PRESENTATION ON PHARMACEUTICALS SBI CAPITAL MARKETS LTD. ANALYST : FALGUN JOSHIPURA 19 March, 2003 Tel.: Extn: 464

IS PHARMA UNDERVALUED ?

OUR STOCK PICKS AT CURRENT LEVELS RANBAXY (BUY) (GOOD TO TRADE) GLAXOSMITHKLINE PHARMA (BUY AND HOLD) DR. REDDY’S (OUTPERFORM) (HIGH RISK) (GOOD TO TRADE) WOCKHARDT (BUY) (VALUE PICK) SUN PHARMA (BUY) (LONGER TERM BET)

A QUICK VALUATION COMPARISON Source: Bloomberg; All figures are 12mth trailing. 19 March, 2003

PFIZER LTD. FACTS  LEGAL MERGER STALLED ON APPEAL MADE BY MINORITY SHAREHOLDERS  INTEGRATION BENEFITS -- RS 100 MN  DISCONTINUATION OF VACCINE. COREX CROSSES RS 1000 MN IN FY02.  PARENT’S BLOCKBUSTER-- ZOLOFT LAUNCHED IN FY02 UNDER NAME OF DAXID.  BENADRYL 25% YOY. SALES NEAR TO RS 500 MN.  TOP 10 BRANDS CONTRIBUTED 66% OF SALES AND 9-10% IN FYO2.

PFIZER LTD.

VALUATION COMMENTS :GOOD PICK FOR FY04 ONWARDS RISK :

GLAXOSMITHKLINE PHARMA LTD. FACTS  RATIONALIZATION PROCESS TO CONTINUE WITH SALE OF WORLI PROPERTY.  BOTTOM-LINE DRIVEN. FOCUS ON CHOSEN 30 BRANDS. OLD BRANDS WILL SUBSIDIZE COST OF PROMOTION OF NEW BRANDS.  POST 2005, LOOKING FOR 2-3 MOLECULES TO GIVE RS 1000 MN EACH IN 2-3 YEARS, BASED ON EXPERIENCE IN CHINA.  2-3 NEW MOLECULES PER YEAR TO BE LAUNCHED. SUCCESSFUL LAUNCH ONLY IF RS MN SALES IN 2-3 YEARS OF LAUNCH.

GLAXOSMITHKLINE PHARMA LTD.

SALES CAGR THROUGH FY13 IS 8.93%. PAT CAGR IS 11.36% VALUATION COMMENTS :BUY AND HOLD RISK : DCF

NOVARTIS INDIA LTD  Q3, FY03 PAT DOWN 30.4% YOY. 9 MONTH PAT UP 31.6%.  GENERIC COMPETITION IN Q3, FY03 -- MARGINS UNDER PRESSURE  HIGHER PROMOTIONAL EXPENSES AND ONE-TIME ERP COST IN Q3, FY03.  RS 559 MN WORTH FG IMPORTED IN FY02.  RS 198 MN FROM GOREGAON PROPERTY IN FY03. RS 384 MN OVER THE NEXT TWO YEARS. FACTS

NOVARTIS INDIA LTD

CAGR SALES 9.74%; PAT 11.19% (FY03—FY14) DCF

NOVARTIS INDIA LTD VALUATION COMMENTS :MARKET PERFORMER RISK :

AVENTIS PHARMA INDIA LTD FACTS  MARGINS IN FY02 A DISSAPOINTMENT. HIGHER RAW MATERIAL COST LOWERED MARGINS.  59% OF RAW MATERIAL IS IMPORTED. THIS SHALL BENEFIT THE COMPANY AS CD LOWERED TO 25% FROM 30%.  STRATEGIC PRODUCTS CONTINUE TO DO WELL. THEY NOW ACCOUNT FOR 27% OF DOMESTIC SALES AND ARE GROWING AT 32% YOY.  A SUSTAINED TURNAROUND IN MARGINS AIDED BY STARATEGIC PRODUCTS WILL BE THE TRIGGER FOR THE STOCK IN FY03-FY04.

AVENTIS PHARMA INDIA LTD

CAGR SALES THROUGH FY14 IS 8.25% AND THAT FOR PAT IS 12.8% Market Uninterested by the price obtained by using DCF DCF

AVENTIS PHARMA INDIA LTD VALUATION COMMENTS :ACCUMULATE ON INDICATION OF MARGIN IMPROVEMENT RISK :

RANBAXY LABORATORIES LTD FACTS  LOW MARKET SHARE IN AUGMENTIN A CONCERN. OUR ASSUMPTION IS OF 10% MARKETSHARE IN FY03. IF THE COMPANY ATTAINS 5% MARKET-SHARE FOR FY03, EPS WILL FALL BY 3.44%.  SIMILAR CONCERNS COULD ARISE IN SORTRET (ISOTRETINOIN). OUR ASSUMPTION IS OF 35% MARKET SHARE IN FY03. AT 20% MARKETSHARE, FY03 EPS WILL DECREASE BY 2.88% AND AT 10% MARKETSHARE (UNLIKELY INCIDENT) BY 4.8%. â GANCICLOVIR EXCLUSIVITY EXPECTED IN Q3, FY03. SALES IN FY03 ESTIMATED BY US AT $ mn. â AUGMENTIN - CAUTIOUS APPROACH â CEFUROXIME AXETIL - APOTEX DELAY

RANBAXY LABORATORIES LTD Consolidated figures

RANBAXY LABORATORIES LTD VALUATION COMMENTS :BUY (GOOD FOR TRADING) RISK :

DR. REDDY’S LABORATORIES LTD FACTS  FILE PARA IV ANDA FOR ALL DOSAGE STRENTGHS OF OLANZAPINE. ELI LILLY HAS SUED IN A DISTRICT COURT. OLANZAPINE SALES WERE $ 2.5 bn IN PATENT EXPIRY IS ONLY ONE PATENT IS CHALLENGED.  15-YEAR PRODUCT DEVELOPMENT AND MARKETING TIE-UP WITH LEINER HEALTH PRODUCTS INC.  PARA IV FOR SERTRALINE (PFIZER’S ZOLOFT; $2.4 bn IN 2002) FOR 25, 50, AND 100 mg DOSAGE FORMS. FILED AGAINST 4 OF THE FIVE PATENT. PFIZER HAS NOT SUED IN THE 45 DAYS.  AMLODIPINE MALEATE

DR. REDDY’S LABORATORIES LTD  THREE MORE 505(b)(2) FILINGS ANTICIPATED.

DR. REDDY’S LABORATORIES LTD Consolidated figures

DR. REDDY’S LABORATORIES LTD RISK : VALUATION COMMENTS :OUTPERFORM (GOOD FOR TRADING)

SUN PHARMACEUTICAL IND. LTD. FACTS  IMPROVED MARGINS ON EXITING THE LOW MARGIN CEPHALOSPORIN BUSINESS. Q3, FY03 PAT IMPROVED BY 20% TO RS mn.  IN ALL 9 DMFs FILED. APPROVALS OBTAINED FOR PENTOXYFILENE AND METROPOLAL TARTARATE. 6 DMFs TO BE FILED FOR THE NEXT TWO YEARS. BULK WILL BE SUPPLIED EVEN TO OTHER PLAYERS IN USA (NOT ONLY CARACO)  3-4 NEW PRODUCTS PER DIVISION FOR THE NEXT 2 YEARS.  OUR SALES EXTIMATE FOR CARACO FO FY03 IS $ mn. ESTIMATED CASH EPS IS $ 0.21/SHARE. THE COMPANY SHOULD MAKE A CASH PROFIT OF $ 3.63 MN IN FY03.

SUN PHARMACEUTICAL IND. LTD. DOMESTIC MARKET CONTRIBUTED TO 82.7% OF TURNOVER IN Q3, FY03.

SUN PHARMACEUTICAL IND. LTD. LEUPROLIDE IN INTERNATIONAL MARKETS

SUN PHARMACEUTICAL IND. LTD. VALUATION COMMENTS :BUY (LONGER TERM BET) RISK :

CIPLA LTD. FACTS  LOSS OF MARGINS AND DELAY IN ASTHMA INHALER EXPORTS HAVE LEAD TO STOCK TRADING NEAR 52 WEEK LOW.  STRATEGY OF LAUNCHING MANY NEW BRANDS NOT SUSTAINABLE IN THE LONG RUN.  STRATEGY FOR BULK EXPORTS TO PARA IV AND EXPORT OF INHALERS ARE THE CATALYSTS AND PILLARS OF CIPLA’S STRATEGY; IMPACTING THE RATING OF THE STOCK.

CIPLA LTD.

VALUATION COMMENTS : HOLD/ACCUMULATE RISK :

WOCKHARDT LTD. FACTS  OWN FACILITIES IN BIOTECH TO AID MARGINS  HUMAN INSULIN LAUNCH IN 2Q,FY03.  TWO OF THE SUPERGENRICS TO BE LAUNCHED IN REGULATED MARKETS IN 3Q OR 4Q, FY03 ON OBTAINING NECESSARY APPROVAL.  BIOTECH PRODUCTS LAUNCHED IN LESS REGULATED MARKETS. LAUNCH IN REGULATED MARKETS IN EARLY  EXITING OF PLAYERS FROM HEP-B IN DOMESTIC MARKET TO WORK WELL FOR WOCKHARDT.

WOCKHARDT LTD. Consolidated figures

WOCKHARDT LTD. VALUATION COMMENTS : BUY / UNDERVALUED RISK : IN MEDIUM TERM

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