Cipla`s strategy a hit with investors Bhuma Shrivastava / New Delhi August 11, 2006

While others scout for acquisitions and challenge patents, Cipla focusses on earnings stability. At a time when domestic pharmaceutical companies are being acknowledged worldwide for their acquisitions and patent challenges, local investors have given a thumbs-up to Ciplas safe strategy by making it the most valuable pharma company in the country in terms of market capitalisation. Mainly focused on the domestic market, Cipla has largely refrained from big-ticket acquisitions overseas, new molecules research and patent challenges. Ranbaxy Laboratories and Dr Reddys, both of which lean heavily on acquisitions and patent challenges, are ranked third and fourth, respectively. Sun Pharma, in the second spot, marries the two strategies. It makes acquisitions, but fewer typically of loss-making companies and turns them around. It also has a marketing operation in the US. The ranking could be influenced by investors perspective of investing preferences in short term vs long term. As research productivity is a challenge and top Indian players have faced many challenges in global markets in the recent past, certain pharma business models pose more uncertainities on shareholders returns, said Sanjay Aggarwal, pharma sector leader, KPMG. Cipla, then, presented a prospect of stable profitability with good earnings per share, he added. Concurs Sanjiv Kaul, managing director, ChrysCap: Cipla has got its market cap because it has delivered great shareholder value, consistently quarter after quarter. The company employs a leveraging model where it undertakes product development and manufacturing for international pharma. Its international partner bears expenses concerning marketing, product registration and litigation. In case of a Dr Reddys or a Ranbaxy, the inherent risk of research and patent challenges in the model despite the potential gains gets factored in. Moreover, these companies are betting big on US and European generics markets, and in the last one-two years, returns especially from the US have been rather poor. Most analysts, however, refute the belief that domestic investors discount acquisitions, research and litigation. The market cap does not always reflect the true potential or valuation of a company. It merely reflects the current sentiment, said a sector expert. Also, there is a difference in the time horizon that investors consider versus the horizon companies work on. While investors, typically fund managers and retail investors, do not look beyond the immediate year or so, companies look at longer-term profitability, he added. Investors have merely adopted a wait and watch approach with regard to the performance of Ranbaxy Labs

and Dr Reddys and that explains their third and fourth rankings. Once their strategies start paying off, the rankings could change dramatically, said an analyst. To that extent, the market cap of Dr Reddys has improved with the player hedging its risks with private equity participation from Citigroup and ICICI ventures in Perlecan Pharma; becomin ttp://books.google.co.in/books?hl=en&lr=&id=23jaNtFc0YC&oi=fnd&pg=PA90&dq=cipla+finance&ots=WtW99VKh0j&sig=VQO 8F3u56ddKhpuridnwnhGzptU#v=onepage&q=cipla%20finance&f=false

Company History - Cipla 1935 - The Company was Incorporated at Mumbai. 1979 - The Company acquired a plot of land from MIDC at Patalganga in Kulaba district of Maharashtra State about 55 kms. from Mumbai. - 18,773 Bonus equity shares issued in proportion 1:1. 1984 - The name of the Company was changed from The Chemical Industrial & Pharmaceutical Laboratories Ltd., to the present one with effect from 20th July. 1985 - 37,546 Bonus equity shares issued in proportion 1:1 in January 1986. 1986 - During August, the Company obtained the consent of the Controller of Capital Issues to issue 3,00,000-15% secured non-convertible redeemable debentures of Rs 100 each aggregating to Rs 300 lakhs by private placement. The entire issue was subscribed by public financial institutions. They are redeemable at a premium of 5% during 1993-94.

1989 Sales in the Company's `PROTEC' division exceeded Rs 5.50 crores for the second year of its operations. 1990 - The Company launched several new products viz., Aerocort inhaler, The Company spent Rs 4.22 crores on R&D and Rs 8.09 crores on modernisation and expansion of plant and machinery. 1991 - - In May, 6,000 equity shares offered at par as rights to pref. shareholders in prop. 1:1. Only 5,216 shares taken up. Allotment of 5 equity shares pending. 1992 - In compliance with the provisions of the Companies Act, 1956, the Company redeemed its 6,000 preference shares of Rs 100 each as on 30th September. - Pref. shares redeemed on 30.9.92, 1,55,395 bonus equity shares issued in prop. 1:1. 1994 . - Equity shares subdivided 155,39,500. shares issued in prop. 1:5. 1995 - Effective 4th July, the Company was forced to declare a lock-out as some of the workmen at the Vikhroli Unit resorted to indiscipline. Equity shares allotted

The Company initiated steps to mitigate the impact it could have on production. - 13,43,383 rights equity shares issued (Prem. Rs. 60/-). the Rights issue was underwritten. 1997 a capital expenditure of Rs 22.73 crores during the year. - The Rs. 3.69 billion Cipla has finalised a marketing joint venture with Australia-based Genpharm, as part of its strategy to consolidate its global presence. - Pharmaceutical major Cipla Ltd grabbed the attention of traders at the Mumbai Stock Exchange (BSE) on December 26 after a large block of about 75,000 shares of the company valued at little over Rs 5 crore changed hands. - The Rs.369-crore Cipla Ltd has entered into a souring arrangement with US-based Geneva Pharmaceuticals, a wholly-owned subsidiary of Swiss multinational Ciba, for a range of generic drugs. 1998 - Pharmaceutical companies, Cipla and Wockhardt, will be seeking shareholders' approval for a proposed share buyback at their forthcoming annual general meetings. - In a notice to shareholders, Cipla has proposed introduction of a new article, Article 64 A, in the Articles of Association of the company to enable the company to purchase and re-issue any of its shares. The existing Article 64 prohibits the company from buying its own shares and applying any of its funds for the purchase of any shares of the company. - The share price of Cipla Ltd, the leading pharmaceutical company scaled a new peak of Rs 920 on the Mumbai Stock Exchange on Sept 29 following fresh bull charge. The scrip opened at Rs 900 and shot up to Rs 920 during mid-session and closed at Rs 884 following hectic trading activities. However,

1999 - Ranbaxy and Cipla, have entered into a strategic partnership to jointly market a select basket of drugs. The alliance will bring forth their strengths in the strongly emerging cardiovascular and perennial anti-infectives market. - As a first step, the two molecules being jointly launched are Carvedilol, a new generation anti-hypertensive and Cefpodoxime Proxetil, an advanced third generation oral cephalosporin. - The Rs 541-crore Cipla has forged a strategic alliance with the UK-based Neolab for marketing a range of generic drugs. The alliance, while improving the Indian company's access to the multi-billion dollar European market for off-patent drugs, will also see Cipla rake in royalties on sales of products covered under the deal. - Cipla's latest tie-up in the international market comes close on the heels of the company's strategic partnership with the Delhi-based Ranbaxy Laboratories for a select basket of drugs. - The Mumbai-based Cipla is working on abbreviated new drug applications (ANDAs) in collaboration with international generics firms for a range of products like flutamide (for advanced prostatic cancer) and felodipine, for hypertension. 2000 - Cipla and Ranbaxy Laboratories have expanded an existing partnership by adding one more new drug in their co-marketing arrangement. 2001 - Cipla has tied up with the US-based Zenith Goldline and United Research Labs for marketing Flutamide, an oncology drug, and Felodipine, a cardiovascular drug, in the US and European markets. - Domestic pharma giant, Cipla, has despatched its first free consignment of anti-AIDS drug, Nevirapine, to the Indian Government for distribution under the public health system.

2002 -Reduces the price of its anti-HIV medicines such as Stavir, Lamivir, Nevimune, Dinex, Indivan, Triomune, Efavir and Duovir -Revokes interim dividend of Rs 5 per share on face value of Rs 10 per share for FY 2001-02 -Company included in the World Health Organisation's (WHO's) list of HIV-related products -Chairman and Managing Director YK Hamied was presented with the lifetime contribution award for excellence in the pharmaceutical industry by Union chemicals & fertilisers minister SS Dhindsa -Resigns from Indian Pharmaceutical Alliance (IPA) over Patents Bill 2003 -Applies its requisiton for Abbreviated New Drug Application (ANDA) with US regulators for a post-menopausal drug -National Pharmaceutical Pricing Authority (NPPA) issues notices to Cipla along with Ranbaxy for overcharging the products -Completes research studies on three Anti-HIV Drugs -Registers Stavudine, Nevirapine, other anti-AIDS products in South Africa 2004 -Signs long-term agreement with Morton Grove Pharmaceuticals Inc (MGP) of Illinois, US, for product launch in the US market -Avesthagen forges alliance with Cipla -Cipla has joined a global initiative taken up by the Vatican in collaboration with global generic pharmaceutical manufacturers and the International Federation of Catholic Pharmacies and Academics to float CUMVIVIUM -Cipla join hands with Pentech Pharma -Indian pharma major Cipla, a pioneer in supplying cheap generic AIDS drugs in Africa, has patented its three-in-one combination tablet Triomune in South Africa -Cipla introduces 'Duova' to fight chronic obstructive pulmonary disease

- Launches a new treatment for arthritis in technical collaboration with California-based Cymbiotics Inc. 2005 -Set-up state-of-the-art facility for manufacture of formulations at Baddi, Himachal Pradesh. -Cipla introduces new drug for arthritis -Cipla to sign deal with Akorn Inc for anti-infective drug -Cipla to produce generic versin of bird-flu drug -Cipla to join hands with Roche - Cipla introduces new drug for arthritis 2006 - Cipla receives Scrip Award for Best Company in an Emerging Market -Safe & steady strategy gives Cipla lead over Ranbaxy -Cipla sets up subsidiary in Dubai -Cipla ties up with Ivax for US market -Cipla receives tentative US FDA approval for AIDS drugs -Cipla receives Pharma Excellence Award for 'Sustained Growth' 2007 - Cipla unveils anti-malaria global initiative. -Set-up state-of-the-art facility for manufacture of formulations at Sikkim. -Award for the Forbes Asia's Best Under A Billion List! -Ciplas drug included in US anti-AIDS initiative -Anti-AIDS blitz sees pharma firms locked in ugly battle -Cipla launches emergency contraception tablet -Cipla launches estradiol transdermal spray in India -Cipla launches cut-price zanamivir in India -Cipla receives International Trade Awards 2006 for outstanding exporter of the year (Pharmaceuticals, Healthcare and Life Sciences category) 2008 -Cipla Ltd has appointed Mr. Pankaj Patel as a Director in casual vacancy with effect from March 05, 2008. -Cipla launched Roche's generic version of anti-infection drug

Cipla discusses growth strategy, Last Updated:August 25, 2011 15:11

denies

rumours

of

divestitures

Cipla chairman Yusef Hamied said Thursday that the drugmaker would consider entering marketing alliances with international pharmaceutical companies to target opportunities in emerging markets. Speaking with shareholders, the executive also noted that the company's founders have no plans to divest their stake in the drugmaker as has been suggested by recent media reports. Hamied said there is a possibility for the "creation of strategic alliances and various types of partnerships" in emerging markets. "There are areas where we are not very strong, but we have strong products, so we want somebody who's stronger in those areas to market our products there and vice versa," he added. Cipla has previously indicated it was in talks with companies including GlaxoSmithKline, Teva, Pfizer and Boehringer Ingelheim about partnerships to supply generic drugs in emerging markets, although no deals have been announced. Moreover, the executive noted that "we will continue to increase our market share in India through more penetration in the rural segment" since much of the companys work to date has focused on growth in urban regions. The drugmaker, which expects to meet domestic industry growth of 14 percent in 2011, plans to spend approximately Rs 600 crore ($130.3 million) to upgrade five of its facilities across India. "For this year, the companys capex would be inclined towards [active pharmaceutical ingredients] and not formulations. That is the strategy," Hamied added. The executive remarked that Cipla may see slower sales in the Middle East because of political unrest affecting its business in Syria, Libya and Algeria. "There has not been major impact on the overall Africa business but only certain countries have a slowdown due to the political situation in the last year," Hamied remarked. Looking ahead, he noted that the company expects overall revenues to grow over six times to between Rs 15,000 crore ($3.3 billion) and Rs 20,000 crore ($4.3 billion) by 2020. Responding to divestiture rumours, the chairman said "we want Cipla's name to grow over and over forever... I can assure you that most of [the reports] are baseless." Earlier this week, reports suggested that Takeda was in preliminary negotiations to purchase the companys pharmaceutical business, and it has also been rumoured that the companys founders were planning to sell their stake.

BUSINESS: Cipla is the largest pharma companies in India in terms of domestic sales. In FY07, the domestic pharma industry grew by 14%, while Cipla clocked a growth of 19.6% in revenues during the same period. Its exports business accounts for more than half of its revenues. It exports raw materials, intermediates, prescription drugs, OTC products and veterinary products to over 180 countries. It also offers technology for

products and processes. Due to the low cost of its anti-HIV drugs, it has become the world's largest manufacturer of anti retroviral drugs by volume. It adopts the safe strategy of entering into strategic marketing alliances with companies abroad to sell its generics. In the US alone, it has strategic alliances with Teva Pharma, USA, Watson Pharma , Eon Labs and Akorn Labs, among others. Cipla set up a wholly-owned subsidiary, Cipla FZE, in October '06 in Dubai. It has R&D expertise to conduct reverse engineering to produce generic version of original formulations, develop new drug delivery systems and devices and enhance productivity in APIs and formulations. GROWTH STRATEGY:

Cipla occupies 6% share in the domestic market. It plans to increase its share by increasing penetration and introducing new products and dosage forms. It's growth comes largely from exports, primarily via partnerships and agency arrangements. Manufacturing combination drugs for developed markets is another lucrative and innovative opportunity for the company. Combination drugs are formed by combining two or more drugs to cure more than one ailment. Cipla is focusing on high-margin areas like anti-AIDS, cardiovascular and anti-cancer drugs to reduce its exposure to the highly competitive anti-infectives segment. Its new export-oriented units in Patalganga, Kurkumbh and Bangalore are expected to account for a significant part of its APIs. Cipla's SEZ in Indore is under construction. FINANCIALS: Revenues have witnessed a CAGR of 22% to Rs 3,438.2 crore over the past five years, while its profit has seen a CAGR of 23% during the same period. Increased material and staff costs have adversely affected its profit over the past year. Cipla has a history of rewarding shareholders through periodical dividends and bonus issues. It has consistently paid dividends at an average payout ratio of 26.5% over the past five fiscals. Despite being in an expansion mode, its dividends have witnessed a CAGR of 31%, which is higher than its profit growth. VALUATIONS & RISKS:

The company is currently trading at a P/E of 25.7. Being a Sensex company with a good track record, it commands a premium over most other pharma companies. Cipla is currently trading at 20.3 and 17.7 times its FY08 and FY09 EPS estimated at Rs 10.6 and Rs 12.1, respectively. The company's R&D expenses stood at Rs 175.7 crore in FY07, which are just 5% of its revenues. It needs to beef up this expenditure to produce a new chemical entity (NCE). B00STER SHOT

33% of Cipla's export revenue comes from North, Central and South America, 28% from Africa, 21% from Europe, 11% from Australasia and 7% from the Middle East

i-pill is the first OTC drug aggressively marketed by Cipla. It occupied No 1 position in the top 10 list of new personal care brands advertised in print during '07 Cipla, in agreement with Avestha Gengraine Tech, is developing biosimilar products for auto-immune disorders, cardiovascular diseases and cancer It has been allowed to continue sales of the generic version of Roche's anticancer drug Tarceva.

Cipla retains top slot in domestic pharma market P B Jayakumar / Mumbai Feb 09, 2010, 01:16 IST

Ads by Google Submit Your Resume : 2-10 years Exp. Salary 3-15 Lakhs. To Apply, Register on Shine.com Now Shine.com/Pharma_Jobs Drug company Cipla maintained its top position in the domestic market for the 12 months ended December, 2009, with a market share of 5.38 per cent up 18 per cent over the year and ahead of Ranbaxy Laboratories and GlaxoSmithKline (GSK). The total domestic drug market is valued at Rs 40,051.74 crore, an increase of 17 per cent over the previous year, according to data from drug sales tracking agency, ORGIMS. The agency tracks drug sales among more than 500,000 traders in the country, through stockist data. Ciplas domestic market share grew 18 per cent during the year, thanks to its product basket of 924 products, which is way ahead of Ranbaxys 565 and GSKs 177 products. Ranbaxy got a market share of 4.91 per cent and GSK had a market share of 4.35 per cent, with a growth of 13.7 per cent and 18 per cent, respectively, in 2009. During the period, Cipla had sales of Rs 2,155.29 crore in the domestic market, ahead of Ranbaxys Rs 1,968.24 crore and GSKs Rs 1,743.15 crore. Cipla had overtaken Ranbaxy and GSK India to become the largest pharmaceutical company in the domestic market for the first time in May, 2007, according to sources. GROWTH TONIC Company Domestic No of turnover products (Rs cr) Market share (%) Growth* (%)

Cipla Ranbaxy GSK Piramal Health Zydus Cadila Sun Pharma

924 565 177 750 735 516

2,155.29 1,968.24 1,743.15 1,644.26 1,484.84 1,449.83

5.38 4.91 4.35 4.11 3.71 3.62

18 13.7 18 22.8 21.2 22.9

Source: ORG-IMS data *Change in 2009 market share over 2008 Piramal Healthcare, Zydus Cadila, Sun Pharma, Alkem Laboratories, Mankind, Lupin and Aristo Pharma occupied the 4th-10th positions in ORG-IMS rankings, respectively. Interestingly, Elder Pharma emerged as the fastest growing company in the domestic market among the top 50 players, with a year-on-year (YoY) growth rate of 28.1 per cent over the previous year. Elders growth in the domestic market is ahead of Mankind (27.9 per cent), Wanbury ( 25.2 per cent), Piramal Healthcare (22.8 per cent), Zydus Cadila (21.2 per cent), Sun Pharma (22.9 per cent), Micro Labs and Alembic (24.7 per cent). A focused approach on promoting flagship brands like Shelcal, which grew 22 per cent, along with Chymoral Forte (30 per cent) and Formic-O (100 per cent), and prioritising the market opportunities helped us achieve this growth, Elder Healthcare Director Alok Saxena said. Among brands, Pfizers cough syrup, Corex, regained its position as the largest drug brand in the country with sales of close to Rs 182 crore.

Pharmaceutical company Cipla Ltds fortunes are set to improve, as the outlook for both domestic and exports growth is looking up, and concerns over Indore Special Economic Zone (SEZ)s contributions and margin pressures are easing. While domestic growth has improved during the second half of FY12, analysts see the trend remaining strong in the coming quarters. The Indore SEZ, too, is seeing improving contribution (46 per cent sequential growth in the March quarter). Though ramp-up in the SEZ will be gradual, traction to export growth in the near term will be provided by Escitalopram (an anti-depressant) supplies to Teva Pharmaceutical Industries, that has launched the generics on exclusivity in the US market. Related Stories Cipla losses appeal in US court for animal healthcare product Cipla Q4 up 36% Cipla breached patent rights by slashing drug prices: Bayer Result Preview: Cipla Cipla considers price cuts on more cancer drugs

Milestone and royalty incomes from its Sweden-based partner, Meda Pharmaceuticals Inc, which has received approval for launch of an allergic Rhinitis product in the US, will further boost earnings in FY13. In this backdrop, analysts are positive on the stock (now at Rs 309) and expect the companys earnings to grow at 15-18 per cent during FY12-14. For the stock, which has underperformed peers and the Sensex since the start of 2012, they have a target price of Rs 350, indicating returns of about 15 per cent in nine to 12 months. STEADY DOSE OF GROWTH In Rs crore Revenue % change y-o-y Ebitda Ebitda margin (%) Adjusted net profit % change y-o-y EPS (Rs) PE (x) FY12 6,977.5 10.5 1,531.4 21.9 1,084.0 13.3 13.5 22.9 FY13E 8,069.2 15.6 1,893.0 23.5 1,344.0 24.0 16.7 18.5 Consolidated

E: Estimates financials Source: Edelweiss Securities

Domestic business: Gaining strength The domestic business that contributes around 45 per cent to Ciplas revenues had remained below the industry growth of 14 per cent in the first half of FY12. Some spark, however, was seen in the December quarter, when domestic sales grew 18 per cent. This was followed by 16 per cent growth in the March quarter and has provided confidence that domestic growth is back on track. Praful Bohra at stock broker Nirmal Bang Securities attributes this to field force additions and entry into newer therapies as neurology, psychiatry and oncology. Cipla, which has strong presence in anti-asthmatic segment, has also gained ground in the gynaecology segment. Analysts at Karvy Stock Broking feel Ciplas pan-India presence with 7,000 field forces and 58 per cent portfolio in the acute segment will be major growth drivers in the future. They add Cipla has been proactive in launches in both these segments, and price-hikes, too, have been undertaken selectively in the respiratory segment. Hitesh Mahida at Fortune Research adds strategic initiatives taken by the company have resulted in the recovery, and, thereby, he expects

domestic business to grow at a compound annual growth rate of 14.2 per cent over FY12-14. Exports outlook improving too Though Ciplas exports grew in double-digits at 10.1 per cent during FY12, it disappointed analysts, given that the Indore SEZ was already operational (since endFY11). The higher expenses on the SEZ had led to margin pressure in FY11 and lumpiness continued during FY12. However, the SEZ has started seeing ramp-up and the March 2012 quarter saw its revenue contribution growing to Rs 190 crore, a growth of 46 per cent sequentially, as capacity utilisations touched 40-50 per cent levels. Notably, as Mahida observes, expenses are under control and margin improvement is already visible in FY12 results. Going ahead, the Indore SEZ, though, will see a gradual growth from here as it still awaits the US Food and Drug Administrations (FDA) approvals. Also, even though Cipla has already launched four inhalers in Europe, the major boost is expected to come from the FY14 launch of combination inhalers in Europe, following which they will be launched in the US. Notably, and for now, boost to exports will come from supplies of Escitalopram to Teva. The latter has launched its branded generic version of Estitalopram on exclusivity in March and Cipla is the supplier of the formulation. Analysts at CLSA see the margins for the formulation supplies to be much better during the exclusivity period. Further, Cipla is likely to launch generics of the Seretide inhaler in FY13, which will provide further boost to exports. Another growth driver for Ciplas export will be a combination inhaler Dymista, used for treatment of allergic rhinitis. Meda has received USFDA approval for the launch of the same and Cipla is its development and manufacturing partner. Analysts at CLSA observe the product is widely estimated to reach $300-500 million in annual sales over the coming years. Apart from approval (outside North America)-related milestone payment ($5 million), they expect gradual increase in Ciplas sales from product related supplies to Meda. Assuming Cipla supplies product at 10-15 per cent of the selling price, Cipla could earn $50-75 million at peak sales. Weakness in the rupee is further likely to benefit Cipla, which gets over 50 per cent of revenues from exports.

Business Line / Saturday, 25 August 2007 Cipla plans Rs 950-cr capacity expansion Our Bureau Mumbai, Aug 24 Cipla is set to undertake a Rs 950-crore capacity expansion over the next two years, Chairman and Managing Director Dr Y.K. Hamied told shareholders. The investments will be made in three formulations facilities at Sikkim, Goa and Indore that would make the finished forms of medicine. About Rs 180 crore will be invested in a tablet and injectible facility in Sikkim, Rs 400 crore will go towards the Goa plant that would make aerosols, capsules and tablets, while Indore will involve an investment of Rs 350 crore and will make formfilled sealed units, among others. The company has, in the last two years, invested about Rs 800 crore in capacity expansion, he said.

The Mumbai-based drug maker has about 30-odd plants across the country, a company official said. Cipla is also looking to raise $100 million in foreign currency loan to off-set the impact of the strong rupee, he added. The company would take a Rs 200-crore hit on exports of about Rs 2,000 crore because of the appreciating rupee, according to him. The Rs 3,500-crore company projects 10-12 per cent growth in the current fiscal, though profits could be lower when compared to the previous year, he indicated. The official admitted that the company was viewing with interest niche business segments for acquisitions, not merely to increase sales but to enhance value by entering new business segments like bio-technology, for instance. The company has, in the current year, received Rs 48 crore for technical knowhow that it has shared with companies and the payment has come on completion of milestones. However, the official denied any tie-up with GlaxoSmithKline on inhalers. Cipla has eight HFA inhalers, of which two have got approval in the European Union and details of the rest have been submitted, he said. CFC-free inhalers from Cipla have got approval in Denmark and Portugal and approvals are expected in the UK and Spain this year. Responding to queries whether Cipla and Reliance were in acquisition-related talks, Dr Hamied told Business Line : The answer is No. I have not met anyone, I have not talked to anyone. Earlier, he told shareholders that there was no sourcing tie-up with Reliance for the retail sale of medicines. Top The Economic Times / Wednesday, 22 August 2007 Cipla notice to US NGO on AIDS drug Khomba Singh NEW DELHI: Domestic major Cipla has sent a legal notice to the AIDS Healthcare Foundation, the US-based NGO which has alleged that the Indian company is selling its anti-AIDS drug, Viraday, in India at two and half times the price it sells in Africa. Cipla joint MD Amar Lulla told ET, We do not sell Viraday tablets in Africa. We have send a legal notice to the NGO asking them to apologise with an advertisement for their false allegations. He claimed that the NGO has apologised, but the company wants the clarification to be issued at a public forum. Cipla is one of the largest exporters of antiretroviral drugs worldwide and its drugs are sold in 60 countries. However, the NGO refuted the company's claim and continues to stand its ground. AIDS Healthcare Foundation's Asia Pacific bureau chief Dr Chingkholal Thangsing said: We have no reason to apologise. There has been some technical (grammar) error in the advertisement. We will withdraw that technical aspect but continue with our campaign. He added that Cipla has offered to sell the drug at Rs 21,000 per year to Medical Sans Frontier (MSF) which means that the company is willing to sell the drug at that price. In India, the drug is sold at Rs 54,000, thus restricting access to many AIDS patients, he claimed. Though the company had indeed offered to sell the drug to MSF at the Rs 21,000

price, it was never sold and the offer has already been withdrawn, Mr Lulla added. The NGO has replied to Cipla's earlier notice after the NGO went public with its allegation earlier this month. However, the NGO is yet to reply to the legal notice from Cipla which has asked it to apologise for its allegations. On August 9, the NGO had alleged that Cipla's drug, Viraday tablets, is available to a patient in Africa for Rs 21,200 for a year's treatment while it costs Rs 54,000 in India. The NGO had issued advertisement in leading Indian newspapers with the same allegations. Viraday tablet is Cipla's generic three-in-one combination antiretroviral therapy that AIDS patients have to take just once a day. The Monopolies and Restrictive Trade Practices Commission (MRTPC) is expected to probe the NGO's allegation. Meanwhile, it is learnt that some global organisations have also shown interest in these developments. UNAIDS and World Health Organisation (WHO) have sought details of the allegation from Aids Healthcare Foundation. conomic Times Mumbai / Economy / October 30, 2006 Safe & steady strategy gives Cipla lead over Ranbaxy Noemie Bisserbe ET INTELLIGENCE GROUP SOME years ago, investors were hooked to Ranbaxy Labs' growth story and the many earnings triggers that lay ahead. Cipla in comparison was a company that got little attention, partly because its strategy seemed quite dull compared to Ranbaxy. That is because, more than Cipla, Ranbaxy Labs has been a pioneer in the Indian pharma industry. Ranbaxy led the way when it began investing in discovery research, when it entered the US generic market, and recently, made headlines by challenging patents of global pharma giants. Ranbaxy's high-risk high-return model had paid off in the past, while Cipla's lower risk strategy seemed less appealing. However, investors have been flocking to Cipla. While Ranbaxy has been going through a rough patch over the last two years, Cipla's steady strategy has proved more rewarding. Ranbaxy Labs' net profit was down 54% to Rs 256 crore in the year ended March '06, compared to Rs 730 crore in the year ended March '04. In comparison, Cipla's net profit more than doubled to Rs 608 crore in '05-06, from Rs 296 crore in '03-04. The effect on their share prices is visible. In the past two years, Ranbaxy Labs fell 23% while Cipla's share price has gone up by 138%. The ET healthcare index, ET Lifex, has risen 47% over the same period. Cipla has overtaken Ranbaxy in market capitalisation. At around Rs 200bn, Cipla's market cap is Rs 47bn more than Ranbaxy Labs. Two years ago, Ranbaxy Labs' market cap was more than twice that of Cipla. According to analysts, Cipla's strategy has shown to be more suitable to today's scenario, in which competition is increasing and pricing pressure is relentless. With a ground presence in 49 countries, products available in 125 countries, and manufacturing operations in eight countries, Ranbaxy is the most globalised pharma company in India. In '05, Ranbaxy's formulation sales in markets outside India were $463m (40% of overall revenue). On the contrary, Cipla does not have its own marketing presence anywhere outside India. Cipla is also very geographically

diversified, it exports to 160 countries and exports account for around 50% of its revenues. However, the company is present in all markets through partnerships and is, therefore, focused on its core competencies of product development and manufacturing. Cipla tied up for the US market with Teva/Ivax, Watson, Morton Grove, Sandoz /Eon and Akorn. In Germany, it entered into agreements with Stada, Hexal and Ratiopharm, in the UK with NeoLabs, and in South Africa with Medpro. While having its own marketing and distribution set-ups involves, if successful, higher payoffs than that from partnership, there are significant risks and downsides associated with this strategy. Important front-end investments and high fixed costs is one of them. According to a recent CLSA report, in absolute terms, Ranbaxy has the highest fixed-cost base amongst top Indian pharma companies at $518m. While Ranbaxy spends around 45% of sales on fixed costs, Cipla has the lowest fixed-cost allocation as a proportion of current sales at 24.4%. As a result, increasing pricing pressures in the domestic and international markets have had a higher impact on Ranbaxy's business. While Cipla's exports almost doubled over the past two years, Ranbaxy has been plagued by poor organic growth across geographies even as fixed costs associated with a large geographic presence keep on rising. Aggressive spending on legal expenses for patent challenges has also not borne fruit for Ranbaxy Labs. According to company sources, Ranbaxy spent around Rs 250 crore on legal expenses in '04 and '05, while Cipla has not filed any patent challenge in the US. High research and development expenditure has also weighted down Ranbaxy Labs profits over the past two years. Ranbaxy spent Rs 493 crore or 9.5% of sales on R&D in '05-06, while Cipla R&D expenditure stood at Rs 120 crore or 4% of sales. Over the last two years, Ranbaxy Labs spent Rs 221 crore on R&D capital expenditure, as against just Rs 44 crore for Cipla. Going forward, however, Cipla's strategy could prove not as sustainable. Cipla has been very aggressive in terms of new product launches in the domestic market, which has helped the company to achieve good margins. However, a slowdown in new product launches can be expected because of the company's low R&D, said an analyst to ET. However, this downside will be compensated by international business, which is expected to continue to witness strong growth in the future, he concluded.
The Times Of India / Monday, 02 March 2009 Pharma retail market grows 15% NEW DELHI: The domestic pharma retail market has started the year with a bang, recording nearly 15% growth in January. The market had grown by nearly 10% during January-December 2008, and over 13% in December alone. There was no major change in rankings of pharma companies in January in terms of market share, with Cipla garnering the largest, followed by Ranbaxy and GlaxoSmithKline at third position, according to consulting company, ORG-IMS. Piramal Healthcare was ranked fourth, followed by

Zydus Cadila at the fifth slot in terms of market share. During January, Pfizer moved up two ranks to the 10th position among companies with the largest retail sales in the market. Abbott (rank 12), Dr Reddy's Labs (rank 14), Intas Pharma (rank 18) and Micro Labs (rank 20) gained one rank each, as against December last year. The domestic retail market valued at Rs 2,908 crore in January, has been recording a growth for the last three consecutive months since November 2008, after a slight blip in October. The value growth for 12-month period ended January (moving annual total basis) was 9.9%, which is almost the same as December's growth of 9.8% (as per December MAT). Industry experts pointed out that pharmaceuticals and healthcare are recession-proof sectors, and will keep growing at a steady pace over the next few months. In January, pain killer drug, Spasmo-Proxyvon was the highest gainer in ranks, amongst the largest selling drugs, moving up from the 24th slot in December to the 18th. The other major gainers are vitamin supplement Revital, having moved up from the 11th slot in December to seventh position in January, and iron supplement Dexorange, gaining four ranks (rank 11 as per January '09). Zinetac used to treat peptic ulcer moved up three slots to the 14th position, up from rank 17 in December. Among the therapeutic areas, cardiovascular segment recorded a 14% growth, while anti-infective medicines grew 10% during the month.

Top The Hindu Business Line / Wednesday, 25 February 2009 Patents yes, but monopoly no
India needs to protect its national interests and not worry about ruffling feathers internationally.

DR YUSUF K. HAMIED, CHAIRMAN, CIPLA P. T. Jyothi Datta It is in this room that Parvinder and I started the IPA (Indian Pharmaceutical Alliance), says the Cipla Chairman, Dr Yusuf K. Hamied, pointing to his office, where M. F. Hussain paintings sit easy with stacks of papers on intellectual property, the Doha debates and speeches crusading against monopolistic practices of drug companies. We were indigenous companies, coming together to jointly fight, he reminisces. Under the leadership of its former chairman, the late Parvinder Singh, Ranbaxy had joined companies such as Cipla and Dr Reddy's in taking the generic-drugs battle right into the backyard of multinational companies, by selling into developed and developing markets. But almost a decade later, there has been no easing of challenges for generic drug-makers, with the latest weapon being Intellectual Property Rights (IPR) and the hydra-headed manner in which it is being interpreted and implemented, globally and at home. As a scientist, I believe in patentsbut I do not believe in monopoly, he says, responding to what the generic drugs industry perceives as covert global efforts to raise obstacles in their way, including equating generics or chemically similar medicines to counterfeits. In the last three-odd months, Indian generic drug-makers Ind-Swift, Dr Reddy's and Cipla have had their medicine consignments seized at Amsterdam, though these shipments were just transiting to South American destinations. The export consignments were held on IPR investigations and the companies involved have since taken back their consignments or

abandoned them. The seizure of the export consignment was done using a European Commission regulation of 2003. And such an interpretation of this rule, five years after being brought into force, was again, a ploy to retain monopoly, says Dr Hamied. At home too, a cocktail of IPR challenges has only added to the woes of local companies, he says, tracing back to the build-up and amendment of the Indian Patent Law in 2005, after which the country started honouring product patents. Then came the more recent attempts in the country to link the issue of patents (given by the Patent Controller's office) with the marketing approvals on medicines given by the Drug Controller General of India's office, an issue currently being fought in the courts here. Frivolous patents Elaborating on his concerns of companies trying to retain monopoly, he explained that an amendment to the Indian Patent Act had been introduced through Section 3d essentially to stop the ever-greening of patents. Ever-greening refers to the practice of drug companies that are known to make small incremental changes to existing drug molecules to extend the patent even as the original 20-year protection expires. There were about 7,000 patents pending clearance once the amended Patent Law came into effect. I am repeating this, again and again and again, that of those 7,000 patents, according to me, 5,000 would be in the 3d category of no novelty, he says, adding that the observation was based on existing pharma patents. Novelty salts, esters, polymorphs, etc., could be not eligible for patents; moreover, some of these patents with minor variations are not legally patentable. We are seeing the same patent under different applications coming in. My contention is, of the patents that the multinationals have put into India and that do not qualify under 3d or on novelty, such as combinations, they should voluntarily withdraw. Not a single patent has been voluntarily withdrawn (till) today, he observes. Out of bounds Referring to the patent-related litigation that Cipla is involved in, he says, We do not like breaking laws. Where we felt we had a very strong case and a good case, we have challenged. Where we have no case, like in the third and fourth generations ARVs (anti-retroviral drugs for AIDS), we have not challenged, he says. Such an admission should have set off alarm bells among the powers that be, coming from Cipla. The Mumbai-based drug-maker had in 2001 set the cat amongst the pigeons when it offered its generic AIDS drugs at a fraction of the MNC price in the African market, forcing the bigger companies to slash prices. Eight years later, Cipla admits that the next generation of AIDS-drugs are out of bounds for generic drug-makers, as they are product patent-protected. The ramifications of Dr Hamied's admission on next-generation AIDS drugs is worrying, as it is not restricted to just this segment of medicines or market. Indian generic drug-makers supply medicines across therapeutic segments to several countries in the world, and this could take a hit, affecting not just the companies, but patients as well. A permanent compulsory licensing (CL) system, where generic companies are allowed to make copies of the innovator's medicine, but on the payment of a royalty of, say, four per cent of their sales, is what Dr Hamied suggests to break the impasse. But whether this suggestion will have takers in the Government or among other innovator

companies is still to be seen. We were promised categorically by the Government that product patents will only kick in post2005. Not back-dated to 1995, he laments. What is wrong is India's defensive attitude. Why are we defending all the time?, he asks, in his characteristic rhetorical style. The EMR (exclusive marketing rights), that was thrust on us, was done retrospectively, he says. The rationale was that process patents filed from 1995 till 2000 could be converted into productpatents on EMRs. World trade rules do not allow patenting in retrospect, he adds. You cannot backdate. Some of the products that were invented in this five-year period, we were working on, thinking that these were process patents and not product patents, he says. National, not international India needs to protect its national interests and not worry about ruffling feathers internationally, he states emphatically. When India is nowhere in the human development report, how are we classified as a developed country. Just because there are pockets in India that are super developed, doesn't make India a shining country, he observes, campaigning for a workable CL system. Third world countries including India cannot afford monopoly. I am repeating it to such an extent that people say you have nothing else to talk about, he exclaims. Distancing the discussion from his company and my newspaper, he says: I am saying what is best for our country, irrespective of Cipla, irrespective of everything. And genuinely, believe me. I have been saying it now for 50 years. Even in 1961, before the patent laws were changed in 1972, we had meetings with the multinationals I said, as a scientist, I believe in patents, I am not saying no. But I do not believe in monopoly. I am willing to pay a royalty. Citing Canada's CL system, he says, nobody objected to it neither the Americans nor the Europeans. Why can't India have a similar system, without worrying about upsetting international friends? When people cannot afford drugs, particularly anti-cancer drugs, at some time it was the antiAIDS drugs, only competition can help you. We are willing to pay royalty but do not stop us from manufacturing, he says.