investor presentation 05 2011 meet/207976_20110513.pdf · injectables, accounting for 90% of the...
TRANSCRIPT
2
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
or variations 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. Claris
Lifesciences Limited does not undertake any obligation to update forward-looking statements to reflect
events or circumstances after the date thereof.
Disclaimer
4
Industry Size
USD 773 bn global pharmaceutical market
USD 143 bn global injectables
USD 20 bn generic Injectables
Claris is present in the injectables space - a lucrative market segment, given a much smaller number of
competitors and hence high profitability margins
Source: CII-KPMG, Pharma Summit 2009,Avalon Global Research, The Global Generic Injectables Business, December 2009
5
Injectables – Key Characteristics
• The Global Pharma industry has grown at a steady pace of 8% CAGR over 2004-2008, while generics market; which is ~14% of the overall Pharma market; grew at an impressive 18% CAGR in the same period.
• The injectables industry, as compared to orals industry, is characterized by less competitive intensity, low price erosion and higher profit margins in comparison to oral formulations; 86% molecules have less than 5 competitors
0 10 20 30 40 50 60 70
1
2
3
4
5
6
7
8
9
10+
Num
ber
of
com
panie
s
Number of Injectable Generic Drugs (in the US)Source: CRISIL Report Mar 2010, IMS, Cygnus, Industry Insight – Global Generics, March 2009)
5562
80
92105
30
90
2004 2005 2006 2007 2008
Global Generic Market Growth
560
605 648
715773
300
500
700
900
2004 2005 2006 2007 2008
Global Pharma Industry Market Size (USD bn)
CAGR 8%
CAGR 18%
6
Injectables – Geographic Segmentation
• USA and EU are the largest regulated markets for
injectables, accounting for 90% of the regulated markets
• USA is the largest market for generic and non-biological
injectables, accounting for about 51% of the global
market, whereas emerging markets account for 20% of
the global generics injectables market
• Injectables is a specialized and niche area within the
pharmaceuticals industry:
- High complexity involved in formulating a large
and complex product portfolio across various
therapeutics based on multiple technology
platforms and multiple delivery mechanisms
- High capital intensity
- Governed by tougher regulations
- Customer segments are almost exclusively
hospitals with distinct decision making process
and criteria
Manufacturing facilities with sustainable cost
leadership that meet the requirements of relevant
regulatory agencies
51%
24%
6%
20%
54%
26%
3%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Generic Non-BiologicalInjectables
US
EU
ORM
EM
Geographical Breakdown of Global Injectables Market, 2009
Source: Avalon Global Research, The Global Generic Injectables Business, December 2009
7
Injectables – India Story
• India has emerged as one of the top generic drug supply hubs globally as low production costs give India an edge over other generics-producing nations
• The Indian pharma industry is expected to grow at a CAGR of 12.2% over 2008 to 2013
• Generics accounted for 88% of the market share in value terms and 90-95% in volume terms of the market in India in 2008
• Within injectables, the Indian market size is estimated at USD 1.86 billion
Source: Cygnus, Industry Insight – Global Generics, March 2009)
311.8247.5
76.6
7.7
773.2
6.4%
14.6%
6.6%
2.7%
5.7%
0
200
400
600
800
North America Europe Japan India Global scale0%
10%
20%
30%
Market size CAGR (2003-08)
India Pharma industry market size (USD bn): 2008
8
Hospitals – India Story
Favorable Demographics
•India‘s rising population and income levels, along with a growing preference for private health services over public services, is augmenting the growth of the healthcare delivery market
Availability of quality and affordable healthcare
•Among countries outside the US, India has one of the largest number of Joint Commission International (JCI)-approved hospitals.
•The country has 0.5 million doctors, 0.9 million nurses and around 1.37 million beds.
•India holds the top position in the number of medical and nursing colleges; 303 and 3,904, respectively.
•The cost of surgery in India is nearly one-tenth of the cost in the US and European countries
Increased expenditure on healthcare
•Population growth and increased disposable income are expected to result in better healthcare awareness and more expenditure onhealthcare.
•Healthcare expenditure in India is expected to increase by 15 per cent per annum. The 2011 budget has allocated 26760 Cr.
•India has the potential to add nearly 1.74 million beds between 2008 and 2027 with an investment of about US$ 104 billion duringthe same period to fulfill the unmet needs.
Changing disease pattern
•India is witnessing a shift in disease patterns from communicable diseases to the high incidence of non-communicable and lifestyle-related diseases, which is driving the need for tertiary-and quaternary-care hospitals and clinics.
Advantage India
Source: E&Y Research, Times of India, CRIS INFAC
9
Growth Drivers
• Future Outlook:
– Global generic injectables are expected to
grow rapidly and are estimated to reach
USD 33 billion in size in 2014, up from USD
20 billion in 2009
– This growth is driven by
- a large number of innovator injectable
products going off-patent in the non-
biological segment and
- limited price erosion in these
products, even after becoming
generics, due to limited competition
compared to oral dosage products
– Products generating revenues of USD 70
bn are expected to go off-patent in US in
the next 3 years
Source :- Datamonitor, Epsicom Business Intelligence, Avalon Global Research, The Global Generic Injectables Business, December 2009
Future Trends – Global Generic Injectables
20
33
2009 2014
CAGR 10%
20 20
28 28 27
2008E 2009E 2010E 2011E 2012E
Patent Expirations (USD bn)
11
Claris Lifesciences: Evolution
• Claris commences business as a Trading Company in Blood Products
• Successfully penetrates the Indian hospitals market
• Creates the core team and support infrastructure
• Launches Speciality Products development programs
• Commences manufacturing project
• Regulatory teams and manufacturing infrastructure in place
• Achieves leadership position in India
• International expansion in emerging markets
• Manufacturing facility approvals by ANVISA Brazil, INVIMA Colombia, MHRA UK and others
• Unveils strategy for regulated markets
• Carlyle invests Rs. 905.06 million in the Company for 11.14% (post issue) stake
• US FDA approval for sterile injectables manufacturing facility
• Emerges as a significant player in international markets
• Launch of a range of infusion products in non-PVC bags
• Commenced own sales and marketing activities in the US
• Scale up of product development and manufacturing facilities
• Obtained registrations for twenty five ANDAs in the United States
• Increase penetration in the international markets with new product launches and opening new geographies
• Regulatory filing for complex and high potential products such as Propofol and Iron Sucrose
• Invest in base business because of expanding demand, lower incremental costs leading to better margins
Claris has evolved from an Emerging Market focused injectables company to one of the leading pure play global injectables players
1999-2002 2007-2010 Going Forward2003-2006
12
Claris Lifesciences: An Overview
• One of the largest Indian sterile injectables pharmaceutical companies
• 128 products formulations across multiple markets and therapeutic areas
• 5 manufacturing facilities in Ahmedabad, India ; 4 operational and 1 under construction
• Approvals by foreign regulatory authorities including US FDA, MHRA(UK), TGA (Australia) & GCC FDCA
• Strong domestic and international marketing & distribution network comprising an appropriate mix of multiple distribution channels / formats / layers
• Customer base primarily includes government and private hospitals, aid agencies and nursing homes
Claris has evolved from an domestic market-
focused injectables company to one of the
leading pure play global Injectables players
International business (58%)
Business mix 2010
Domestic business (42%)
SIP Business (Critical Care) (59%)
Base Business (Hospitals) (41%)
13
Claris Lifesciences: An Overview
Business model
Product authentication
Therapy and drug target action
Formulation stage
Delivery route
Markets
R&D
Development, manufacturing, marketing
Contract development and/ or manufacturing
Outsourcing, marketing and distribution
Patented BrandBranded GenericsGeneric
Life saving and supportCritical care and SupportPrimary Healthcare and OTC
NDDSFormulationsAPIs
InjectablesInhalations and oralsOintments
Regulated marketsSemi-Regulated / Emerging
marketsUnregulated
DiscoveryDevelopmental/
InnovativeGeneric product formulation
Claris’ PresenceClaris has involved from the Hospital / Base Business to Critical Care business which is
higher up in the value chain of the pharmaceutical industry in terms of Therapy & Drug
Target Action, Formulation Stage, Delivery Systems & Market Focus
14
Integrated Business Model
Scale and profitability in a niche segment
Committed management team and well qualified workforce
In house regulatory and R&D Capabilities
Established sales & distribution network
Broad product portfolio across therapeutic areas, technology platforms
Capability to manufacture complex APIs for captive use
Manufacturing facilities, with sustainable cost leadership, that meet the requirements of relevant regulatory agencies
Presence in 76 countries worldwide
15
Key players in the industry
Company Product MixKey
comments
Medication management systems, I.V. Sets, solutions & irrigation, drug delivery systems, in-patient glycemiccontrol, pharmaceuticals, invasive monitoring systems, suction products
Anesthesia, bio surgery, clinical nutrition, critical care, hemophila, immunoglobulin, infusuion systems / IV tubing, pharmaceuticals, solutions and drug delivery, pulmonology, renal, subcutaneous fluid administration, vaccines
Anesthesia, clinical nutrition, continence care, diabetes care, extracorporeal blood treatment, infection prevention, infusion therapy, neurosurgery, orthopaedics
Hemodialysis, acute dialysis, peritoneal dialysis, dialysis care, spectra laboratories, liver support therapy, therapeutical apheresis
Globally Claris, competes with these major players
17
Wide Product Range
• Filed 305 applications for product registrations in regulated markets, including 37 applications in the US
• Received 172 product registrations, including 25 in the US
• Products catering to both segments of the Hospitals – the Base Segment (Hospital Care) and SIP (Critical Care) Segment.
• Multiple technology platforms – aqueous solutions as well as complex colloidal solutions, liposomal products and emulsions
• Multiple delivery systems – glass and plastic bottles, vials, ampoules and non-PVC & PVC bags
• Presence across 76 countries worldwide
• Developed and registered dossiers for countries across the world
Registrations (Excluding Variants)
Registered Applied
1186
317
Breakup of Registrations
Registered Applied
EM RM
1014 184
172 133
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Delivery Systems and Technology Platforms
• Glass Ampoules
• Glass Vials
• Glass bottles
• PVC bags
• Non-PVC bags
- Single chamber bags
- Double chamber bags
- Triple chamber bags
Current delivery systems
• Emulsion technology
• Aqueous technology
- SVP
- LVP
• Form-Fill-Seal technology for bags
- Non-PVC bags
• Blow-Fill-Seal technology for plastic bottles
Current technological capabilities
Strong capabilities in a range of delivery systems
20
Manufacturing Infrastructure
• 4 operational manufacturing plants across a 78 acre campus
• Certain facilities have been approved by Foreign Regulatory Authorities including US FDA, MHRA(UK), TGA (Australia) & GCC FDCA
• One of the few manufacturers in India and other emerging markets to have facilities approved by multiple regulatory authorities in the regulated markets for:
- Large volume parenterals in glass bottles
- Emulsions manufacturing and
- Bag manufacturing (PVC & Non PVC)
• Over 100 successful audits from regulatory authorities; WHO GMP, ISO 9001-2000 and regulatory compliance certifications
• Cost leadership – These facilities have a significant cost advantage over the facilities set up by international competitors in North America or Western Europe
• Technologies purchased from international suppliers such as a double pass reverse osmosis system from Christ (Switzerland), distillation columns from Stillmas (Italy), manufacturing vessels from Diesel (Germany), glass vials washing and sterilization tunnels from Groninger (Germany), etc.
• Received Indian Drug Manufacturer Association’s Quality Excellence Award and ‘Frost and Sullivan’award for manufacturing excellence
21
Excellent R&D Facilities & Track Record
• R&D facility approved by the Department of Science and Technology, GOI
• R&D capability and experience to develop, manufacture and register products across
various delivery systems to increase the efficiency of drug delivery and make the products
better suited to market requirements
• We currently employ approximately 75 scientists and specialists in India for R&D activities
• Expertise in developing complex and difficult to develop products such as propofol, iron
sucrose, hydroxyl ethyl starch and glutamine I.V. and complex and difficult to develop
delivery systems, such as multi-chamber bags etc. signifies its excellent R&D track record
• 116 registered trademarks and 85 trademarks applied-for in India; 38 registered
trademarks and 39 pending applications internationally
• 3 registered process patents and 15 pending applications for process patents in India
• 12 copyright registrations in India and applications for 2 copyright registrations
23
Sales and Marketing Strategy & Network
Philosophy Tier I Countries Tier II Countries
• Tiered approach for international
markets based on clearly defined
criteria:
- Nature of the market,
attractiveness of the market
and relative position of the
players in the supply chain
• Allows Claris to leverage its
product development, regulatory
and manufacturing strengths
• Distributor manages the supply chain
• The Distributors has a dedicated sales team for on the ground sales of Claris Products.
• Countries like Brazil, Mexico, Venezuela, Columbia, Chile, Vietnam, Uzbekistan, etc. follow this model.
• Supply chain and sales are both managed by the Distributor.
• Sales team of approximately 422 people in India who supply mainly to hospitals
• Network of approximately 43 clearing and forwarding agents, 40 distributors, 16 consignee agents and
1,120 stockists in India
• Total sales force of about 107 people in the international markets
• Business arrangements with local companies in regulated markets to grow the distribution network and
to strengthen the sales and marketing presence across 76 countries
24
Geographical Presence
Latam
Brazil, Mexico, Venezuela, Chile, Nicaragua, Colombia, Trinidad & Tobago, Argentina, Jamaica, Costa Rica, Peru, DR, Guyana
Africa
Tanzania, Algeria, Mozambique, Uganda, Kenya, Madagascar, Ghana, Mauritius, Malawi, Angola, Ethiopia, Zimbabwe, Zambia, Comoros, Nigeria, Rwanda, Senegal, Sierra
Asia
India, Vietnam, Srilanka, Nepal, Indonesia, Philippines, Singapore, Cambodia, Thailand, Bangladesh
CIS
Uzbekistan, Kazakh, Kyrgyzstan, Turkmenistan, Tajikistan, Georgia, Azerbaijan, Russia, Ukraine
GCC+ME
Saudi Arabia, Bahrain, Jordan, Qatar, Lebanon, UAE, Oman, Kuwait, Afghanistan, Syria, Yemen
Regulated Markets
USA, UK, Australia, Canada, Denmark, Greece, Italy, Netharlands, NewZealand, Poland, Portugal, Senagal, South Korea
26
Board of Directors
• Post Graduate in Management from Northeastern University, Boston, USA and holds a Bachelor of Commerce degree from Gujarat University,Ahmedabad
• Appointed as Director of the Company on February 19, 2001 and has been the Managing Director & CEO since September 26, 2008
• Holds a Bachelors degree in Commerce and Doctorate in finance from Mumbai University and also qualified & practicing Chartered Accountant and Cost and Works Accountant
• Appointed as a Director on April 27, 1999
• Holds a Master of Business Administration degree from Babson College, Boston, USA and holds a Bachelor of Commerce degree from GujaratUniversity, Ahmedabad
• Appointed as a Director of the Company on June 13, 2006 and served as CFO of the Company from January 1, 2008 to March 31, 2009
Arjun S. Handa Managing Director & CEO
Dr. Pravin P. Shah Non-Executive Chairman and Independent Director
Aditya S. HandaNon-Executive & Non-Independent Director
Eminent & Experienced directors bring extensive knowledge and best practices, assisting in attaining higher levels
• Holds a Bachelor of Science degree from Saurashtra University, Rajkot
• Joined the Company on April 1, 1999 and has around 34 years of experience in the pharmaceutical industry
• Responsible for the technical aspects of the business
Chetan MajumdarExecutive Director
27
• Holds a Master of Commerce degree from Maharaj Shivajirao University, Vadodara
• Appointed as an Executive Director in July , 2009, he has been with the company since April 1, 1999
• Has around 13 years of experience in the pharmaceutical industry
ChandrasinghPurohitExecutive Director(Finance)
Board of Directors
Amish VyasExecutive Director
• Holds a Post-graduate degree in Mathematics and a Graduate degree in Law from Punjab University and has completed his training in Public Administration from the National Academy of Administration
• Served in the Indian Administrative Service for about 35 years
• Retired from Public Service as Chairman of the Board for Industrial and Financial Reconstruction
Surrinder LalKapurIndependent Director
Eminent & Experienced directors bring extensive knowledge and best practices, assisting in attaining higher levels
• Hold a Bachelor of Electronics and Communication degree from Gujarat University, Ahmedabad and holds MBA degree from Gujarat University
• Been with the Company since February 1, 2003 and has about 15 years of experience in the pharmaceutical industry
• Responsible for spearheading Company’s foray in to the regulated markets
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Board of Directors
• Holds a Post-graduate diploma in management from Indian Institute of Management, Ahmedabad and B.Com (Hons) from the University of Delhi
• Is the Vice-President of Carlyle India Advisors Pvt. Ltd.
Nikhil MohtaNon-Executive
• Management team includes senior executives, a majority of whom have worked with the Company for
over five years
• Total Employee strength of 1,614
• We have around 1,539 employees in India, out of which 75 employees worked for R&D and
approximately 493 were post graduates and around 805 were graduates
• We employed around 75 foreign nationals in the country and around 1,841 contract labourers
Eminent & Experienced directors bring extensive knowledge and best practices, assisting in attaining higher levels
• Holds a Master of Science degree in Biomedical engineering from the Indian Institute of Technology, Chennai, and is a graduate in mechanical engineering from the Indian Institute of Technology, Chennai
• Has over 35 years of experience in manufacturing and consulting
T. V. AnanthanarayananIndependent Director
30
Financial Highlights
2,770
3,905
5,999
7,522 7,435 7,523
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2005 2006 2007 2008 2009 2010
419
881
1,620
2,1012,295
2,434
15%
23%
27%28%
31%32%
-
500
1,000
1,500
2,000
2,500
3,000
2005 2006 2007 2008 2009 20100%
5%
10%
15%
20%
25%
30%
35%
212476
8351,084
1,304 1,4148%
12%
14% 14%
18%19%
-
200
400
600
800
1,000
1,200
1,400
1,600
2005 2006 2007 2008 2009 20100%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
23% 22%
29% 28%25%
15%19% 19%
26%24%
22%
15%
0%
5%
10%
15%
20%
25%
30%
35%
2005 2006 2007 2008 2009 2010
Net Sales (mn) EBITDA (mn)
PAT (mn)
CAGR – 18%
CAGR – 34%
EBITDA Margin (%)
ROE (%) ROCE (%)
CAGR – 37%
31
Balance Sheet
As at 31st December
15%
15%
3,606
-
3,606
9,146
8,508
638
5,631
3,672
5,347
3,956
12
7,630
2010
22%ROCE
25%ROE
3,140 Total Loan Funds
171 Unsecured Loans
2,969 Secured Loans
5,102 Net Worth
4,761 Reserves & Surplus
341 Share Capital
2,607 Net Current Assets
4,799 Total Current Liabilities & Provisions
5,036 Total Current Assets, Loans & Advances
2,369 Cash & Bank Balances
23 Intangible Asset (Net of Amortization)
6,129Net Block
2009
(In Rupees Million)`
32
Profit & Loss
As at 31st December
19%
32%
1,414
1,605
362
1,967
467
2,434
5,244
5,244
7,678
154
7,523
2010
18%PAT Margin (%)
31%EBITDA Margin (%)
1,304 PAT
1,437PBT
410Interest (Net)
1,847EBIT
448Depreciation
2,295 EBITDA
5,299Total Expenditure
5,299Operating & Other Expenses
7,594 Total Income
159Other Income
7,435Net Sales
2009
(In Rupees Million)
33
Quarterly Financials – Key Numbers
Quarterly Breakup of CY11 Numbers
13%
26%
199
218
64
282
128
410
1,004
178
1,592
25
1,566
Q1
PAT Margin (%)
EBITDA Margin (%)
PAT
PBT
Interest (Net)
EBIT
Depreciation
EBITDA
Total Operating Expenditure
NPD Expenditure
Total Income
Other Income
Net Sales
(In Rupees Million)