CONFIDENTIAL

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CONFIDENTIAL
A presentation on
August 9, 2005
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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 Growth
drivers Generics Drug Discovery Financials Miss
ion 2010 Value Proposition
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Pharmaceutical Industry
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Global Pharmaceutical Market

• Size of global pharmaceutical industry is
  estimated to be USD 518 billion (2004) 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 248 billion in
  size and has grown by 7.8 during 2004)

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
• 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
• Regulated markets constitute 66 of the retail
  cephalosporin demand, which offers a major
  opportunity for Orchid

Global anti-infectives market
Global Cephalosporins market
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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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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 over 2600 people across plants,
  research centre, field and offices.
• Revenues of USD 160 million

API facilities at Alathur and Aurangabad
Formulations facilities at Alathur and
Irungattukottai RD Centre at Sholinganallur Pharm
a Research Centre at Irungattukottai
Joint ventures in China and US
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Orchid - Capital Structure
FCCB subscribed in May 2001, converted in
November 2002
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Shareholding Pattern
As on July 18, 2005
Shares listed on NSE, BSE and MSE
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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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Orchid - Regulatory Approvals / Certifications

• Approval received from US FDA for Cephalexin API
  and Cefazolin sterile API Australian TGA
  approval for entire range of Cephs (APIs) and
  Nutraceuticals (APIs and Formulations)
• Orchids Generic facility has undergone
  successful inspection by US FDA without any 483
  observations. 9 ANDAs were taken for inspection
  Approvals received for Cefazolin Na Inj.,
  Cephalexin capsules and Ceftriaxone Inj. more
  expected
• Certificates for Suitability (CoS) from EDQM for
  select products (9 so far)
• 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,
  National show-case in environment friendliness

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A skilled employee base supports competencies
across all locations
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Initiatives Undertaken
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Our strategy, developed in consultation with
McKinsey, is to grow the business in multiple
horizons
In each of the Horizons, Orchid has taken
specific growth initiatives, both organic and
inorganic, under a major investment plan which
integrated Schroders and IFC investments,
internal generations and borrowings
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Orchids select facilities (1/2)
API plant - Alathur
API plant - Aurangabad
Orchid Towers
Non-sterile API plant
Sterile API plant
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Orchids select facilities (2/2)
Generics facility- Rear view
Generics facility Front view
Non-ceph formulations facility
Ceph formulations facility
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Organic and inorganic growth
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Growth Drivers Generics Drug Discovery
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Business Model

• Orchid business covers (domestic exports)
• API
• Formulations
• Orchid has strong growth drivers
• Generics (Cephs, betalactums and others US
  Europe)
• New Drug Discovery (NDD)
• Novel Drug Delivery Systems (NDDS)
• Orchid has end-to-end execution capability
• API
• Formulations
• Research

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Orchid has a unique position in the antibiotic
generics space

• The cephalosporin and high-end betalactum
  generics space, where Orchid specializes, has
  less number of players and is relatively
  insulated from price pressures
• Manufacture requires dedicated, non-switchable
  facilities
• High technology and investment requirements
  present significant entry barriers
• Orchid has the widest product range and the most
  comprehensive US FDA approved facilities and a
  core competence in sterile injectable products

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For Orchid, the chosen core antibiotic generics
field offers significant advantages in the
immediate and near term
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Orchids near term generics opportunity 2005-2008

• 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 is tapping this huge US anti-infectives
  generics market space on priority, followed by
  the European opportunity
• Orchid will achieve a broad-based presence in
  this market with a significant share in this
  space, with specific block-buster and niche
  products

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Orchid has several USPs in its core antibiotic
generics field, over and above the inherent
advantages of the field enumerated earlier

• Comprehensive range of 16 oral and sterile
  cephalosporins, in 33 dosage forms and 85 dosage
  strengths, unmatched by any other player in the
  US generics space
• Complete therapeutic range covering first to
  fourth generation cephalosporins and life-saving
  betalactums
• Maximum number of 19 ANDA (and 18 DMFs) filings
  already made, coverage of the balance ANDAs (and
  DMFs) this fiscal
• Three ANDA approvals (Cefazolin and Ceftriaxone
  injections and Cephalexin capsules) received,
  several others in pipeline
• End-to-end product development, manufacturing and
  regulatory capabilities, covering both API and
  dosage forms
• State-of-the-art, US FDA approved generics dosage
  form plants and API facilities
• Distribution partnerships with top ranking
  generics companies, Apotex and Par

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Key Products offer major opportunity in the US
Veterinary product yet to be genericised
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Potential revenues from US antibiotics generics

• Orchid expects a turnover of USD 20 million from
  the US foray in 2005-06 from H2
• A doubling of regulated generics turnover is
  anticipated from 2006-07 onwards
• Regulated generics would offer robust
  profitability of at least 50 as trended from key
  launches and current indications

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Track record of rapid regulatory filings in the
cephalosporin space

• US Generics entry is supported by 18 US DMFs and
  19 ANDAs, already filed with the USFDA
• Plans for 2005 target a further increase in DMF /
  ANDA filings
• EU DMFs including 10 CoS applications filed few
  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 Process and Discovery infrastructure
New Drug Discovery Complex
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
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Orchid-Bexel drug discovery pipeline
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About BLX-1002

• Novel orally active small molecule, developed by
  our US drug discovery JV, Bexel Pharmaceuticals
  (now a 74 Orchid subsidiary)
• Distinctive mode of action, compared to the
  latest series of anti-diabetes drugs
• Glucose reduction as well as lipid lowering and
  hypertension control
• No change in liver enzymes and no weight gain,
  two critical issues with other anti-diabetes
  drugs
• Successfully completed human clinical (safety,
  tolerability proof of efficacy) studies in
  Europe
• Outlicensing deals being discussed 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 255
Patent filings as of June 2005
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Financials
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Orchid FY 2004-05 vs FY 2003-04
Rs Mn
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Orchids Q1 performance 2005-06 vs 2004-05
Rs Mn
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Orchids recent performance 2004-05 vs 2003-04
and Q1 of 2005-06 vs Q1 of 2004-05

• Orchids revenues were maintained with higher
  profitability, despite continued competitive
  conditions in the unregulated markets
• Profitability has been robust in FY 05 and in Q1
  of FY 06 as summarised below (on a respective
  basis)
• EBIDTA has grown by 8.4 and 23.1
• EBIDTA margin is higher at 24.1 and 26.9
• Cash profit margins were higher at 13.1 and
  14.2
• Improved profitability has been achieved through
• higher proportion of sale to regulated markets
• a higher value added product mix
  
• plant related process efficiencies/yield
  improvements
• RM price reduction of key inputs Pen-G 7-ADCA
• Entry into regulated generics from Q2 of FY 06
  will have a major positive impact on future
  financials

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Orchids penetration into the regulated markets
of US and EU has been notable
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Key highlights of regulated markets

• Orchids revenues from the regulated markets has
  grown by 29.3 to Rs 1638.9 Mn, mainly due to
  higher revenues from the US EU markets
• N.American market revenues had grown by 147 to
  Rs 595.9 Mn, driven by Cephalexin and Cefazolin
  API sales
• EU market revenues had grown by 16 to Rs 1022.1
  Mn, based on a large product portfolio
• Orchids regulated market share on total revenues
  has gone up to 24.2 in FY 04-05 from 18.3 in FY
  03-04

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Orchid is also diversifying the product portfolio
Rs Mn
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Mission 2010
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Mission 2010
Become a USD 1 Billion Company by 2010-11
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Nine business drivers to achieve Mission 2010

• Consolidate base business model
  (APIFormulations)
• Fulfill North American CefTazo-Pip generics
  opportunity
• Extend into EU with CefTazo-Pip generics
• Enter Japan with CefTazo-Pip API
• Implement NPNC regulated market business model
• Expand formulations business in Less Regulated
  Markets
• Consolidate miscellaneous initiatives (NPNC
  non-reg. etc)
• Diversify anti-infectives business with penems
  and penicillins
• Capture out-licensing value from NDD and NDDS

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Integrating multiple initiatives, Orchid plans
achieve a turnover of USD 1.0 Bn by 2010-11
All figures within the boxes are in USD Mn
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A snap-shot of the key product and business
growth drivers (2005-10)
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NPNC regulated generics strategy

• Master list of over 87 NPNC molecules drawn up
  covering diverse therapeutic groups (CVS, CNS,
  ADD, Urology, Osteo etc)
• The above molecules address a current and peak
  retail opportunity of US 92 Bio and US 191 Bio
  in the US EU.
• As of date supply agreements have been executed
  with 3 prominent players viz Alpharma, Stada
  Par in the US EU generic space
• The agreements cover 20 molecules that address a
  current retail opportunity of USD 25 Bio.
• Would diversify therapeutic portfolio and provide
  continuous product pipe-line
• Some of the molecules would provide Para-IV /
  first-to-file opportunities
• New RD labs and API facility for NPNC
  commissioned. Formulations facility under
  advanced execution

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New facilities
Non-antibiotic API Plant - Aurangabad
Non-antibiotic Formulations Plant - Chennai
Betalactum Plant - Chennai
Pharma RD complex - Chennai
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Orchids distribution strategy for regulated
markets (ceph and non-ceph)

• Unique in Indian pharma for its broad-spectrum
  product coverage and beneficial terms
• Covers 36 products in 76 dosage forms and 178
  dosage strengths
• Alliances with top-ranking generic-players, known
  for robust market presence more selective
  alliances likely
• Enables Orchid focus investments and attention on
  technology and product development
  manufacture

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Overview of Orchids generics contracts
Additional individual filings for Mexico,
Canada and Europe (not quantified here) are
required,as the case may be
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Highlights of Orchids distribution contracts

• All ANDAs will be developed and owned by Orchid
• Manufacture would be from Orchids
  state-of-the-art generics plant at
  Irungattukottai, with API from Orchids modern
  API plants at Alathur and Aurangabad
• Supplies will be made by Orchid under a
  favourable profit share arrangement
• Exclusivity subject to performance
• In addition, the partners would pay Orchid for
  ANDA related developmental costs - part upfront
  and the balance based on achievement of certain
  regulatory / launch milestones
• Flexibility to supply API to third parties

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Orchids transition from un-regulated to
regulated markets FY 1995 to FY 2011
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The Mission 2010 business model is reinforced by
several positives

• The model is robust with success and the right
  traction in all key components
• Track record of performance in the regulated
  cephalosporins arena 18 US DMFs and 19 ANDAs in
  a short time and several more in clear visibility
• Complete gamut of API, formulations and drug
  discovery facilities, with requisite
  certifications and approvals
• A comprehensive list of NPNC generic products
  which has met the due diligence of established
  generic players
• Notable successes in firming up three major NPNC
  development and marketing arrangements for the US
  and EU.
• Fast progress in NPNC API and formulation
  development
• A high level of organizational awareness on the
  path forward, activities and milestones

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Value Proposition
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Orchids business model offers major partnership
benefits to a global pharmaco

• Capabilities and strengths of an integrated
  pharmaceutical major
• A complete in-house, end-to-end connected
  infrastructure, and a complete portfolio of
  services covering
• Active pharmaceutical ingredients / Intermediates
• Generic formulations
• Drug discovery
• In the cephs / Sterile Pen. / Penems / Oral NPNC
  space
• Ability to offer the above products and services
  with world-class quality at a cost advantage
• Adherence to principles of client
  confidentiality and intellectual property rights

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Some key positives (1/2)

• Orchid is well positioned as a fully integrated
  life sciences company
• Orchid operates in the global pharmaceutical
  industry and has the necessary world-class
  infrastructure that meets the global regulatory
  requirements, including US FDA
• Global pharma provides Orchid an opportunity
  (generics and outsourcing of manufacturing and
  basic research), which will substantially boost
  the revenue and profit performance of the Company

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Some key positives (2/2)

• Combined with Orchids proven management
  capabilities, the Company is well poised to
  become a significant player in the global
  markets
• Orchids business model is robust and is set to
  achieve quantum increases in performance with US
  ceph generics entry from 2005-06, and with US/EU
  NPNC generics entry from 2007-08
• Amongst the lowest price / cash earnings
  multiples among comparables in the industry,
  providing high potential

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THANK YOU