21
Equity Research 15 January 2014 Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA. PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 16. India Healthcare & Pharmaceuticals Green shoots We believe that the recovery in the Indian Pharmaceutical Market (IPM) is gaining roots with the second month of positive, high single-digit sales growth (8.3% in December vs. -2.2% in October). Although some way remains to reach the mid- to high-teen growth rate that we view as the long-term domestic growth rate, we remain positive on the Indian Pharma (BSEHC underperformed in 3Q FY14 for the first time in the past six quarters). Volume growth of 4.1% in December built on the increased momentum of November (at 2.5% - refer to Nov volume growth shows a healthy 9% shift: Green shoots?). We expect this trend to be sustained, estimating a recovery for the IPM in early 2014 (link), but believe material margin expansion is unlikely near term. Sun and Glenmark continued to lead in December in terms of sales growth. Volume recovery under way; realization growth likely in 2H CY14: While a broad-based volume recovery has started in November, realization growth still remains weak (affected by NLEM drugs). We expect volume traction to drive the first leg of a recovery in early CY14 followed by an increased contribution from pricing in 2H CY14 as 1) bases become favourable and 2) allowable price increases come into play (pegged to WPI each year). Complete margin resolution with trade appears key for full potential realization: Our interactions with the industry suggest that companies are still arriving at a resolution with the trade, and hence, a big bang closure is unlikely. Despite multiple discussions and trade margin hikes by domestic players, the supply chain disruptions have continued to impact the NLEM category (link). In our view, resolution of this issue is important for growth at a double-digit rate as nearly 25% of the IPM is likely to be held hostage to this disruption. Material margin expansion unlikely near term: 1) The realization component remains weak (0.8% growth in Dec) with a 14% price decline for NLEM drugs (vs. 3% growth in non-NLEM drugs), and 2) more companies have allowed for higher trade margins. Sun and Glenmark (OWs) lead: The two were the best performers in our coverage with December sales growth of 15% and 20% y/y. respectively, driven by a sustained traction in both the acute and chronic segments. On the other hand, Lupin and Ranbaxy continued to face broad-based challenges, lagging peers with y/y growth of 0% and -7%. FIGURE 1 Domestic sales growth rates for December; Sun and Glenmark led peers Source: AIOCD Data, Barclays Research Voting has begun for the 2014 Institutional Investor All-Asia Research Team survey. Barclays welcomes your support. To request a ballot, please go to the II Ranking Assistance page 4% 9% 7% 20% 0% -7% 15% 8% -12% 10% 15% 9% 1% 29% 16% -20% -10% 0% 10% 20% 30% Cadila Cipla Dr Reddys Glenmark Lupin Ranbaxy Sun Abbott Glaxo Mankind Alkem Intas Sanofi IPCA Wockhardt INDUSTRY UPDATE India Healthcare & Pharmaceuticals POSITIVE Unchanged India Healthcare & Pharmaceuticals Balaji Prasad, M.D. +91 22 6719 6295 [email protected] BSIPL, Mumbai Rohit Goel +91 22 6719 6029 [email protected] BSIPL, Mumbai

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Page 1: Barclays Greenshoots

Equity Research15 January 2014

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Investors should consider this report as only a single factor in making their investment decision.

This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA.

PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 16.

India Healthcare & Pharmaceuticals

Green shoots We believe that the recovery in the Indian Pharmaceutical Market (IPM) is gaining roots with the second month of positive, high single-digit sales growth (8.3% in December vs. -2.2% in October). Although some way remains to reach the mid- to high-teen growth rate that we view as the long-term domestic growth rate, we remain positive on the Indian Pharma (BSEHC underperformed in 3Q FY14 for the first time in the past six quarters). Volume growth of 4.1% in December built on the increased momentum of November (at 2.5% - refer to Nov volume growth shows a healthy 9% shift: Green shoots?). We expect this trend to be sustained, estimating a recovery for the IPM in early 2014 (link), but believe material margin expansion is unlikely near term. Sun and Glenmark continued to lead in December in terms of sales growth.

Volume recovery under way; realization growth likely in 2H CY14: While a broad-based volume recovery has started in November, realization growth still remains weak (affected by NLEM drugs). We expect volume traction to drive the first leg of a recovery in early CY14 followed by an increased contribution from pricing in 2H CY14 as 1) bases become favourable and 2) allowable price increases come into play (pegged to WPI each year).

Complete margin resolution with trade appears key for full potential realization: Our interactions with the industry suggest that companies are still arriving at a resolution with the trade, and hence, a big bang closure is unlikely. Despite multiple discussions and trade margin hikes by domestic players, the supply chain disruptions have continued to impact the NLEM category (link). In our view, resolution of this issue is important for growth at a double-digit rate as nearly 25% of the IPM is likely to be held hostage to this disruption.

Material margin expansion unlikely near term: 1) The realization component remains weak (0.8% growth in Dec) with a 14% price decline for NLEM drugs (vs. 3% growth in non-NLEM drugs), and 2) more companies have allowed for higher trade margins.

Sun and Glenmark (OWs) lead: The two were the best performers in our coverage with December sales growth of 15% and 20% y/y. respectively, driven by a sustained traction in both the acute and chronic segments. On the other hand, Lupin and Ranbaxy continued to face broad-based challenges, lagging peers with y/y growth of 0% and -7%.

FIGURE 1 Domestic sales growth rates for December; Sun and Glenmark led peers

Source: AIOCD Data, Barclays Research

Voting has begun for the 2014 Institutional Investor All-Asia Research Team survey. Barclays welcomes your support. To request a ballot, please go to the II Ranking Assistance page

4%9% 7%

20%

0%

-7%

15%8%

-12%

10%15%

9%1%

29% 16%

-20%

-10%

0%

10%

20%

30%

Cadil

a

Cipla

Dr R

eddy

s

Glen

mar

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Lupin

Ranb

axy

Sun

Abbo

tt

Glax

o

Man

kind

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m

Inta

s

Sano

fi

IPCA

Woc

khar

dt

INDUSTRY UPDATE

India Healthcare & Pharmaceuticals POSITIVE Unchanged

India Healthcare & Pharmaceuticals Balaji Prasad, M.D. +91 22 6719 6295 [email protected] BSIPL, Mumbai

Rohit Goel +91 22 6719 6029 [email protected] BSIPL, Mumbai

Page 2: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 2

Volume growth improvement sustains The month of December saw 4.1% volume growth for sales for the Indian Pharmaceutical Market (IPM), which built on the momentum gained in November (up 2.5%) after three successive months of negative volume growth y/y. As margin negotiations (refer to the Appendix on page 15) are resolved along with rationalization of inventory pressures, we expect improved traction for volume growth.

FIGURE 2 Indian Pharmaceutical Market – breakdown of sales growth rates for the various components; positive volume growth after three months

1.7% 2.0% 2.2% 2.2% 3.1% 4.1% 4.4% 4.4% 4.1% 4.1% 3.5% 2.3% 1.5% 0.8% 0.8%

7.7% 7.5% 6.4%9.8% 11.1% 9.0%

6.0%1.9%

0.2%2.3%

-5.5% -7.2% -6.3%

2.5% 4.1%

-12%

-8%

-4%

0%

4%

8%

12%

16%

20%

24%

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2

12

Q3

12

Q4

12

Q1

13

Jul-

13

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Price Growth New Introductions Volume Growth

FIGURE 3 NLEM drugs contributed majorly to the growth decline

Market Sales (INR Mn) y/y Growth Volume ('000s) y/y Growth IPM 62,560 8.2% 1,471 3.1%NLEM 7,420 -8.5% 211 3.6%Non-NLEM 55,140 10.9% 1,260 3.0%

FIGURE 4 Sharp volume recovery across both NLEM and non-NLEM drugs

FIGURE 5 However, price growth remains weak (impact driven by the non-NLEM drugs)

-10%

-8%

-6%

-4%

-2%

0%

2%

-15%

-10%

-5%

0%

5%

10%

Jun-

13

Jul-

13

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Volume Growth

NLEM vs Rest (RHS) NLEM Non-NLEM

-20%

-15%

-10%

-5%

0%

-20%

-15%

-10%

-5%

0%

5%

10%

Jun-

13

Jul-

13

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Price Growth

NLEM vs Rest (RHS) NLEM Non-NLEM

Source for all charts on this page: AIOCD Data, Barclays Research

Page 3: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 3

Trends for our coverage group

FIGURE 6 Sales for our coverage group grew by c7.5% in December

14.4 13.6 14.0 14.8 15.6 16.1 16.4 15.6 15.4 15.6 14.7 14.7 16.5 16.1 15.0 16.6 16.5 16.8 16.6 17.0 16.6

16%15%

16%

15%

15%

13%

22%

10% 9%

14%

11%

8%

15%

18%

7%

12%

6%

4% 1%

9%7%

0%

5%

10%

15%

20%

25%

10.5

11.5

12.5

13.5

14.5

15.5

16.5

17.5

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

INR

Bn

FIGURE 7 Glenmark and Sun Pharma continued to outperform peers in December and 3Q FY14

Glenmark (OW) and Sun Pharma (OW) outperformed the coverage universe in December while Lupin and Ranbaxy underperformed 4%

9% 7%

20%

0%

-7%

15%

2%7%

10%

21%

1%

-12%

16%

-15%-10%

-5%0%5%

10%15%20%25%

Cadi

la

Cipl

a

Dr R

eddy

s

Gle

nmar

k

Lupi

n

Ranb

axy

Sun

Phar

ma

Cadi

la

Cipl

a

Dr R

eddy

s

Gle

nmar

k

Lupi

n

Ranb

axy

Sun

Phar

ma

Y/Y growth rates -Dec Y/Y growth rates - Q3 FY14

FIGURE 8 Market share trajectory among the top three players in the IPM

As discussed in our upgrade note of 8 March “Sun Pharmaceutical Industries: First among equals: to $3bn revenues? Upgrade to OW; PT raised to Rs936”, consistent above-industry domestic growth has helped Sun move to No. 2 in terms of market share in the IPM and has sustained the position for the past six months.

6.7%

6.7% 6.7%6.6%

6.4%6.6% 6.5% 6.5% 6.5% 6.4% 6.5%

5.5% 5.4%

4.9%

5.2%

5.1%

5.2%

4.9% 4.9% 4.9%5.2% 5.2%

5.5%

5.1%

5.3%

5.3%

5.4%

5.1%

5.2% 5.2%

5.5%5.7%

5.5%

4%

5%

5%

6%

6%

7%

7%

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Abbott Cipla Sun Pharma

Source for all charts on this page: AIOCD, Barclays Research

Page 4: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 4

Does the narrowing of acute and chronic growth divergence imply recovery? Despite an overall moderation, the chronic segment (at 16%) continued to grow ahead of the acute segment (at 8%) in December with the divergence having narrowed marginally during the month because of a recovery in the acute segment. Although we remain confident of a rebound in the acute segment’s growth levels as the inventory correction pressures normalize, we remain cautious about any potential weakness in the chronic segment, such as CVS/CNS, especially as the competitive intensity is likely to be increased along with an expansion of the market size.

Sun, Glenmark and DRL continued to be the companies that posted double-digit acute growth.

FIGURE 9 Segmental (chronic vs. acute) y/y growth rates for our coverage universe

Chronic segment continued to grow ahead of the acute segment in December; however, the divergence narrowed on account of a sharp recovery in the acute segment. We have seen an exaggerated divergence between the two since Dec-12 partly because the bulk of NLEM drugs belong to acute category.

0%

5%

10%

15%

20%

25%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

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Mar

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Apr

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May

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Jun-

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Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Growth difference (RHS) Acute growth Chronic growth

Source: AIOCD, Barclays Research

FIGURE 10 Acute vs. chronic split for our coverage universe

Sun Pharma, Cipla and Lupin had the highest exposure to the chronic therapeutic market Sun Pharma and Glenmark have had strong relative outperformances across both the chronic and acute segments

18%31% 30% 37% 43% 46%

56%39%

-16%

11%

9%

33%

17%

0%

12%

10%

-4%

1%

26%

14%

3%-2%

20%

5.6%

-40%

-20%

0%

20%

40%

60%

80%

100%

Ranbaxy Cadila DRL Glenmark Cipla Lupin Sun Coverage

Acute % Chronic % Chronic Growth Acute Growth

Source: AIOCD, Barclays Research

Page 5: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 5

FIGURE 11 Indian Pharmaceutical Market (IPM) – growth trends improved across most therapies in December – derma, respiratory maintained their leads

3.3%

-3.7%

6.9%

2.8%

6.1%

-15.8%

-1.2%-4.0% -4.6%

7.4%

-2.9%

7.6%5.7%

14.1%

-1.1%

3.8%

14.4%

0.2%

10.4%

1.1%

7.9% 6.9%

16.8%

4.0% 3.5%

15.0%

-1.7%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Alimentary Tract

Blood CVS CNS Derma Anti-Infectives Musculo Skeleton

Respiratory Genito Urinary

Oct-13 Nov-13 Dec-13

Source: AIOCD, Barclays Research

FIGURE 12 CVS and CNS together constitute 18% of the IPM …

FIGURE 13 … but have a slightly higher contribution of c23% for our coverage

Aimentary25%

Anti-Infectives

17%

CVS11%

Respiratory9%

CNS7%

Derma6%

Genito-Urinary

5%

Musculo-Skeleton

6%

Others14%

Alimentary

17%

Anti-Infectives

16%

CVS15%Respiratory

14%

CNS8%

Derma7%

GenitoUrninary

6%

MusculoSkeleton

5%

Others12%

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

Page 6: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 6

Other key companies in the Indian Pharmaceutical Market (IPM)

FIGURE 14 Growth levels for the other key companies in the IPM

FIGURE 15 Market share movements in the past 12 months

-2%

-15%

0%

9% 9%

-2%

12%

-9%

8%

-12%

10%15%

9%

1%

29%

16%

-20%-15%-10%

-5%0%5%

10%15%20%25%30%35%

Abb

ott

Gla

xo

Man

kind

Alk

em

Inta

s

Sano

fi

IPC

A

Woc

khar

dt

Abb

ott

Gla

xo

Man

kind

Alk

em

Inta

s

Sano

fi

IPC

A

Woc

khar

dt

Y/Y Growths in Q2FY14 Y/Y Growths in Dec

-100 -50 0 50 100

SunGlenmark

DRLCipla

CadilaLupin

Ranbaxy

GlaxoIntas

MankindIPCA

WockhardtAlkemSanofi

Abbott

bpsC

overageIPM

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

FIGURE 16 IPM’s top 20 companies – market share movements in the past 12 months and the latest revenue growth snapshot

Company Nov Sales (INR Mn)Market Share

(Dec ' 13)Rank

(Dec'13)Rank (Dec'12) Movement? Y/Y Growth

Abbott + Abbott Hc + Solvay 4,091 6.5% 1 1 7.6%

Cipla 3,281 5.2% 3 2 8.4%

Sun Pharma 3,459 5.5% 2 3 15.4%

Glaxo 2,316 3.7% 6 4 -12.1%

Zydus + Biochem 2,759 4.4% 4 5 11.5%

Ranbaxy 2,359 3.8% 5 6 -1.6%

Mankind 2,187 3.5% 7 7 10.2%

Alkem + Cachet + Indchemie 2,151 3.4% 8 8 14.8%

Pfizer + Wyeth 1,652 2.6% 12 10 -6.7%

Lupin 1,822 2.9% 10 9 2.2%

Macleods 1,641 2.6% 13 11 8.3%

Intas 1,615 2.6% 14 12 8.7%

Aristo 1,513 2.4% 15 14 22.3%

Sanofi-Aventis + Universal 1,663 2.7% 11 13 0.9%

Emcure + Zuventus 1,849 3.0% 9 16 23.5%

Dr. Reddys 1,430 2.3% 17 17 7.0%

Glenmark 1,479 2.4% 16 15 19.7%

Micro + Bal 1,310 2.1% 18 18 19.3%

IPCA 1,139 1.8% 19 19 29.5%

Wockhardt 1,096 1.8% 20 20 15.9%

Source: AOICD, Barclays Research

Page 7: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 7

India Healthcare & Pharmaceuticals – valuation comparisons

FIGURE 17 Indian HealthCare & Pharmaceuticals – valuation comparisons for our coverage universe

Current Price

12-mth TP

Pot. Up /Mkt Cap

FY15E Shares

Ticker Rating (in Rs) (in Rs) Downside ($ bn) EPS (in Mn) Sales EBIT EPS P/EEV/

EBITDAP/B ROE

2-yr PEG

TP Implied

P/E

Lupin LPC IN OW 937 1,019 9% 7.5 46.3 447 20.0% 23.6% 25.8% 20.2 13.0 6.2 24% 0.8 22.0

Sun Pharma SUNP IN OW 605 646 7% 22.4 26.9 2,071 26.3% 123.0% 36.7% 22.5 16.8 7.6 26% 0.6 24.0

Glenmark GNP IN OW 502 690 37% 2.4 36.3 271 19.6% 22.3% 26.5% 13.8 10.2 3.9 22% 0.5 19.0

Dr Reddys DRRD IN EW 2,647 2,455 -7% 8.0 129.2 170 13.7% 14.2% 14.6% 20.5 13.2 5.0 20% 1.4 19.0

Cadila CDH IN EW 890 766 -14% 3.3 45.1 205 14.2% 18.5% 18.7% 19.7 13.1 4.9 21% 1.1 17.0

Cipla CIPLA IN EW 411 395 -4% 5.9 22.3 803 14.8% 10.6% 7.8% 18.4 12.1 3.3 16% 2.4 17.7

Ranbaxy RBXY IN UW 429 331 -23% 3.2 22.2 422 3.3% -6.7% 0.7% 19.4 12.5 4.0 17% 29.7 13.3

5% 18.1% 35.4% 21.7% 19.2 13.1 5.2 22% 1.1 19.8

Stock Info Growth Metrics Valuation Metrics

(FY13E - FY15E CAGR) FY 2015 E

Indian Pharma (ex-RBX)

Company

Notes: Prices as of the market close on 14 January 2014 For Ranbaxy, estimates are for CY14E Stock ratings: OW: Overweight; EW: Equal Weight; UW: Underweight For full disclosures on each covered company, including details of our company-specific valuation methodology and risks, please refer to http://publicresearch.barcap.com Source: Company reports, Barclays Research estimates

Page 8: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 8

Sun Pharma (OW): Broad-based growth maintained

FIGURE 18 Consistent above industry domestic growth levels

Sun has continued to outperform the industry Dec y/y Growth of 12% in the acute segment, and 20% in the chronic segment

23%

28%26%

18%

22%23%

27%27%

17%

24%

15%17%

22%

15%

18%

26%

21%

12%

16%

15%

16%15%17%

15%

0%

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10%

15%

20%

25%

30%

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 19 Higher market share trajectory for Sun Pharma

Higher market share trajectory for Sun Pharma As expected in our report of 8 March, “Sun Pharmaceutical Industries: First among equals: to $3bn revenues? Upgrade to OW; PT raised to Rs936”, Sun Pharma has become the No. 2 in the Indian Pharmaceutical Market

4.7%

4.7%4.6%

4.9%4.8%

4.9%

4.5% 4.6%4.7%

5.1%5.2%

5.5%

5.1%

5.3%

5.3%5.4%

5.1%

5.2%

5.2%

5.5%5.5%

5.7%

5.5%

4.2%

4.4%

4.6%

4.8%

5.0%

5.2%

5.4%

5.6%

5.8%

Feb-

12

Mar

-12

Apr-

12

May

-12

Jun-

12

Jul-1

2

Aug-

12

Sep-

12

Oct

-12

Nov-

12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr-

13

May

-13

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct

-13

Nov-

13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 20 Therapy-wise breakdown for Sun Pharma (per Dec’13)

FIGURE 21 Strong growth levels across all key therapies for Sun

Alimentary26%

CNS24%

CVS17%

Genito Urinary

9%

Musculo -Skeleton

4%

Others20%

16%13% 14%

11%

29%

7%

15%18%

11%8%

37%

4%

17% 16%

9% 8%

32%

1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Ove

rall

Alim

enta

ry

CN

S

CV

S

Gen

ito

Urin

ary

Mus

culo

-Sk

elet

on

Oct-13 Nov-13 Dec-13

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

Page 9: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 9

Glenmark (OW): Strong recovery in growth

FIGURE 22 All round performance by Glenmark driving the par-industry growth levels

Glenmark has registered robust growth recovery after a dip in June. This has been driven by a strong rerating across both acute and chronic segments Dec y/y: Growth of 14% in the acute segment, and 33% in the chronic segment

37%

30%32%

21%21%20%23%

11%10%

16%

10%12%

18%15%

5%

19%21%

23%

17%

25%

20%

0%

10%

20%

30%

40%

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 23 Market share remains stable sequentially; Up c25bps on a y/y basis

Market share for Glenmark has remained stable in the past three months after a sharp increase from the 1.9-2.0% share band in H2CY13

1.9%

2.0%2.0%

2.0%1.9%1.9%

1.8%

1.9%1.9%1.9%2.0%1.9%2.0%

2.1%2.1%

2.0%2.0%2.1%

1.9%1.9%

2.1%

2.3%

2.5%

2.3%2.3%2.4%

1.5%

1.7%

1.9%

2.1%

2.3%

2.5%

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 24 Therapy-wise breakdown for Glenmark (as per Dec’13)

FIGURE 25 Recovery across all the key segments

Derma28%

CVS24%

Anti-Infectives

12%

Respiratory18%

Alimentary10%

Others8%

17% 19%27%

-6%

13%

66%

25%17%

36%

18%

29%

59%

20%14%

29%

8%

20%

60%

-12%

0%

12%

24%

36%

48%

60%

72%

Ove

rall

Der

ma

CVS

Ant

i-Inf

ectiv

es

Resp

irato

ry

Alim

enta

ry

Oct-13 Nov-13 Dec-13

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

Page 10: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 10

Lupin (OW): Growth remained weak in December

FIGURE 26 Growth remains weak in Dec, due to challenges in both acute and chronic segments

Growth remained weak in December, driven by a sequential contraction in both acute and chronic categories Dec y/y: Growth decline of 2% in the acute segment; 0% growth in the chronic segment

16%

15%14%17%

11%

15%14%

18%21%

11%13%

21%

10%9%

14%11%

16%14%14%

3%6%

-2%

0%

-4%

7%

0%

-10%

-5%

0%

5%

10%

15%

20%

25%

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

`

Source: AIOCD, Barclays Research

FIGURE 27 Market share for Lupin declined by c20bps both sequentially and on a y/y basis

Lupin ‘s market share has declined sharply in December (down 20bps on a sequential basis), post a broadly stable range of 3.0% - 3.1%.

2.8%

3.0%3.0%

3.0%

3.1%

3.0%

2.9%

3.0%3.1%

3.1%3.2%3.1%3.1%3.1%3.1%

3.0%

3.0%

2.9%

3.0%3.0%

3.1%

2.9%

2.7%

2.9%

3.1%

3.3%

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

`

Source: AIOCD, Barclays Research

FIGURE 28 Therapy-wise breakdown for Lupin (as per Dec’13)

FIGURE 29 Growth y/y for the key therapy segments

Anti-Infectives

24%

Alimentary23%

CVS20%

Respiratory13%

Blood5%

CNS6%

Others9%

-19%

10%

2% 2%

-11%

-3%

0%

13%10%

13%

5%

1%

-11%

9%

0%

8%

-6%-1%

-20%

-10%

0%

10%

20%

Ant

i-In

fect

ives

Alim

enta

ry

CVS

Resp

irato

ry

Bloo

d

CNS

Oct-13 Nov-13 Dec-13

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

Page 11: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 11

Dr. Reddy’s (EW): Strong above-industry growth maintained

FIGURE 30 DRL continues to grow ahead of the industry

20% y/y growth in December driven by a strong performance in the acute segment, while chronic remained relatively weak Dec y/y: Growth of 26% in the acute segment, and 9% in the chronic segment

11.2%

8.8%

11.6%10.6%

9.2%9.1%9.3%9.1%

17.5%

5.5%

20.2%

4.9%

3.6%5.4%

1.2%1.3%

24.0%26.5%

14.2%

22.7%

11.7%

21.6%

15.2%

19.8%20.4%

0%

4%

8%

12%

16%

20%

24%

28%

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-

12

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-

13

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research Note: Unadjusted for the base of Nov-12

FIGURE 31 With market share inching upwards on a y/y basis

Market share on a gradual uptick for DRL after a strong performance in the past six months

2.1%2.0% 2.1%2.1%

1.9%2.0%2.0%

1.9%1.9%

1.9%1.9%

2.0%

2.1%

1.9%1.9%2.0%

2.2%

2.2%

2.1%

2.1%

2.1%

2.3%

2.2%2.2%

2.3%

1.8%

1.9%

2.0%

2.1%

2.2%

2.3%

2.4%

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 32 Therapy-wise breakdown for Dr Reddy’s (as per Dec’13)

FIGURE 33 Y/Y Growth levels across the key therapies

Alimentary35%

CVS16%

MusculoSkeletal

8%

Antiinfectives

8%

Derma8%

Other25%

15%

5%

9%

0%-3%

21%20%

4%0%

13%

22%

13%

20%

8%

0%

8%

16%

28%

-5%

0%

5%

10%

15%

20%

25%

30%

Ove

rall

Alim

enta

ry

CV

S

Mus

culo

Skel

etal

Ant

iin

fect

ives

Der

ma

Oct-13 Nov-13 Dec-13

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

Page 12: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 12

Cadila (EW): High exposure to NLEM drugs

FIGURE 34 Cadila – Sales growth remains stable in Dec; marginal pickup in the last 2 months

The sharp growth decline in the past three months has been broadly in line with expectations as Cadila is the most exposed to DPCO drug pricing policy changes as per our estimates amongst our coverage. Recovered in Nov in line with the industry Dec y/y Flat growth in the acute segment; Growth of 11% in the chronic segment

13.5%

9.0%

13.3%

21.6%

16.7%

22.8%

16.7%

29.3%

15.6%16.2%

19.9%21.2%

14.7%

22.8%

19.2%

6.6%

8.8%

1.3%

0.2%-2.6%

4.0%4.1%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 35 Leading to a break in the y/y market share gains

Market share has seen some moderation in the last few months (decreased by c20bps in the eight months) – growing broadly in line with the industry 4.2%4.0%

4.2%

4.6%

4.4%4.5%

4.3%

4.5%

4.6%4.6%

4.6%

4.8%

4.6%4.5%4.5%

4.6%

4.4%

4.6%

4.5%

4.5%4.6%

4.4%

3.8%

4.0%

4.2%

4.4%

4.6%

4.8%

5.0%

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-

12

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-

13

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 36 Therapy-wise breakdown for Cadila (as per Dec’13)

FIGURE 37 Most of the key therapies remain muted

Respiratory10%

Genito-urinary

12%

CVS15%

Anti-Infectives

13%

Alimentary14%

Others36%

-3% -2%

-8%

4%

-2%

26%

-4%

1%

-8%

4% 8% 5%

-1%

4%

-11%

-10%

0%

10%

20%

30%

Ove

rall

Resp

irato

ry

Gen

ito-u

rinar

y

CVS

Ant

i-In

fect

ives

Alim

enta

ry

Oct-13 Nov-13 Dec-13

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

Page 13: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 13

Ranbaxy (UW): Sustained underperformance

FIGURE 38 Growth levels continue to be below industry levels, though improving sequentially

Growth levels continue to remain weak for Ranbaxy, despite an overall improvement in the industry Dec y/y: Growth decline of 4% in the acute segment and 11% in the chronic segment

7% 8%

19%18%

5%

12%7%

5% 6%

22%

12%7%

16%

6%

-1%2%

20%

-1%

4%

-3%

-12%

-19%

-10%-7%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 39 Market share for Ranbaxy has declined sharply; Down 20bpsq/q and 60bps y/y in Dec

Market share for Ranbaxy has remained quite weak and is down c60bps in the past 12 months

4.0%4.1%

4.3%4.3%

3.9%

4.1%4.2%4.1%

4.3%

4.5%4.7%

4.4%

4.3%

4.0%4.0%4.1%

4.2%

3.9%4.0% 4.0%

3.9%

3.7%

4.0%

3.8%

3.6%

3.8%

4.0%

4.2%

4.4%

4.6%

4.8%

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 40 Therapy-wise breakdown for Ranbaxy (as per Dec’13)

FIGURE 41 Subdued growth across most of the key therapies for RBXY

Anti-Infectives

30%

Dermatology 12%

Musculo-Skeleton

12%

CVS11%

Alimentary8%

Varios9%

Others17%

-19%

-32%

-2%

-16%

-5%-8%-10%

-24%

16%

-8%

2%

-7%-7%-8%

8%

-5% -3%

-11%

-40%

-30%

-20%

-10%

0%

10%

20%

Ove

rall

Ant

i-Inf

ectiv

es

Der

ma

Mus

culo

-Ske

leto

n

CVS

Alim

enta

ry

Oct-13 Nov-13 Dec-13

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

Page 14: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 14

Cipla (EW): Grew in line with industry in December

FIGURE 42 Domestic growth declined sequentially in Dec, though grows in line with IPM

Negative growth in the genitor-urinary segment continues to offset the strong performance across the other therapies Sharp recovery across both the acute and chronic segments Dec y/y: Growth of 3% in the acute segment, and 17% in the chronic segment

17%

18%17%17%16%

4%

7%9%

11%

15%

-1% 0%

6% 6%

-1%

5%

12%

11%

15%

5%

-2%

0%

13%

9%

-4%

0%

4%

8%

12%

16%

20%

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 43 Market share, though up on a y/y basis, has declined sharply from Jan-13 levels

Market share on a sequential increase in the past six months, however, has declined materially from the high 5.7% in Jan-12 This has led to Cipla moving to No. 3 in the domestic market

5.7%

5.5%

5.2%

5.4%

5.0%

4.5%4.6%

4.7%4.8%

4.9%4.9%

5.2%

5.5%5.4%

4.9%

5.2%5.1%

4.8%4.9%

4.9%4.9%

5.1%

5.2%5.2%

4.5%

4.7%

4.9%

5.1%

5.3%

5.5%

5.7%

5.9%

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-

12

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-

13

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Source: AIOCD, Barclays Research

FIGURE 44 Therapy-wise breakdown for Cipla (as per Dec’13)

FIGURE 45 Growth y/y for the key therapy segments

Respiratory34%

Anti-Infectives

25%

Genito Urinary

6%

Alimentary 10%

CVS10%

Others15%

0%8%

2%

-45%

6% 5%13% 18%

22%

-41%

14%

11%

9%17%

17%

-52%

10%16%

-60%-50%-40%-30%-20%-10%

0%10%20%30%

Ove

rall

Resp

irato

ry

Ant

i-In

fect

ives

Gen

ito U

rinar

y

Alim

enta

ry

CVS

Oct-13 Nov-13 Dec-13

Source: AIOCD, Barclays Research Source: AIOCD, Barclays Research

Page 15: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 15

Appendix: Critical for trade margin issues to be resolved

Margins contracted for the trade partners in DPCO 2013 The National Pharmaceutical Pricing Authority (NPPA) through its Drug Price Control Order (DPCO 2013) revised downwards the margins for retailers and stockists, a move that has been adding to the supply chain disruptions. Margins for retailers and stockists have been reduced by 400bps (to 16% from 20% earlier) and 200bps (to 8% from 10% earlier), respectively.

Spate of negotiations within the supply chain to restore the margins As discussed during our healthcare trip (click for our report 'The world is their oyster' - Takeaways for Indian Pharma from our Healthcare trip) with a major pharma distributor, this move has led to a round of negotiations between the trade channel, the companies and the NPPA as trade partners bid to restore the margins to earlier levels. There have been arguments of a twin negative impact driven by lower margins along with lower price points as ruled by the revised pricing policy change (coupled with lower near-term volumes).

Smaller firms started offering higher margins; NPPA to reconsider policy Subsequently, we have witnessed an increasing number of smaller firms, including Franco-Indian Pharma, Blue Cross Labs, RPG Life Sciences and Delcure Life Sciences (Pharmabiz, 11 Sept - link) that have started offering higher margins to the retailers and trade partners (at the pre DPCO 2013 levels) in a bid to end the trade channel disruptions.

Media reports (Pharmabiz, 13 Sept) indicate that NPPA has commented that while any modifications would involve an approval from the Ministry of Law, margins could be revised back to the earlier levels post discussions with the various stakeholders involved.

Increasing push towards a speedy resolution We find positive the fact that NPPA is pushing towards a speedy resolution of these trade margin pressures along with positive signals from the trade partners that have announced that they would start stocking the drugs irrespective of the lower margins.

FIGURE 46 Margin structure in the Indian pharma supply chain

Source: NPPA, Barclays Research

Manufacturer

CFA

Stockist

Pharmacy Retail

Consumers

1 - 5%

10% => 8% (for NLEM)

Margins

20% => 16% (for NLEM)

Compilation of our reports on Drug Pricing Reforms 24 Sept 2012 Dissecting Indian drug pricing policy impact 28 Sept 2012 Market Based Price cuts benign; stay Positive 5 Oct 2012 Uncertainty prolonged 21 Oct 2012 Twist in the tale: Drug Pricing - Part IV 23 Nov 2012 Uncertainty settling as MBP approved by cabinet 22 March 2013 Drug pricing VI - Ceiling price redefined; minimal impact for market leaders 17 May 2013 Drug pricing Part 7: Emerging clarity could unbridle domestic pharma growth 24 June 2013 Drug pricing part 8: Price notification begins; Cipla & Cadila most vulnerable 09 July 2013 Drug pricing part 9: Meeting with NPPA; Focus on early implementation 20 Sep 2013 Drug pricing part X: Trade margin debate adds to disruptions; IPM still volatile

Page 16: Barclays Greenshoots

Barclays | India Healthcare & Pharmaceuticals

15 January 2014 16

ANALYST(S) CERTIFICATION(S):

I, Balaji Prasad, M.D., hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related tothe specific recommendations or views expressed in this research report.

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Materially Mentioned Stocks (Ticker, Date, Price)

Cadila Healthcare Ltd. (CADI.NS, 14-Jan-2014, INR 886.65), Equal Weight/Positive, J

Cipla Ltd. (CIPL.NS, 14-Jan-2014, INR 411.15), Equal Weight/Positive, D/J/L

Dr. Reddy's Laboratories Ltd. (REDY.NS, 14-Jan-2014, INR 2649.00), Equal Weight/Positive, D/J/K/L/N

Fortis Healthcare (FOHE.NS, 14-Jan-2014, INR 98.65), Overweight/Positive, J

Glenmark Pharmaceuticals Ltd. (GLEN.NS, 14-Jan-2014, INR 503.40), Overweight/Positive, J/K/M/N

Lupin Ltd. (LUPN.NS, 14-Jan-2014, INR 934.35), Overweight/Positive, J

Ranbaxy Laboratories Ltd. (RANB.NS, 14-Jan-2014, INR 429.95), Underweight/Positive, D/J/L

Sun Pharmaceutical Industries (SUN.NS, 14-Jan-2014, INR 603.55), Overweight/Positive, J

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M: This issuer is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate.

N: This issuer is, or during the past 12 months has been, a non-investment banking client (non-securities related services) of Barclays Bank PLC

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Barclays | India Healthcare & Pharmaceuticals

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IMPORTANT DISCLOSURES CONTINUED

and/or an affiliate.

O: Barclays Capital Inc., through Barclays Market Makers, is a Designated Market Maker in this issuer's stock, which is listed on the New YorkStock Exchange. At any given time, its associated Designated Market Maker may have "long" or "short" inventory position in the stock; and its associated Designated Market Maker may be on the opposite side of orders executed on the floor of the New York Stock Exchange in the stock.

P: A partner, director or officer of Barclays Capital Canada Inc. has, during the preceding 12 months, provided services to the subject company for remuneration, other than normal course investment advisory or trade execution services.

Q: The Corporate and Investment Banking division of Barclays Bank PLC, is a Corporate Broker to this issuer.

R: Barclays Capital Canada Inc. and/or an affiliate has received compensation for investment banking services from this issuer in the past 12months.

S: Barclays Capital Canada Inc. is a market-maker in an equity or equity related security issued by this issuer.

Guide to the Barclays Fundamental Equity Research Rating System:

Our coverage analysts use a relative rating system in which they rate stocks as Overweight, Equal Weight or Underweight (see definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry (the "industry coverage universe").

In addition to the stock rating, we provide industry views which rate the outlook for the industry coverage universe as Positive, Neutral or Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investorsshould carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.

Stock Rating

Overweight - The stock is expected to outperform the unweighted expected total return of the industry coverage universe over a 12-month investment horizon.

Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the industry coverage universe over a 12-month investment horizon.

Underweight - The stock is expected to underperform the unweighted expected total return of the industry coverage universe over a 12-month investment horizon.

Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or tocomply with applicable regulations and/or firm policies in certain circumstances including where the Corporate and Investment Banking Divisionof Barclays is acting in an advisory capacity in a merger or strategic transaction involving the company.

Industry View

Positive - industry coverage universe fundamentals/valuations are improving.

Neutral - industry coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.

Negative - industry coverage universe fundamentals/valuations are deteriorating.

Below is the list of companies that constitute the "industry coverage universe":

India Healthcare & Pharmaceuticals

Apollo Hospitals Enterprise (APLH.NS) Cadila Healthcare Ltd. (CADI.NS) Cipla Ltd. (CIPL.NS)

Dr. Reddy's Laboratories Ltd. (REDY.NS) Fortis Healthcare (FOHE.NS) Glenmark Pharmaceuticals Ltd. (GLEN.NS)

Lupin Ltd. (LUPN.NS) Ranbaxy Laboratories Ltd. (RANB.NS) Sun Pharmaceutical Industries (SUN.NS)

Distribution of Ratings:

Barclays Equity Research has 2591 companies under coverage.

44% have been assigned an Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 47% ofcompanies with this rating are investment banking clients of the Firm.

39% have been assigned an Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 42% of companies with this rating are investment banking clients of the Firm.

15% have been assigned an Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 40% of companies with this rating are investment banking clients of the Firm.

Guide to the Barclays Research Price Target:

Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price target over the same 12-month period.

Barclays offices involved in the production of equity research:

London

Barclays Bank PLC (Barclays, London)

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Barclays | India Healthcare & Pharmaceuticals

15 January 2014 18

IMPORTANT DISCLOSURES CONTINUED

New York

Barclays Capital Inc. (BCI, New York)

Tokyo

Barclays Securities Japan Limited (BSJL, Tokyo)

São Paulo

Banco Barclays S.A. (BBSA, São Paulo)

Hong Kong

Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong)

Toronto

Barclays Capital Canada Inc. (BCCI, Toronto)

Johannesburg

Absa Capital, a division of Absa Bank Limited (Absa Capital, Johannesburg)

Mexico City

Barclays Bank Mexico, S.A. (BBMX, Mexico City)

Taiwan

Barclays Capital Securities Taiwan Limited (BCSTW, Taiwan)

Seoul

Barclays Capital Securities Limited (BCSL, Seoul)

Mumbai

Barclays Securities (India) Private Limited (BSIPL, Mumbai)

Singapore

Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)

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DISCLAIMER:

This publication has been prepared by the Corporate and Investment Banking division of Barclays Bank PLC and/or one or more of its affiliates (collectivelyand each individually, "Barclays"). It has been issued by one or more Barclays legal entities within its Corporate and Investment Banking division as providedbelow. It is provided to our clients for information purposes only, and Barclays makes no express or implied warranties, and expressly disclaims all warrantiesof merchantability or fitness for a particular purpose or use with respect to any data included in this publication. Barclays will not treat unauthorizedrecipients of this report as its clients. Prices shown are indicative and Barclays is not offering to buy or sell or soliciting offers to buy or sell any financialinstrument.

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This communication is being made available in the UK and Europe primarily to persons who are investment professionals as that term is defined in Article 19of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. It is directed at, and therefore should only be relied upon by, persons whohave professional experience in matters relating to investments. The investments to which it relates are available only to such persons and will be enteredinto only with such persons. Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority andthe Prudential Regulation Authority and is a member of the London Stock Exchange.

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services are only available to Professional Clients, as defined by the Dubai Financial Services Authority.

Barclays Bank PLC in the UAE is regulated by the Central Bank of the UAE and is licensed to conduct business activities as a branch of a commercial bankincorporated outside the UAE in Dubai (Licence No.: 13/1844/2008, Registered Office: Building No. 6, Burj Dubai Business Hub, Sheikh Zayed Road, DubaiCity) and Abu Dhabi (Licence No.: 13/952/2008, Registered Office: Al Jazira Towers, Hamdan Street, PO Box 2734, Abu Dhabi).

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© Copyright Barclays Bank PLC (2014). All rights reserved. No part of this publication may be reproduced in any manner without the prior writtenpermission of Barclays. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP. Additional informationregarding this publication will be furnished upon request.

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