Industrial Presentation on:

Contents: 1. Company History 2. Company Profile 3. Board of Directors & Offices 4. Organizational Structure 5. Products 6. Exports 7. Marketing Strategy 8. Competitors 9. Market Conditions 10. Recent News

1. Company History:
Khwaja Abdul Hamied, the founder of Cipla, was born on October 31, 1898. In 1935, he set up The Chemical, Industrial & Pharmaceutical Laboratories, which came to be popularly known as Cipla. He gave the company all his patent and proprietary formulas for several drugs and medicines, without charging any royalty. On August 17, 1935, Cipla was registered as a public limited company with an authorized capital of Rs 6 lacs. The search for suitable premises ended at 289, Belasis Road (the present corporate office) where a small bungalow with a few rooms was taken on lease for 20 years for Rs 350 a month. Cipla was officially opened on September 22, 1937 when the first products were ready for the market. July 4, 1939 was a red-letter day for Cipla, when the Father of the Nation, Mahatma Gandhi, honoured the factory with a visit. He was "delighted to visit this Indian enterprise", he noted later. From the time Cipla came to the aid of the nation gasping for essential medicines during the Second World War, the company has been among the leaders in the pharmaceutical industry in India. On October 31, 1939, the books showed an all time high loss of Rs 67,935. That was the last time the company ever recorded a deficit. In 1942, Dr Hamied's blueprint for a technical industrial research institute was accepted by the government and led to the birth of the Council of Scientific and Industrial Research (CSIR), which is today the apex research body in the country. In 1944, the company bought the premises at Bombay Central and decided to put up a "first class modern pharmaceutical works and laboratory." It was also decided to acquire land and buildings at Vikhroli. With severe import restrictions hampering production, the company decided to commence manufacturing the basic chemicals required for pharmaceuticals. In 1946, Cipla's product for hypertension, Serpinoid, was exported to the American Roland Corporation, to the tune of Rs 8 lacs. Five years later, the company entered into an agreement with a Swiss firm for manufacturing foromycene. Dr Yusuf Hamied, the founder's son, returned with a doctorate in chemistry from Cambridge and joined Cipla as an officer in charge of research and development in 1960. In 1961, the Vikhroli factory started manufacturing diosgenin. This heralded the manufacture of several steroids and hormones derived from diosgenin.

2. Company Profile:
Cipla is based in Indias commercial capital Mumbai, The Chemical, Industrial & Pharmaceutical Laboratories. Today, Cipla is a leading player in antiinfective and anti-asthmatic formulations. The company also specializes in the manufacturing of steroids and hormones. Cipla manufactured ampicillin for the first time in the country in 1968. In 1983, Cipla developed two anticancer drugs, vinblastine and vincristine from the common garden plant Vinca rosea in association with the National Chemical Laboratory. The company pioneered the manufacture of the antiretroviral drug, zidovudine, in technological collaboration with Indian Institute of Chemical Technology in 1993. In 1997 Cipla became the first company in the world by launching transparent Rotahaler, a dry powder inhaler device. In 1998 the company launched lamivudine, and became one of the few companies in

the world to offer all three component drugs of retroviral combination therapy (zidovudine and stavudine already launched).Cipla received clearance from the Drugs Controller General of India to manufacture and market the country's first non-nucleoside reverse transcriptase inhibitor (NNRTI), nevirapine, for the treatment of AIDS. Cipla Ltd became Indias second largest pharmaceutical, edged out the multinational giant GlaxoSmithKline which was reigning supreme in the country for long, in terms of drug sales last year. Consistently maintaining a fast-track growth momentum, Cipla has registered an 80-percent jump in net profit for the quarter ended on March 31 2006, driven by growth in domestic sales and exports. In the fourth quarter, Cipla posted a net profit of 1.90 billion rupees. Net sales grew 63 percent to 8.7 billion rupees. Cipla's exports in the quarter grew 63.7 percent while domestic sales rose 56.4 percent. Cipla anticipates 15 to 20 percent growth in this year. Cipla's R&D division focuses on the development of new products and new drug delivery systems across a range of therapies. The company is spending over 4 per cent of its total turnover on R&D activities. The company supplies drugs to treat over 2 lac HIV-positive patients worldwide. The company has also been among the major suppliers of anti-malarial drugs and drugs for schistosomiasis to international markets.

Business Overview
The present businesses of Cipla can be broadly classified into: Domestic branded formulation sales (74% of total sales; 19-20% operating profit margin) Domestic unbranded formulation sales (7% of total sales; over 10% operating profit margin) Exports (19% of total sales; around 38-40% operating profit margin). Breakup of exports is as follows:

Europe (17%), US (30%), Africa (34%), Middle East (8%) and Australia (11%). Cipla has been relatively low profile on its R&D initiatives compared to the domestic peers, all of whom have set their sights on discovering new chemical entities (NCEs). But lately, R&D spend of Cipla has increased by 25% to Rs. 300 mn (4% of sales) and the company has an R&D team of 200 people. In future the R&D expenditure is expected to grow at a faster pace compared to sales and might rise to over 5% of sales. The business environment for

Cipla has become highly competitive in the last few years. The major factors affecting Cipla are as follows: New Drug R&D costs are prohibitive, which has made MNCs to spread their R&D costs through Mergers / Acquisitions. In Indian Pharmaceutical Sector prices of over 60% of the Drugs/Formulations is controlled by the government through DPCO (Drug Price Control Order). For Cipla DPCO coverage is around 55% Low entry barriers in the bulk drugs market has led to a situation of overcapacity, which has made major domestic players, shift their focus towards formulations segment. As a result Cipla, which is earning nearly 80-85 percent of its sales from formulations, is facing increasing competition. With the focus on post 2005 era, MNCs are strengthening their position in India through marketing tie-ups with local majors and fully owned subsidiaries. This can lead to even higher degree of competition.

Shareholding Pattern (As on 30/06/2009):

The company has an equity capital base of Rs. 60.2 cr. and the face value of share is Rs. 2 The market capitalization as on Sept 04, 2009 was Rs. 20738.36 cr. The promoters are holding 39.38% stake in the company. The free float available in the market is 60.62%.

Share holding pattern as on :

30/06/2009 No. Of Shares

31/03/2009

31/12/2008 No. Of Shares 13936536 0 16674268 7 30610804 7 % Holding 17.93 21.45 39.38

Indian Promoters Foreign Promoters Sub total

% No. Of % Holding Shares Holding Promoter's holding 139365360 17.93 13936536 17.93 0 166742687 21.45 16674268 21.45 7 306108047 39.38 30610804 39.38 7 Non promoter's holding Institutional investors 100475671 115218568 248022118 12.93 10781308 7 14.82 10414763 3 31.91 24722541 5 Other investors 2.66 3.45 0.98 16638521 26890755 8908066 13.87 13.40 31.81

Banks Fin. Inst. and Insurance FII's Sub total

10839955 4 10460301 4 24520072 6 15889637 26886776 8645766

13.95 13.46 31.55

Private Corporate 20695402 Bodies NRI's/OCB's/Foreign 26780056 Others Others 7607146

2.14 3.46 1.15

2.04 3.46 1.11

Sub total General public Grand total

55082604 7.09 168078588 21.62 777291357 100.00

52437342 17152055 3 77729135 7

6.75 22.07 100.00

51422179 17456040 5 77729135 7

6.62 22.46 100.00

3. Board of Directors & Offices:

Board of Directors
Chairman & Managing Director Dr. Y.K. Hamied Joint Managing Directors Mr. M.K. Hamied Mr. Amar Lulla Non-Executive Directors Dr. M.K.Gujar Mr. V.C. Kotwal Dr. H.R. Manchanda Mr. S.A.A. Pinto Mr. M.R. Raghavan Mr. Ramesh Shroff Mumbai Corporate Office and R& D centre for formulations
289, J. B. B. Marg, Mumbai Central, Mumbai - 400 008

Manufacturing and R&D facilities

Vikhroli Manufacturing of bulk drugs & formulations (Liquid Orals, Aerosols), R&D bulk drugs & formulations Bangalore Manufacturing of bulk drugs & formulations (R&D Bulk drugs) Approved by US FDA (for bulk drugs); WHO Patalganga Manufacturing plant for bulk drugs & formulations (R&D Bulk drugs) Kurkumbh Manufacturing facility for bulk drugs & formulations (R&D Bulk drugs) Goa Manufacturing set up for formulations Baddi, Himachal Pradesh Manufacturing of tablets & capsules, formulations

4. Organizational Structure:

Cipla has incorporated a unique, flat organization structure that seems to work for them. Brother, MK Hamied, looks after marketing and his cousin Amar Lulla heads the finance division, while YK Hamied is responsible for Cipla's overall vision and strategy. Stories about Hamied the workaholic are legendary. Managers at Cipla say that whenever he is in India, he is in office by seven in the morning, looking at new products in the laboratories. Hamied is basically a scientist by nature. Apart from driving Cipla's international growth he is actively involved with his 200-people strong R&D division. Employees at Cipla are very well paid. His chemists with PhD's make about $10,000 (Rs480, 000) a year, a good salary in India. The lowest-paid of his 3,500 employees makes about $2,400 (Rs115, 200) a year. Hamied may be generous with employees but it does not mean that he is not aware of costs. In fact the reason he manages to charge less for all his drugs is because he is a shrewd cost cutter, and keeps his overheads low.

5. Products:
Cipla has the largest product basket among all the pharmaceutical players in India ranging from prescription to OTC to animal health, besides a big kitty for active pharmaceutical ingredients (APIs) or bulk drugs. Prescription Amoebicides/Antiprotozoals, Anabolic steroids, Anaesthetics, Analgesics/Antipyretics, Antacids, Anthelmintics, Anti-inflammatory drugs, Anti-TB drugs, Antiacne drugs, Antiallergic drugs, Antialzheimer drugs, Antiasthma drugs, Antibiotics and Antibacterials Anticancer drugs etc. OTC Ciplas over-the-counter drugs portfolio comprises the following segments Analgesics Oral, Artificial Sweetener, Calcium Preparations, Child Care, Cold & Flu, Constipation, Cosmetics & Skin Care, Dental Care & Oral Hygiene, Diarrhoea, Food Supplements, Indigestion, Infant Food, Medicated Plasters, Medicated Shampoos,Veterinary etc. Ciplas animal health care products division has four sections dedicated for equine, poultry, companion animals, livestock animals products, apart from Herbal Specialities. Active Pharmaceutical Ingredients(API) Cipla is one of the biggest exporter of low-cost, high quality APIs across the world. Major bulk drugs and intermediates manufactured by Cipla are: Adefovir Dipivoxyl, Albendazole USP, Albuterol Sulfate, Alendronate Sodium.3H2O, Alprazolam, Amlodipine Besylate, Anastrazole, Atorvastatin, Aripiprazole, Azelastine HCl etc.

6. Exports:
Cipla exports raw materials, intermediates, prescription drugs, OTC (Over the Counter) products and veterinary products to more than 160 countries including the U.S. and a number of countries in Europe, Africa, Australia, Latin America and the Middle East. Cipla shipped products worth more than Rs.10, 500 million last year. Cipla also offers technology for products and processes. Cipla's manufacturing facilities have been approved by: Food and Drug Administration (FDA), USA; Medicines and Healthcare products Regulatory Agency

(MHRA), UK; Therapeutic Goods Administration (TGA), Australia Medicines Control Council (MCC), South Africa; National Institute of Pharmacy (NIP), Hungary; Pharmaceutical Inspection Convention (PIC), Germany; World Health Organization (WHO); Department of Health, Canada State Institute for the Control of Drugs, Slovak Republic and ANVISA, Brazil. Cipla keeps the steady momentum of growth with an overall growth of more than 57% in income from operations for the quarter ended March 2006. Currently, we are one of the largest exporters of pharmaceutical products in India, exporting APIs and formulation products to more than 160 countries including the U.S., and a number of countries in Europe, Africa, Australia, Latin America and the Middle East. Both the international as well as the domestic business have recorded a growth of more than 56% and 63% respectively, in the last quarter. All the major segments including anti-asthmatics, cardiovascular and anti-biotics/bacterials segments have shown good performance in the domestic market. In the exports markets, anti-retroviral, anti-malarial, anti-asthmatics, antidepressants and cardiovascular segments have performed well. Cipla has filed 658 DMFs (Drug Master File) and 71 ANDAs (Abbreviated New Drug Application). The company has also secured 170 marketing authorizations in Europe, 4,000 product registrations globally and 7000 pending approvals and Exports grew by 37%; Accounts for 50% of total sales; API(active pharmaceutical ingredients) exports grew by 120%.

7. Marketing Strategy:
Cipla follows an excellent marketing strategy. Strategic Tie-Ups Cipla has set up a wholly owned subsidiary, Cipla FZE situated at Jebel Ai Free Zone in Dubai, United Arab Emirates. This is the part of strategy to explore the growing markets in Middle East countries through exports. Cipla entered agreement with Pentech Pharma of USA for marketing a range of generic products for American market. Pentech is involved in developing therapies for lifestyle and quality of life conditions. This will further boost its export performance. Low-risk business model: Robust partnership model CIPLA has entered into global tie-ups with various generic players (like Watson, Mylan, Barr and Ivax) for supplying its generic products. This strategy enables Cipla to leverage local market knowledge of its partners and utilize its own R&D, product development, and manufacturing skills. Cipla's offer to sell anti- aids drugs at onethird the price to developing countries like South Africa or any other country. The questions were raised against the strategy the company follows but Cipla is not committing any illegal or unethical act as it is entitled to sell anti- aids drugs in any country that does not have the requisite patent protection. Cipla is not using pirated technology since India does not have a product patent regime. Therefore, Cipla has the right to develop and reverse engineer any pharmaceutical product not protected by the country's laws. Therefore, the issue is whether Cipla is selling its products below its costs or is it able to sell cheaply because it has not incurred any research and development (R&D) expenses like multinationals incur in

developing drugs. Cipla is entitled to "make hay while the sun shines', in other words, capitalize on a sympathetic patent law in India, but keeping in mind that after 2010, the world (and Indian) pharmaceutical industry will become a "jungle', where only the "fittest' will survive.

8. Competitors:
These are some of the competitors of CIPLA - APOLLO HOSPITALS (HOSPITAL& MEDICAL SERVICES), AURBINDO PHARMA, BILCARE (PACKAGING), BIOCON, DISHMAN PHARMA, DIVIS LABS, Dr. REDDY's LABS, Pftizer, GlaxoSmithKline, Alkem, Glen mark, Ipca LABS , Lupin, Opto Circuits(Hospitals & Medical Services), Orchid Chemicals, Nicholos Piramal Health, Ranbaxy Labs, Sterling Bio, Sun Pharma, Sun Pharma Advanced Research Company, Wockhardt, Zydus Cadila Healthcare, Ajanta Pharma , Alembic, Zandu Pharma , Aarti Drugs etc. Competition Table (BSE Data): Company Last Price Sun Pharma Cipla Ranbaxy Labs Dr Reddys Labs GlaxoSmithKlin e Lupin Piramal Health Divis Labs Cadila Health Glenmark 1,177.25 268.05 319.80 784.70 1,439.45 975.40 328.30 514.95 449.00 216.50 Market Cap. (Rs. cr.) 24,382.78 20738.36 13,443.49 13,235.32 12,192.58 8,228.35 6,861.90 6,723.03 6,128.81 5,425.18 Sales Turnover 3,861.55 5,270.54 4,494.52 4,197.53 1,685.56 2,967.13 2,333.46 1,203.49 1,945.72 856.11 Net Profit 1,265.29 767.83 -1,032.33 560.89 576.57 416.97 275.32 421.26 265.91 217.93 Total Assets 5,175.02 4,336.35 7,442.15 5,899.40 1,546.72 2,320.21 1,520.76 960.05 2,052.70 1,552.79

9. Market Condition: BSE

Price Gain Loss NSE Price Gain Loss 1 week 269.15 / -24.37% 2 week 258.15 -21.15% 1 month 282.85 -28.04% 3 month 232.55 -12.47% 6 month 192.50 5.74% 9 month 183.45 10.96% 1 year 236.25 -13.84% 1 week 269.85 / -0.87% 2 week 258.85 3.34% 1 month 281.95 -5.13% 3 month 231.60 15.5% 6 month 192.05 39.29% 9 month 183.45 45.82% 1 year 236.50 13.11%

10. Recent News:

1. CIPLA had a research alliance with a Bangalore-based biotech company Avesthagen, to develop biotherapeutic products. CIPLA has terminated its marketing agreement with Avesthagen and is looking at selling its 5.8% stake in the Bangalore-based company. Cipla terminated the agreement due to Avesthagens alleged failure to meet targets. Under the agreement, Avesthagen was supposed to develop the biosimilar products and Cipla would have used its strong marketing force to commercialize and market it. Cipla was, however, not happy with the progress of Avesthagens research. The Mumbai-based generics major is, however, clear that it wants a presence in the biosimilar space and is close to finalizing a deal with a Chinese partner. Cipla is keen on partnering with a Chinese player for its biosimilar venture since the Chinese are strong in this space. The products will be developed in China and manufactured in India. Ciplas termination of its agreement with Avesthagen has resulted in the biotech company going it alone in the Indian market. 2. CIPLA plans to raise Rs 1,500 cr. either by issuing foreign currency convertible bonds or through global depository receipts (GDRs) to clear its debt as well as finance its capital expenditure. Addressing the shareholders at the companys annual general meeting, chairman and MD YK Hamied said the pharma company has debt of Rs 800 cr. and plans to invest Rs 500-600 cr. in the next two years. Cipla is so far the only company to manufacture generic versions of both Tamiflu and Relenza. Reports say that if the virus mutates, it could wipe out half the worlds population The Companys version of Tamiflu, Antiflu, is the only generic anti-viral drug approved by the WHO. After taking a hit of Rs 228 cr. in forex losses last year, Cipla has changed its hedging policy. The company is now hedging all its loans and covering all net exports on a monthly basis. This is due to the fluctuation in the currency market.