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Exhibit 1: Recent International Acquisitions by Indian Companies

Date
Jul-07

Target
Nikho

Jul-07

Vit. D business of Solvay Netherlands

Dishman Pharma

May-07
May-07
Apr-07

Taro pahramceuticals
Negma Labs
Hollister-Steir

Sun Pharma
Wockhardt Ltd.
Jubiliant Organosys

Source: ENAM Research

Country
Brazil

Israel
France
USA

Acquirers name
Cadilla Healthcare

Value ($ mn.)

Sales ($ mn.)
26

26

16.5

22.6

454
265
112.5

298
150
55

Exhibit 2: Summarized financial information Lupin (all figures in rupees millions


Summarised Income Statement
Total income
Manifacturing expenses
Employee cost
Selling & distribution expenses
PBDITA
PBDTA
PBT
PAT

FY 2005
12,310.4
5,673.7
1,256.8
1,076.2
1,436.7
1,163.6
832.0
822.9

Summarised balance sheet:


Liabilites and Networth:
Net worth
Total borrowings
Other liabilities
Total Liabilities
Assets:
Gross fixed assets
Net fixed assets
Investments
Current assets, loans & advances
Less: Current liabilites and provisions
Total assets

FY 2005
5,005.0
4,406.4
934.4
10,345.8
7,846.6
6,287.5
93.7
6,738.7
2,774.1
10,345.8

* It had 80.345 million equity shares outstanding as of March 2007 and its average market capitalization d
March 2007 was Rs. 47.05 billion. Lupin was listed in the leading national stock exchanges in Ind
Source: Data provided by Lupin Ltd.

ees millions)

FY 2006
17,335.5
5,673.7
1,256.8
1,629.5
2,968.7
2,665.7
2,264.8
1,790.0

FY 2007
22,155.2
5,673.7
1,256.8
1,916.9
4,761.3
4,390.4
3,926.7
2,979.8

FY 2006
6,439.5
9,123.5
956.1
16,519.1

FY 2007
8,884.1
8,645.5
1,027.2
18,556.8

8,602.7
6,676.1
95.0
13,141.7
3,391.2
16,521.6

10,342.6
7,963.6
58.6
14,755.3
4,220.7
18,556.8

s average market capitalization during the


national stock exchanges in India

Exhibit 3: Share of Generic Drugs in Major Markets (%)

UK
US
Germany
France
Japan

Sales (value)
Sales (volume)
24.00%
60.90%
12.80%
68.60%
21.80%
63.70%
15.90%
39.80%
6.20%
17.20%

Source: Provided by the company and credited to the Japan Generic Medicines Association Website
Data concerning the US, UK Germany and France are of 2008. Japan data are of 2007

Exhibit 4: Share of Japanese Generic Drugs (%)

2001
2002
2003
2004
2005
2006
2007

Sales (value)
Sales (volume)
4.70%
10.80%
4.80%
12.20%
5.20%
16.40%
5.20%
16.80%
5.10%
17.10%
5.70%
16.90%
6.20%
17.20%

Source: Provided by the company and credited to the Japan Generic Medicines Association Website

80.00%
70.00%
60.00%
50.00%

Sales (valu
Sales
(volume)

40.00%
30.00%
20.00%
10.00%
0.00%
UK

US

Germany

France

Japan

20.00%
18.00%
16.00%
14.00%
12.00%

Sales
(value

10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2001

2002

2003

2004

2005

2006

2007

Sales (value)
Sales
(volume)

apan

Sales
(value)

2007

Exhibit 5: Generic Drug Companies in Japan (sales figures in JPY millions)


There are approximately 120 companies in the generic market and top four major companies are increasing their shares in the m

MARKET SHARE ESTIMATE BY COMPANY AND HISTORICAL GENERICS SALES (JPY


FY2005
FY2006
Company Name
Sales
% of Total Sales
Sawai Pharmaceutical
26,616
7.6%
34,316
Nichi-iko Pharmaceuticals
23,349
6.7%
28,173
Towa Pharmaceutical
24,193
6.9%
29,235
Taiyo Pharmaceutical Industry
21,402
6.1%
25,937
Mylan
16,500
4.7%
17,660
Nipro Pharma
12,368
3.5%
13,163
Fuji Pharma
10,129
2.9%
11,240
Taisho Pharm Ind(2)
Nippon Chemiphar
Kyowa Pharmaceutical Industry
Meiji Seika Kaisha
Kaken Pharmaceutical
Choseido Pharmaceutical
Kyorin Rimedio
Tatsumi Kagaku
Yoshindo
Elmed Eisai
Sandoz
Ohara Pharmaceutical
Nissin Pharmaceutical
Other
Total
Top 4 Companies

7,468
7,835
7,125
4,600
3,500
4,211
2,628
3,384
3,890
3,340
3,200
2,590
3,204
158,819
350,351
95560

2.1%
2.2%
2.0%
1.3%
1.0%
1.2%
0.8%
1.0%
1.1%
1.0%
0.9%
0.7%
0.9%
45.3%
100%
27.3%

8,679
9,013
7,433
5,700
4,145
4,729
4,567
4,003
4,250
3,840
3,800
3,167
3,287
160,872
387,209
117661

(1) Sales form OEM, OTC are excluded, (2) Teva announced acquisition of Taisho Pharm Ind on December 24,2009
Source: MHLW "2005 IYAKUHIN SANGYOU ZITTAI CHOUSA", Total Planning Center "2008 Generics IYAKUHIN NO SI

ies are increasing their shares in the market

TORICAL GENERICS SALES (JPY IN MILLIONS)(1)


FY2006
FY2007
FY2008E
% of Total
Sales
% of Total Sales
% of Total
8.9%
37,631
9.3%
44,783
10.00%
7.3%
31,828
7.9%
43,000
9.60%
7.6%
31,495
7.8%
35,060
7.8%
6.7%
27,424
6.8%
31,000
6.9%
4.6%
18,500
4.6%
19,400
4.3%
3.4%
13,500
3.3%
14,200
3.2%
2.9%
13,250
3.3%
13,842
3.1%
2.2%
2.3%
1.9%
1.5%
1.1%
1.2%
1.2%
1.0%
1.1%
1.0%
1.0%
0.8%
0.8%
41.5%
100%
30.4%

10,042
9,680
7,673
7,500
4,500
4,754
4,400
4,320
4,380
4,070
4,000
3,738
3,430
157,787
403,902
128378

2.5%
2.4%
1.9%
1.9%
1.1%
1.2%
1.1%
1.1%
1.1%
1.0%
1.0%
0.9%
0.8%
39.1%
100%
31.8%

11,462
11,422
9,102
9,000
5,100
4,973
4,711
4,697
4,690
4,316
4,300
4,120
3,570
166,149
448,897
153843

Ind on December 24,2009


er "2008 Generics IYAKUHIN NO SIZUOU BUNSEKI CHOUSA"

2.6%
2.5%
2.0%
2.0%
1.1%
1.1%
1.0%
1.0%
1.0%
1.0%
1.0%
0.9%
0.8%
37.0%
100%
34.3%

Exhibit 6: Major Products of Kyowa


FY 2006
FY 2005
Ranking
Ranking
1
140
2
3
3
2
4
10
5
5
6
4
7
6
8
7
9
8
10
9
11
11
12
14
13
21
14
19
15
20
16
17
17
29
18
16
19
1
20
24
* Not available
Source: Provided by Lupin Ltd.
Exhibit 7: Major Suppliers and Contract Manufactures of Kyowa
Top 10 suppliers (Financial year 2006)
Ranking
1
2
3
4
5
6
7
8
9
10

Supplier
Koa Shoji
Uji Pharma.
Nihon Bulk Pharma.
Daito
Miat
MG Pharama.
Kaken Pharma.
Valent pharma.
Sumitomo Chemical
Karinco s.p.a
Total

Top 10 contract manufacturers


Ranking
1
2
3

Manufacturer
Kyorin Rimedo
Daito
Tatsumi kagaku

4
5
6
7
8
9
10

Pharma Pack
Toyo Capsule
Seiko Eiyo Yakuhin
Maruko Pharma.
Taiyo Yakuhin
Meguro Kako
Kanae
Total

Source: Provided by Lupin Ltd.

Brand Name
Flutcasone nasal solution
Omeperazole
Pravastatin Na
Flunitrezapem
Lunapron
Kashilon
Lansaprazole
Sulpride
Calfina
Mestinon
Simvastatin
Akriden
Amel
Majoprin
Carbamazepine
Neuomil
Eparose
Nifeslow
Tamsulosin
Milmag
Total

Sales (JPY mn.)


FY-2005
FY-2006
na*
459.38
317.28
432.62
393.05
387.13
168.11
219.23
203.71
216.37
239.52
211.90
196.67
204.93
176.49
204.00
175.91
194.51
170.17
190.14
141.10
152.87
122.07
137.99
108.30
136.50
110.53
129.01
108.89
127.53
113.04
121.83
82.11
119.18
116.05
116.77
448.50
106.25
97.76
104.14
3,489.23
3,972.28

d Contract Manufactures of Kyowa

Category
API/Finished products
Finished products
API/Pharmaceutical vehicle
API/Interim product
API
Finished products
API
API/Preparation
API
API

Major product
Tanus aqua spray, Fluticason nasal solution
Sulpiride tablet , Loxipain tablet
Flunitrazepam tablet, Lupnapron fine granule

Amount (JPY
mn.)
526.4
466.9
430.0
313.3
201.3
120.3
83.2
80.5
76.4
76.2
2,374.6

Amount (JPY
mn.)
386.5
113.3
70.1

Rhinojet
Eparose
Lucus tablet, Alfospan tablet
Droxipoda capsule
Nitopress tablet
Toccata tablet, Majoprin tablet
Aspizone

37.5
25.9
10.3
6.2
5.9
5.7
1.8
663.3

Exhibit 8: Detailed Historical Balance Kyowa (figures in JPY millions)


FY2003
Assets
Depreciation
Property, plant and equipment
Plants and buildings
Facility fixtures and structures
Machines and provision
Tools, equipment, structures and delivery equip.
Land
Intangibles:
Goodwill
Telephone/ Facilities rights
Software
Investment etc.
Investment securities
Guaranty money and long term prepaid exp.
Working Capital
Current asstes:
Cash and cash deposits
Notes receivable
Accounts receivable
Less: Allowance for bad debt
Inventory
Other Current Assets
Current liabilities:
Notes payable
Trade account payables
Other account payables
Unpaid income tax
Deposit/ suspense receipt
Unpaid consumption tax
Net Working Capital
Deferred assets
Total Assets
Liabilities
Shareholders Fund
Capital Stock
Retained earnings:
Retained surplus
Special reserve
Director retirement reserve
unappropriated profits
Long-term liabilities:
Long-term borrowing

735
314
268
102
1,343
2,762
251
9
25
285
168
92
260

1,010
1,374
1,694
-34
2,027
65
6,136
895
375
214
34
21
0
1,539
3,825
10
7,142
FY2003
98
25
1,873
55
224
2,177
4,005

Guarantee money received


Debentures
Retirement pention reserve
Total Liabilities and Capital

497
1,110
27
5,639
7,914

Source: Provided by Lupin Ltd.


Exhibit 9: Detailed Income Statement Kyowa (figures in JPY millions)

3
9
10
11
13
14
15
16
17
18
19
20
21
22
23
24

Sales
Cost of goods sold
Gross profit
SG&A:
Sales Cost
R&D Expense
Administrative Expenses
Operating Profit
Non-operating revenue
Interest and dividend received
Non-operating expense
Interest paid*
Ordinary income
Extraordinary loss
Net income before tax
Income tax**
Net income after tax
Dep
WC change
investment

FY2003
6,768
4,391
2,378
2,031

346
80
1
138
77
288
70
218
58
161

NPV
WACC
* Included in non-operating expense
** Kyowa faced 42% tax rate
Source: Provided by Lupin Ltd.

7%

FY2004

FY2005

FY2006

FY2007

FY2008

FY2009

386
424

391
543

362
459

760
298
485
122
1,343
3,008

718
280
559
91
1,343
2,991

678
302
555
95
1,343
2,973

3,011

3,163

3,260

216
8
28
252

147
6
23
176

80
5
46
131

131

131

131

168
91
259

168
107
275

168
115
283

283

283

283

1,215
1,362
2,101
-36
1,535
50
6,227

1,206
1,356
2,710
-41
1,757
23
7,011

747
1,578
2,549
-41
2,146
20
6,999

901
307
143
11
18
59
1,439
3,790
56
7,365

910
244
221
76
20
3
1,474
4,669
42
8,153

949
316
127
110
25
32
1,559
5,008
28
8,423

4,497
28
7,950

5,173
28
8,778

5,834
28
9,536

FY2004

FY2005

FY2006

98

98

98

98

98

98

25
1,963
55
98
2,141

25
1,983
55
155
2,218

25
2,023
55
197
2,300

-880
2,023
55
197
1,395

-52
2,023
55
197
2,223

706
2,023
55
197
2,981

4,646

4,660

4,530

4,530

4,530

4,530

501
966
11
6,124
8,363

499
1,538
8
6,705
9,021

509
1,414
4
6,457
8,855

FY2004
6,783
4,435
2,349
2,224
950
896
378
125
70
1
92
85
103
60
42
9
34

FY2005
7,241
4,466
2,775
2,370
1,043
831
495
405
42
1
129
90
318
152
166
69
97

FY2006
7595
4,887
2,708
2,299
927
815
557
409
55
2
130
120
334
90
244
110
134

Firm value
Debt
Equity
Synergy
E+S

509
1,414
4
6,457
8,778

509
1,414
4
6,457
9,536

1
FY2007
8,086
5,078
3,008
2,417
986
868
563
591

2
FY2008
9,301
5,813
3,488
2,701
1,135
998
568
787

3
FY2009
10,490
6,504
3,986
2,979
1,280
1,126
574
1,007

591

787
20
767
322
445
391
676
543
-383
-334

1,007
20
987
415
572
362
662
459
-186
-152

591
248
343
386
-511
424
816
762

10,018

JPY

509
1,414
4
6,457
7,950

USD
10,933
5,944
4,989
11,147.39
16,135.94

99.39
54.04
45.35
101.34
146.69

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

3,260

3,260

3,260

3,260

3,260

3,260

131

131

131

131

131

131

283

283

283

283

283

283

6,301
28
10,003

7,164
28
10,866

7,544
28
11,246

7,897
28
11,599

8,505
28
12,207

9,160
28
12,862

98

98

98

98

98

98

1,173
2,023
55
197
3,448

2,036
2,023
55
197
4,311

2,416
2,023
55
197
4,691

2,769
2,023
55
197
5,044

3,377
2,023
55
197
5,652

4,032
2,023
55
197
6,307

4,530

4,530

4,530

4,530

4,530

4,530

509
1,414
4
6,457
10,003

509
1,414
4
6,457
10,866

509
1,414
4
6,457
11,246

509
1,414
4
6,457
11,599

509
1,414
4
6,457
12,207

509
1,414
4
6,457
12,862

4
FY2010
11,330
7,024
4,305
3,178
1,382
1,216
580
1,128

5
FY2011
12,882
7,987
4,895
3,539
1,572
1,382
585
1,356

6
FY2012
13,565
8,410
5,155
3,702
1,655
1,455
591
1,453

7
FY2013
14,935
9,260
5,675
4,022
1,822
1,602
597
1,653

8
FY2014
16,085
9,972
6,112
4,291
1,962
1,726
603
1,821

9
FY2015
17,323
10,740
6,583
4,581
2,113
1,859
609
2,001

1,128
20
1,108
465
643
0
467
0
176
134

1,356
20
1,336
561
775
0
863
0
-88
-63

1,453
20
1,433
602
831
0
380
0
451
300

1,653
20
1,633
686
947
0
353
0
15,102
9,371

1,821
20
1,801
756
1,044
0
608
0

2,001
20
1,981
832
1,149
0
655
0

g
r

3%
7.06%

FY2016

FY2017

FY2018

FY2019

FY2020

FY2021

FY2022

3,260

3,260

3,260

3,260

3,260

3,260

3,260

131

131

131

131

131

131

131

283

283

283

283

283

283

283

9,865
28
13,567

10,625
28
14,327

11,443
28
15,145

12,324
28
16,026

13,273
28
16,975

13,406
28
17,108

13,540
28
17,242

98

98

98

98

98

98

98

4,737
2,023
55
197
7,012

5,497
2,023
55
197
7,772

6,315
2,023
55
197
8,590

7,196
2,023
55
197
9,471

8,145
2,023
55
197
10,420

8,278
2,023
55
197
10,553

8,412
2,023
55
197
10,687

4,530

4,530

4,530

4,530

4,530

4,530

4,530

509
1,414
4
6,457
13,567

509
1,414
4
6,457
14,327

509
1,414
4
6,457
15,145

509
1,414
4
6,457
16,026

509
1,414
4
6,457
16,975

509
1,414
4
6,457
17,108

509
1,414
4
6,457
17,242

10
FY2016
18,657
11,567
7,090
4,893
2,276
2,002
615
2,196

11
FY2017
20,094
12,458
7,636
5,229
2,451
2,156
621
2,407

12
FY2018
21,641
13,417
8,224
5,590
2,640
2,322
628
2,634

13
FY2019
23,307
14,450
8,857
5,978
2,843
2,501
634
2,878

14
FY2020
25,102
15,563
9,539
6,396
3,062
2,693
640
3,143

15
FY2021
25,353
15,719
9,634
6,460
3,093
2,720
647
3,174

16
FY2022
25,606
15,876
9,730
6,525
3,124
2,748
653
3,206

2,196
20
2,176
914
1,262
0
705
0

2,407
20
2,387
1,002
1,384
0
760
0

2,634
20
2,614
1,098
1,516
0
818
0

2,878
20
2,858
1,201
1,658
0
881
0

3,143
20
3,123
1,311
1,811
0
949
0

3,174
20
3,154
1,325
1,829
0
133
0

3,206
20
3,186
1,338
1,848
0
134
0

FY2023

FY2024

FY2025

FY2026

FY2027

FY2028

FY2029

3,260

3,260

3,260

3,260

3,260

3,260

3,260

131

131

131

131

131

131

131

283

283

283

283

283

283

283

13,675
28
17,377

13,812
28
17,514

13,950
28
17,652

14,090
28
17,792

14,230
28
17,932

14,373
28
18,075

14,517
28
18,219

98

98

98

98

98

98

98

8,547
2,023
55
197
10,822

8,684
2,023
55
197
10,959

8,822
2,023
55
197
11,097

8,962
2,023
55
197
11,237

9,102
2,023
55
197
11,377

9,245
2,023
55
197
11,520

9,389
2,023
55
197
11,664

4,530

4,530

4,530

4,530

4,530

4,530

4,530

509
1,414
4
6,457
17,377

509
1,414
4
6,457
17,514

509
1,414
4
6,457
17,652

509
1,414
4
6,457
17,792

509
1,414
4
6,457
17,932

509
1,414
4
6,457
18,075

509
1,414
4
6,457
18,219

17
FY2023
25,862
16,035
9,828
6,590
3,155
2,775
660
3,238

18
FY2024
26,121
16,195
9,926
6,656
3,187
2,803
666
3,270

19
FY2025
26,382
16,357
10,025
6,722
3,219
2,831
673
3,303

20
FY2026
26,646
16,521
10,126
6,790
3,251
2,859
680
3,336

21
FY2027
26,913
16,686
10,227
6,857
3,283
2,888
686
3,369

22
FY2028
27,182
16,853
10,329
6,926
3,316
2,917
693
3,403

23
FY2029
27,454
17,021
10,432
6,995
3,349
2,946
700
3,437

3,238
20
3,218
1,351
1,866
0
135
0

3,270
20
3,250
1,365
1,885
0
137
0

3,303
20
3,283
1,379
1,904
0
138
0

3,336
20
3,316
1,393
1,923
0
140
0

3,369
20
3,349
1,407
1,943
0
141
0

3,403
20
3,383
1,421
1,962
0
142
0

3,437
20
3,417
1,435
1,982
0
144
0

FY2030

3,260

131

283

14,662
28
18,364

98
9,534
2,023
55
197
11,809
4,530

509
1,414
4
6,457
18,364

24
FY2030
27,728
17,191
10,537
7,065
3,383
2,975
707
3,471

3,471
20
3,451
1,450
2,002
0
145
0

Exhibit 10: Kyowa Pharmaceuticals and Major Comparables FY 2006 (figures JPY million)
Kyowa
Sawei
Nichi-lko
Towa
Pharma.
Pharma.
Pharma.
Pharma.
7,595
26,225
27,774
23,072

Sales (FY 2006, JPY million)


No.of days of sales:
Notes receivable
71.91
57.23
Accounts receivable
113.66
101.35
Total receivable
185.57
158.58
Total Inventory
93.50
114.14
Notes payable
(47.53)
(11.70)
Trade account payables
(16.35)
(40.14)
Net working capital
215.19
220.89
% of sales accounted by:
Product sales
83%
75%
Merchendise sales
15.70%
25.47%
Gross profit margin
36.0%
45.6%
Percentage of total cost:
Material
60.67%
61.15%
Labour
12.77%
14.64%
Others
26.57%
24.21%
Outsourcing
8.93%
n.a.
SG&A / Sales
36.03%
33.63%
R&D / Sales
6.69%
8.34%
* Other costs mainly comprised depreciation, lease charge and utility
Source: Provided by Lupin Ltd.

68.33
94.21
162.54
61.55
(50.89)
(25.33)
147.87

111.41
45.55
156.96
95.22
(26.81)
(34.49)
190.88

n.a.
n.a.
47.3%

88%
11.59%
45.1%

70.40%
12.73%
18.27%
7.70%
34.54%
4.58%

58.83%
24.60%
16.57%
n.a.
34.34%
7.59%

s JPY million)

Fuji Pharma.
11,241
24.79
125.94
150.73
75.78
(8.81)
(48.15)
169.55
92%
7.51%
44.0%
70.00%
11.40%
18.60%
n.a
31.25%
6.68%

Exhibit 11: Key Income Related Projections


a)
b)
c)
d)

e)
f)
g)

The projection assumes April 2006 as the date of decision.


Sales are expected to grow at 6.46%, 15.03% and 12.79% for FY2007, 2008 and 2009 respectively. Thereaft
Cost of Goods Sold as a percentage of sales is expected to remain at 62.80% and 62.50% during FY2007 and
Forecast about different components of SG&A cost:

Selling cost as a percentage of sales will remain at the same level as in FY2006 i.e. 12.20%

R & D expenses as a percentage of sales will remain at the same level as in FY2006 i.e. 10.73%

Total administrative expenses are expected to grow at a rate of 1% per year (steady growth) from FY20
The non-operating expenses (including interest paid) was expected to be 131 and 159 million during FY20
Extraordinary loss from disposal of inventories of JPY 20 million were expected for the next six year starting
The number of days of sales of key working capital items are below:

Working Capital Item


No. of days of sales
Notes receivable
67
Accounts receivable
106
Inventory
85
Notes payable
-46
Trade Accounts payable
-15
Net working capital
204
All other current assets and current liabilities may be assumed to be equal to FY2007 amount. Assuming
h)
i)
j)
k)
l)
m)

The cash balance was expected to be maintained around JPY 770 m.


Investment in fixed assets (and depreciation) on fixed assets in mn JPY are expected to be: 424 mn (386 mn
Refer Exhibit 13 for expected cost savings from shifting production from Japan.
Kyowas effective tax rate was 42%
Kyowa Equity:Debt ratio after acquisition is expected to be 60:40
The long-term borrowings and debentures stay at the same level as the actual balance.

Source: Provided by Lupin Ltd.

d 2009 respectively. Thereafter, it can be assumed that Kyowa sales will grow at the same rate as that of Generics Market (Scenario II)
d 62.50% during FY2007 and FY2008 respectively.

Y2006 i.e. 12.20%


in FY2006 i.e. 10.73%
ar (steady growth) from FY2007 onwards.
d 159 million during FY2007 and FY 2008 and 181 million thereafter. Non-operating revenues (including interest and dividend rece
d for the next six year starting FY2008.

to FY2007 amount. Assuming year has 365 days. Lupin is optimistic about reducing days inventory to 96 in FY2013 and thereafter.

pected to be: 424 mn (386 mn) for FY2007, 543 mn (391mn) for FY2008 and 459 mn (362 mn) for FY2009 respectively. Thereafter, a re

Generics Market (Scenario II)

uding interest and dividend received) was expected to remain at 50 million during FY2007 - FY2009. These cash flows may be ignore

6 in FY2013 and thereafter.

009 respectively. Thereafter, a reasonable assumption to make is that the investments in fixed assets would be equal to the extent of that

09. These cash flows may be ignored while computing DCF.

would be equal to the extent of that depreciation charged.

Exhibit 12: Generic Drugs: Growth Rate and Share in Total Pharmaceutical Market
Scenario I
Year

2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Generic: Growth
rate
10.4%
18.1%
14.7%
17.3%
8.0%
13.7%
5.3%
10.1%
7.7%
7.7%
7.7%
7.7%
7.7%
7.7%
7.7%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

Scenario II

Generic: Share in
total Pharma.
market
8.4%
9.5%
10.8%
12.0%
13.3%
14.5%
15.4%
16.5%
17.6%
18.7%
20.0%
21.3%
22.7%
24.3%
25.9%
25.9%
25.9%
25.9%
25.9%
25.9%
25.9%
25.9%
25.9%
25.9%
25.9%

Generic: Growth
rate
5.8%
11.3%
9.8%
13.6%
5.4%
10.6%
4.2%
9.0%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
6.6%
1.0%
1.0%
1.0%

Source: Yano Research Institute, provided by Lupin Ltd.

20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%

Colu
mn C

16.0%
14.0%
12.0%
Colu
mn C

10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

armaceutical Market
Scenario II
Generic: Share in
total Pharma.
market
7.5%
8.1%
8.7%
9.5%
10.2%
10.8%
11.4%
12.0%
12.7%
13.4%
14.1%
14.9%
15.7%
16.6%
17.5%
18.5%
19.5%
20.6%
21.7%
22.9%
24.2%
25.5%
25.5%
25.5%
25.5%

Colu
mn C

Market
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
FY2023
FY2024
FY2025
FY2026
FY2027
FY2028
FY2029
FY2030
FY2031

1.07E+06
1.18E+06
1.39E+06
1.60E+06
1.87E+06
2.02E+06
2.30E+06
2.42E+06
2.67E+06
2.87E+06
3.09E+06
3.33E+06
3.59E+06
3.86E+06
4.16E+06
4.48E+06
4.53E+06
4.57E+06
4.62E+06
4.66E+06
4.71E+06
4.76E+06
4.80E+06
4.85E+06
4.90E+06
4.95E+06

Sales - Kyowo
7,595
8,086
9,301
10,490
11,330
12,882
13,565
14,935
16,085
17,323
18,657
20,094
21,641
23,307
25,102
25,353
25,606
25,862
26,121
26,382
26,646
26,913
27,182
27,454
27,728
27,728

COGS
0.71%
0.69%
0.67%
0.66%
0.60%
0.64%
0.59%
0.62%
0.60%
0.60%
0.60%
0.60%
0.60%
0.60%
0.60%
0.57%
0.57%
0.57%
0.57%
0.57%
0.57%
0.57%
0.57%
0.57%
0.57%
0.56%

4.89E+03
5.08E+03
5.81E+03
6.50E+03
7.02E+03
7.99E+03
8.41E+03
9.26E+03
9.97E+03
1.07E+04
1.16E+04
1.25E+04
1.34E+04
1.45E+04
1.56E+04
1.57E+04
1.59E+04
1.60E+04
1.62E+04
1.64E+04
1.65E+04
1.67E+04
1.69E+04
1.70E+04
1.72E+04
1.72E+04

20 21 22 23 24 25

Colu
mn C

Savings-Proc
64.34%
0.628
0.625
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62
0.62

Savings-Site COGS - savings


Gross profit SG&A:
4,887
2,708
2,299
5,078
3,008
2,417
5,813
3,488
2,701
6,504
3,986
2,979
7,024
4,305
3,178
7,987
4,895
3,539
8,410
5,155
3,702
9,260
5,675
4,022
9,972
6,112
4,291
10,740
6,583
4,581
11,567
7,090
4,893
12,458
7,636
5,229
13,417
8,224
5,590
14,450
8,857
5,978
15,563
9,539
6,396
15,719
9,634
6,460
15,876
9,730
6,525
16,035
9,828
6,590
16,195
9,926
6,656
16,357
10,025
6,722
16,521
10,126
6,790
16,686
10,227
6,857
16,853
10,329
6,926
17,021
10,432
6,995
17,191
10,537
7,065
17,191
10,537
7,072

Sales Cost
R&D Expense
Administrative Exp Operating Profit
Non-operating revenue
927
815
557
409
986
868
563
591
1,135
998
568
787
1,280
1,126
574
1,007
1,382
1,216
580
1,128
1,572
1,382
585
1,356
1,655
1,455
591
1,453
1,822
1,602
597
1,653
1,962
1,726
603
1,821
2,113
1,859
609
2,001
2,276
2,002
615
2,196
2,451
2,156
621
2,407
2,640
2,322
628
2,634
2,843
2,501
634
2,878
3,062
2,693
640
3,143
3,093
2,720
647
3,174
3,124
2,748
653
3,206
3,155
2,775
660
3,238
3,187
2,803
666
3,270
3,219
2,831
673
3,303
3,251
2,859
680
3,336
3,283
2,888
686
3,369
3,316
2,917
693
3,403
3,349
2,946
700
3,437
3,383
2,975
707
3,471
3,383
2,975
714
3,464

Interest and dividenNon-operating expense

Interest paid*

Ordinary income
409
591
787
1,007
1,128
1,356
1,453
1,653
1,821
2,001
2,196
2,407
2,634
2,878
3,143
3,174
3,206
3,238
3,270
3,303
3,336
3,369
3,403
3,437
3,471
3,464

Extraordinary
90
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20

Net income beIncome tax** Net income after tax


319
134
185
591
248
343
767
322
445
987
415
572
1,108
465
643
1,336
561
775
1,433
602
831
1,633
686
947
1,801
756
1,044
1,981
832
1,149
2,176
914
1,262
2,387
1,002
1,384
2,614
1,098
1,516
2,858
1,201
1,658
3,123
1,311
1,811
3,154
1,325
1,829
3,186
1,338
1,848
3,218
1,351
1,866
3,250
1,365
1,885
3,283
1,379
1,904
3,316
1,393
1,923
3,349
1,407
1,943
3,383
1,421
1,962
3,417
1,435
1,982
3,451
1,450
2,002
3,444
1,447
1,998

Exhibit 13: Potential Savings from API Procurement Variation

Phase

Phase 1

Molecules

Qty (Kg)

Pravastatin$

152

11000

1.67

Amlodipine$

250

2000

0.5

60

9000

0.54

130

1750

0.23

180

2500

0.45

60

10000

0.6

0.112

3000000

0.34

780

200

0.16

60

3500

0.21

300000

0.3

80

2000

0.16

Risperidone$
Lansoprazole
Omeprazole
Simvastatin

Beraprost Na

Zonisamide#
Phase 1

Potential
Savings $ Mn

Savings/Kg

Epinastine

Tamsulosine

Zopiclone
Tax benefits
$
Full saving potential occurs in 2011-12.
#

Full saving potential occurs in 2012-13


It is also expected that Lupin will save $0.44 mn on bulk procurement of API in FY 2010
The potential tax savings due to relocation of certain manufacturing activities to India was expected to be U
For estimating terminal value, one may assume that Lupin will be able to save amounts similar to FY2013 d
#

Source: Provided by Lupin Ltd.

Exhibit 14: Potential Savings from Site Variation Direct Manufacturing


4
2009-10

Panel A: Savings from site variation to India ($0.0075 / tablet, net of freight charges of $0.0021/tablet)
No of units to be shifted to India (million)
0
Projected cost savings
0
Panel B: Savings from capacity increase at existing facility ($0.0015 # / tablet)
No of units with possible savings
100
Projected cost savings
0.15
0.37
0.37
0.28
#

Current Manufacturing cost / unit was $ 0.0114/ tablet and expected savings was 13% i.e. $0.0015 per tabl

Source: Provided by Lupin Ltd.

2010-11
(50%)

2009-10

2011-12
(100%)

2012-13
(102%)

0.84

1.67

1.70

0.25

0.50

0.51

0.27

0.54

0.55

0.12

0.23

0.23

0.23

0.45

0.46

0.30

0.60

0.61

0.17

0.34

0.08

0.16

0.11

0.21

0.15

0.30

0
0.22

0
0.26

0.08
0.44

0.16
0.52

API in FY 2010
ities to India was expected to be USD 0.22 mn, 0.26mn, 0.44 mn and 0.52 mn respectively for FY2010 to FY2013
save amounts similar to FY2013 during future years

5
2010-11

6
2011-12

2012-13

reight charges of $0.0021/tablet)


100
250
0.75
1.875
300
0.45
3.455
3.455
2.46

7
Over
years

usd to jpy
500 3.75

500
750 0.75
1.125
7.64
10.6348
7.64 150.7293539
5.08
93.53

ings was 13% i.e. $0.0015 per tablet.

6.38

2.48
r
g
11,147.39

0 to FY2013

110

7.06%
0%

Exhibit 15: Key Stock Market and Exchange Rate Information


Item
Japanese 10 yr Govt Bond (6 months average to February 28, 2007)
Risk premium in the Japanese market*
Size Premium in Japan
Cost of Debt for similar companies
After-tax Cost of Debt
Exchange rate (JPY/USD)
Exchange rate (JPY/INR)
*Available from Ibbotson Associates Japanese Equity Risk Premia Report 2006
Source: Provided by Lupin Ltd.

WACC
rccf
E
D/E
rf
mrp
T
beta u
beta l
re

Rate
1.698%
5.80%
3.95%
2.43%
1.41%
110
2.73

1.41%

7.06%
7.46%

0.6
1.698%
5.80%
42%
0.535
0.892
10.82%

D/V

0.40 E/V

0.6

0.6666666667

0.3858173077

Exhibit 16: Market Multiples of Major Comparables


Sawai
Nichi-lko
Information
Pharma.
Pharma.
Towa Pharma. Fuji Pharma.
EV/Sales
2.69
1.9
1.96
1.2
EV/EBIT
17.02
15.4
15.4
9
EV/EBITDA
12.28
12.91
11.31
6.54
PE Ratio
29.07
24
26.77
17.2
Price to book value
29.96
21.44
59.91
19.93
0.565
Beta
0.53
0.41
0.69
0.63
0.535
Unlevered beta
0.48
0.35
0.68
0.63
Note: The Price to Book ratio based on 2006 information, remaining are based on information in March 2007

Source: Provided by Lupin Ltd.

ation in March 2007

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