Eris LifeSciences -- ed 2 · This report is intended for the sole use of the Recipient. Disclosures, and analyst certifications are given in the Appendix. Anand Rathi Research India

Anand Rathi Share and Stock Brokers Limited (hereinafter “ARSSBL”) is a full-service brokerage and equities-research firm and the views expressed therein are solely of ARSSBL and not of the companies covered in the Research Report. This report is intended for the sole use of the Recipient. Disclosures, and analyst certifications are given in the Appendix. Anand Rathi Research India Equities

Healthcare

Initiating coverageIndia I Equities

Shikha JainResearch Analyst

Rashmi Sancheti Research Analyst

Candice Pereira Research Associate

Key financials (YE Mar) FY17 FY18 FY19e FY20e FY21e

Sales (`m) 7,495 8,556 10,952 12,637 14,589 Net profit (`m) 2,468 2,941 3,500 4,231 5,037 EPS (`) 17.9 21.4 25.5 30.8 36.6 PE (x) 44.3 37.2 27.3 22.6 19.0 EV / EBITDA (x) 39.5 33.9 21.9 17.9 14.6 PBV (x) 19.3 12.7 7.9 5.8 4.5 RoE (%) 55.6 41.2 33.8 29.7 26.7 RoCE (%) 56.1 34.1 28.4 28.5 27.9 Dividend yield (%) - - - - -Net debt / equity (x) -0.5 0.0 -0.2 -0.4 -0.5

Source: Company, Anand Rathi Research

`

Key data ERIS IN / ERIS.BO 52-week high / low `896 / 560 Sensex / Nifty 34780 / 104533-m average volume $0.5m Market cap `95bn / $1283m Shares outstanding 138m

Shareholding pattern (%) Jun'18 Mar'18 Dec'17

Promoters 55.9 55.9 55.9 - of which, Pledged - - -Free float 44.1 44.1 44.1 - Foreign institutions 8.7 8.6 6.8 - Domestic institutions 10.8 10.8 12.4 - Public 24.6 24.7 24.9

17 October 2018

Eris Lifesciences

Focused domestic player, robust financials; initiating, with a Buy

Focused on therapies for lifestyle-related disorders, a purely domestic pharmaceutical, Eris Lifesciences is expected to register 19%/20% revenue/PAT CAGRs over FY18-21. We believe it to be driven by its focus on high-growth chronic therapies and specialty acute therapies (complementing its chronic range). These are bolstered by its unique patient-care initiatives and prescriptions from specialists and super-specialists. This helps it to higher volumes, better margins and growth across segments. We initiate coverage on Eris Lifesciences with a Buy and a target of `879, based on 24x FY21e earnings.

Operations in high-growth chronic and specialty acute therapies. Eris’ focus has been on developing products linked to lifestyle diseases. Its key focus therapies are cardiovascular, anti-diabetes, gastroenterology and vitamins, which bring ~80% to its revenue. While consolidating existing therapy areas is its focused strategy, it is also keen on expanding into newer high-growth therapies (CNS, bone health, VMN, women’s health [IVF], cosmeceuticals), which are a large part of the next growth phase.

Robust financials. Eris’s capital intensity is low, in terms of both working capital and fixed assets. Along with high margins, this drives its healthy cash generation. We believe its strong revenue growth, healthy EBITDA margin and low capex requirement, together with strong profit growth (a ~20% CAGR over FY18-21), would continue to result in healthy free-cash-flow generation. This would help it grow inorganically as management stated that it would keep on seeking inorganic growth.

Valuation.We like Eris for its focus on the fastest-growing therapeutic areas, healthy balance sheet and robust operating margins. We initiate coverage on it with a Buy recommendation and a price target of ₹879, based on 24x FY21e EPS. Risks: More products under the NLEM, delay in execution, competition risk.

Relative price performance

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Rating: Buy Share Price: `695 Target Price: `879

17 October 2018 Eris Lifesciences – Focused domestic player, robust financials; initiating, with a Buy

Anand Rathi Research 2

Quick Glance – Financials and ValuationsFig 1 – Income statement (`m) Year-end: Mar FY17 FY18 FY19e FY20e FY21e

Net revenues 7,495 8,556 10,952 12,637 14,589 Growth (%) 25.6 14.2 28.0 15.4 15.4Direct costs 1,046 1,341 1,668 1,903 2,193 SG&A 3,758 3,995 5,038 5,742 6,576 EBITDA 2,691 3,220 4,246 4,991 5,821 EBITDA margins (%) 35.9 37.6 38.8 39.5 39.9 - Depreciation 228 256 293 324 355 Other income 251 264 150 165 182 Interest expenses 10 106 244 168 93 PBT 2,704 3,122 3,859 4,664 5,554 Effective tax rate (%) 8.8 5.5 9.0 9.0 9.0 + Associates / (minorities) -2 9 10 13 15 Net income 2,468 2,941 3,500 4,231 5,037 Adjusted income 2,468 2,941 3,500 4,231 5,037 WANS 138 138 138 138 138 FDEPS (` / sh) 17.9 21.4 25.5 30.8 36.6

Fig 3 – Cash-flow statement (`m) Year-end: Mar FY17 FY18 FY19e FY20e FY21e

PBT (adj other income/ interest) 2,463 2,964 3,954 4,668 5,466 + Non-cash items 228 256 293 324 355 Oper. prof. before WC 2,691 3,220 4,246 4,991 5,821 - Incr./(decr.) in WC 164 222 351 179 179 Others incl. taxes 524 652 849 1,026 1,222 Operating cash-flow 2,002 2,346 3,046 3,787 4,420 - Capex (tang. + intang.) 463 251 200 200 200 Free cash-flow 1,540 2,095 2,846 3,587 4,220 Acquisitions 774 5,244 - - - - Div. (incl.buyback& taxes) 169 - - - - + Equity raised - - - - - + Debt raised -65 3,735 -1,026 -1,000 -1,000 - Fin investments 621 381 284 307 331 - Misc. (CFI + CFF) (10) 128 94 3 (88) Net cash-flow -73.1 82.5 1,442 2,277 2,977 Source: Company, Anand Rathi Research

Fig 5 – Price movement

Source: Bloomberg

Fig 2 – Balance sheet (` m) Year-end: Mar FY17 FY18 FY19e FY20e FY21e

Share capital 138 138 138 138 138Net worth 5,671 8,613 12,113 16,344 21,381Total debt 6 3,768 2,742 1,742 742Minority interest 238 247 257 270 285DTL/(assets) -152 -483 -983 -1,588 -2,308Capital employed 5,763 12,145 14,129 16,767 20,099Net tangible assets 557 526 553 549 514Net intangible assets 1,382 6,250 6,130 6,010 5,890Goodwill 378 935 935 935 935CWIP (tang. & intang.) 1 - - - -Investments (strategic)

Investments (financial) 3,032 3,654 3,938 4,244 4,575Curr. assets (excl. cash) 1,394 2,124 2,686 3,041 3,487Cash 24 106 1,549 3,826 6,802Current liabilities 1,004 1,450 1,661 1,838 2,104Working capital 390 674 1,025 1,203 1,382Capital deployed 5,763 12,145 14,129 16,767 20,099Contingent liabilities 129 145 - - -

Fig 4 – Ratio analysis Year-end: Mar FY17 FY18 FY19e FY20e FY21e

P/E (x) 44.3 37.2 27.3 22.6 19.0 EV/EBITDA (x) 39.5 33.9 21.9 17.9 14.6 EV/sales (x) 14.2 12.8 8.5 7.1 5.8 P/B (x) 19.3 12.7 7.9 5.8 4.5 RoE (%) 55.6 41.2 33.8 29.7 26.7 RoCE (%) - after tax 56.1 34.1 28.4 28.5 27.9 RoIC (%) - after tax 129.1 50.5 42.2 49.0 57.1 DPS (`/ sh) - - - - -Dividend yield (%) - - - - -Dividend payout (%) - incl. DDT - - - - -Net debt/equity (x) -0.5 0.0 -0.2 -0.4 -0.5 Receivables (days) 24 28 28 28 28 Inventory (days) 27 28 28 27 27 Payables (days) 19 39 32 30 30

CFO:PAT% 81.1 79.8 87.0 89.5 87.7 Source: Company, Anand Rathi Research

Fig 6 – Revenue break-up (FY18)

Source: Company

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Chronic62%

Acute38%



Operating in the fastest-growing therapeutic arenas Manufacturing and marketing branded formulations for lifestyle-related disorders, Eris primarily focuses on such products in the chronic and specialty acute categories, which complement its chronic products. Its key focus therapeutic areas are cardiovascular (CVS), anti-diabetes, vitamins, gastroenterology and anti-infectives. In FY18 the market for Eris’ products, constituting 44% of the IPM, expanded 35% to `531bn.

Its chronic and acute therapies revenue split is 62:38, as most of its products are to treat CVS and diabetic issues. It’s CVS and anti-diabetes therapies account for 80-90% of its chronic revenue; its vitamins and gastroenterology therapies account for 55-60% of its acute-category revenue.

Strong foothold in CVS and diabetic drugs

Of the top-25 pharma companies in India (according to IMS Health), Eris has emerged as the second-fastest growing company in the chronic category with strong brands in CVS and anti-diabetes. In terms of FY18 revenue, it was ranked 20th of 395 domestic and multinational companies operating in the IPM’s chronic category (source: company, IMSTSA MAT, Mar’18). In the chronic category it registered ~24% revenue CAGR over FY13-18 vs. 13.3% for the IPM.

In India, CVS is the largest chronic therapeutic area, a ~`142 bn market. For Eris hypertension and lipid-lowering agents are key therapeutic sub-segments within CVS. It has outpaced market growth with 20.2% revenue CAGR over FY13-18, vs.10.5% for the IPM. Its mother brands (Eritel, Olmin, LnBloc, Atorsave, Crevast) are among the top-10, ensuring its therapeutic coverage and leadership.

Fig 8 – Eris’ position in represented CVS therapy

Market size Therapy rankMarket share

% % of revenueCAGR (FY13-18)

%IPM CAGR

(FY13-18) %

`86bn 10 3.3 29.3 20.2 10.5


Anti-diabetics is the second-largest chronic category in India, a `113bn market in FY17, registering a 17.6% revenue CAGR over FY13-17. With its focus on oral anti-diabetics, Eris’ anti-diabetic products clocked a 28.9% revenue CAGR in that period. The company has created certain leading brands

Fig 7 – Revenue break-up, IPM vs. Eris

Source:Company, Anand Rathi Research

Chronic 34.8%

Acute65.2%

IPM contribution

Chronic 62.4%

Acute37.6%

Eris contribution



through its patient-care model, which combines diagnostics assistance to increase awareness and improve prognosis. Its largest brand, Glimisave, addresses this market, has a 5.5% market share and is 3rd in prescription rank.

Fig 9 – Eris’ position in represented Anti-diabetic therapy

Market size Therapy rankMarket share

% % of revenueCAGR (FY13-18)

%IPM CAGR

(FY13-18) %

`58bn 7 4.7 28.1 28.9 17.6


We believe Eris’ focus on lifestyle-related-disorder therapies will drive growth in its chronic category. In India chronic diseases have been rising because of such disorders (modern sedentary lifestyles, unhealthy eating habits, greater work-related stress). Thus, segments focused on by Eris are some of the fastest-growing in the industry. We expect its chronic category (excl. Strides) to register a ~16% revenue CAGR over FY18-21, aided by its unique position in the market, focus on high-growth therapeutic segments andlaunches andgrowth in its leading brands.

Eris’ specialty acute product range complements its chronic portfolio

Eris’ specialty acute division focuses on developing products for lifestyle-related disorders and those which require prescriptions over a protracted period rather than just one-time incidence-related medication. Within the specialty acute segment, most of its revenue arises from vitamins and gastroenterology. These are, in general, acute segments. For Eris, however, they are natural extensions of its cardiac and anti-diabetes products. It developed its mother-brand groups in gastroenterology and vitamins as natural extensions of its cardiovascular and anti-diabetes products. For instance, its Vitamin-D brand, Tayo 60k, is useful for lipid metabolism, diabetes and hypertension; its key gastro product, Rabeprazole, is prescribed in cardiac and diabetic issues.

The acute category brought ~38% to its revenue in FY18, registering a 14% revenue CAGR over FY13-18, vs. 9.9% for the IPM.

Fig 10 – Eris’ position in represented vitamin and gastroenterology therapy

Therapy areas Market size

(` bn) Therapy rankMarket share

% Growth CAGR

(FY13-18) %

Vitamins/Nutrients 51 3 4.9 10.1

Gastro 60 18 1.5 6.1


While consolidating its existing therapy areas (cardiac and diabetes) is Eris’ prime strategy, it is also focusing on CNS, bone health, VMN, women’s health (IVF) and cosmeceuticals as a large part of the next phase of growth. We expect that its focus on specialty and super-specialty therapeutic areas would continue to generate sustainable growth in demand for its products.

Fig 11 – Increasing therapeutic focus Therapy Remarks

CNS Added two divisions;the acquired Strides range of products is complementary to this; expanded field force from 65to 200

Bone health Kinedex deal added momentum

Vitamins /nutrients Strides' brand Renerve has emerged as the 3rd-largest brand, `800m in sales, a 6.4% market share

Women’s health - IVF New focus area, on the UTH healthcare acquisition

Cosmeceuticals New focus area, working out strategiesregardingproducts, marketing, etc.




Prudent product selection; greater proportion of products in a growth phase to drive growth

Almost 73% of its revenue arises from products in growth phases, vs. ~31% for peers (source: company). This has enabled it to grow faster. Besides a good selection of products, one of the reasons for Eris’ better product-mix is the young age of its products, indicating product newness and the considerable growth opportunities they offer. Of its 397 brand extensions, 35(bringing 9.7% to sales in FY18) fall under the DPCO. Further, a key element of its product planning is to grow its specialty therapeutic areas which require 1-3 month’s medication. This would ensure healthy growth.

Fig 12 – Lifecycles of pharmaceutical molecules % Eris IPM

In a growth phase 73.0 30.7

Mature 25.1 39.4

Declining 1.6 28.7


Strong brand building, the core of its marketing strategy

A significant proportion of Eris’ revenue arises from brands which are among the top-10 in their sub-categories. A higher proportion of its revenue comes from its top-15 brands than the average of the top-25 in the IPM. Its top-15 mother brands account for ~74.2% of its revenues. (source: IMS TSA MAT Mar’18) Its focus on creating large brands has led to a significantly higher contribution from its top-15 mother brands.

Fig 13 – Eris’ top-15 brands Top-15 brands Therapies Market share %Revenue (FY18, ` m) Brand CAGR % (FY13-18) Market CAGR % (FY13-18) Prescription rank

Glimisave Diabetes 5.5 1,835 24.4 17.2 3

Eritel Hypertension 4.9 1,023 22.3 20.1 4

Renerve Neuropathy 6.4 801 15.5 13.8 3

Tayo Vit. D deficiency in metabolic disorders 4.6 530 6.5 18.6 5

Rabonik Gastroenterology 3.8 477 4.6 11.9 12

Olmin Hypertension 6.3 475 27.3 17.3 3

Remylin Diabetic neuropathy 14.0 470 5.5 21.7 3

Tendia Diabetes 6.4 400 38.9 55.4 4

Rosiflex Arthritis 36.9 383 203.8 82.5 1

Lnbloc Hypertension 7.0 374 122.0 66.7 2

Atorsave Lipid lowering 3.4 328 2.8 0.2 7

Raricap Iron supplement 1.3 264 10.6 8.9 9

Cyblex Diabetes 4.1 227 362.4 12.9 5

Crevast Lipid lowering 2.3 218 14.8 20.0 8

Marzon Anti-infectives 48.6 140 0.0 10.1 1




Fig 14 – Revenue contribution–IPM vs.Eris’top-15 mother brands


Targeting specialists and super-specialists

Eris’ product range primarily focuses on therapeutic areas requiring the intervention of specialists and super-specialists (cardiologists, diabetologists, endocrinologists, gastroenterologists). The company focuses on metropolises and class-1 towns in India, which have a higher incidence of lifestyle disorders and a concentration of specialists and super-specialists.

Sales are largely through prescriptions for Eris’ products by such specialists and super-specialists. With this, almost three-fourths of its cardiovascular and anti-diabetic revenues come from metros and class-1 towns. The number of doctors prescribing Eris’ products has increased from 24,606 in FY12 (9.3% of doctors in metros and class-1 towns in India) to 49,476in FY17 (16%) and 80,267 in FY18, according to an IMS medical audit.

The most significant impetus to the company’s goodwill is its unique patient-care initiatives. Eris’ combination of diagnostics with commercialisation and marketing enhance the quality of diagnosis and prognosis. Initiatives to support doctors have helped it increase prescription rates of products.

For example:

ABPM (ambulatory blood-pressure monitoring) is a key tool in diagnosing and monitoring hypertension. This records a patient’s blood pressure through the day. Eris launched an “ABPM on call”, offering doctors and patients better insights and accessibility to the tool. Through “ABPM on Call”, it has supported (by Mar’18) more than 3,800 doctors and 36,500 patients.

The “Holter on Call” (an initiative for 24-hour rhythm monitoring) has supported more than 2,200 doctors and 18,000 patients. Besides, its Eritel Sleep Study on Call, highlighting the links between cardiac diseases and sleep disorders, has till now supported more than 850 clinicians and 3,000 patients to meet the changing needs of cardiovascular care.

CGM (continuous glucose monitoring) is important to make choices related to treatment for diabetes. Eris launched ‘Tendia CGM On Call’, which engages with doctors who need CGM to treat patients. Eris’ executives attach CGM devices to patients and monitor glucose levels for 3-6 days, after which the company collects data for the doctor. In diabetes management, Eris has supported more than 3,800 clinicians and 500,000 patients through various measures such as CGM on Call and Tendia Vascular Screening.

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Super-specialists and specialists bring 92.6% to the company’s prescriptions, contrasting with 61.6% for the IPM.The urban market for Eris’ pharmaceutical products is growing faster than the rural market. We believe the company is well placed to capitalise on growth opportunities, and endeavors to grow faster than the market in these categories.

Fig 16 – Eris’ prescription rank Doctor specialty Prescription Rank FY18

Diabetologists /Endocrinologists 2

Cardiologists 2

Cons. Physicians 5

Gynaecologists 13

Gastroenterologists 3

Orthopedicians 13

ENT 2

Chest specialists 2

Neurologists 5


Strategic acquisitions to support business and boost growth

In FY17 and FY18 Eris diversified its product range. It made strategic acquisitions to 1) strengthen or expand its product range within its therapies, 2) develop operating leverage for key therapeutic areas by unlocking efficiency and synergies, 3) gain access to new markets or enter new high-growth therapeutic areas and widen its geographical reach.

Amay Pharma: To further grow it’s cardiovascular and anti-diabetics product basket, it acquired from Amay Pharma in July’16 trademarks related to 40 brands for `328.7m. Key brands: Atorica, Apriglim, Rosurica.

Kinedex: To add products for mobility-related disorders in the musculo-skeletal therapeutic area toits portfolio, it acquired 75.48% equity in Kinedex (61.5% in Nov’16, 14% in Dec’16) for `771.79m. Key brands: Rosiflex, Meltocol, Lactovel, Oleevcal.

UTHHealthcare: In Oct’17, Eris acquired for `128.5m 100% equity in UTH, which is into obesity, diabetes, gestational diabetes mellitus, maternal nutrition, and cardiovascular areas. The acquisition provides a range of products that complement Eris’.

Fig 15 – Proportion of specialist and super-specialist prescriptions – Eris and the IPM


Super specialist and specialist

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General practitioners

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Super specialist and specialist

92.6%

General practitioners

7.4%

Eris



Strides: In Nov’17, Eris acquired for `5bn the Strides’ India business (branded), together with the employees. This generics business, comprising more than 130 brands in neurology, psychiatry, nutraceuticals, gastroenteritis, etc., had sales of `1.81bn in FY17and was EBITDA neutral, though the gross margin was 69-70%. Management believes that, with sourcing moved to the Guwahati plant, the gross margin would improve. The integration added 250-300 MRs.

This transaction is a good strategic fit for Eris. The acquisition marks its foray intoCNS (central nervous system) therapy and neurology and helps scale up its operations in gynaecology and gastrointestinal. The Strides’ acquisition gives scale in the chronic (CNS) and the faster-growing specialty acute (gastro, vitamins, Gynaec) specialties. It strengthens Eris’ position as a chronic-focused specialty player on the emergence of CNS therapy as Eris’ third-largest therapy. Also, the crucial lever for the deal: ~70% (52% from Tamil Nadu) of sales of the acquired range of products arise from the southern region. The synergies of the acquisition would provide Eris’ core portfolio immediate access to south Indian markets and offer opportunities to expand the Strides range of products to other parts of the country.

The two acquired companies, Kinedex and Amay, reported modest sales growth and positive EBITDA in FY18. At present, Kinedex’/Amay Pharma’s EBITDA margins are 9%/11%. We expect the integration of the acquired products, especially those of Strides, would generate strong sales and earnings growth momentum in FY19, FY20 and FY21. Eris will continue to focus on enhancing its product line and capabilities inorganically.

Focus on enhancingfield-force productivity

At present, Eris has 1,970 market representatives and its strategy to create strong prescription-driven brands ensures higher productivity per MR and continues to drive operating leverage. Over the years it has consistently improved its field-force productivity, from a low ₹3.3m in FY13 to ₹5m in FY17. The slightly lower (₹4.3m) field-force productivity in FY18 was because of the expansion, the Strides acquisition (which added 300 MRs whereas revenue was consolidated only for part of the year) and the GST impact. We expect MR productivity to improve in FY19, as the company expands its product basket through in-licensing of key products or brand acquisition, along with the full-year revenue of the acquisition kicking in.

Fig 17 – Number of MRs


Fig 18 – MR productivity


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Financials Strong revenue growth

We expect a ~19% revenue CAGR over FY18-21 for Eris, to `15bn. The growth is likely to be driven by both the chronic and acute divisions, even as consolidating existing therapy areas remains its focus strategy. It is also focused on expanding into newer high-growth areas.

Fig 19 – Revenue growth trend


Expect 220-230bp expansion in EBITDA margin

Over the years Eris’ EBITDA margin has expanded as a result of higher capacity utilisation (which has boosted its gross margin) and the consistent improvement in MR productivity. We expect 226bp expansion by FY21in the EBITDA margin, to ~40%, considering the higher MR productivity on optimum utilisation of existing and acquired employees (this would improve operating leverage) and better utilisation of its own plant to maintain an 84-85% gross margin. In absolute terms, we expect a 22% EBITDA CAGR over FY18-21, to `5.8bn.

Fig 20 – EBITDA and margin trend


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Strong profitability

Considering its revenue growth trajectory and healthy EBITDA margin, we believe Eris would report healthy profit growth. We expect it to register a 20% PAT CAGR over FY18-21, to `5bn.

Fig 21 – Strong earnings growth


Strong operating and free-cash-flow generation

Considering its strong revenue growth trajectory, healthy EBITDA margin, low working capital days and low capex required, we believe its operating cash-flow (OCF) and free cash-flow (FCF) would register strong growth. This would help it grow inorganically. Its OCF/EBITDA and FCF/EBITDA conversion was more than ~78% and ~56% respectively over FY15-18 due to low working capital and low capex required.

Fig 22 – OCF and FCF


Eris has a manufacturing plant at Guwahati, Assam, which brought ~66% to its revenue in FY18. The Guwahati plant is eligible for certain tax incentives, incl. income-tax and excise-duty exemptions for 10 years (until FY24 and FY25, respectively), besides certain capital investment and trade subsidies. Management said that the consolidated tax rate in FY19 would be 8–9%.

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Valuation Considering Eris’ persistent strong growth momentum (a 20% PAT CAGR over FY18-21), healthy operating margins and return ratios, along with healthy free-cash-flow generation and sturdy business model (focusing on the fastest-growing chronic therapies, lifestyle diseases, super-specialty acute therapy segments with clinically differentiated products/unmet needs and complementary portfolio), we are sanguine about its mid- to long-term prospects.

At present, the stock trades at 27.3x/22.6x/19x of FY19e/FY20e/FY21e earnings. We initiate coverage on Eris Lifesciences, with a target of ₹879 based on 24x FY21e earnings, a discount to multinational pharma’s. These trade at much higher PEs, are much larger and enjoy well-established old brands and wide distribution networks. We believe, however, that Eris ’operating margins and return ratios stand out from its peersand, because of its healthy earnings growth, offer scope for re-rating.

Fig 23 – Peer comparison


Risks

More products under the NLEM.

Execution delays.

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Fig 24 – Peer comparison Company CMP M Cap PE (x) PB (x) EV/EBITDA ROE (%)

(`) (` bn) FY19e FY20e FY21e FY19e FY20e FY21e FY19e FY20e FY21e FY19e FY20e FY21e

Eris 695 95.6 27.3 22.6 19.0 7.9 5.8 4.5 21.9 17.9 14.6 33.8 29.7 26.7

Alkem 1,966 235.0 25.0 19.1 16.8* 4.2 3.5 3.1* 18.4 14.2 12.4* 17.9 20.0 19.9*

GSK 1,451 248.2 53.7 44.9 50.0 11.7 11.4 10.5 35.1 29.3 30.1 21.8 24.8 21.8

Abbott 7,428 158.4 32.7 27.1 NA 7.7 6.3 NA 21.4 17.8 NA 25.4 25.5 NA

Sanofi 5,991 138.6 34.5 29.9 24.5 6.2 5.5 4.8 20.5 17.5 13.0 18.5 19.4 21.2

Pfizer 2,897 132.8 30.4 26.2 22.9 4.4 4.0 3.5 18.4 15.5 13.2 15.4 16.0 16.3

Source: Company, Anand Rathi Research, *Alkem FY21 numbers from Bloomberg



Company Background & Management Founded by Amit Bakshi and team in 2007, Eris is the second-fastest-growing company in chronic therapies (cardiovascular, anti-diabetics) among the top-25 pharma companies and features among the top-30 in Indian brand-named formulations. Its focus has been on developing, manufacturing and marketing products linked to chronic lifestyle-related disorders and treated by super-specialists and specialists. These prescribe 92.6% of the company’s prescriptions, compared with 61.6% for the IPM; its chronic category brings over 62.4% to its revenues, (34.8% for the IPM).

Fig 25 – Shareholding pattern


Fig 26 – Key shareholders Entity % shareholding

Promoters 55.93

Domestic institutions 10.74

Motilal Oswal Multicap 35 Fund 3.59

Aditya Birla Sun Life 3.44

Foreign institutions 8.68

Matthews India Fund 1.42

Goldman Sachs India Limited 1.31

Abu Dhabi Investment Authority – Behave 1.01

Public 24.6


Fig27 – Management and Board of Directors Name Position Profile

Amit Bakshi Chairman, MD

On the Board since inception. Brings extensive experience of the Indian pharmaceutical industry and handles strategic management across all functions. Previously with pharmaceutical companies in various capacities;more than 20 years’ experience in pharmaceuticals

Himanshu Shah Executive Director

On the Board since inception. Responsible for supporting overall management in line with strategic direction across multiple operationalfunctions. Previously with pharmaceutical companies in various capacities;more than 20 years’ experience in pharmaceuticals

Sachin Shah CFO B.Com. CA. Associated with the company since 2013as senior manager, finance and processes. Appointed CFO in Sep’16. Previously with ICICI Bank, Avendus Capital Pvt Ltd.


Promoters55.9%

FII8.7%

DII10.8%

Public24.6%

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Documents

Eris LifeSciences -- ed 2 · This report is intended for the sole use of the Recipient. Disclosures, and analyst certifications are given in the Appendix. Anand Rathi Research India