Equity Research Pharmaceutical Sector

Pharmaceuticals
Equity Research
Content
Industry
Government Schemes & Projects
Opportunities & Threats
Key Statistics
Equity Research  About the Company
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 Abbott India  Product Highlights
 Deals & News
 AstraZeneka
 Qualitative Aspects
 GSK  Quantitative Aspects
 Pfizer India  Quarterly Results
 Yearly Results
 Sanofi India
 Market Comparison
Industry
• Indian pharma market (IPM) stood at Rs.121,833 Crore & experienced a value growth of 6.3% at the end of financial year 2018
• The industry growth of 6.3% in the end of Financial Year 2018 was primarily contributed by new product launches
• 6th largest market globally in absolute size
• Increase in the size of middle-class households coupled with the improvement in medical infrastructure and increase in the penetration of health
insurance
• Budget 2016 increased FDI to 74%
• Indian drugs are exported to more than 200 countries in the world, with the US as the key market
• Indian pharma companies spend 8-13 per cent of their total turnover on R&D
• Strong presence in generic space will thrive in export market
• Growing disposable income, epidemiological data movement and government’s effort and expenditure which are the fundamental drivers of the IPM
• By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth
• The total pharmaceutical market is forecast to grow at a CAGR of 9.7% (±3.0%) over the period 2017-2022
• By 2024-25, India’s biotech industry is estimated to increase to US$ 100 billion
Government Schemes & Projects
• Government has approved Biopharma Mission to accelerate biopharmaceutical development in India
• National Health Policy (NHP) aims to upgrade 150,000 sub-centres to ‘health and wellness centre’ providing comprehensive healthcare and free essential
drugs and diagnostic services
• Pradhan Mantri Swasthya Suraksha Yojana correcting regional imbalances in the availability of affordable and reliable tertiary healthcare services and
also to augment facilities for quality medical education in the country
• Central Government Health Scheme (CGHS) providing comprehensive medical care facilities to Central Government employees, pensioners and their
dependents residing in CGHS covered cities
• Employee State Insurance Scheme (ESIS) a self-financing social security and health insurance scheme for Indian workers
• Rashtriya Swasthya Bima Yojana (RSBY) aims to provide health insurance coverage to the unrecognised sector workers belonging to the BPL category and
their family members
• Draft Pharmaceutical Policy, 2017 regulating the production and marketing of pharmaceutical products in India
• The Jan Aushadhi stores for the retail market and AMRIT stores serving the hospital sector, would help in ensuring the availability of essential drugs at
affordable prices
• Drug registration process has been simplified by waiving local trials especially when the products address unmet medical needs, or where India is
included in global clinical trials
• Ayushman Bharat a National Health Protection Scheme extending health insurance coverage of up to Rs. 5 Lakh per family per annum to over 10 Crore
families
Opportunities & Threats
Opportunities-
• Department of Pharmaceuticals sets out key objectives such as increasing access at affordable prices for essential drugs
• The exponential growth in the adoption of mobile and digital media, will continue to be an important tool for patient engagement and a medium to raise disease awareness
• Rapid growth in Non-Communicable Diseases (cardiovascular diseases, chronic respiratory diseases, cancer and diabetes)
• Increase in diagnosis rate of NCDs
• Government Initiatives to improve access to healthcare and essential medicines
• Expansion of the private hospital sector
• Increasing Health insurance coverage
• MOHFW is considering a new rule where new drugs which have already been approved in countries with robust regulatory agencies, such as in Europe and the US might not
require Phase III trials in India
• Increasing air pollution in our cities and rural areas is contributing to a high burden of respiratory diseases
• India finalized its National Action Plan (NAP) on AMR in 2017
Threats-
• Increased price controls under the Drug Price Control Amendment Order (DPCO)
• Currently 29 therapeutic classes are covered by the list. It is expected that future revisions of NLEM will ensure price controls are not diluted
• Effects of ban on irrational Fixed Dose Combinations (FDCs)
• Policies and programmes to encourage the use of generics
Key Statistics
Equity Research
Abbott India
• Abbott India (Abbott) is a leading MNC in the domestic pharmaceutical market
• Owns a portfolio of 110 brands and a manufacturing site in Goa and over 30 third party manufacturers
• The company operates mainly in the gastro-intestinal (GI), vitamins & minerals, neuro, gynaecological and hormones domain
• Abbott also distributes Novo Nordisk’s insulin products in India
• The company also has a licensing agreement with Bharat Biotech India Ltd to market vaccines
• Launched 21 new products during the year
• Launched 65 new products in last 5 years
• Abbott group operates through two legal entities in India (rank: No. 2, domestic market share: 6.2%, consolidated revenues of ~7200 crore AIOCD
November MAT 2017) viz. Abbott India and Abbott Healthcare Pvt Ltd.
Abbott India – Product Highlights
Gastroenterology Central Nervous System
 This business unit posted a strong growth of 10.5%  Grew by 8.8%
 Launched 4 new products during the year  2 new products
GI Prospera GenNext
 Business unit grew by 3.9%  Negative growth of 2.6%
 Launched 3 new products  Arachitol Nano and Duvadilan have shown positive
growth
GI Advance  Zolfresh retains No.1 position in its participated market
 Formed in 2018
 4 new products Vaccines
 Showed a growth of 59.7%
Metabolics  Contribute 3.4% of sale
 Grew by 15.3%  Influvac achieved No.1 position in participated market
this year
 1 new product
Abbott India – Deals & News
Deals:
• Corona Remedies Pvt. Ltd. acquired two diabetes and hyperthyroidism brands, Obimet and Thyrocab, comprising 14 product line extensions, from Abbott
India Ltd. : April 02, 2018
News:
• Abbott gets reprieve from Supreme Court in FDC ban case : September 10, 2018
Supreme Court (SC) directed the government to lift the ban on 15 fixed dose combination (FDC) medications that were approved before 1988. The ban was recommended by a sub-
committee appointed by Drugs Technical Advisory Board (DTAB). The government had asked the DTAB sub-committee to re-examine 334 FDCs, on the order of the SC.
• Abbott to unveil blood test in India to predict heart attacks : September 27, 2018
Abbott announced it would introduce high-sensitive troponin-I blood test in India, which can predict chances of a heart attack or other cardiac event months to years in advance.
Abbott India - Qualitative
Particular
Women's Health, Gastro Intestinal, Vitamins, Neuro/ Cns , Gynaecological, Hormones, Anti-Infectives, Derma ,
Focus Area Pain/ Analgesics, Cardiac, Anti Diabetic, Vaccines, Respiratory
Advantage Top 10 brands comprise 70% of sales. 8 out of 10 brands rank no. 1 in the market
Strategy The company plans for 20 new launches in FY19 and 100 launches over 5 years
Haven’t exported from India yet. The company in an interview said that the company is turning to exports
Exports (livemint Aug 20, 2015)
One of the positive factors for Abbott India is that it doesn’t have to pay any royalty to its Parent Abbott
Royalty Expense Laboratories, US.
Promoters Holding 74.99%
Market Share 2.71%
R&D Expense Rs. 70.42 Lakh (0.02% of total turnover)
Comprehensive Growth 13.70% till March 2018

Abbott India - Quantitative
Particular Particular
Market Cap Rs. 15,550 Cr. Inventory Turnover Ratio 6.07
Surplus Cash (FY 18) Rs. 37.68 Cr. Price to BV 9.19
Capex Rs. 1.71 Lakh EV/ EBITDA 24.92
Contingent liabilities Rs. 36.12 Cr NPM last Year 12.16%
Dividend Payout Ratio 29.13% OPM Last Year 15.90%
Debt Debt Free OPM (5 Yrs.) 13.94%
ROCE & ROE 40.63% & 26.07% PE Ratio 35.71
Average ROCE & ROE (3 Yrs.) 37.59% & 23.95% Historical PE (3 Yrs.) 35.65
Sales Growth (TTM) 20.02% Current Ratio 3.37
Sales Growth (3 Yrs.) 12.95% EPS last year Rs. 188.81
Sales Growth (5 Yrs.) 14.82% EPS preceding year Rs. 130.19

Abbott India - Quarterly
(INR Crores) Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 Jun 2017 Sep 2017 Dec 2017 Mar 2018 Jun 2018
Sales 670 684 729 721 747 706 698 931 881 788 845
Expenses 570 600 624 615 623 643 644 730 718 682 734
Operating Profit 99 84 105 106 123 63 53 201 163 107 111
OPM % 15% 12% 14% 15% 16% 9% 8% 22% 19% 14% 13%
Other Income 12 13 14 14 14 15 24 15 19 59 22
Depreciation 4 4 4 4 4 4 4 4 4 4 4
Interest 0 2 0 0 0 2 1 1 1 2 1
Profit before tax 108 91 115 116 133 72 73 212 178 159 129
Tax 40 32 41 41 47 30 25 74 62 59 46
Net Profit 68 59 74 75 86 42 48 138 115 100 82

Abbott India - Yearly
(INR Crores) Nov 2008 Nov 2009 Dec 2010 Dec 2011 Dec 2012 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018 TTM
Sales 696 795 1,037 1,490 1,653 2,276 2,289 2,614 2,903 3,298 3,446
Expenses 620 697 967 1,315 1,470 2,009 1,977 2,250 2,505 2,774 2,863
OPM % 11% 12% 7% 12% 11% 12% 14% 14% 14% 16% 17%
Other Income 26 29 36 20 51 49 48 51 58 117 114
Depreciation 7 9 11 15 19 22 15 14 16 16 16
Interest 0 0 0 0 0 0 0 3 2 4 4
Tax 33% 34% 35% 33% 33% 33% 34% 36% 37% 35% -
Net Profit 63 78 61 120 145 198 229 255 277 401 435
EPS in Rs. 43.58 53.77 38.52 53.90 65.34 71.59 101.44 120.12 130.19 188.81 -
Dividend Payout % 30% 30% 38% 30% 25% 25% 29% 29% 31% 29% -
Abbott India - Comparison
AstraZeneka
• AstraZeneca Pharma India Limited (AZPIL) is the operating company and covers manufacturing, sales and marketing activities of the company in India
• It is a listed company and is a subsidiary of AstraZeneca Plc, UK, having a workforce of 1500 employees across the country
• The company has an innovative portfolio in crucial areas of healthcare including cardiovascular & metabolic diseases, oncology and respiratory
• Rated as one of the finest in South East Asia, AstraZeneca’s Indian manufacturing facility has a sophisticated production facility designed to meet the
most stringent international standards
• The Company registered sales of Rs. 5,276 million with a growth of 3% achieving a Net Profit of Rs. 259 million, during the year
• The current year growth for the Company comes from the focussed therapeutic areas Cardio-Metabolism, Oncology and Respiratory
• Over the next couple of years, new product launches in treatments for diabetes, cancer and plaque psoriasis are expected to contribute most to growth
• Introduction of new brands to the Dapaglifozin and Saxagliptin franchise, the Company would continue to provide additional options for the betterment
of diabetic patients (Antidiabetic Therapy is the second largest contributor to IPM, and at 11.8% value growth)
• Cadila Healthcare Ltd. acquired eight brands of Astrazeneca Pharma India Ltd. Namely bricarex, bricarex-A, bricanyl, xylocard, ceriviprime, prostodin,
partocin and primiprost on January 20, 2017
AstraZeneka – Product Highlights
• Company’s Growth Platforms consist of the innovative drugs like Brilinta, Forxiga, Xigduo,
Symbicort, Onglyza, Kombiglyze and the recently launched Tagrisso (Lung cancer segment) which
together constitutes 64% of total sales
• Brilinta (Ticagrelor) is approved for treatment in Acute Coronary Syndrome (ACS) disease and
continued to register rapid growth
• Ticagrelor franchise enjoyed 32% market share (MAT March 2018) while the Oral Anti-Platelets
(OAP) market grew by 3.2%, proving the success of the drug
• Forxiga in the dapagliflozin franchise having ~33% market share also experienced robust growth
• Company’s innovator brand in Oral Anti Platelet (OAP) market, Brilinta® (Ticagrelor), continues to
improve its value market share
• Anti-asthmatics segment in which AstraZeneca is primarily operating is particularly growing at a
rate of 10.8%
• High burden of respiratory diseases may present an opportunity to AstraZeneca with Symbicort®
• Company has in its current Oncology Portfolio, products to provide treatment in the areas of
women’s cancer and lung cancer (cancer is becoming a major cause of mortality in India)
AstraZeneka – Deals & News
Deals:
• Cadila Healthcare Ltd. acquired eight brands of Astrazeneca Pharma India Ltd. Namely bricarex, bricarex-A, bricanyl, xylocard, ceriviprime, prostodin,
partocin and primiprost on January 20, 2017
News:
• 4 years after shutting R&D site, AstraZeneca to open drug development unit in Bengaluru today : May 29, 2018
AstraZeneca will inaugurate its expanded Global Medicines Development (GMD) unit in Bengaluru on Wednesday, a development that comes four years after the
biopharmaceutical company had shut its research and development site here.
AstraZeneka - Qualitative
Particular
Focus Area Respiratory, Inflammation, Autoimmunity, Cardiovascular, Renal, Metabolic Diseases & Oncology
Advantage Partnership with Sun Pharma has helped to boost the reach to customers
AstraZeneca will continue to prioritize investments in its focus areas in-line with its global growth platforms.
Strategy Accelerating new products is a key priority
Exports N.A. (The operations of the Company are carried out mainly in India)
Royalty Expense N.A.
Promoters Holding 75%
Market Share 0.47%
R&D Expense N.A.

AstraZeneka - Quantitative
Capex N.A. EV/ EBITDA 75.36
Dividend Payout Ratio 0.00% OPM Last Year 8.11%
Debt Debt Free OPM (5 Yrs.) 2.82%
ROCE & ROE (FY 18) 18.64% & 11.03% PE Ratio 144.36
Sales Growth (5 Yrs.) 7.90% EPS preceding year RS. 8.02

AstraZeneka - Quarterly
Sales 144.58 158.82 139.54 138.17 150.29 115.71 127.48 164.26 128.54 150.73 161.44
Expenses 132.94 155.61 121.59 134.99 135.16 115.01 121.26 128.61 139.38 135.46 152.16
Operating Profit 11.64 3.21 17.95 3.18 15.13 0.70 6.22 35.65 -10.84 15.27 9.28
OPM % 8.05% 2.02% 12.86% 2.30% 10.07% 0.60% 4.88% 21.70% -8.43% 10.13% 5.75%
Other Income 1.48 2.09 1.62 1.88 9.90 0.99 4.65 2.50 2.76 2.34 3.42
Depreciation 4.44 4.24 4.07 4.06 4.02 3.68 3.71 3.75 3.73 3.55 3.55
Interest 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Profit before tax 8.68 1.06 15.50 1.00 21.00 -1.99 7.16 34.40 -11.82 14.06 9.15
Tax 0.00 0.50 2.90 0.19 4.79 7.57 1.37 7.01 -1.46 10.84 2.75
Net Profit 8.67 0.56 12.60 0.80 16.21 -9.56 5.80 27.38 -10.35 3.22 6.39
AstraZeneka - Yearly
(INR Crores) Dec 2008 Dec 2009 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018 TTM
Sales 353 397 594 531 390 474 517 564 544 571 605
Expenses 241 308 490 501 459 487 528 547 507 525 556
Operating Profit 112 89 104 30 -68 -13 -11 16 37 46 49
OPM % 32% 22% 17% 6% -18% -3% -2% 3% 7% 8% 8%
Other Income 14 6 6 6 10 23 6 7 14 12 11
Depreciation 5 6 9 7 12 10 15 17 16 15 15
Interest 7 0 0 0 0 0 0 0 0 0 0
Profit before tax 114 88 101 29 -70 0 -21 6 36 44 46
Tax 35% 35% 36% 32% -27% - -0% 9% 44% 41% -
Net Profit 74 58 64 20 -90 -1 -21 5 20 26 27
EPS in Rs. 26.99 21.35 19.25 7.34 0.00 0.00 0.00 2.10 8.02 10.36 -
Dividend Payout % 51% 43% 39% 44% -0% -0% -0% 0% 0% 0% -

AstraZeneka - Comparison
GSK Pharmaceutical
• GSK Pharmaceuticals business has a broad portfolio of innovative and established medicines
• No. 3 in IPM (Volume terms)
• No. 1 Vaccines company, self pay segment with 28% market share, 12 vaccines for varied age group
• Currently focus on developing new medicines in respiratory, HIV, oncology and immuno-inflammation
• R&D approach focused on science related to the immune system, use of genetics and advanced technologies
• Seven of the top 20 vaccines belong to GSK India marketing it to be the no. 1 vaccine company with almost 28% market share in value terms
• 6 GSK Brand features in top 50 of the IPM (namely Augmentine, Calpol, Synflorix, Zinetac, Betnovate – N, Betnovate – C
• Company is making progress in the construction of new manufacturing plant at Vemgal, Bengaluru
• Revenue is deflated arising from impact of divestment & discontinuation to the portfolio and impact of GST rates
• Company’s flagship brand in the mass speciality segment
• During the year primary care segment grew by 8% driven mainly by brands like Eltronix, Ceftum, Supacef, Zyloric, and Betnovate
• Maintained leadership in Dermatology segment during the year
• Well performance of brands in mass market segment
• Calpol continued its legacy of leadership in Fever
GSK – Product Highlights
• Infanrix Hexa – world’s No. 1 hexavalent DTaP vaccine in India (DTP Vaccine)
• Priorix tetra (MMRV Vaccine) has insured GSK to maintain its leadership position in vaccines market
• Relaunch of Neosporin (wound care topical antibiotic) has been a great success, regained lost market share during the year
• Augmentin had faced mandatory price reduction in 2016. The team used it as an opportunity to increase the access as a result of which it reached its all
time high sale in 2017 and registered 11% value growth and 26% unit growth
• Augmentin solid is no.1 by value in the Amoxyclav solid market. 6 strips of Augmentin were sold per second in 2017
• Zinetac has been a pioneer in Acid Peptic Disorder

• Priorix Tetra, since its relaunch has helped regain leadership in the varicella vaccines market
GSK – Deals & News
News:
• Coke, Nestle for second round in Horlicks race : October 1, 2018
Nestle, Unilever and Coca-Cola are among bidders for GlaxoSmithKline’s Indian Horlicks nutrition business, expected to fetch more than $4 billion, four people familiar with the
matter said.
• Nestlé, Coca-Cola and Unilever in final bidding war for GSK's Horlicks : October 02, 2018
As several buyers pursue GlaxoSmithKline’s Indian consumer products business, the drug maker has shortlisted Nestlé, Unilever and Coca-Cola for a second round of bidding, the
Economic Times reports, citing people familiar with the discussions.
The business, which includes the drinks brand Horlicks, could fetch up to $4 billion, analysts have said. ET reported that the shortlisted companies are set to continue negotiations
with GSK next week in London.
GSK - Qualitative
Particular
Bioelectronics R&D, Biopharmaceuticals technologies and processes, Consumer Healthcare, Immuno-

Focus Area inflammation, Infectious diseases including bacterial, viral and parasitic infections, Metabolic and cardiovascular,
Neglected Tropical Diseases, Neurosciences, Oncology, Ophthalmology, Respiratory, Vaccines
Advantage No. 1 Vaccines company, self pay segment with 28% market share
Strategy Focus on developing new medicines in respiratory, HIV, oncology and immuno-inflammation
Exports N.A.
Market Share 2.36%
R&D Expense N.A.

GSK - Quantitative
Surplus Cash (FY 18) Rs. 1,280 Cr. Price to BV 11.82
Capex N.A. EV/ EBITDA 37.55
Debt Rs. 0.99 Cr OPM Last Year 17.71%
Dividend Payout Ratio 84.22% OPM (5 Yrs.) 17.23%
Sales Growth (3 Yrs.) -4.41% EPS last year Rs. 20.78

GSK - Quarterly
Sales 751 706 705 799 706 760 583 836 704 749 736
Expenses 646 577 615 658 654 623 563 644 562 594 604
OPM % 14% 18% 13% 18% 7% 18% 3% 23% 20% 21% 18%
Other Income 26 40 26 18 33 41 26 15 12 18 18
Depreciation 8 7 5 7 7 8 8 8 13 9 11
Interest 0 0 0 0 0 0 0 0 0 0 0
Tax 45 56 39 54 25 57 12 69 51 58 50
Net Profit 79 106 72 99 53 113 26 130 90 106 89

GSK - Yearly
(INR Crores) Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018 TTM
Sales 1,665 1,873 2,112 2,376 2,626 2,546 3,288 2,826 2,903 2,872 3,024
Expenses 1,157 1,236 1,400 1,916 1,959 2,025 2,712 2,363 2,485 2,363 2,404
OPM % 31% 34% 34% 19% 25% 20% 18% 16% 14% 18% 21%
Other Income 311 153 148 160 197 228 199 138 120 71 63
Depreciation 16 16 18 20 18 20 25 25 27 38 42
Interest 1 0 1 0 0 0 0 0 0 0 0
Tax 28% 34% 33% 28% 32% 31% 37% 35% 34% 35% -
Net Profit 577 512 564 431 577 502 472 375 337 352 414
EPS in Rs. 30.64 27.87 30.14 21.86 30.32 25.43 17.19 15.75 19.88 20.78 -
Dividend Payout % 59% 50% 60% 89% 73% 84% 112% 113% 75% 84% -
GSK - Comparison
Pfizer India
• Leading anti-infective company of the world
• The Company has a state-of-the-art and award winning manufacturing facility in Goa that produces more than a billion tablets annually
• No. 1 in non-viral anti-infective injectable space
• 17 brands are no. 1 in their representative product market
• Company’s Respiratory portfolio is ranked 3rd in the represented market
• Robust vaccine R&D program
• Signed a MoU with Indian Council of Medical Research (ICMR) to combat AMR (Antimicrobial Resistance)
• Exploring options to launch global products later this year that will further expand its anti-infectives portfolio
• While the market witnessed a slowdown growing at 6.3% in fiscal year 2018, Company grew in double digits at 13%
• Top Pfizer brands such as Dolonex, Wysolone, Magnex & Corex Dx have grown faster than their represented markets
• Corex Dx is now ranked number 1 in its represented cough market
• Company continues to enjoy leadership position in Pneumococcal Vaccines Market with a market share of 60.5% and healthy double digit growth of 11.8%
• Inflammation and Immunology (‘I&I’) & Internal Medicine: Around 10.1 Lakhs patients in India suffer from Rheumatoid Arthritis. Company has 2 products in the space of
Immunology, Enbrel & Xeljanz
• Company’s Pain portfolio is ranked 7th in the represented market with the flagship brand Dolonex outperforming the market with 3.8% growth
• Acquired the brand Meronem (Meropenem). Meronem is strongly endorsed for the treatment of high risk patients in the ICU setting
• Strong presence across the antibacterial continuum, ranging from Beta-Lactam/ Beta-Lactamase-Inhibitor (BL/BLI) products to high-end anti-bacterial products, Company’s brand
Magnex is #1 brand in its represented product market segment
Pfizer India – Product Highlights
• Brands include Prevenar 13, Lyrica, Eliquis, Enbrel, Becosules, Gelusil and Corex range of products
• The homegrown brands, such as Gelusil, Becosules, Folvite and Corex range, continue to be an essential and widely recognized part of the Company’s portfolio and revenues in
India
• The success of global brands, such as Meronem, Neksium and Xeljanz launched in the last two years will play a key role in fueling the growth of the Company
• Magnex is the number 1 brand in anti infective segment, with ~5.6% value market
• Discontinue Corex Cough Syrup
• With its continuing preference among Pediatricians, Prevenar 13 is now the 8th ranked brand in the Indian Pharma Industry
• Corex T which is now leading the market with 75% share in its molecular segment
• Corex Dx continued its leadership position with 51.8% market share 31.2% growth and robust 13.4% prescription growth
• Successfully launched a new brand Corex LS, under Corex franchise in the cough market
• Multi-vitamins portfolio (Becosules): increasing its market share from 51.6% to 52.7%
• Mucaine Gel continues to be the market leader with 18.4% market share and is also the most prescribed brand in Liquid Antacids category
• Women healthcare iconic brand: Folvite, Ovral, Autrin and Premarin
• Terramycin, a broad-spectrum antibiotic – an outcome of Pfizer’s first discovery program
• Diflucan – Pfizer’s discovery that has remained the mainstay to counter fungal infections
• Zithromax emerged as a standard of care in respiratory infections
Pfizer India – Deals & News
Deals:
• Pfizer Ltd. has entered into a definitive agreement to acquire Neksim Brand from AstraZeneca AB, Subsidiary of AstraZeneca Plc, for a total consideration
of INR 748.39 million on May 31, 2017
• Piramal Enterprises Ltd. acquired four brands of Pfizer Ltd. for a total consideration of $16.48 million (INR 1.1 billion) on May 31, 2016
• Vidhi Research and Development LLP entered into a definitive agreement to acquire manufacturing plant of Pfizer Ltd. for a total consideration of $27.02
million (INR 1.78 billion) on a slump sale basis on September 23, 2017
• Pfizer Ltd. acquired 48.88% stake in Mumbai based Wyeth Ltd. for an undisclosed amount on November 23, 2013
News:
• Pfizer drops 3% on valuation concerns : September 12, 2018
Shares of Pfizer (NSE -0.33%) declined nearly 3 per cent in Wednesday’s trade on valuation concerns, even as the drug maker's fundamentals remain strong.
The stock has climbed 37 per cent in last three months and 74 per cent on year-to-date basis.
• Pfizer CEO Ian Read to step down : October 02, 2018

US drug maker Pfizer on Monday announced that chief executive Ian Read was stepping down, handing off to chief operating officer Albert Bourla on January 1.
Pfizer India - Qualitative
Particular
Antimicrobial resistance, Vaccines, I&I, Respiratory, Multi-vitamins, Pain Management, Gastric, Women
Focus Area Healthcare, Chronic Care, Critical Care
It has a leading portfolio of products and medicines that support wellness and prevention, as well as treatment
and cures for diseases across a broad range of both acute and chronic therapeutic segments. Two of their key
Advantage brands Corex and Becosules (Multivitamin) have also been awarded the Most Trusted Brand Award and continue
to rank among the Top 15 pharmaceutical drug brands.
Improving the performance of their innovative core by generating a portfolio of differentiated medicines and
Strategy vaccines creating a culture of ownership and decisiveness in research
Exports N.A.
Royalty Expense NIL (as per Annual Report)
Market Share 1.70%
R&D Expense NIL (as per Annual Report)

Pfizer India - Quantitative
Capex Rs. 50 Lakh EV/ EBITDA 19.02
Dividend Payout Ratio 25.41 % OPM Last Year 25.43%
Debt Rs. 2.50 Cr. OPM (5 Yrs.) 20.49%

Pfizer India - Quarterly
Sales 506 512 501 536 491 438 421 571 457 520 512
Expenses 425 390 400 444 429 343 344 404 339 381 382
OPM % 16% 24% 20% 17% 13% 22% 18% 29% 26% 27% 25%
Other Income 25 29 29 128 46 29 27 24 32 31 31
Depreciation 15 15 15 16 15 16 15 16 18 17 18
Interest 0 0 0 0 0 0 0 0 0 -0 0
Tax 30 49 35 76 30 39 31 64 45 48 50
Net Profit 60 87 80 126 62 68 57 111 87 105 92

Pfizer India - Yearly
(INR Crores) Nov 08 Nov 09 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 TTM
Sales 707 772 1,252 1,093 1,049 1,112 1,853 2,012 1,966 1,969 2,060
Expenses 582 655 986 897 865 872 1,549 1,579 1,616 1,468 1,506
OPM % 18% 15% 21% 18% 18% 22% 16% 22% 18% 25% 27%
Other Income 304 101 93 93 519 109 155 97 232 114 118
Depreciation 11 8 12 10 8 8 250 58 63 66 69
Interest 0 0 2 2 2 1 2 1 2 1 0
Tax 29% 35% 34% 33% 27% 35% 66% 35% 35% 34% -
Net Profit 299 137 226 185 503 221 70 305 337 360 395
EPS in Rs. 98.12 43.75 54.88 59.84 163.09 12.83 12.72 66.66 73.61 78.70 -
Dividend Payout % 12% 27% 22% 20% 19% 486% 82% 22% 27% 25% -
Pfizer India - Comparison
Sanofi India
• It offers a wide array of medicines for therapy areas such as Diabetes, Cardiology, Thrombosis, Central Nervous System and Antihistamines
• Company is among the leading companies in Diabetes care with a significant presence in Insulins and oral anti diabetic drugs
• Company took charge to establish Indian consensus on managing allergic rhinitis and urticaria
• Company partnered with global health experts and organizations to conduct multi-city scientific symposia to disseminate latest research and global
guidelines in allergy management
• The growth of domestic business of the Company is likely to be in line with the market growth in the therapy areas it participates
• The export business volumes are likely to grow steadily
• During the year ended 31st December 2017, the Company exported its products to 51 countries, with Germany, Australia, UK, Russia, Czech Republic and
Italy ranking as the main markets
• During the year ended 31st December 2017, exports revenue contributed 26% of Net Revenue from Operations
Sanofi India – Product Highlights
• Lantus® grew by 24% in value terms. It continues to be the number 1 brand in the Basal analogue insulins market
• Insuman® cartridges grew at 19% in value terms and Apidra® grew at 23% in value terms
• Targocid® is a high end antibiotic used in critically ill patients with resistant gram positive infections and is the number 1 brand in this category
• Primosa® registered a value growth of 4% by driving disease awareness programs called Speak-Up around premenstrual syndrome in clinics
• DePura by Sanofi registered a value growth of 49% and saw an important trial published in Journal of Pediatric endocrinology and TM metabolism
• Allegra® is the number 1 antihistamine brand in the Indian pharmaceuticals market. In the year 2017, Allegra® group grew in value terms by 10%
• The key products exported by the Company in terms of formulations are, Paracetamol and Codeine tablets, Metformin tablets, Festal Dragees, and API's
namely Pentoxyfylline and Articaine HCL
• Combiflam® group declined 5% in value terms and is now the third largest brand in the Non-steroidal Anti-inflammatory Drugs (NSAID) market
Sanofi India – Deals & News
News:
• N Rajaram on how Sanofi plans to be in pink of health in India : September 27, 2018
• Sanofi India: High-margin diabetic products and exports to drive profits : September 14, 2018
Though Sanofi India has gained over 62 per cent on the bourses over the last one year and is trading near its 52-week highs, there is more upside to the
stock. This is because net profit growth for this pharma multinational is expected to outpace revenue growth, led by its high-margin portfolio of insulin
products.
In addition to its insulin portfolio, growth drivers include its well-known brands in pain control, anti-allergic segments like Combiflam and Allegra, as well
as its line extensions.
Sanofi India - Qualitative
--
Particular
Vaccines, rare diseases, multiple sclerosis, oncology, immunology, infectious diseases, diabetes, cardiovascular
Focus Area solutions, consumer healthcare, established prescription products and generics
Six of its brands feature among the top 100 pharmaceutical brands in India, a wide portfolio of therapeutic
solutions across Diabetes & Cardiovascular diseases, Consumer Healthcare, Central Nervous System, Thrombosis,
Advantage Anti-infectives, to name a few. 4 of its products feature amongst the top 100 pharmaceutical brands in the
country
Aligning itself with India's healthcare needs by building expertise, capability & capacity, through continued
Strategy investments, strategic partnerships, and a shared commitment towards patients
Exports Exports revenue contributed 26% of Net Revenue from Operations
Market Share 2.10%
R&D Expense Rs. 8.86 Cr. i.e. 0.38% of the total turnover

Sanofi India - Quantitative
Capex Rs. 1.10 Cr. EV/ EBITDA 21.35
Debt Debt Free OPM Last Year 21.81%
Dividend Payout Ratio 50.09% OPM (5 Yrs.) 20.98%
Average ROCE & ROE (3 Yrs.) 26.55% &16.51% Historical PE (3 Yrs.) 35.34
Sales Growth (TTM) 10.09% Current Ratio 2
Sales Growth (5 Yrs.) 9.39% EPS preceding year RS. 119.00

Sanofi India - Quarterly
Sales 569 556 620 638 605 553 601 668 670 617 684
Expenses 456 427 470 492 496 451 485 481 536 483 519
OPM % 20% 23% 24% 23% 18% 18% 19% 28% 20% 22% 24%
Other Income 80 26 11 15 15 16 28 18 18 23 21
Depreciation 30 27 27 27 38 25 26 26 26 25 25
Interest 0 0 1 0 1 0 0 0 1 0 0
Tax 43 46 47 51 32 32 45 62 50 49 60
Net Profit 120 83 86 83 53 60 74 116 76 82 100

Sanofi India - Yearly
(INR Crores) Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 TTM
Sales 995 974 1,085 1,301 1,573 1,809 1,977 2,193 2,367 2,464 2,638
Expenses 843 883 1,020 1,141 1,261 1,411 1,639 1,734 1,832 1,926 2,019
OPM % 15% 9% 6% 12% 20% 22% 17% 21% 23% 22% 23%
Other Income 125 167 267 156 41 83 131 135 66 81 80
Depreciation 18 17 20 31 90 92 97 113 119 102 102
Interest 0 0 3 0 1 0 0 0 2 1 1
Tax 36% 35% 26% 33% 32% 32% 29% 33% 37% 37% -
Net Profit 166 157 231 191 177 265 264 322 304 326 374
EPS in Rs. 69.44 64.95 91.12 77.86 71.36 107.28 105.77 126.52 119.00 127.96 -
Dividend Payout % 22% 29% 55% 40% 43% 39% 39% 46% 51% 50% -
Sanofi India - Comparison
Sources
• Annual Reports
• Motilal Oswal Healthcare Report April 2018
• IQVIA Market Feedback Report December 2017
• IBEF Pharmaceuticals Report September 2018
• BSE India
• www.screener.in
• www.tradingview.com
• Various other research reports, etc.

Equity Research Pharmaceutical Sector

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Pharmaceuticals

Promoters Holding 74.99%

Market Share 2.71%

R&D Expense Rs. 70.42 Lakh (0.02% of total turnover)

Comprehensive Growth 13.70% till March 2018

Surplus Cash (FY 18) Rs. 37.68 Cr. Price to BV 9.19

Capex Rs. 1.71 Lakh EV/ EBITDA 24.92

Contingent liabilities Rs. 36.12 Cr NPM last Year 12.16%

Dividend Payout Ratio 29.13% OPM Last Year 15.90%

Debt Debt Free OPM (5 Yrs.) 13.94%

ROCE & ROE 40.63% & 26.07% PE Ratio 35.71

Sales Growth (TTM) 20.02% Current Ratio 3.37

Sales Growth (3 Yrs.) 12.95% EPS last year Rs. 188.81

Sales Growth (5 Yrs.) 14.82% EPS preceding year Rs. 130.19

Operating Profit 99 84 105 106 123 63 53 201 163 107 111

Net Profit 68 59 74 75 86 42 48 138 115 100 82

Other Income 26 29 36 20 51 49 48 51 58 117 114

Royalty Expense N.A.

Promoters Holding 75%

Market Share 0.47%

R&D Expense N.A.

Surplus Cash (FY 18) Rs. 113.98 Cr. Price to BV 15.57

Capex N.A. EV/ EBITDA 75.36

Contingent liabilities Rs. 7.34 Cr NPM last Year 4.45%

Dividend Payout Ratio 0.00% OPM Last Year 8.11%

Debt Debt Free OPM (5 Yrs.) 2.82%

Sales Growth (TTM) 13.79% Current Ratio 1.70

Sales Growth (3 Yrs.) 3.36% EPS last year Rs. 10.36

Sales Growth (5 Yrs.) 7.90% EPS preceding year RS. 8.02

Operating Profit 112 89 104 30 -68 -13 -11 16 37 46 49

OPM % 32% 22% 17% 6% -18% -3% -2% 3% 7% 8% 8%

Profit before tax 114 88 101 29 -70 0 -21 6 36 44 46

Tax 35% 35% 36% 32% -27% - -0% 9% 44% 41% -

Net Profit 74 58 64 20 -90 -1 -21 5 20 26 27

Dividend Payout % 51% 43% 39% 44% -0% -0% -0% 0% 0% 0% -

• Zinetac has been a pioneer in Acid Peptic Disorder

Bioelectronics R&D, Biopharmaceuticals technologies and processes, Consumer Healthcare, Immuno-

Royalty Expense N.A.

Promoters Holding 75.00%

Market Share 2.36%

R&D Expense N.A.

Comprehensive Growth 7.80% till March 2018

Surplus Cash (FY 18) Rs. 1,280 Cr. Price to BV 11.82

Capex N.A. EV/ EBITDA 37.55

Contingent liabilities Rs. 637.85 Cr NPM last Year 12.26%

Debt Rs. 0.99 Cr OPM Last Year 17.71%

Dividend Payout Ratio 84.22% OPM (5 Yrs.) 17.23%

Sales Growth (TTM) 6.19% Current Ratio 1.42

Sales Growth (3 Yrs.) -4.41% EPS last year Rs. 20.78

Sales Growth (5 Yrs.) 1.80% EPS preceding year Rs. 19.88

Net Profit 79 106 72 99 53 113 26 130 90 106 89

• Pfizer CEO Ian Read to step down : October 02, 2018

Royalty Expense NIL (as per Annual Report)

Promoters Holding 63.92%

Market Share 1.70%

R&D Expense NIL (as per Annual Report)

Comprehensive Growth 2.70% till March 2018

Surplus Cash (FY 18) Rs. 50.73 Cr. Price to BV 4.59

Capex Rs. 50 Lakh EV/ EBITDA 19.02

Contingent liabilities Rs. 471.27 Cr NPM last Year 18.29%

Dividend Payout Ratio 25.41 % OPM Last Year 25.43%

Debt Rs. 2.50 Cr. OPM (5 Yrs.) 20.49%

Sales Growth (TTM) 9.22% Current Ratio 2.39

Sales Growth (3 Yrs.) 2.04% EPS last year Rs. 78.70