FILE IS USEFUL

1. Emkay Research
Generic Pharma Sector
BAL
DifferentiatingG L lO c a l from the rest
the obest
Geographically Dominance in a niche
well diversified business segment
Global
Generics
US$135bn
Healthy Para IV pipeline Lean cost structure
n Generic markets to become a US$135bn market by 2013
n Varied growth triggers for different geographies
n Our generic scorecard ranks companies on their ability to become
global generic players
n Lupin, DRL and Cadila are our top picks
Reco Company CMP (Rs) TP (Rs)
BUY Cadila Healthcare Ltd. 787 962
ACCUMULATE Cipla Ltd. 314 366
BUY Dr Reddy's Laboratories Ltd. 1168 1478
BUY Lupin Ltd. 1585 2111
SELL Ranbaxy Laboratories Ltd. 453 329
HOLD Sun Pharma Industries Ltd. 1655 1644
March 2010
Manoj Garg
Research Analyst-Pharma
manoj.garg@emkayglobal.com
+91 22 6612 1257
Akshat Vyas
Research Associate
akshat.vyas@emkayglobal.com
+91 22 6612 1491

2. Generic Pharma Sector
Content
Synopsis 3
Valuation Matrix 6
Investment Argument 8
Generic industry: greener pastures 8
US$135bn opportunity awaits generic drugs by 2013 8
Key growth drivers for generics 9
Key geographies: macro environment and growth drivers 11
Global Generics - Overview 13
Indian generics: Well placed to capture the growing generic opportunities 15
Scorecard of Indian pharma companies 17
Expect earning CAGR of 28% over FY09-12E 17
Valuations 18
Premium valuations to sustain 18
Top picks 18
Sector Risks 21
Companies
Cadila Healthcare Ltd. 23
Cipla Ltd. 27
Dr Reddy's Laboratories Ltd. 37
Lupin Ltd. 41
Ranbaxy Laboratories Ltd. 45
Sun Pharma Industries Ltd. 57
Emkay Research 10 March, 2010 2

3. Generic Pharma Sector
Synopsis
Synopsis
The generic pharma industry has evolved and grown over the years to become a
US$87bn market, with the potential of touching US$135bn by 2013. However, with
time, the growth opportunities have shifted from being solely US centric to a global one
as economies around the globe are increasingly favoring generics. Too much of focus
and dependence on any single market is turning out to be a risky proposition. We
believe that generic players have to be dynamic in their approach if they want to fully
capitalize on the growth opportunities that the sector offers. We have identified four
parameters, which will enable them to tackle the diverse issues across geographies
and emerge as strong players in the generic space. They are - a) Geographically well
diversified business, b) Dominance in a niche segment, c) Healthy Para IV pipeline and
d) Lean cost structure. We believe that these parameters will ensure that a generic
player is able to capitalize on the opportunities available across regions and also grow
profitably in the highly competitive generic space.
We have assessed the companies in our universe on each of these parameters and
assigned scores accordingly. Sun Pharma and DRL emerge as the highest generic
scorers with a score of 17 each, while Cadila and Cipla rank lowest with a generic
score of 12 each. We have rated the companies on the basis of their generic score,
earnings growth and valuations. As a result, we have rated Sun Pharma and Ranbaxy
as a Hold and Sell respectively, despite them scoring high on our generic scorecard
owing to expensive valuations. Similarly, Lupin and Cadila are our top picks despite
lower generic scores on account of the immense upside potential (34% and 22%) that
they offer from current levels. Lupin, DRL and Cadila are our top picks. We initiate
coverage on Cipla with an Accumulate rating, Sun Pharma with a Hold rating and
Ranbaxy with a Sell rating. We have a positive bias on all these stocks and will upgrade
our ratings on Cipla, Sun Pharma and Ranbaxy, subject to materialization of the positive
triggers that we have anticipated for each of them.
Generic markets to become a US$135bn market by 2013
We believe the growth drivers for generics are clear and sustainable. We expect the
generic industry to grow at a faster pace (9% CAGR over CY08-13E) compared to the
overall pharmaceutical market (2-3% CAGR over CY08-13E). The global generic market,
which stands at US$87bn, is likely to grow at 9% CAGR over CY08-13E to US$135bn on
the back of a) drugs worth US$235bn going off patent over FY10-15E, b) tripling of elderly
population (60+ population-700mn in 2005 to 1900mn by 2050), c) spiraling healthcare
expenses across the globe and d) favorable government policies.
Varied growth triggers for different geographies
We are of the view that while we expect generics to grow across geographies, the factors
driving growth for generics are varied. To elaborate further - In the US - the largest generic
market - generic usage is being driven by a) pro-generic environment, b) huge patent
expiry, c) rising healthcare cost. In the EU territory, we are of the view that the generic
industry has yet to reach its full potential. Pro generic policies will drive growth in the more
developed Western EU markets while Central and East European (CEE) markets offer
higher growth prospects because of low generic penetration and lower per capita spending
on drugs. Similarly, Japan is going to be the most exciting market for generic companies
on account of a) It being the second largest pharmaceutical market in the world, b) low
generic penetration and c) government initiative to promote generic usage. Though
developed markets continue to remain critical markets because of their sheer size,
developing markets are emerging as a compelling opportunity because of higher growth
prospects. We expect the generic opportunity outside the US, western EU and Japan to
Emkay Research 10 March, 2010 3

4. Generic Pharma Sector
reach US$92bn by 2013 (CAGR of 11.5% over CY08-13E). Emerging geographies offer
higher growth potential on the back of a) rising prevalence of life-style related diseases,
b) aging population, c) increasing per capita spend, d) lower penetration of modern
medicine and e) increasing insurance penetration.
We have identified four parameters essential for becoming generic majors
While there exists huge opportunity in the generic space, we believe that to become a
major generic player calls for certain requirements. We have identified four parameters,
which will enable companies to become strong contenders for generic opportunities.
Geographically well diversified business - Too much of focus and dependence on any
single market is turning out to be a risky proposition. In order to capitalize on the growth
opportunities that different regions offer, a well diversified geographical presence is a
must.
Dominance in a niche segment - In order to remain profitable in the highly price sensitive
generic market, it is advantageous to have dominance in a niche segment, which will
provide the much required hedge against price erosion in the competitive generic
segments.
Healthy Para IV pipeline - will boost profitability and also ensure a competitive edge post
the exclusivity period
Lean cost structure - to ensure profitable growth
We believe that companies that can differentiate from competition by building niche product
portfolios, novel drug delivery systems, chart a geographically diversified presence and
sustain and nurture vertically integrated operations will benefit the most. We believe that
companies, which fare well on these parameters, are well placed to cash in on generic
opportunities.
Our generic scorecard ranks companies on their ability to become global
generic players
We believe that companies which fare well on the above mentioned parameters, are well
placed to cash in on generic opportunities. We have rated and assigned scores to the
companies in our universe on each of these parameters and have arrived at an overall
generic scorecard. As per our scorecard, Sun Pharma and DRL emerge as most preferred
companies with the highest score of 17 each. Cipla and Cadila feature last with a score
of 12 each. Cipla scores low because of absence of Para IV pipeline as it has adopted
partnership model.
We have valued companies in our universe using valuation tools that best capture their
value. Based on their generic score, we have valued them at premium, par or discount.
Generic score card
Company Parameters Total Score Valuation Criteria
Geographical Dominance in Para IV Cost
presence niche segment pipeline structure
Sun Pharma 3 5 4 5 17 10% premium to sector multiple
Dr Reddy 4 5 5 3 17 15% premium to its 5 year mean multiple
Ranbaxy 5 5 5 1 16 5% premium to sector multiple
Lupin 4 5 3 3 15 In-line with the sector multiple
Cipla 4 5 0 3 12 In-line with sector multiple because of low
risk business model
Cadila 4 5 0 3 12 10% discount to sector multiple
Source: Emkay Research
Emkay Research 10 March, 2010 4

5. Generic Pharma Sector
Initiate coverage on Sun Pharma with Hold rating, Ranbaxy with Sell
rating and Cipla with Accumulate rating
We initiate coverage on Sun Pharma with a Hold rating and Ranbaxy with a Sell rating.
Given their high generic scores, we have ascribed 10% and 5% premium to Sun Pharma
and Ranbaxy, arriving at a price targets of Rs1644 and Rs329 respectively. Despite this
premium, we believe that current valuations are expensive. We believe that the growth
prospects for Sun Pharma and Ranbaxy in the generic space are extremely promising.
They are however, marred by US FDA ban on certain facilities (Caraco for Sun and Paonta
Sahib and Dewas for Ranbaxy). While we are confident that the worst is behind and that
these issues will be resolved in the near future, we have not factored the potential upsides
from a positive outcome on these issues. We shall be keenly watching the developments
and will revise our rating on the stocks when clarity emerges. We initiate coverage on
Cipla with an Accumulate rating as our current estimates have not factored in the upsides
from launch of combination inhalers in EU. Despite a low generic score (12) due to the
absence of Para IV filing, we value Cipla in line with the sector average because we
believe that its dominance in the lucrative inhaler space and established business model
makes it a low risk bet on the generic opportunity.
Lupin, DRL and Cadila are our top picks
We re-iterate our Buy rating on Lupin, DRL and Cadila with price targets of Rs2111,
Rs1478 and Rs962 respectively. Lupin, third in our generic scorecard (score of 15), with
its well diversified geographical reach, foray into high growth oral contraceptive segment
along with attractive Para IV pipeline is an attractive investment proposition because of
valuations discount to its large cap peers (20%). Lupin provides the highest upside (34%)
in our universe with a price target of Rs2111 (20xSep'11 EPS; NPV of Rs22/share for Para
IV pipeline).
DRL, with the highest score of 17 on our generic scorecard, is among the best bets to buy
into the generic growth story. We have ascribed a 15% premium to its 5 year average
multiple and valued the company in line with the sector multiple of 20x Sep'11 EPS and
arrived at a target price of Rs1478 (20xSep'11 EPS; NPV of Rs77/share for Para IV pipeline),
an upside potential of 26%.
Cadila, despite featuring last in our generic scorecard, is one of our top picks. Even after
ascribing a 10% discount to sector multiple, our fair value of Rs962 (18xSep'11E) provides
an upside potential of 22%. We believe that strong earnings growth and visibility in Cadila
and Lupin compensate for its lower generic scores and provide huge upsides from the
current levels.
We have valued the companies on the average of FY11E and FY12E earnings reflected
as on September’11 EPS.
Emkay Research 10 March, 2010 5

6. Valuation Matrix
CADILA CIPLA DR REDDY
2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012
Financials (Rs mn)
Sales 29275 37734 45673 54626 52343 58299 65990 75313 68830 72727 86682 100626
Emkay Research
Sales (base) 63566 70338 79985 90141
EBIDTA 6058 8164 9797 11706 12218 15135 17312 19854 14749 15594 21170 26205
EBIDTA (base) 9718 11910 14565 16916
PAT 3272 5077 6391 8182 9719 11305 13610 15745 7571 9481 13680 18066
PAT (base) 4301 8087 10458 13134
Growth (%)
Sales 26 29 21 20 24 11 13 14 38 6 19 16
Sales (base) 30 11 14 13
EBIDTA 32 35 20 19 47 24 14 15 93 6 36 24
EBIDTA (base) 31 23 22 16
PAT 24 55 26 28 51 16 20 16 127 25 44 32
PAT (base) 124 88 29 26
Profitability (%)
10 March, 2010
EBIDTAM 21 22 22 22 23 26 26 26 22 22 25 27
EBIDTAM base 16 17 19 19
PATM 11 14 14 15 19 19 21 21 11 13 16 18
PATM base 7 12 13 15
RoE 29 35 33 31 19 22 22 22 19 24 28 28
RoCE 22 26 29 32 20 21 22 22 16 20 28 31
Per Share Data (Rs)
EPS 24.0 37.2 46.9 60 12.1 14.1 17.0 20 45 56 81 107
EPS Base 26 48 62 78
CEPS 32.2 46.4 56.9 71 11.5 16.0 19.7 23 75 81 108 137
BVPS 89 123 165 218 55.9 72.2 84.2 98 209 257 329 425
DVPS 4.5 5.0 5.0 7 2.0 3.4 4.2 5 6 7 8 10
Valuation (x)
P/E 29.1 18.8 14.9 11.6 26.1 22.4 18.6 16.1 26 21 14 11
CPER 21.7 15.0 12.3 9.9 27.5 19.8 16.1 14.0 16 14 11 9
P/BV 7.8 5.7 4.2 3.2 5.6 4.4 3.8 3.2 5.6 4.5 3.5 2.7
EV/Sales 3.7 3.1 2.5 2.0 5.1 4.6 4.0 3.4 3.1 2.9 2.3 1.9
EV/EBIDTA 17.4 12.7 10.4 8.3 26.8 20.7 17.7 15.1 14.3 13.1 9.3 7.0
Dividend Yield (%) 0.6 0.7 0.7 0.9 1 1 1 2 0.5 0.6 0.7 0.9
Turnover (Days)
Debtors Turnover 61 56 55 55 134.5 133.2 133.2 133.2 77 72 70 70
Inventory Turnover 76 75 75 75 101.5 100.8 100.4 100.4 71 72 71 70
Gearing Ratio (x)
Net Debt/Equity 0.84 0.51 0.28 0.1 0.2 -0.01 -0.04 -0.1 0.4 0.2 0.0 -0.2
Generic Pharma Sector
Source: Emkay Research, Company
6

7. Valuation Matrix
LUPIN RANBAXY SUN PHARMA
2009 2010 2011 2012 2008 2009 2010 2011 2009 2010 2011 2012
Financials (Rs mn)
Sales 38523 47346 56526 64749 74214 75970 84753 91777 41870 40515 45218 49765
Emkay Research
Sales (base) 71854 70157 71780 78453 34448 33861 41389 50269
EBIDTA 7284 9565 12241 14163 5732 7124 13052 15014 18676 13465 16116 16978
EBIDTA (base) 5242 3055 4666 8630 11702 8973 12830 16589
PAT 5058 6559 8438 10109 2597 4338 8212 8910 18178 13622 15297 16596
PAT (base) 2254 1693 2549 4639 12947 10288 12818 16315
Growth (%)
Sales 41 23 19 15 9 2 12 8.3 27.1 -3.2 11.6 10.1
Sales (base) 8 -2 2 9 28.8 -1.7 22.2 21.5
EBIDTA 61 31 28 16 -37 24 83 15 20.2 -27.9 19.7 5.4
EBIDTA (base) 25.2 -23.3 43.0 29.3
PAT 51 30 29 20 -53 67 89 9 22.3 -25.1 12.3 8.5
PAT (base) -57 -25 51 82 26.5 -20.5 24.6 27.3
Profitability (%)
10 March, 2010
EBIDTAM 19 20 22 22 7.7 9.4 15.4 16.4 44.6 33.2 35.6 34.1
EBIDTAM base 7.3 4.4 6.5 11.0 34.0 26.5 31.0 33.0
PATM 13 14 15 16 3 6 10 10 43.4 33.6 33.8 33.3
PATM base 3 2 4 6 37.6 30.4 31.0 32.5
RoE 37 36 33 32 7.3 9.9 17.4 17.2 31.2 18.5 17.9 17.0
RoCE 25 28 30 32 -0.6 7.5 12.3 15.5 27.4 14.9 15.8 14.5
Per Share Data (Rs)
EPS 57 74 95 114 0.0 0.0 0.1 0.1 87.8 61.3 73.9 80.1
EPS Base 0.0 0.0 0.0 0.0 62.5 49.7 61.9 78.8
CEPS 67 88 115 135 6.2 10.3 19.5 21.2 68.5 57.2 70.0 87.5
BVPS 172 251 318 399 5.4 4.0 6.1 11.0 340.1 394.0 454.5 520.1
DVPS 13 18 24 28 88.4 22.7 15.6 13.6 27.5 20.3 22.8 24.8
Valuation (x)
P/E 28 21 17 14 73.3 43.9 23.2 21.4 18.9 27.0 22.4 20.7
CPER 23 18 14 12 35.1 27.1 17.2 16.0 24.2 28.9 23.6 18.9
P/BV 9 6 5 4 4.4 4.3 3.8 3.6 4.9 4.2 3.6 3.2
EV/Sales 4 3 3 2 2.9 2.8 2.5 2.3 7.8 7.9 6.9 6.0
EV/EBIDTA 19 16 14 11 88.4 22.7 15.6 13.6 17.6 23.7 19.2 17.6
Dividend Yield (%) 1 1 2 2 0.0 0.7 1.1 1.2 1.7 1.2 1.4 1.5
Turnover (Days)
Debtors Turnover 99 98 98 98 66.2 65.8 62.3 62.3 75.8 108.0 108.0 108.0
Inventory Turnover 91 91 91 91 97.7 96.5 91.8 88.2 84.0 86.4 86.4 86.4
Gearing Ratio (x)
Net Debt/Equity 0.8 0.3 0.1 0.0 0.4 0.3 0.3 0.3 -0.2 -0.3 -0.4 -0.4
Generic Pharma Sector
Source: Emkay Research, Company
7

8. Generic Pharma Sector
Investment Argument
Investment Argument
Generic industry: greener pastures
By 2050, world population of the 60+ The growth outlook for generics remains robust. An aging population, rising healthcare
age group is expected to jump 2.7x to spending and increasing acceptance, coupled with favorable government policies are
1.9bn. key growth drivers for generics. By 2050, the world population of the 60+ age group is
expected to jump 2.7x to 1.9bn. As elderly people consume 66% more medicine than the
younger group, this jump is likely to further pressurize healthcare costs of developed
countries. The healthcare costs of developed countries have already been growing faster
than their GDP. As more brand-name drugs come off patent and payers push for cost cuts
in health care, the demand for generics are likely to scale new highs.
Global generic market to grow at a Overall, we expect the global generic market to grow at a CAGR of 9% to US$135bn by
CAGR of 9% to US$135bn by 2013 2013, which will be higher than the growth of the branded pharmaceutical market. We are
of the view that non-US markets will be the key growth drivers and will grow faster than the
developed markets. The share of the US generic market is likely to come down from 20%
to 16% by 2013.
US$135bn opportunity awaits generic drugs by 2013
Generic opportunity outside the US, The global generic market, which stands at US$87bn as on CY2008 (IMS Health) is likely
Western EU and Japan to reach US$ to grow to US$135bn by 2013 (CAGR of 9%). Though US would continue to remain the
92 bn by 2013 largest generic market (currently 20% of total generic market), emerging markets are
likely to grow at a faster pace and narrow the gap going further. We expect the generic
opportunity outside the US, Western EU and Japan to reach US$92 bn by 2013 from the
current level of US$53bn (CAGR of 11.5% over CY08-13E).
Generic industry growth estimates
160
140 $135b
120
100 $87b $50b
US$ bn
80
60
40
20
0
2008 2013
North America Europe International
Source: Emkay Research, Teva
Generic penetration in key markets
70% 64% 65%
60% 54%
50%
50%
40%
30%
17% 17%
20% 12%
7%
10%
0%
France
US
UK
Germany
Japan
Netherlands
Spain
Italy
Source: Emkay Research, Stada
Emkay Research 10 March, 2010 8

9. Generic Pharma Sector
Key growth drivers for generics
Patent expiries, rising healthcare costs coupled with aging population and favorable
government policies are the key drivers of increased generic penetration the world over.
Drugs worth US$235bn are likely to go off-patent over 2010-2015
Patent expiry likely to open a plethora Drugs worth US$235bn are likely to go off-patent over 2010-2015. With high profile drugs
of opportunities for generics like Lipitor (US$13.5bn) and Plavix (US$8.7bn) going off-patent in 2011, the global pharma
market is likely to see a further slowdown in sales. Other key products going off-patent in
the next five years are Takepron (Lansoprazole; US$4.2bn revenue; 2009), Seretide
(Salmetrol + Fluticasone; US$7.7bn; 2010), Effexor (Venlafexine, US$4bn, 2010), Seroquel
(Quitapine, US$5.4bn, 2012) and Nexium (Esomeprazole, US$7.9bn, 2014), etc. These
patent expirations are likely to open a plethora of opportunities for generics and ensure
that their growth momentum is maintained.
Generic growth driven by patent expiries ($bn)
121
235
114
2010 - 2012 2013 - 2015 Total
Source: Emkay Research, Teva
2010-2014 - Key patent expiries
2010 2011 2012 2013 2014
Arimidex US Plavix Symbicort Oxycontin Nexium
Cozaar/ Hyzaar Advair Seroquel Cymbalta Copaxone
Aricept Zyprexa Avapro Zometa Actonel
Taxotere Femara Avandia Yasmin Micardis
Lipitor Singulair
Xalatan Diovan
Viagra
Detrol
Geodon
Lovenox
Avapro
Source: Emkay Research, Industry
Spiraling healthcare expenses indicate greater acceptance of generics
Healthcare expenditures of OECD With spiraling healthcare expenses across the globe, the acceptance of generics is
countries (ex-US) are likely to rise to steadily increasing. In a bid to cut healthcare costs, countries hitherto using only branded
16% of their GDP by 2020 drugs are gradually resorting to use of generics. As a result, branded markets like Germany
are resorting to use of generic drugs. Similarly, we have also seen a steady increase in
the generic penetration of developed markets like US, UK. The healthcare expenditures of
OECD countries (ex-US) are likely to rise to 16% of their GDP by 2020 (currently, it is 10%
of GDP). By 2020, the US is likely to spend around 21% of GDP on healthcare from the
current level of 16%. In all, the US will spend approximately US$10tn by 2020. Curtailment
of this uptrend is a very significant factor driving generic growth.
Emkay Research 10 March, 2010 9

10. Generic Pharma Sector
Healthcare spending as % of GDP in the US
17%
15%
12%
9%
7%
1970 1980 1990 2003 2008
Source: Emkay Research, Teva
Graying planet
Elderly people consume 66% more Growing proportion of elderly population is expected to add to the already burgeoning
medicine than the younger group healthcare costs in both developed as well as developing countries. As per WHO estimates,
global elderly population (65+) is expected to almost double from 480mn in 2000 to
800mn by 2025. As per industry estimates, there are currently 30 pension eligible elders
in the developed world for every 100 working age adults. By the year 2040, there will be 70
elders for every 100 working adults. Elderly people consume 66% more medicine than
the younger group, further adding to healthcare costs.
World population by age (in bn)
9.1
1.9
6.5
60 above 0.7 2.3
40 to 59 1.4
2 2.5
20 to 39
2.4 2.4
0 to 19
2005 2050
Source: Emkay Research, Teva
Biosimilars: the future
Between 2010 and 2015, biotec drugs Generic biologics or Biosimilars have the potential to be the next growth driver for the
worth US$101bn are set to loose generic industry. Biosimilars promise remarkable cost-savings for spiraling healthcare
patent protection budgets. Yet, the full potential can only be harvested when a number of significant markets,
regulatory and clinical hurdles have been overcome globally. There is still lack of clarity for
product launches in the US market. However, Europe has already begun to approve
generic biologics and till date has approved 13 biosimilars for launch. Biosimilar legislation
is evolving rapidly in other countries as well. Other national authorities have already
successfully addressed the biosimilar regulatory and legal framework, prominent among
them being Australia, Canada, Malaysia and Japan. On October 5, 2009, the Japanese
government has approved the first biosimilar. However, progress in the US, the most
lucrative biopharmaceuticals market with two thirds of global biological sales, is still
painfully slow. Legislation has been introduced in Congress to provide a similar pathway
for approval and regulation of generic biologics in the US. Now that this legislation has the
backing of the Obama administration, we expect the first biosimilar approval in 2011.
Between 2010 and 2015, biotec drugs worth US$101bn are set to loose patent protection.
Emkay Research 10 March, 2010 10

11. Generic Pharma Sector
Biologics patent expiry ($ bn)
20
9
59
8
2 1
1 1
Number of
1 3 4 2 3 9 7 16 45
molecules
Source: Emkay Research, Industry
The impending expiry of several patented blockbuster biopharmaceuticals and the
increasing demand from patients, insurers, and government agencies to reduce drug
costs have created numerous opportunities in the global biosimilar markets. This is new
territory for most generic players with the commercial rewards of their foray paying off in
the long run.
Key geographies: macro environment and growth drivers
US generic market to grow at a CAGR Our analysis of macro and micro environments of key geographies clearly reveals that
of 5% to US$22 bn over 2008-13 each of the markets present ample opportunities and challenges in terms of generic
usage. To put things in perspective, despite multiple challenges, US continues to remain
the largest and most exciting market in the generic space. The generic penetration in the
US is as high as 65%. The new healthcare bill under discussion, proposes to discount
prices of certain drugs by 50% from their current levels and provide coverage for people
currently not eligible for coverage (15% of US population). Though the new bill is expected
to act as a disincentive to research and innovation, it is expected to provide a big impetus
to generic drug manufacturers globally. Pro-generic environment, huge patent expiry (drugs
worth US$94 bn are likely to go off-patent in next 5 years) and rising health care costs are
some of the key growth drivers for increased generic usage, going forward. We expect this
market to grow at a CAGR of 5% to US$22 bn over 2008-13.
CEE generic markets offer significant Similarly, we are of the view that the EU generic industry has yet to reach its full potential.
growth opportunity (12-13%) The EU generic industry is highly fragmented and on the basis of usage, can be classified
as mature generic markets (generic penetration of more than 40%) and developing generic
markets. Countries having pro-generic policies such as Germany (generic penetration
59%), UK, Denmark, Netherland and Poland are the mature generic markets, while
countries like France, Italy and Spain, where the current generic penetration is very low are
developing generic markets. These developing generic markets offer significant growth
opportunity (12-13%), going forward.
Japan is aiming to raise its generic Similarly, Central and East European (CEE) markets offer higher growth prospects because
exposure to 30% of volume by 2012 of low generic penetration and lower per capita spending on drugs (10-30% of Western
Europe). On the other hand, Japan, the world's second largest pharmaceutical market, is
expected to be the most exciting market for generic companies, going forward. While the
Japanese pharma market constituted 9.9% of global sales in 2008, it had one of the
world's lowest consumption rates for generic drugs. Japan, which currently has 19%
generic penetration in volume and 4% in value (US$2.7bn), is aiming to raise its generic
exposure to 30% of volume by 2012.
Emkay Research 10 March, 2010 11

12. Generic Pharma Sector
Emerging geographies offer higher Though developed markets continue to remain critical markets because of their sheer
growth potential size, developing markets are emerging as a compelling opportunity because of higher
growth prospects. Although, the generic market value of these countries are not as
impressive as mature markets, most are experiencing tremendous growth rates compared
to the modest 2-5% growth seen in the US and Europe. We are of the view that emerging
geographies like India, Brazil, China, Russia, Mexico, Turkey and South Africa offer higher
growth potential on the back of a) rising prevalence of life-style related diseases, b) aging
population, c) increasing per capita spend, d) lower penetration of modern medicine and
e) increasing insurance penetration. Being branded generic in nature, these markets not
only offer higher margins but also have strong entry barriers because of doctor relationship
and brand equity.
We expect these pharemerging markets to grow at a sustainable rate of 12-13% over the
next decade to become a US$400bn market by 2020. Ongoing economic growth in these
countries will not only improve socio-economic profile and healthcare infrastructure but
also result in increased spending on chronic diseases.
The table overleaf is a snapshot of various regions in terms of size, growth potential,
regulatory environment, key growth drivers and challenges for each of the key geographies.
Genericisation of the global pharma market:
n Governments across the globe, and particularly those in major pharma markets
such as UK, US, Germany and Japan, have come under increasing cost contain-
ment pressure, leading to creation of regulations that encourage the use of lower
priced generics.
n The era of 'blockbusters' has passed. As recently as 2006, there were nearly 90
drugs that had achieved the blockbuster status, generating 30% of total global
pharma sales at US$200bn. By 2009, eight of these block buster drug ($18 bn)
were facing patent expiry.
n Failure of newly launched drugs due to safety concerns and dwindling pipeline of
small molecule drugs
n Increasing acceptance of generic drugs in large, highly regulated pharma markets.
n Emergence of biotechnology as an alternative to traditional small molecule phar-
maceutical
n A spate of M&As, driven primarily by pharma majors like Pfizer, Merck and Roche to
gain wider R&D pipeline
n Pharma majors are increasingly turning towards emerging markets as these mar-
kets offer higher growth potential
n Pharma majors are eying the generics and biosimilars markets as an alternate
revenue source.
Emkay Research 10 March, 2010 12

13. Global Generics - Overview
Europe
US Germany UK France CEE Spain Italy
Nature of market Mature Mature Mature Developing Developing Developing Developing
Generic penetration 64% 54% 65% 17% 20-25% 12% 7%
Emkay Research
Market size as of 2007 (US$ bn) 17 6.7 4.5 5.4 14 2.7 3
Expected market size by 2013 (US$bn) 22 7.8 4.8 7.3 26 3.4 3.5
CAGR 5% 3% 1.3% 6% 13% 4.7% 3.1%
Drugs going off patent (US$bn) 94 50
Regulatory Environment Pro generic Pro generic Pro generic Encouraging generic usage
Key growth drivers • Largest generic market • Various healthcare reforms introduced by the German government have resulted in
• Drugs worth $94bn are going off patent progeneric structural and regulatory changes
• Regulatory & political environment is pro-generic • Government in other European markets such as France, Hungary, Spain and Italy have also
initiated various reforms to combat the healthcare cost
• Rising healthcare cost is leading to legislative changes that are likely to see an increasing
penetration of generics in Europe
• 0.5bn people- aging population
• Low generic penetration
10 March, 2010
Key challenges • Price Erosion • No long term generic medicine policies
• Competition • Limited transparency on prices and availability
• Stringent FDA regualtions • Continued price linkage to originator products
• Market entry delays due to post-market authorization procedures for establishing pricing
and re-imbursement status
• Economic disincentives for pharmacists to dispense generic medicines
• Lack of economic incentives for physicians to prescribe the generic medicines
• Limited incentives for patients to request generic medicines
• Evergreening of medicines
Indian company's presence • US has always remained an important destination • Indian companies have expanded their presence in the EU market through M&A
for Indian generic companies • Increased penetration of generic drugs in EU countries is long term positive for Indian
• Indian companies have scaled up their presence in companies
the US market • DRL was the second highest contract winner of AOK tender.
• Indian companies are ranked one among the top 5
companies in terms of ANDA and FTF filings
• Built up strong Para IV pipeline
• Companies like DRL and Lupin stand one among
the top 10 generic companies in the US
• Despite 90-95% price erosion, realizations are still
higher in the US
Key opportunities • Large market share • Generics have yet to reach its full potential
• Para IV monetization • Increased pace of generic penetration
• Focus in the niche segment • Some of the Western European markets still have low level of penetration
• Biosimilars can be a key opportunity • Central and Eastern European markets offer higher growth prospects
• Bio-similars can be a key opportunity
Source: Emkay Research
Generic Pharma Sector
13

14. Global Generics - Overview
Emerging markets
Japan Brazil Russia India South Africa
Nature of market Developing Branded Generic Branded Generic Branded Generic Branded Generic
Generic penetration 17% 20% 30% 70% 40%
Emkay Research
Market size as of 2007 (US$ bn) 2.7 1.5 2.5 6.6 1
Expected market size by 2013 (US$bn) 4.9 4.6 5.2 9.3 1.5
CAGR 15% 25% 16% 14-15% 15%
Drugs going off patent (US$bn)
Regulatory Environment Encouraging generic usage Pro-generic Pro-generic Pro-generic Pro-generic
Key growth drivers • Large number of patent expiries • Improving economic condition
• Largely under penetrated nature of market • Aging population
• Government's initiative to encourage generic usage • Low per capita drug consumption
• Higher purchasing power
• Rapid growth in insurance sector
• Increased prevalance of chronic diseases
• Low penetration of modern medicine
10 March, 2010
Key challenges • People’s perception and cultural difference towards • Upfront investment to establish front end marketing and distribution network
generic • Opportunities spread over 100 markets
• Prescribers' attitudes • Government and regulatory interference
• Japanese patients perceive generics as inferior to • Acceptance of patent regime
branded products • Currency fluctuations
• Competition
Indian company's presence • The Indian pharma industry is diversifying its • Indian companies have fairly large presence in some of the key emerging markets
geographical presence to reduce dependency on • Indian pharma companies have higher familiarity with emerging market dynamics
US • Most of the Indian companies have built-up front end marketing and distribution network in
• Japanese generic market offers huge opportunity these countries except Cipla, who mainly rely on partnership model
• Ranbaxy plans to capitalize Daiichi’s presence in • With large product baskets, regulatory expertise, low costs and successful experience in
Japanese market operating profitably in semi-regulated branded generic markets, India pharmas are targeting
• Lupin and Cadila have built presence the market large opportunities in emerging markets
Key opportunities • Government provides traction for higher generic • Emerging markets are likely to grow 5-6x faster than developed markets (expect this
utilization market to be US$400bn by 2020)
• Under patented market • Offers higher margins because of branded generics
• High entry barriers because of doctor relationship and brand equity
• Renewed interest of MNCs towards emerging markets
Source: Emkay Research
Generic Pharma Sector
14

15. Generic Pharma Sector
Indian generics: Well placed to capture the growing generic
opportunities
Geographical diversification, Indian pharma companies, by virtue of their strong presence in the domestic pharma
dominance in a niche segment, Para market, highest number of US FDA approved plants outside the US and considerable
IV pipeline and cost structure are the exposure to developed generic markets are in the forefront for capitalizing opportunities in
qualifying parameters for a formidable the generic space. Global presence, a wide and diversified product pipeline spread
generic player across multiple segments, presence in niche segments, strong FTF pipeline and
integration across the product value chain coupled with lean cost structure are the key
fundamental drivers for Indian generic companies. We have identified four parameters for
a company to qualify as a formidable generic player. They are geographical well diversified
business, dominance in a niche segment, Healthy Para IV pipeline and Lean cost structure.
We believe that companies, which fare well on these parameters are well placed to cash
in on generic opportunities. We have explained each of these parameters in detail below
and have also rated the companies in our universe on each of these parameters.
Geographically well diversified business
Widespread geographic footprint Indian pharma companies operate in multiple geographies with a majority of their revenues
reduces earnings volatility and coming from the sale of branded formulations in India and other semi-regulated markets.
enables them to capture oppurtunities A widespread geographic footprint reduces earnings volatility, especially as traditionally
lucrative markets such as US, Germany and UK have turned extremely competitive.
Moreover, a well diversified geographical mix will enable them to cash in on the growth
opportunities that different markets provide. Most Indian pharma companies are well
diversified geographically, but Ranbaxy clearly has the widest global footprint, with products
available in 125 countries, operations in 49 countries and manufacturing base in 8 of
them. Cipla would be the second with exports to 175 countries mainly through a partnership
model. DRL has built a significant presence in CIS/Russia as well as in Germany and US
and the partnership with GSK will further strengthen its presence in the emerging markets.
Sun Pharma has a strong presence in the US and exports formulations to 26 countries-
mainly in the emerging markets. It is now diversifying into European territories. After
building strong franchises in US, Japan, India and 22 countries in AAMLA region, Lupin is
gearing to enhance its presence in other key markets such as EU territories and Latin
American countries.
Geographical presence
120%
100%
(Revenue %)
80%
60%
40%
20%
0%
Ranbaxy Cipla Sun pharma Dr Reddy Cadila Lupin
US EU Emerging market Japan
Source: Emkay Research, Company
Dominance in a niche segment
Dominance in a niche segment Apart from having presence across various product categories, we believe that dominance
enables them to have pricing power in a niche segment is a pre-requisite for becoming a major generic player. Dominance in
and better margins a niche segment enables them to have pricing power and better margins, which will
largely insulate them from the tough competition in the generic space. A more specialized
Emkay Research 10 March, 2010 15

16. Generic Pharma Sector
focus on products that are difficult to manufacture or have limited generic competition,
even though the target market may be small, differentiate them from 'me too' generic
companies and reduce the sensitivity of earnings to price erosion. Most Indian generic
players have already identified and are establishing themselves in a particular niche
segment, which will afford them insulation against the vagaries of the highly competitive
generics market. Cipla, with its dominance in inhalers, DRL in bio-similars, Sun Pharma
in controlled substances and Lupin in oral contraceptives are working towards these
directions.
Building a niche in complex generics
Ranbaxy Cipla Sun pharma Dr Reddy Cadila Lupin
ANDAs 241 107 159 92 90
DMFs 271 133 148 76 85
Complex Penem's Inhalers Controlled Biosimilars Transdermal Oral
generics Substances patches; Contraceptives
vaccines
Source: Emkay Research
Healthy Para IV pipeline
The 180-day period of exclusivity for the first generic company is a very strong incentive for
generic companies to stay ahead of the competition. Strong Para IV pipeline with potential
FTFs not only provide 6-months exclusivity (one time profit) but also help to maintain
leadership position in that molecule. Indian pharma majors are likely to derive significant
benefit from some non-recurring Para IV earnings and their first mover advantage will
also help them retain market share, even post exclusivity. Among Indian companies, we
believe that DRL with 38 potential FTFs, Ranbaxy with 26 potential FTFs, Sun Pharma with
24 potential FTFs and Lupin with 15 potential FTFs will benefit the most from this
development. Cipla, on account of adopting the partnership model, has no Para IV pipeline.
Para IV - product differentiation
Dr Reddys 38
Ranbaxy 26
Sun 24
Lupin 15
0 5 10 15 20 25 30 35 40
Source: Emkay Research
Lean cost structure
Companies with lean cost structure Being cost competitive is one of the key ingredients of a successful global generic company.
and front end presence across region While integration across the value chain from intermediate to formulation yields cost
will be better positioned to capitalize advantages, forward integration by way of having front end distribution network lowers the
on generic opportunities risk of increasing competition and allows a company to capture large share of profit from
a product. As it is difficult to predict the future revenue, the only thing which a company can
do is to control cost. Our view is that companies with lean cost structure and front end
presence in key geographies will be better positioned to capitalize on generic opportunities.
Sun Pharma has the leanest cost structure with low fixed costs, while Ranbaxy and DRL
(high manpower cost and other expenditures) are aggressively cutting cost by closing
down their non-profitable operations.
Emkay Research 10 March, 2010 16

17. Generic Pharma Sector
Cost structure of Indian companies
Ranbaxy Cipla Sun pharma Dr Reddy Cadila Lupin
Raw material cost 42% 47% 20% 34% 33% 42%
GPM 46% 53% 80% 66% 67% 58%
Employee cost 13% 5% 8% 15% 11% 13%
R&D cost 6% 5% 7% 6% 5% 6%
Other exp 33% 23% 19% 25% 31% 21%
OPM 7% 19% 45% 20% 21% 19%
Source: Emkay Research
Scorecard of Indian pharma companies
We believe that companies that can differentiate from competition by building niche product
portfolios, novel drug delivery systems, chart a geographical diversified presence and
sustain and nurture vertically integrated operations will benefit the most. We have ranked
the companies on the basis of above parameters. As per our scorecard, Sun Pharma and
DRL emerge as most preferred companies with the highest score of 17 each. Cipla and
Cadila feature last with a score of 12 each.
Generic score card
Company Parameters Total Score
Geographical Dominance in Para IV Cost
presence niche segment pipeline structure
Sun Pharma 3 5 4 5 17
Dr Reddy 4 5 5 3 17
Ranbaxy 5 5 5 1 16
Lupin 4 5 3 3 15
Cipla 4 5 0 3 12
Cadila 4 5 0 3 12
Source: Emkay Research
Expect earning CAGR of 28% over FY09-12E
We expect our generic universe' revenues to grow at a CAGR of 15% over FY09-12E,
driven by 23% and 19% growth in Cadila Healthcare and Lupin pharma respectively.
$235bn patent expiry, double digit growth in the emerging markets and sustainable
momentum in the domestic markets would be the key growth drivers going forward. We
expect operating margins to expand by 215 bps to 21.7% over FY09-12E. We expect
Ranbaxy’s margin to expand by 660bps and Cipla’s margin to expand by 310bps during
the same period. We expect 15% revenue CAGR and strong operating performance to
drive a 28% earning CAGR over FY09-12E.
Emkay Research 10 March, 2010 17

18. Generic Pharma Sector
Valuations
Valuations
Premium valuations to sustain
Premium valuations to sustain Our universe currently trades at 20x (ex-Ranbaxy) FY11E EPS and 16x (ex-Ranbaxy) FY12E
because of 28% earning CAGR, EPS. Current sector valuations are at a 20% premium to its 5 year average historical PE.
strong return ratios, low leverage Historically, generics have traded at a 10-15% premium to the broader markets on account
(0.2x) and free cash flow of consistent earnings growth, healthy balance sheet and non-cyclical nature. Going
forward, we expect premium valuations to sustain because of 28% earning CAGR, strong
return ratios, low leverage (0.2x ) and free cash flow. Moreover, we are of the view that
because of emergence of innovator-generic partnership model, premium valuations for
Indian pharma are likely to sustain.
We expect our large cap universe to continue to trade at 20x one year forward PE (in-line
with its 5 year mean multiple; 20% premium to sensex). However, in case of companies
like Lupin and Cadila, who have historically traded at 5 year mean multiples of 13-14x
(mid cap valuations), the gap to large cap multiple is narrowing down as these companies
have gradually moved into the league of big pharma companies and we expect this gap
(trading at 20% discount to comparable peers) to further narrow down. We initiate coverage
on Cipla, Sun Pharma and Ranbaxy with an Accumulate, Hold & Sell rating respectively.
Lupin, DRL and Cadila are our top picks in the sector.
Historically, the pharma sector has outperformed in times of uncertainty as well as downturn
and has underperformed when the market is bullish. As the broader market is likely to
remain zigzag, we are of the view that investors will continue to hold pharma stocks to
balance their high beta exposure. Apart from appreciating currency coupled with company
specific issues, the sector is largely insulated from the concerns that prevail in a slowdown.
Lupin, DRL and Cadila are our top picks
Cadila Healthcare
Cadila Healthcare emerges as our top pick given its strong growth prospects, wide
geographical reach, foray into difficult to manufacture generics and attractive valuations.
We expect Cadila's earnings to grow at 27% CAGR over FY10-12E on the back of strong
growth in its international business, steady growth from domestic operations & meaningful
contribution from Hospira JV. We believe that over time, Cadila's Hospira JV will not only
make up for losses on its Nycomed JV but also add to Cadila's overall profitability. Despite
ascribing 10% discount to sector multiple because of low generic score (12, last in the
universe), its discounted valuations are sufficient to provide huge upsides. Our fair value
for Cadila is Rs962 (18xSep'11E), an upside potential of 22%. The fact that Cadila has
surpassed all our estimates since we initiated coverage on the stock, increases our
confidence in its ability to meet our future estimates. We re-iterate our Buy rating on the
stock with a target price of Rs962.
Cipla Ltd
We initiate coverage on Cipla with an Accumulate rating and a price target of Rs366. Apart
from being the largest Indian pharma company by market size, it is one of the most
diversified companies with presence in more than 175 countries. Its strategy for export is
built around supply chain model and tie-ups with global players, without investing in
building up front-end presence. We are of the view that huge capacity expansion made
over last four years will start delivering now, improving its RoCE, going forward. Moreover,
despite significant capex, Cipla's balance sheet continues to remain healthy with a D/E of
0.2x and expect company to generate net free cash flow from FY11E onwards. We expect
earnings CAGR of 18% over FY10-12E driven by a) 11.8% CAGR in domestic market,
Emkay Research 10 March, 2010 18

19. Generic Pharma Sector
b) 12.6% CAGR in export formulation. Since Cipla has adopted the tie-up route in the
generic space, it has no Para IV pipeline, resulting in it being one of the lowest scorers
(generic score of 12). However, its dominance in the lucrative inhaler space and established
business model makes it a low risk bet on the generic opportunity. As a result, we have
valued Cipla in line with the sector average (20x Sep'11 EPS of Rs18.3) and arrived at a
target price of Rs366 (upside of 16%). Signing of MNC contracts and launch of inhalers in
EU could be potential upside triggers.
Dr Reddy’s Laboratories (DRL)
DRL, with the highest score of 17 on our generic scorecard, is among the best bets to buy
into the generic growth story. Its well diversified geographic reach, strong presence in the
high growth potential biosimilars space, healthy Para IV pipeline and strong earnings
growth are likely to ensure upside potential from the current level. Strong growth in base
business (barring Betapharm), revenue upsides from its Omeprazole OTC launch and its
GSK alliance are likely to result in a 38% earnings CAGR over FY10-12E. Despite 38%
out-performance to broader market over the last six months, we continue to remain positive
on the stock and reiterate our buy rating with a target price of Rs1478, an upside potential
of 26%.
Lupin Laboratories
Lupin's outperformance across segments along with its well charted growth strategy
makes it our best bet in the Indian generic pharma space. We expect Lupin's earnings to
grow at 24% CAGR over FY10-12E driven by a) strong growth across the key geographies,
b) launch of oral contraceptives in the US market, c) increasing generic penetration in the
Japanese market and d) 200 bps operating margin expansion in next 3 years. Lupin, third
in our generic scorecard (score of 15), with its well diversified geographical reach, foray
into high growth oral contraceptive segment along with attractive Para IV pipeline is an
attractive investment proposition because of its valuation discount to large cap peers
(20%). Despite 57% absolute return and 47% outperformance to broader market over the
last six months, strong execution across the markets and increasing visibility in revenue
and earnings (17% and 24% CAGR over FY10-12E), makes Lupin our preferred pick in
the large cap pharma space. With the Mandideep issue getting resolved in favor of Lupin,
we are of the view that Lupin should now trade in-line with its large cap peers. We re-
iterate our Buy rating on the stock with a target price of Rs2111 (20x Sep'11 EPS of
Rs104.5; NPV of Rs22/share for Para IV).
Ranbaxy Labs
We initiate coverage on Ranbaxy with a Sell rating and a price target of Rs329. With
dominance in niche segments such as penems, strong para IV pipeline coupled with
well diversified geographical reach, Ranbaxy features second in our generic scorecard
(score of 16). Our base business earnings of Rs6 and Rs11 for CY10E and CY11E factors
a gradual improvement in the base business as we believe that most of the initiatives will
start contributing from CY11E onwards. We have valued its FTF pipeline on NPV basis
unlike the practise of treating FTF as recurring earnings.This itself has brought a valuation
difference of Rs95 per share. We have arrived at a price target of Rs 329, assigning
Rs220 for its base business (20xCY11E) and Rs 109per share as NPV of FTF pipeline.
Though we are positive on the long term prospects of the company, we believe that current
valuations are way ahead of actual improvement in the business and hence, recommend
a sell on the stock. Earlier than expected resolution of FDA issue at Dewas or strong
earning visibility from CY11E onwards are positive catalysts to the stock price.
Emkay Research 10 March, 2010 19

20. Generic Pharma Sector
Sun Pharma
We initiate coverage on Sun Pharma with a Hold rating and a price target of Rs1644. Sun
Pharma's strong foothold in the domestic formulation business, robust pipeline for
regulated markets and healthy balance sheet are the positives, which will enable it to
maintain its leadership position.
While Sun Pharma ranks high on parameters like dominance in niche segments such as
controlled substances and attractive para IV pipeline, it is its lean cost structure that gives
it a distinct advantage over its peers. We have ascribed 10% premium to sector multiple
because of its high generic score (17). Our fair value for Sun Pharma works out to Rs1644
(22x Sep'11E base business EPS; NPV of Rs66/share for Para IV pipeline; Taro Investment-
Rs30/share). Despite ascribing 10% premium because of high generic score, our target
price of Rs1644 does not offer much upside from the current levels. Earlier than expected
clearance of Caraco, visibility of high end product launches or successful acquisition of
Taro are potential positive catalysts to the stock price. Delay in clearance of Caraco could
impact our numbers adversely.
Emkay Research 10 March, 2010 20

21. Generic Pharma Sector
Sector Risks
Sector Risks
Increasing scrutiny by the US FDA
The US FDA has become increasingly stringent about Good Manufacturing Practices
(GMPs) in order to maintain the quality of drugs to be supplied in the US. This has resulted
in a sharp rise in Form 483 and warning letters, even at minor deviations. Till date, FDA
has issued 5 warning letters compared to 12 and 16 in 2009 and 2008 respectively.
Indian companies like Ranbaxy, Caraco (US subsidiary of Sun Pharma), Lupin and Cipla
(already cleared) are under the FDA scanner. We are of the view that managing regulatory
issues have become a big challenge for Indian generic companies.
Currency movements
68% of our universe revenues come from exports and most of it is dollar denominated.
Movement in currency adversely impacts the profitability of the companies. Our universe
is exposed to various cross currencies and therefore, the impact of currency movement
on their profitability is difficult to estimate.
Pricing pressure in the US
Higher than expected pricing pressure for the US generic business can further erode the
profitability of the companies. We have currently built in 10% price erosion in the base
business.
Healthcare reforms in EU territories can lead to tender systems
Spiraling healthcare costs in developed countries have resulted in introduction of various
bills to encourage generic penetration in the EU territories. In order to further restrict their
healthcare spending, Germany, last year adopted the tender model moving away from the
branded generic market. This has hurt the profitability of the companies. If this model
becomes successful, then many countries may be encouraged to adopt it, which can
further put pressure on companies in our universe.
Increasing competitive landscape for emerging markets
With global pharma companies targeting the emerging markets for growth, there is a fair
possibility of price wars in these geographies. We believe this can impact the profitability
of Indian companies and therefore, the valuations also.
Domestic drug policy
Indian government's proposal to expand the scope of price controls from existing 74
drugs to 354 drugs might impact domestic formulation business of Indian pharma
companies. Generally, domestic business contributes 20-50% of overall revenue and 30-
60% of recurring EBIDTA.
Emkay Research 10 March, 2010 21

22. Generic Pharma Sector
Companies
Cadila Healthcare Ltd.
Cipla Ltd.
Dr Reddy's Laboratories Ltd.
Lupin Ltd.
Ranbaxy Laboratories Ltd.
Sun Pharma Industries Ltd.
Emkay Research 10 March, 2010 22