CONFIDENTIAL

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CONFIDENTIAL
A presentation on
November 8, 2004
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Disclaimer

• This presentation includes forward-looking
  statements / projections, which are based on
  current expectations and forecast about future
  events. Such statements involve known / unknown
  risks uncertainties and other factors and may
  cause and defer the actual results materially.
  Such factors include, but are not limited to,
  changes in local and global economic conditions,
  the Companys ability to successfully implement
  strategies, the market acceptance and demand of
  the Companys products and services, the
  Companys growth rates, expansion, technological
  change and the Companys exposure to market risks
• By this nature, these indications and projections
  are only estimates and actual results could
  differ from these in the future.

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Contents
Pharmaceutical Industry Orchid - An
introduction Initiatives Undertaken Business
Model Generics Financials Growth Drivers
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Pharmaceutical Industry
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Global Pharmaceutical Industry

• Size of global pharmaceutical industry is
  estimated to be USD 467 billion (2003) and is
  expected to grow significantly by 2005
• Industry growth rate 7 to 9 during the last
  five years.
• North America is the largest and the fastest
  growing market in the world (USD 229.5 billion in
  size and has grown by 12.7 during 2003)

Source IMS Global Health
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Global Anti-infectives Market

• Global anti-infectives constitute a large market
  in terms of both revenue and prescription volume
  - USD 30 bio in 2002
• The anti-infectives market is poised to grow to
  USD 38 billion by 2006 at a CAGR of 3-5
• Cephalosporins and combinations represent the
  largest segment (USD 9.65 billion) of the
  anti-infectives market
• Cephalosporins are effective against both gram
  positive and gram negative bacteria with a wide
  spectrum of activity
• There are over 60 Cephalosporins, spanning first
  to fourth generation, with diversified
  therapeutic activity newer cephalosporins are
  under pre-clinical and clinical trials.

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The overall global cephalosporin retail market
Regulated markets constitute 66 of the retail
cephalosporin market, which offers a major
opportunity for us
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Trends in Global Pharmaceutical Industry

• Growing importance of generics
• Generics will be a fast-growing segment in
  regulated markets
• With USD 10 billion (retail) worth of drugs going
  off-patent each year on average, generics
  represent a major opportunity for India
• High quality, cost-competitive API and
  formulations are vital for growth of generics
  industry
• Managed healthcare driving down healthcare costs,
  boosting generics
• Increasing need for new drug pipeline
• Big pharma companies under great pressure to
  enhance NCE pipeline
• Focus on extending patent life through novel drug
  delivery systems and therapeutic switch
• Major potential to select Indian firms to support
  drug discovery
• Consequent structural changes
• Generics outsourcing
• RD outsourcing

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Indian Pharmaceutical Industry

• The Indian pharmaceutical industry is USD 7.5
  billion in size (Domestic - USD 4.5 billion and
  Exports - USD 3 billion)
• The Indian pharmaceutical industry is led by
  Indian companies known for their chemistry skills
  and companies with domestic brand equity
• The patent regime enabled Indian pharma players
  achieve dominance in new product introductions
  utilising the chemistry skills
• With the impending introduction of product patent
  regime, select Indian pharma players are now
  positioning themselves in regulated generics and
  drug discovery space
• Orchid has emerged as a front-runner in the
  Indian pharma industry in a short span of 10
  years.

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Orchid - An introduction
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Orchid
Is a first generation enterprise which has carved
out for itself a niche in global anti-infectives
markets in a short span of time and... Is
evolving rapidly into a composite pharmaceutical
major with presence in bulk drugs, formulations
and drug discovery
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Orchid - An Introduction

• Orchid was incorporated in 1992 as a 100 Export
  Oriented Unit (EOU)
• Promoted by Mr. K Raghavendra Rao, (Founder- MD)
  a first generation entrepreneur with hands-on
  experience in conceptualising and commercialising
  large pharmaceutical and other projects.
• Commenced operations in February 1994 with
  manufacture of bulk cephalosporins (Cephs) range
  of antibiotics from its manufacturing facility at
  Alathur, near Chennai, Tamil Nadu.
• Evolved rapidly into an integrated life sciences
  company with a strong presence in
• Active Pharmaceutical Ingredients (APIs)
• Formulations
• New Drug Discovery (NDD)
• Novel Drug Delivery Systems (NDDS)
• Company employs 3000 people across plants,
  research centre, field and offices.
• Revenues of USD 160 million (2003-04)

API facilities at Alathur and Aurangabad
Formulations facilities at Alathur and
Irungattukottai RD Centre at Sholinganallur
Joint ventures in China, US and Europe
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Orchid - Performance Profile (1/2)
In a short span, Orchids quantitative sales have
crossed 1000 MT, with a 15 share in global
cephalosporins market.
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Orchid - Performance Profile (2/2)
Despite declining international bulk drug prices
in recent years, Orchids sales have touched USD
160 Mn - Orchid continues to be one of the
fastest growing pharmaceutical companies in
India.
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Orchid - The Board and Key Management Persons

• Maintains high standards of corporate governance
• Fully compliant with all guidelines on corporate
  governance
• On US GAAP for the last 5 years, with audit by
  Deloitte, one of the Big 4 Accounting firms.

One of the robust organisations in Indian pharma
today, with high calibre professionals having
proven track record
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Orchid - Capital Structure
FCCB subscribed in May 2001, converted in
November 2002
Shares listed on NSE, BSE and MSE
As of 31/10/2004
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Orchid - An established name in the Indian
pharmaceutical industry

• USD 160 million, Chennai-based pharma major in
  India
• Leader in the global cephalosporins segment
• Largest manufacturer-exporter of Ceph APIs in
  India
• Among the Top Five Ceph manufacturers in the
  world
• Fifth largest exporter of pharmaceutical products
  in India
• Ranks among the Top 10 Indian pharma companies
  and Top 11 pharma companies (Indian and MNC) in
  terms of Sales

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Orchids ranking in Indian Pharma
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(No Transcript)
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Orchid - Regulatory Approvals / Certifications

• Facilities / products approved by international
  regulatory authorities
• Approval received from US FDA for Cephalexin API
  and Cefazolin sterile API - more
  inspections / approvals in the pipeline
• Certificates of Suitability (CoS) from EDQM for
  select products (9 approvals received so far)
• Approval from Australian TGA for entire range of
  Cephs (APIs) and Nutraceuticals (APIs and
  Formulations)
• A quality oriented Company, committed to safety,
  health and environment
• Certifications ISO 9001 2000
• ISO 14001
• ISO 14001 and OHSAS 18001 for Aurangabad
• Orchid pioneered "zero discharge" pharmaceutical
  manufacturing in India Invested over Rs. 500
  million in effluent treatment plant at Alathur.
• Orchid has been awarded the Confederation of
  Indian Industry Leadership Excellence Award in
  Safety, Health, Environment Manufacturing
  Award during 2002 and several other national
  international accolades
• Orchid is a national show-case in environmental
  friendliness

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A skilled employee base supports competencies
across all locations
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Orchids web of six core capabilities
Quality leadership
Cost advantage

• ISO 90012000 certified
• cGMP approved
• EDQM / CoS
• US FDA certified
• TGA approved

• 30-40 lower manufacturing cost than
  global pharmaceutical corporations

Environmental showcase
Manufacturing prowess

• World-class Lyophillization and Crystallization
  plants
• Highly automated, flexible manufacturing
  capabilities
• Expertise in handling complex and hazardous
  reactions
• New plant for non-cephs
• World-class finished dosage form facilities

• Indias first and only Zero Discharge, ISO
  14001 certified facility
• ETP investment over Rs 500 million
• Recognized as the Gold Standard in environmental
  consciousness by the Government of India

Orchid is emerging as a preferred supplier to
global pharmacos which recognize Orchids quality
leadership, cost advantage and management
strengths
World class talent
RD strengths

• Non-infringing novel routes of synthesis
• New Chemical Entities
• Novel drug delivery systems
• Alternative processes to improve yields and
  reduce effluents
• Large basket of patents and IP
• Pipeline of DMFs and ANDAs

• Innovative, entrepreneurial, collaborative
  senior management team
• Over 250 highly qualified professionals with
  advanced degrees in science, engineering and
  management (including PhD/MS/MTech/MBA)

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Initiatives Undertaken
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Orchids strategy in 1999 aimed at expansion and
modernization of facilities

• Cephalosporin infrastructure at Alathur upgraded
  and balanced to requirements
• A bulk drugs unit in Aurangabad has been acquired
  and upgraded for high-end non-cephalosporin
  betalactams
• RD strengthened with state-of-the-art NMR, LCMS
  and GCMS equipment
• SAMe bulk nutraceutical facility set up in
  Alathur for US dietary supplement market
• Nutraceutical formulations facility set-up to
  value add for US dietary supplement market
• Loans drawn down selectively to reduce interest
  burden

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Recognizing the changing market dynamics, Orchid
recast its plans in 2001 to focus on regulated
markets, formulations and drug discovery
Pre-2001
Post-2001 (Additional to Pre-2001)
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The investment strategy was based on a sound
business strategy drawn up with McKinsey
The strategy is to grow the business in multiple
horizons comprising core, emerging and
knowledge-intensive businesses
In each of the Horizons, Orchid has taken
specific growth initiatives, both organic and
inorganic under a USD 100 million investment plan
which integrated Schroders and IFC investments,
internal generation and borrowings
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Orchid - Initiatives Undertaken
Integrating the earlier Schroders / IFC
investment, the capital investment plan was...
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Newly commissioned facilities
Generics facility
Sterile API plant
Orchid Towers
Non-sterile API plant
Intermediates plant
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Orchid - Organic and inorganic growth
Horizon 3
NDD NDDS research Biotech Research
Horizon 2
Generics (US) Formulations
Horizon 1
Bulk - Unregulated Bulk - Regulated
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Orchid - Investment Philosophy

• Orchids investment philosophy has been for the
  long term
• Invested in high-technology, high-quality assets
  from inception. Though investment intensive, this
  has positioned the Company ahead in its regulated
  market initiatives.
• The Company undertook a strategic transformation
  into a composite pharmaceutical major, focused on
  US generics and drug discovery, entailing
  relatively long gestation periods.
• The Company has also invested in research
  oriented Joint Ventures, which have a large
  upside potential
• The above resulted in relatively high leverage,
  reduced net margins and lower sales to asset
  ratio. Yet, the company has high operating
  margins - Over 21.65 at the EBIDTA levels -
  Comparing favorably with the industry. Lower
  margins at net level have been more due to the
  impact of depreciation and interest. Cash
  profit-wise, Orchid is comparable with its peers
  in the industry.
• The company has now world-class infrastructure in
  compliance with global regulatory requirements.
  The completed projects provide a launch pad for
  growth.
• The Company is confident that with its
  world-class infrastructure in place, it is poised
  for high growth and profitability, which will
  lead to the following
• High margins
• Low Leverage
• Good sales to asset ratio

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Business Model
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Orchids Business Model

• Orchid business covers (domestic exports)
• API
• Formulations
• Orchid has strong growth drivers
• US Generics (Cephs and high-end betalactum
  molecules)
• New Drug Discovery (NDD)
• Novel Drug Delivery Systems (NDDS)

• The business model of Orchid is anchored on
• Consolidating and growing non-regulated API
  business
• Penetrating European US markets with API
• Exploiting the global generics markets
  (particularly US)
• Expanding formulations business in emerging
  markets and domestic market with high potential
  molecules in chronic therapy segments
• Development of new chemical entities and novel
  drug delivery systems

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Orchids product-market grid
Arrangements for injectables with Apotex for US
and Canada and with Par Pharma for Orals in US
Varied alliances for other markets
US Europe Australia New Zealand Canada
Varied marketing arrangements for APIs
US Europe Japan
Regulated markets
China Africa Latin America Russia CIS Asia
Far East
Africa ME Latin America Russia CIS Asia Far
East
Non-regulated markets
JV in China will be a major growth driver
Russia and Brazil will be major markets
API Formulations
Presently 17.8 of sales come from regulated
markets expected to go up sharply in the years
to come
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Orchids API infrastructure
Active Pharmaceutical Ingredients - APIs
API facility, Aurangabad near Mumbai
API facility, Alathur near Chennai
US FDA approval for Cephalexin and Cefazolin
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The Ceph API market

• Orchids core competence in cephalosporins offers
  major opportunity in worldwide API as well as
  regulated generics markets
• Cephs are the largest and the fastest growing
  range of antibiotics (around 30 of the
  antibiotics segment)
• Globally Cephs recorded sales of USD 10 billion
  during 2002 (Global tonnage- Approx 7000 MTPA)
• In realisation terms growth of 5 pa.
• In volume terms growth rate will be closer to 10
  pa.
• Pen G based Cephs constitute around 26 and
  Ceph-C based Cephs constitute around 74
• China continues to be the largest market for
  Cephs. Chinese market is expected to grow at
  over 14 pa.
• Ceph molecules coming off patent in the next few
  years offer a breakthrough opportunity for Orchid
  in US and Europe

Orchid is present in all these product segments.
besides other molecules
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Orchids core competencies in API business

• A large API revenue base of Rs. 5708.7 mio (USD
  127 mio) for 2003-04, poised to grow further
• An entire basket of Cephs and high-end
  betalactums to offer (spanning first to fourth
  generations) literally a one stop shop for the
  above products.
• Non-infringing processes (NIPs) for all its Cephs
  and betalactums with filings in the US, European
  and Indian Patent Offices.
• Highest quality standards in sterile products,
  which normally entail complex manufacturing
  processes.
• Cost competitive technology for all its products
  regardless of the complexity of synthesis.
• Amongst the worlds largest integrated
  manufacturing complexes for cephalosporins at
  Alathur and for high end betalactums at
  Aurangabad
• Sophisticated facilities for niche nutraceuticals
• A new facility in China (through the Joint
  venture NCPC), commissioned in Sept 2003 to cater
  to the large and growing Chinese market.

All this adds up to high quality at competitive
prices on a global scale
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Orchids API market plans

• Orchid commenced operations catering to the
  unregulated markets.
• Currently, its products are sold in over 75
  countries
• Orchid has Marketing / Liaison offices in US,
  Russia, CIS and Brazil
• Orchid has several alliances for API marketing in
  Europe and USA.

• A marked shift in strategy towards high-end
  products
• for regulated markets is evident from
• Over USD 23.6 million (18.6 of total income) is
  from exports to regulated and quality conscious
  markets like US and Europe.
• Progressive evolution to latest generation Ceph
  molecules
• Broadening of product portfolio to include
  high-end betalactums
• Increasing proportion of sales from regulated
  markets (from less than 5 during 1997-1998 to
  18.6 during 2003-04)
• Invested aggressively over the last 3 years in
  creating
• state of the art facilities with global quality
  standards for
• international regulatory compliance (USFDA, EDQM,
• Australian TGA)

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Orchids formulations business model

• Leveraging on its core product knowledge, Orchid
  moved up the value chain by launching Orchid
  Healthcare (OHC), the formulations division
• OHC started off with a portfolio of antibiotic
  products capitalising on the in-house
  availability of the bulk material
• The domestic antibiotics market, though one of
  the largest, is also one of the most competitive
  markets with a large number of players
• Identifying the need for a strategic realignment
  in the product portfolio to include specialty
  products, Orchid acquired a niche formulations
  company, Mano Pharmaceuticals
• This provided Orchid an entry into the high
  growth high margin chronic / specialty therapy
  segments of anti-diabetes, cardiovascular,
  neuropsychiatry and nutraceuticals products
• Orchids formulations business now covers acute
  therapy products (Orchid Healthcare) as well as
  chronic therapy products (Mano Pharma)

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Orchids formulation facilities
Generics facility
Non-ceph formulations facility
Ceph formulations facility
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Orchids core competencies in formulations
business

• A market base of around Rs 100 crores per annum
  a critical scale reached with therapeutic
  diversity
• Increasing share of the chronic therapy products
• An extremely versatile product portfolio of over
  300 products
• A large field force of 800 persons (up from 200,
  a year ago)
• Impressive Doctor coverage of 1,28,000 (up from
  40,000 in 2002)
• World-class capabilities in formulations
  development, including novel drug delivery
  systems, a competence which few Indian pharmacos
  possess

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Notable presence across therapies in domestic
formulations market
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Orchids formulations market plans

• Exploit optimally the increased product portfolio
  by offering a wider range of therapeutic
  solutions
• Drive growth in chronic therapy product segments
  of Cardiovascular, Neuropsychiatry, anti-diabetes
  and nutraceuticals
• Leverage on the product knowledge in the
  anti-infectives segment and launch new products
  or products in new delivery forms with improved
  efficacy
• Enhanced distribution with a pan-India status
  offers scope for better penetrative reach and
  opens up new markets
• Be open to inorganic growth through acquisitions
  of companies / brands with segment compatibility
  with current portfolio and no / limited price
  controls.
• Enhance exports growth through focused efforts in
  large, high growth markets such as Brazil and
  Russia

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Generics
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Generics offers a huge market potential

• Generics - Equal in Quality, competitive in
  price - is a compelling statement for a cost
  conscious managed healthcare service provider
• According to a US Congressional Budget Office
  study, generics save over USD 8-10 billion every
  year
• The global generics industry is currently USD 42
  billion in size and is growing at a rate of 10
  -12 pa as compared to the overall growth rate
  of 7-9 pa for the pharmaceutical industry. It
  is estimated to touch USD 60 billion by 2005
• The US is the largest generics market. (USD 14
  billion)
• Typically, the generic version is priced at a
  60-70 discount to the original version. This is
  due to the premium pricing of the original
  molecule and low developmental costs associated
  with a generic version
• In Japan, the discount rates amount to only 10
  due to price control implications. Even this
  situation, provides for healthy margins
• Generics offer good profitability to the players
  with Indian manufacturers entering the fray,
  profit opportunities could be even more
  significant

US Market Statistics
Source Generics Pharmaceutical Manufacturers
Association of US, IMS, Stada, SSKI
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The US Generics Opportunity (1/2)
Generics - Introduction

• To introduce a generic, the applicant must prove
  and ensure that the generic version of the
  product
• contains the same active ingredient as that of
  the innovators product
• is identical in strength, dosage form and route
  of administration
• has the same indications, dosing and labeling
• is therapeutically bio-equivalent to the
  innovator drug
• meets the same batch-to-batch requirements for
  strength, purity and quality and,
• is manufactured under the same strict good
  manufacturing practice regulations as the branded
  pharmaceutical.

• Data from the Pharmaceutical Researchers and
  Manufacturers of America show that it takes an
  average of 15 years and costs around USD 800
  million for the average drug to reach the
  marketplace
• Only about 200 in 10000 compounds that enter
  pre-clinical testing make it to human testing
  phase and of these, only one is approved
• Therefore a new product is provided patent
  protection for a period of 20 years (effectively
  10 years excluding the development period)
• During this period, the product develops brand
  recognition and goodwill in the marketplace
  (subject to its efficacy)
• Competition intends to partake of this market
  acceptance of the product
• Regulations provide for introduction of a generic
  version without the time-consuming and costly
  aspects of clinical trials (Besides, the costly
  discovery process is not required!)

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The US Generics Opportunity (2/2)

• To introduce a generic version of a product, an
  Abbreviated New Drug Application (ANDA) has to be
  made with the US FDA
• An ANDA must have a patent certification. This
  certification must make one of the following
  statements. This certification determines under
  which category (Para) the application is being
  made
• Para I No patent information on the drug that
  is the subject of the ANDA has been submitted to
  the FDA
• Para II Such patent has expired
• Para III The date on which such patent expires
• Para IV That such patent is invalid or will not
  be infringed by the manufacture, use or sale of
  the product for which the ANDA is submitted (MOST
  LITIGUOUS)

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Orchid is on the threshold of a major foray into
the highly attractive US Generics market
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Orchids generics opportunity

• The generics market space (including US, Europe,
  Canada and Japan) for Cephalosporins and high-end
  betalactums is estimated at USD 7 billion
• Of this, the US constitutes the single largest
  market (USD 3.2 billion)
• Orchid proposes to tap this huge US
  anti-infectives generics market space on priority
  
• Orchid is planning to capture a significant
  market share in this space, with specific block
  buster products and niche product opportunities.

The current US retail market size of Orchids
range of products is approximately USD 3.2
billion. Key blockbuster products will go off
patent between 2005 and 2008.
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Orchids generics strategy
Orchids US generics strategy is a comprehensive,
end-to-end connected generics strategy in its
product class
(1) Facilities World class infrastructure
for - Sterile, non-sterile and oral
cephalosporins APIs - Sterile high-end
betalactum APIs - Sterile and Oral
cephalosporin formulations (2) Non-infringing
process A comprehensive array of over 140
process patent applications filed in US,
Europe, PCT and India (WTO) patent offices to
support ANDA applications (3) DMFs / ANDAs
Full range of Drug Master Files
(DMFs) and Abbreviated New Drug Applications
(ANDAs) for all products (First ANDA filed in
April 2004, 9 filed till date) (4) US FDA
approvals A few inspections / approvals
completed, more in pipeline (5) Products A
complete basket of products (8 injectables and 7
orals) Several products going off patent from
2005 providing significant market
opportunity (6) Marketing arrangements
Win-win, long term exclusive pacts for
injectables with Apotex for US and Canada and
with Par Pharmaceuticals for the oral range.
Flexibility to supply select APIs to other
generics players too.
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Orchid-Apotex alliance

• Exclusive pact to market 8 injectable antibiotic
  formulations in the US, 3 of them premium,
  high-value products to go off-patent
• Current US retail market of the 8 injectable
  products is USD 1.4 billion (18 dosage forms and
  36 dosage strengths)
• First of the kind exclusive broad-based alliance
  by Apotex world-wide
• Extended to the Canadian market

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Orchid-Par alliance

• Covers 7 key oral cephalosporin products, 2 of
  them premium, high-value products to go
  off-patent
• Broad range with 15 dosage forms and 39 dosage
  strengths
• Current US retail market of the 7 oral products
  is USD 1.7 billion
• Exclusive supply and distribution arrangement for
  the agreement period

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Other highlights of Apotex and Par contracts

• All ANDAs will be developed and owned by Orchid
• Manufacture would be from Orchids
  state-of-the-art generics plant at
  Irungattukottai
• Supplies will be made by Orchid under a
  favourable profit share arrangement
• In addition, the partners would pay Orchid for
  ANDA related developmental costs over a period of
  time
• Flexibility to supply API to third parties

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About Apotex

• Group turnover of USD 600 million
• The largest Canadian-owned pharmaceutical company
• Employs over 5,000 people world-wide in sales and
  marketing as well as research, development and
  manufacturing of pharmaceuticals
• Product line includes over 200 different quality
  generic pharmaceuticals used by millions of
  patients in 100 countries around the world

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About Par Pharma

• A USD 863 million generics major
• Principal subsidiary of Pharmaceutical Resources,
  Inc.
• Distributes 80 drugs with 170 dosage strengths
• Ranked 7th amongst the Top-10 generic companies
  in the US market

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With Par and Apotex, a complete market coverage
in the US

• The Apotex alliance for sterile injectables and
  the recent Par arrangement takes all of Orchids
  key antibiotic products to the US market
• The current US retail market for the agreement
  products (15) is over USD 3 billion
• As many as 5 (out of 15) products are slated to
  go off-patent progressively from 2005 a few more
  are niche generics
• Apotex and Pars market standing provides a
  perfect US market entry for Orchids broad
  product line-up
• Orchid anticipates a quantum jump in sales and
  profitability from 2005 onwards

56
Orchids European generics strategy
Orchids European generics strategy is further
customised to Europe and is already on to high
gear, with similar scope and connectivity
(1) Facilities Inspected by EDQM (2)
Certifications Certificates of Suitability
(CoS) received for nine products
(Cephalexin, Ceftriaxone, Cefuroxime
Axetil, Cefixime, Cefazolin, Cefotaxime Sodium,
Cefadroxil Monohydrate, Cefradine and
Cefuroxime Sodium) more in the
pipeline (3) Marketing Alliances A wide
spectrum of alliances, country-specific and
product-specific, tailored to European needs (4)
Future opportunity Commissioning of
Irungattukottai formulations facility will
provide a major boost to European generics.
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Track record of rapid regulatory filings in the
cephalosporin space

• US Generics entry supported by 14 US DMFs and 9
  ANDAs, already filed with the USFDA
• 7 US DMFs and 7 ANDAs in the pipeline for the
  rest of this fiscal
• Planned cumulative count of 21 US DMFs and 16
  ANDAs represents one of the most aggressive
  filings record in Indian pharma
• 18 EU DMFs including 9 CoS applications filed 2
  more in the pipeline
• MA dossier activity for EU generics gathering
  momentum in parallel

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The Drug Discovery Opportunity

• Global pharmaceutical players are keen on
  strengthening their NCE pipeline in alliance with
  niche drug discovery firms
• high cost and long lead time of in-house MNC
  efforts
• shrinking pipeline
• growing pressure from generics, dictating need
  for more innovative drugs
• Apart from new molecules, potential exists for
• supply of pre-clinical and clinical quantities
• pre-clinical evaluation of new leads
• custom synthesis of select structures /
  processes, and
• co-development
• All this presents a major opportunity for Orchid

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Orchids RD infrastructure

• Orchid has one of the best RD centres in Indian
  pharma
• Comprises dedicated divisions for
• process research
• pharma research
• novel drug delivery systems
• new drug discovery
• biotechnology
• Drug discovery infrastructure covers full
  spectrum of medicinal chemistry, molecular
  modeling, in vitro microbiology and pharmacology,
  in vivo microbiology and pharmacology and safety
  toxicology
• Currently has a team of over 250 scientists
  (Around 150 PhDs / Engineers)
• Invested over Rs. 800 million in creating
  state-of-the-art infrastructure more in the
  pipeline
• Facility equipped with latest sophisticated
  analytical instruments like XRD, NMR, GC-MS, LC
  MS, IR/UV etc
• Established a GLP Pre-Clinical Centre with animal
  house

RD Centre at Sholinganallur, Chennai
Pre-clinical facility
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Orchids end-to-end business model for drug
discovery
Orchid has complete in-house capabilities for
drug discovery and development from structure
design to drug screening in animal models human
clinicals are outsourced to CROs
61
Orchids drug discovery leads
4 molecules in pipeline (Orchid Stable)
1 molecule in Phase 2(a) (Bexel JV Stable)
 
Three other therapeutic areas being worked upon
by Orchid and Bexel
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Progress of BLX-1002, anti-diabetes molecule

• Phase 1(a) and Phase 1(b) human clinical trials
  completed in Europe (double-blinded placebo
  controlled)
• Phase 1(a), safety and tolerance study, proved
  the safety of the molecule upto 1600 mg
• Phase 1(b), safety and tolerance study, proved
  the safety of the molecule in multiple dose
  levels upto 200 mg
• Large therapeutic window, given the anticipated
  human dose level of 20-40 mg
• Independent Ethics Committee (IEC) cleared the
  molecule to enter proof-of-concept Phase 2(a)
  trials, recently completed

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About BLX-1002

• Novel orally active small molecule, developed by
  our US drug discovery JV, Bexel Pharmaceuticals
• Distinctive mode of action, compared to the
  latest series of anti-diabetes drugs
• No change in liver enzymes and no weight gain,
  two critical issues with other anti-diabetes
  drugs
• Outlicensing deals to be considered pursuant to
  discussions with MNCs

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In research and other knowledge intensive areas,
long term IPR value is built
Orchids cumulative patent filing count is 205.
Further boost to IPR in terms of NDD and NDDS is
targeted in the coming months Patent filings
as of October 31, 2004
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Financials
66
FY 03-04 Financials
(Rs. Lakhs)
67
H1 FY 04-05 Financials
(Rs. Lakhs)
68
Growth Drivers
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Summary of Growth Drivers

• Orchid would derive significant incremental
  revenue, arising from key growth drivers
• US generics thrust for cephs and high-end
  betalactums
• Regulated markets (US and Europe) for all APIs
  and Formulations
• Larger (high volume-high growth) less-regulated
  markets such as Brazil and Russia (APIs and
  Formulations)
• Specialty formulations from Mano Pharma division
  (Domestic and Exports)
• NDD licensing and royalty streams in the medium
  to long term

The growth map envisages a quantum jump in
performance, turnover and profitability from
2005
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Organisational development

• Formulations and Research business activities
  have been consolidated into two distinct SBUs, in
  line with the generics and drug discovery led
  growth strategy
• The core bulk business is being further
  strengthened to cater to technology
  development, scale-up, outsourcing and
  manufacturing challenges of diverse therapeutic
  groups
• Continued induction of talent at various levels
  in chemistry, biology, regulatory, patent and IPR
• With a robust organisation aligned for the
  future, Orchid expects to achieve the anticipated
  business development

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The current cephalosporin growth initiatives
would have a significant, positive business
impact from 2005
Entry into the US markets progressively from
2005, both in bulk and pharma
Regulated Markets
With key products to go off-patent from 2005,
step-function jump in revenues and profits
anticipated
Scale and earnings
Orchid expects to extract value from its
discovery activities in India and US, based on
leads under advanced evaluation
Innovation
Orchid is poised for robust growth and
profitability
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Orchid is now executing a plan for the next wave
of growth from 2008
To become a global, multi-therapeutic
generics and drug discovery major
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Following initiatives are underway as part of a
future business model

• New RD laboratories for NPNC products including
  a new kilo lab
• NPNC manufacturing facility at Aurangabad
• NPNC formulations facility at Irungattukottai
• Additional infrastructure for drug discovery and
  development
• Proposed facilities would be versatile,
  multi-purpose and modular

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NPNC generics initiative

• A master list of 64 products drawn up 16
  products under development, in two phases
• Advanced negotiations for generic partnerships in
  US and EU with beneficial terms
• Would diversify therapeutic portfolio and provide
  continuous product pipeline
• Some of the products would provide Para IV /
  first-to-file opportunities

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Combining current and future business models,
Orchid anticipates USD 1 billion turnover by
2010-11, with significant product-market
diversification
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