FUTURE SUN PHARMA Chairmans Speech

Dear Shareholders,

The Global Pharmaceutical Market is expected to touch US$ 1.4 trillion
by 2020, compared to US$ 1.0 trillion in 2015 as per IMS. Demographics,
increased incidence of chronic ailments, ageing population, increasing
income levels and improved access to healthcare will be the key drivers
of pharmaceutical demand in the coming years. However, globally rising
health care costs continue to be a major concern for everyone from
patients to policymakers. Population growth, ageing citizens and slower
global economic growth are likely to pressurise global healthcare
budgets. In such an environment, generic drugs are an essential part of
any solution to sustaining the healthcare system and are the key
drivers of increasing patient access to modern medicines.

However, the global healthcare industry is changing rapidly. Product
differentiation is becoming a key driver of success in an ever
competitive and demanding industry. Businesses will need to be more
innovative as well highly cost competitive to ensure long-term
sustainable value for shareholders. At the same time, with increased
expectations of various regulators, cGMP compliance is also becoming a
key determinant of future success. This requires focused efforts and
investments on the part of the industry to remain 24x7 compliant with
CGMP norms. Large companies like ours have the capabilities and
resources to ensure that we are able to adhere to these norms.

Highlights of FY16

After many years of sustainable growth, our business for FY16 witnessed
muted growth and was in line with our annual guidance. We faced
anticipated supply constraints and delays in product approvals at the
Halol facility driven by the cGMP compliance remediation efforts. This
impacted our US revenues for the year. We expect to eventually resolve
this in future. However, this did not deter us from continuing to
invest heavily in building the specialty business in the US. These
investments, as of now, do not have commensurate revenue streams and
hence they depress our profitability. Current profitability is after
accounting for these investments. Our R&D efforts continue to be
directed towards building a strong and differentiated product pipeline.
These R&D efforts include a pragmatic mix of initiatives directed
towards generating short-term, medium- term and long-term cash flows.

Our subsidiary, Taro has done well, despite increased competition for
some of its products. Adverse currency movements in certain emerging
markets coupled with a conscious decision to reduce focus on certain
non- remunerative businesses impacted our international revenues
outside the US. Hence, our overall consolidated revenues were almost
fat for the year.

Enhancing presence in the specialty segment

We continue to allocate significant resources towards building the
specialty business in the US. The main objective behind this is our
intent of building a business, which can generate sustainable value for
all our stakeholders. These are long-gestation projects and there are
many milestones yet to be crossed to achieve this objective. Our
initiatives in this segment cover the entire value- chain, from
in-licensing early-to-late stage clinical candidates, as well as
getting access to on-market patented products. Dermatology and
Ophthalmic are the key segments targeted through these initiatives,
besides a few other segments. Today, we are amongst the leading branded
companies in the US dermatology segment driven by innovative products
like Absorica, Kerastick and the Topicort range of products.

During the year, we invested heavily in the development of
Tildrakizumab, which we had in-licensed from Merck in 2014. In May
2016, we announced positive results from the Phase-3 trials of
Tildrakizumab to treat chronic plaque psoriasis. We expect to announce
the detailed results of these Phase-3 trials at an upcoming medical
conference. Post the completion of these Phase-3 trials; we have
commenced steps towards fling the Biologics License Application (BLA)
for this product with the US FDA.

During the year, we proceeded further with steps towards establishing
the required specialty teams for the US market as well as commenced
steps towards building the front-end distribution network necessary for
the specialty segment.

Ranbaxy Integration

The integration of Ranbaxy into Sun Pharma is on track. Post the
Ranbaxy acquisition in FY15, our organisation size had nearly doubled,
mandating a significant integration effort to implement common values,
systems and processes across the merged entity. The synergy benefits
from this integration have started reflecting in our financials in
FY16; and we expect to build further on these synergy benefits in FY17.
We continue to target US$ 300 million in synergy benefits from this
acquisition by FY18 and are on track to achieve this significant
milestone. The key objective of this merger is to accelerate growth
and create opportunities for all stakeholders. The combined
organisation will benefit from substantial synergies that lie in our
technologies, combined pipeline and R&D expertise, wider product
portfolio and rationalisation of manufacturing footprint, driven by our
larger talent pool.

Global cGMP Compliance

Adherence to the stringent cGMP requirements of global regulators is a
non-compromising objective for us. Compliance to these standards has
become a key determinant of future success for the pharmaceutical
industry. Our Halol facility, which was impacted by cGMP deviations in
FY15, underwent a very significant remediation effort in FY16. These
efforts are likely to culminate in to a request for re-inspection which
we are likely to put in with the US FDA by June 2016. This remediation
process has temporarily impacted our supplies and product approvals
from this facility, which we expect to improve, once the entire
remediation process is completed and the facility gets recertified.

We are gradually progressing on the remediation process at the
erstwhile Ranbaxy facilities, which were found to be non-compliant in
the past. While significant efforts to make these facilities compliant
are on, this will be a time-consuming process. We expect to complete
the remediation steps in at least one of these facilities in FY17.

We continue to invest significant time and resources in ensuring that
we remain committed to 24x7 cGMP compliance. Over the past year, our
cGMP capabilities have been strengthened significantly. Talent with
long-standing global expertise has enhanced our abilities in this
pertinent area. We are also targeting appropriate technology-based
solutions to facilitate cGMP compliance, coupled with an increased
focus on requisite manpower training.

Transformation

It is obvious that to generate long-term sustainable value for
shareholders, businesses will need to continuously evolve and transform
themselves to build a strong foundation for future growth. The key is
to improve the underlying fundamentals so that we can aim for
delivering much more from our current levels. At Sun Pharma, we have
embarked on a transformational journey to make Sun Pharma a Better,
Stronger and Faster Company. This should help us drive a stable and
consistent growth in cash flows, which is a key objective of our
corporate philosophy.

Better

It is imperative and expected of us that, as an organisation, we
consistently deliver Better quality products. We must become Better by
improving the quality of what we do in each of our businesses and
functions. Sustained efforts are being made for improving manufacturing
and sales processes. Getting it right the first time is the key
objective and it can make a difference between success and failure. For
this, care needs to be taken to ensure that right from product
development to each of our processes, quality standards and compliance
principles are adhered to.

Stronger

Our customers expect us to deliver quality products at highly
competitive prices. To achieve this, focus on becoming Stronger through
productivity enhancement becomes a key driver. Productivity
improvement mandates "doing more with less" and reducing costs and
wastages. Cost leadership has been a critical determinant of our past
success and will continue to do so in future as well. Sales
productivity, throughput and yield will be the key contributors to this
overall productivity improvement.

Faster

A better and stronger organisation can do well only if it is Fast in
responding to customer requirements. Time-to-market and minimum cycle
times are extremely critical in our business. We have to ensure that
increasing size does not limit our agility and flexibility. Our ability
to make our products available on time consistently to our customers
determines our service standards to customers. A responsive
organisation requires seamless cross-functional collaboration across
all the markets which we service, in order to serve the customer. This
helps us in devising the most optimum response to business
opportunities.

Overall Outlook

The transformation to a Better, Stronger and Faster company will
involve crossing critical milestones over the next few years. As we
transition, we have guided for our overall consolidated revenues to
grow by 8-10% for FY17.

Persistently working for patients across the world, we are targeting to
increase the share of complex generics and specialty products to our
overall business in the coming years. This objective will be driven by
a combination of our own efforts coupled with relevant inorganic
initiatives as well as external partnerships. Our specialty strategy
coupled with the benefits from the Ranbaxy merger and the targeted
productivity improvements, should favorably impact our profitability in
the long-term. Our capable and committed employees will be the key
drivers of this profitability.

As a shareholder, you have continuously supported our endeavours over
the past many years. As always, we are grateful to you for this
confidence.

Warm regards,

Dilip Shanghvi

Managing Director

Sun Pharmaceutical Industries Ltd.

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