo India Humayun Dhanrajgir
Ex-President of Organization of Pharmaceutical Production of India Non-Executive Director

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Board and Key Management
Dr. Christopher M. Ph.D. in Organic Chemistry - Purdue University, U.S.A.
Cimarusti Post Doctoral Research - Columbia University, U.S.A.
Former Sr. Vice President, Pharmaceutical Development - Bristol-Myers Squibb
Non-executive Director

Professor of International Management, Fuqua School of Business, Duke Dr. Will Mitchel
University, Durham, NC, USA. On the editorial board of several
management journals. Non-Executive Director

Previous experience:
P V Maiya,
Helped set up ICICI Bank and retired as its CMD
Non-Executive Director Managing Director at Central Depository Services (India) Limited

Previous experience:
Ms. Bharati Rao
Nominee Director of SBICAP ventures , SBICAP securities, SBI Global factors, SBI Capital
market and Suzlon energy. Director on the board of Vijaya Bank. Independent Director

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 Manufacturing Strength

Bonthapally, Hyderabad Pashamylaram, Hyderabad R&D Facility, Hyderabad

Establishment • Started operations in 1986 • Started operations in 1994 • Started operations in 2008

Size and capacity • Built up area of 45,325 sq mtr. • Built up area of 36,800 sq mtr. • Built up area of 3382.5 sq mtr.
• Plant capacity : 181.490 KL • Plant capacity : 310,200 liters

Key • Ramipril • Olanzapine • Ciprofloxacin Hcl • Process Investigation

Products/Activities • Mirtazapine • Salmeterol • Ranitidine • New Products Development
• Enalapril maleate • Salbutamol
• Entacapone • Peptides
• Sotalol Hcl • NCE APIs
• Prostaglandins • Contract Research and
• Levetiracetam • Peptide APIs
• NCE APIs Manufacturing Services
• Levofloxacin • Vitamin D2
• Intermediates & RSMs
analogues

Other Operational • Employee strength: 399 • Employee strength: 345 • Employee strength: 170
Details • US FDA, EDQM & PMDA approved plant • US FDA, EDQM & PMDA approved • Fume Hoods: 60
plant

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 Business Mix
Revenue by Verticals
CMS
15%
CMS
• API Heritage of 30 years CMS 6%
Active Pharmaceutical

3%
• 2 US FDA and EU GMP compliant manufacturing facilities
Ingredients(APIs)

• Collective capacity with 525 KL

• Flexible 100g to hundreds ton capacity
API
• Non competitive advantage (do not compete in finished formulation) API API 85%
94%
• World wide customer base 80+ countries 97%

• Project management systems underpin CRM

• EHS Record FY12 FY13 FY14
• 75 APIs across 10 diverse areas

• • Ciprofloxacin HCl,to optimized

Mirtazapine,Ranitidine HCl,Enalapril % Revenue by Territory
Access technology platform processes to streamline product
Custom Manufacturing

Maleate,Ramipril,Sotalol HCl, Olanzapine, Ipratropium Bromidet ,

pipeline
Itraconazole and Salmeterol
Solutions(CMS)

• Experienced technology transfer from process research to commercial-scale

• Peptide manufacturing facility
Japan ROW
• Expertise in manufacturing deuterium exchanged APIs 4% 8%
• Generic drug production capabilities
• Vitamin D2 analogues North America
15% Europe
• Analytical development and Regulatory/QA support 44%

India
29%

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Regulatory Filings and IPR

Regulatory Agency No. of DMFs registered

USFDA 48

Canada 23

EU 378

EDQM (COS) 19

Japan 5

Korea 9

Others (ROW) 84

Total 566

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 Industry structure and key drivers
API Industry’s Share in Global Contract
Key Drivers
Manufacturing Industry
• Increased demand for biopharmaceutical
manufacturing services
• Complex and potent drug development will
Finished
Dosage lead to higher demand of High Potency Active
Forecast Formulations
33% Pharmaceutical Ingredients which command a
2022 higher price
APIs • Reformulation of drugs nearing patent expiry
67%
and for companies looking to differentiate
commoditised products

Market Projections through 2022- Global API Industry • The pharmaceutical industry is keen to cut
spending in many areas, including drug
production
• Pharmaceutical companies will look to take
advantage of low cost manufacturing
opportunities available in India
0
FY14( Est) FY15(P) FY18(P) FY20(P) FY22(P) Data Source: Vision Gain.com

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 Key Financial Indicators

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Financials
CURRENT RATIO
0.9 0.9
500 100
464 466
450
0.8 0.8
398
400

2011 2012 2013 2014

Figures in INR Cr

300
DEBT TO EQUITY
50 2.8
2.5
200 1.9
1.5

100
2011 2012 2013 2014

0 0 FIXED ASSET
TURNOVER
FY11 FY12 FY13 FY14 2.8
2.7
2.5
2.1
• Steady growth coupled with increase in profitability margins
• Focused effort to rationalize debt levels

2011 2012 2013 2014

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 Current Year Performance- 9MFY 15
Figures in INR Cr

Key Developments Q2 FY15 Q3 FY15

Business Update

• Rights issue completed on October 30th Sales 121 108

• Successful completion of regulatory audits from EBITDA 15 13
US, Mexico, Brazil, Korea during first 6 months
PAT 5 2
EPS 6.7 2.2
Margins
EBITDA 13% 12%
PAT 4% 2%
Quarter on Quarter % change
Sales -11% 
EBITDA -13% 
PAT -63% 
EPS -67% 

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 Future Growth Strategy

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 Business Strategy

Exports higher volumes to Add new therapies

Japan and other regulated and products having

Fo Pr
s
markets

ie
high margins

cu o d
ph

s o uc
ra

n ts
og

ne
ge

w
w
Ne

Future
Strategy

a lth
e
Bu

l w
si

ua th
ne

Add more capacity and ct

ss

l le row File DMFs, Patents and

Sc

consolidate existing with a te G

al

In grow intangibly.
e

profitable product basket

Create an organization that results in value for all stakeholders.

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Focus on new products
30%
15%

15% 50%
2015 2018

70%

20%

Higher margins Increased

Faster Growth with
with complex Penetration in the
high volume APIs
molecules APIs CMS space

Bring sustainability for future

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 Future Product and market share mix
100%
Actual FY14 100% Projected for FY 18
World Market Share

90% 90%

80% 80%

70% 70%
8 products > 20% MS 20 products > 20% MS
4 products > 40% MS 12 products > 40% MS
60% 60% 17 products > INR 20 Cr
6 products > INR 20 Cr Total No. Of Products: 43
Total No. Of Products: 33
50% 50%

40% 40%

30% 30%

20% 20%
0 10 20 30 40 50 60 70 0 10 20 30 40 50 60 70 80 90 100

10% 10%

0% 0%

Revenue (INR Crores)

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Growth in CMS

Develop Scale up Manufacture

• 11 development labs • 2 kilo labs • 2 manufacturing sites

• 55 fume hoods • cGMP pilot plant with two • 11 diverse production blocks
• mg to gm scale production areas • Kg to ton scale
• Analytical R&D • 0.5-50 kg batch size

Scale the revenue growth in CMS from 15% to 30%

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Investment Rationale
Horizontal Growth

 Continued expansion as preferred API source world wide

 Enhance manufacturing capacity to sustain high growth in APIs and CMS
 Increased number of new products with focus on market share on existing
products through process improvement and capacity utilization
 
Expansion of Geography New
 
 Build on platform created in high margin regulated markets such as Japan
products New
 Focus on expanding the product basket and entering newer markets to have with High
Geographies
a dominant position by FY 18 margins

Revenue Mix
  Intellectual
 Focus on high margin, niche and complex APIs belonging to therapies such
as anti-psychotic, anti- asthmatic etc.
Growth
 Increase contribution of margin accretive Custom Manufacturing Solutions
(CMS)
 

Intellectual Wealth
 Portfolio of 65 products with 400+ DMFs to meet customer needs across
multiple therapeutic areas
 Accelerate to > 125 products and 150+ patents to ensure leadership in the
API industry driven by innovation

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For further information contact:
Bhamidipati Sarada Ankit Gupta
Company Secretary Christensen
+91 40 3021 1685 +91 22 4215 0210
ir@neulandlabs.com ankitgupta@christensenir.com
Shareholding Pattern as on 31st December 2014

Key FII / DII holders

Others
46% Promoters FII: ICGQ
52% DII: Reliance Capital Trustee and L&T

DIIs
FIIs
1%
1%

Investor Presentation | Neuland Labs | www.neulandlabs.com