Creating Lasting Value

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Creating Lasting Value

• Investor Presentation
• March 2006

2
Disclaimer

• Except for the historical information
  contained herein, statements in this presentation
  and the subsequent discussions, which include
  words or phrases such as will, aim, will
  likely result, would, believe, may,
  expect, will continue, anticipate,
  estimate, intend, plan, contemplate,
  seek to, future, objective, goal,
  likely, project, should, potential, will
  pursue and similar expressions or variations of
  such expressions may constitute "forward-looking
  statements". These forward-looking statements
  involve a number of risks, uncertainties and
  other factors that could cause actual results to
  differ materially from those suggested by the
  forward-looking statements. These risks and
  uncertainties include, but are not limited to our
  ability to successfully implement our strategy,
  our growth and expansion plans, obtain regulatory
  approvals, our provisioning policies,
  technological changes, investment and business
  income, cash flow projections, our exposure to
  market risks as well as other risks. Sun
  Pharmaceutical Industries Limited does not
  undertake any obligation to update
  forward-looking statements to reflect events or
  circumstances after the date thereof.

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Contents

• Strategic Focus and Recognition
• Management and Governance
• Growth Milestones and Financial Snapshot
• Key Strategic Elements
• Business Operations
• Formulations
• India
• US
• International
• API
• Manufacturing
• Research Development
• Financials
• Future Key Elements / Guidance

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Strategic Focus

• Speciality prescription brands in India and
  emerging markets
• US generic presence
• Speciality APIs
• Innovation projects in drug discovery and
  delivery systems
• Recognition
• Ranked by Forbes Global among the best companies
  for 2001, 2003, 2004, 2005
• (Turnover less than USD 1 billion, from a
  total universe of over 20,000 companies that meet
  their criteria, Forbes Oct 2001, Oct 2003, Oct
  2004, Oct 2005)

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Management and Governance

• Sun Pharma established in 1983
• IPO in 1994
• Consistently focused on Speciality Products and
  Innovation to fulfill unmet patient needs
• Entrepreneurship, a way of life professionals
  manage all key functions
• Eminent Independent Directors
• Hasmukh Shah, Former Chairman and Managing
  Director, IPCL
• Keki Mistry, Managing Director, HDFC
• Ashwin Dani, Vice Chairman and Managing Director,
  Asian Paints
• Mohanchand Dadha, Former Chairman and Managing
  Director, TDPL
• Audit Committee chaired by Keki Mistry comprises
  Hasmukh Shah and Mohanchand Dadha

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Growth Milestones
FCCB USD 350 million
Hungary acquisition
Stake increased to 63 on buyout of 3
stakeholders USD 46 million invested
1983 1993 Successfully transitioned from start
up to industry therapy area leadership
Acquisition of Able Lab assets
48 stake through technology transfer
Proposed De-merger of Innovative RD
RD Centres 250,000 sq ft Baroda 50,000 sq ft
Mumbai
New world-class injectable unit set up., receives
USFDA approval
Equity stake in Caraco USD 7.5 million investment
US FDA, European Approvals
8 strategic acquisitions completed
Research Centre inaugurated
Equity stake in MJ
Greenfield Bulk drug unit setup
IPO, Rs 550 million
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Growing Steadily

• Turnover double and Net Profit triple in 4 years,
• continuing the trend of the past decade despite
  increasing size

Prior to 01-02 Standalone rest consolidated
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Sustained Profitability

• Superior business model
• Sun Pharma Net Margins consistently higher than
  EBITDA Margins for peers (other top 10 Indian
  pharma companies)

Gross Margin gap
EBITDA Margin gap
Net Margin gap
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Shareholders

• Market capitalisation at INR 178 billion / USD
  4.0 billion
• Rs 1,000 invested in the 1994 IPO
• Currently worth Rs 68,750
• Earned dividend of Rs 1,244
• Foreign Institutional Investors hold 15.6
• High stability of institutional investors
  Average holding time is around 5 years

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Strategic Consistency

• Create sustainable revenue streams through focus
  and differentiation
• Products for chronic therapies and complete
  disease management basket
• Differentiate with technically complex products
• Phased product rollout
• Innovative in identifying and pursuing
  opportunities
• Seek acquisitions that offer significant value
  addition opportunities
• Balance short-term profitability while investing
  for the future
• Focus on research to bring novel products to
  market
• Conservative use of resources through superior
  and continuous optimisation of costs
• Integrated from Development through Manufacturing
  (API and Formulation) to Marketing

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Successful at acquisitions

• Acquired 13 high potential yet under-performing
  businesses
• Successful turnarounds

Consolidated Financials
Standalone Financials
8 early acquisitions
Includes companies, plants or brands
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Business Operations
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Balancing opportunity and returns
International Bulk (CAGR 8)
Rs 12,750 million
Rs 5,050 million
International Formulations (CAGR 31)
US Generics (CAGR 86)
India Bulk (CAGR 4)
India Formulations (CAGR 17)
Consolidated
2004-05
1999-2000
Estimated Consolidated
Size of circle indicates relative sale value
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Standing Strong

• Sun Pharma ranked 6th with 3.28 market share
  and 14 growth
• Ability to spot unmet patient need and launch
  products quickly
• Over 40 new products launched in 2004-05,
  contributing 6 of sales
• More than half of these technically complex on
  account of delivery system / formulation
• Over 50 of brands in over 300 therapeutic
  categories among top 3 by molecule
• Sales spread out over several products and not
  dependent on a few blockbusters
• Top 10 brands contribute 24 of sales

Based on revised IMS ORG methodology.
Starting August 05, IMS ORG compiles industry
sales data based on stockists sales while
earlier this was based on retailers sales
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Chronic Leadership

• Speciality Marketing Focus
• A stable and consistent business
• Prescriptions have a long life, repeat value
  generally not switched
• Steady and consistent revenue streams

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Relentless Customer Focus

• First in India to introduce therapy focused
  marketing divisions
• Now, 17 therapy area focused marketing divisions
  Speaking the customers language
• A 2000 representative strong field team for
  regular customer calls
• Selective niche coverage of 120,000 specialists
  who write high value chronic area prescriptions
  strong relationships with most

Ranks to offer platform for in licensing post 2007
Source CMARC Jul Oct 2005
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Climbing Steadily

• Sun Pharma market share up from 0.93 (Dec-92) to
  3.27 (Dec-05)
• Market share for most of the peer group companies
  has either declined or increased marginally over
  the same period

1992 Market Share indexed to 100 for all companies
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US Generics

• The highest priority market
• Integrated generic manufacturer Speed and cost
  for large volume products
• Flexibility for manufacture onshore / offshore
• Caraco, the US generics subsidiary, markets 20
  products
• Current Sun Pharma stake at 73 (with preference
  stock conversion assumed) to increase to 76
  based on technology transfer
• Investment USD 50 million and over 30 products
  transferred
• Sun Pharma stake now valued around USD 325
  million
• Bought 2 heritage brands from Women's First for
  USD 4 million with sales of USD 5 million first
  steps involve telemarketing, mailing, ensuring
  availability
• Strengthened management team Daniel Movens,
  industry veteran, joins as CEO

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Caraco Sure Turnaround

• Sales grows 13 times and Gross Profit 22 times in
  4 years

Current Market Cap USD 475 million
Market Cap USD 13 million
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Caraco

• Product pipeline
• In Dec 2005, Caraco launched a generic version of
  Ultracet for which it had earlier received
  summary judgment for non-infringement
• As of Dec-05, 38 ANDAs pending approval between
  Caraco and Sun
• 13 from Caraco, generally para 3
• 25 from Indian site comprising
• Large volume products (with relative thin
  margins)
• Regulatory / legal challenge
• Dosage form other than aqueous based tablets

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Europe Generic Markets

• Work with a partner in 3 key markets UK, France
  and Germany
• Filings made from an Indian site
• Offer manufacturing and product development
  support - no direct market presence planned
• Acquired an API and dosage form manufacturing
  company in Hungary with controlled substance
  capacity

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Branded Generic Markets

• Less Regulated Markets
• Product basket width / technology as a growth
  driver
• Currently 7 of the turnover To grow at 40
  per annum over the next two years
• Technically complex specialty products with good
  market opportunity and relatively less
  competition are close to market
• Across 26 countries, around 740 products
  registered and another 350 await registration
• Replicating the speciality template
• Focus countries / regions market characteristics
  similar to India in terms of brand promotion
  CIS, China, South East Asia, South Africa, the
  Middle East
• Important new markets Brazil, Mexico, Peru,
  Colombia
• 260 strong local field force promotes brands to
  doctors generating prescriptions and building
  loyalty

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Speciality Bulk Actives

• High Margin Regulated Markets
• Rapid ramp up of the speciality bulk business
  largely to end users in regulated markets
• From 2 products in 1995 to over 100 now across 6
  plants
• Strong regulatory capability
• 8 DMF and 10 EDMF approved
• Hungary 8 products including controlled
  substances approved for US / Europe
• 34 DMF and EDMF awaiting approval

(FDA cleared, ANDA activation pending)
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Manufacturing

• Formulation
• 9 manufacturing sites (Halol, Silvassa, Dadra,
  Jammu, Dhaka, Detroit, Hungary, Ohio, New
  Jersey) compliant with international regulatory
  standards
• Over 750,000 sq. ft. area and 10 billion tablets
  / year capacity
• Halol
• UKMHRA, USFDA and several other market approvals
• Dedicated areas for anticancer, steroids,
  hormones, parenterals
• USFDA approved, new specialty injectables plant-
  36,000 sq ft manufacturing area
• 7 lines with capability to handle liquids (vials,
  ampoules), powder, lyophilized products, eye
  drops
• Hungary Film coated and effervescent tablets,
  capsules
• Ohio Creams, ointments and liquids
• New Jersery Controlled substances

Partnership
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Manufacturing

• Bulk
• 6 World class locations (Panoli, Ahmednagar,
  Ankleshwar, Baroda, Chennai, Hungary) with all
  sites ISO 14001, ISO 9002 approved
• Reactor capacity 1200 KL with over 650,000 sq ft
  area
• Over 25 bulk processes scaled up ((including
  those for filing) / launched annually
• Panoli and Ahmednagar
• International regulatory approvals USFDA,
  European
• Stand alone units for
• Peptides
• Anticancers
• Steroids
• Sex Hormones
• Hungary
• Controlled substances manufacture

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Research Development
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Research and Development

• Innovation Initiative
• Starting at 4 of sales in 1993, RD spend
  increased to 12 in 2004-05
• Strong research teams in reverse engineering,
  dosage form development, biological support,
  chemistry
• Balancing the risk
• Immediate term ANDA, DMF, Products for India
• Medium term Drug delivery systems
• Long term Innovation based drug delivery
  systems, new chemical entity

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Research Development

• Intellectual property creation fuels long term
  sustainability

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Drug Discovery Innovation Goals

• Innovation to be de-merged into a new company
• Priority areas
• NDDS
• Platforms
• Targeted drug delivery
• Controlled release systems
• Gastric retention systems
• Matrix based products for highly soluble drugs
• Biodegradable injections/implants
• Dry powder inhalers
• 2 products on track
• Human studies in the next few months
• NCE
• 3 known targets, analogue based approach
• Known biology hence lower risk of failure
• 1 product is in human studies, US IND to be filed
  shortly

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RD Infrastructure

• Sun Pharma Advanced Research Centre (SPARC)
• Baroda
• World class labs in Formulation Development,
  Process Chemistry, Biotech (tissue culture,
  cloning), Biological Research (Pharmacokinetics,
  Pharmacology, In vitro, In vivo screening),
  Analytical Development
• Priority is NCE and NDDS
• 16 acre campus, 250,000 sq ft research area,167
  labs
• Current strength Expert 355 person-strong
  scientific team Additional 150 person staff to
  be recruited in 2 years
• Mumbai
• Develops Dosage forms and generics for US, Europe
• Also works on new NDDS platforms
• 65 person strong scientific team
• Well equipped lab over 50,000 sq. ft

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Financial Highlights
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Financials
Consolidated
33
Financial Ratios
Consolidated
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Future Key Elements / Guidance

• India Formulations market share to increase to 4
  up from 3.28
• Rapid expansion of the international business
  including Caraco to 50 of sales
• Sales growth (Apr 05 Mar 06)
• India formulations 15 - 20
• Caraco 25 - 30 over calendar 2004
• International formulations (without US) 40
• Bulk business (India International) 20 - 25
• RD spend 10 - 11 of consolidated sales
• Spend in innovation to increase to 50 of
  research budget in the next two years
• Separation of Innovative programs (NCE NDDS)
  into a new company
• Capex Around Rs 1,000 million
• Seeking an acquisition in the US

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To become a research based international pharma
company

• For updates and specific queries, please visit
• www.sunpharma.com
• or feel free to contact
• Mira Desai, 91 22 56455645, mira.desai_at_sunpharma.
  com
• Uday Baldota, 91 22 56455645, uday.baldota_at_sunpha
  rma.com

In addition to Company data, data from IMS ORG,
CMARC, Stock Exchanges and industry publications
has been used for this presentation.