Piramal Enterprises Limited. Investor Presentation October 2012

Transcription

1 Piramal Enterprises Limited Investor Presentation October 2012

2 Piramal Enterprises an overview: Equity Investment In Vodafone India Rs. 5,862 crores Piramal Enterprises Pharma Information Management Financial Services Pharma Solutions Partners with MNC pharma cos to service their mfg & development needs Sales Rs bn Critical Care Sells anesthetic products to hospitals globally Sales Rs. 4.1 bn OTC Sells OTC drugs in India Sales Rs. 1.4 bn Life Sciences Has a pipeline of 16 compounds with 8 in clinical trials Received approval for cartilage repair gel BST-Cargel 2 DRG Provides research, predictive analytics via proprietary databases & consulting to healthcare sector Sales (E) - $ 160 mn NBFC NBFC focused on lending to Real estate sector Book of Rs. 3.5 billion Indiareit A Real Estate PE fund with domestic and offshore fund Total AUM Rs. 42 billion

3 Pharma Segment 3

4 Pharma Solutions 4

5 Market Characteristics Global Outsourcing market estimated to be USD 32 billion, growing at 12% Market share of India extremely low Lower costs and high quality manufacturing skill presents compelling rationale to shift manufacturing to India Cost pressures on big pharma due to patent expiries leading to opportunities for Indian CMOs Global Outsourcing Market Size India CMOs Size USD B n U SD B n Year 2011 Year 2017 Source: Business Insights Year 2011 Year

6 A full-service CMO across the drug life-cycle Medicinal Chemistry Early Phase Custom Synthesis and Formulations Development Full scale supplies CLINICAL DEVELOPMENT Discovery Research Pre-clinical Dev. API Pre-clinical Dev. Forms Phase I API Phase IIa Phase IIb Phase III API Launch Clinical Trials Formulations Formulations development Medicinal & Synthetic Chemistry Services India - Ahmedabad API Canada Torcan UK Morpeth, India Ennore Formulations UK Morpeth India - Ahmedabad API Canada - Torcan UK Morpeth, India Ennore, Formulations UK Morpeth India Ahmedabad API Torcan (niche APIs only) Morpeth, Digwal, Ennore Formulations Morpeth Pithampur Sales break-up (Rs. In crores) FY2012 Growth Pharma Solutions 1, % From assets in India % From assets outside India %

7 Pharma Solutions Global Footprint CANADA UNITED KINGDOM Toronto API development & manufacturing Morpeth API development & manufacturing Formulation development Commercial formulation manufacturing Clinical Trial supplies & distribution Grangemouth Antibody Drug Conjugates development & manufacturing RM supplies INDIA CHINA Mumbai R&D API development Formulation development Shanghai Sourcing Office Chennai API development & manufacturing Hyderabad API manufacturing Ahmedabad Drug Discovery Services Formulations Development Clinical Trial manufacturing Pithampur Commercial formulation manufacturing 7

8 Critical Care 8

9 Critical Care - expanding product portfolio and enhancing geographic reach Geographies /Products Halothane Isoflurane Enflurane US EU RoW US EU RoW US EU RoW Sevoflurane Desflurane Propofol Addressable Market Opportunity $ Million ,800 9

10 Critical Care Infrastructure in place for sustained rapid growth 84 Distributors 32 Sales Field Force 38 Managers Products Bethlehem Products Manufactured Approvals/Certific ation USFDA, AFSSAPS Digwal US FDA, WHO, UKMHRA, MCC Ambernath (BSV) Baddi (Abbott) WHO UKMHRA (Rs. In crores) FY2012 Growth Critical Care Sales % Desflurane Sevoflurane Enflurane Isoflurane 10 Halothane Propofol Haemaccel

11 OTC Business 11

12 OTC Strong Track Record Strong brand portfolio across various high growth segments Moved from no. 40 in 2008 to top-10 in 2011 Field force expansion to improve distribution to 4 lakh chemists and cover all lakh+ towns in India Lacto Calamine won coveted 2010 REBRAND 100 Winner Successful Rx to OTC transformation for Polycrol, Tetmosol and Supractiv 12

13 Life Sciences 13

14 R&D: To launch a molecule globally 16 products under development in various stages Working in four therapeutic areas Oncology, Diabetes / Obesity, Inflammation and Anti infectives Our lead molecule for P276 is currently undergoing Phase I/II clinical trials for multiple indication of cancer: Head & Neck, Mantle Cell Lymphoma, Pancreatic and Triple Negative Breast Cancer; Earliest expected launch: FY2014 Started Phase II clinical trials for P276 for reduction of serious radiation induced mucositis in patients of head and neck cancer receiving chemoradiation Received the European CE mark approval for the innovative bio-orthopaedic product for cartilage repair - BSTCarGel. Acquired molecular imaging development portfolio of Bayer pharma which includes rights to Florbetaben a final stage Phase III clinical trial molecule. Annual spend : Rs. 230 Rs. 250 crores 14

15 BST-CarGel will be the first patented product to be launched from PEL A novel bioscaffold for advanced cartilage regeneration that has clinically demonstrated consistently higher quality cartilage repair An EU class III medical device, it is a liquid scaffold which, combined with the patient s whole blood, is then implanted into a debrided cartilage lesion prepared with bone marrow access Received European CE mark regulatory approval in April 2012 Plans to commercially launch in the fourth quarter of the 2012 calendar year Filed for regulatory approval to sell in Canada and will soon file in India MRI of patient treated with CarGel Damaged Cartilage Before Treatment Cartilage After Treatment Current European Market Potential The CE mark enables us to access a potential $ 200 mn market in Europe. While we can sell in all EU countries, the largest markets in Europe for BST-CarGel are: UK, Germany, France, Spain, and Italy 15

16 Piramal Imaging Acquisition of Bayer s molecular imaging development portfolio Acquired leading portfolio of molecular imaging tracers from Bayer AG forming subsidiary Piramal Imaging Lead compound Florbetaben - final stage Phase III molecule Reliably detects Beta-Amyloid in the brain, which is the pathological hallmark of disease in probable Alzheimer's disease patients Potential tool to aid in diagnosis and assessment of Alzheimer s disease Early diagnosis can both improve patients quality of life and reduce healthcare costs Positive Phase III results presented on April 25 at American Academy of Neurology Annual Meeting Potential Market size: $ 1.5 billion Earliest regulatory filing: 2012 Other assets include strong pipeline of PET imaging tracers in CNS, Oncology, and Cardiovascular diseases Core members of Bayer s R&D team have joined Piramal Imaging leadership team Manufacturing & distribution alliance formed with IBA Molecular, a world leader in Nuclear Medicine 16

17 Financial Services 17

18 PHL Finance: An overview PHL Finance: Real Estate Lending to quality real estate developers Currently focusing on Mumbai, Pune, Bangalore and Chennai Not >25% of total assets towards commercial and retail projects Book as on 30 th June 2012: Rs. 498 crores SME To foray into funding education sector from FY13 Fund established educational institutions for growth, upgrading facilities Newer verticals to be added 18

19 Strong systems & process in place now.. Credit Committee Members who are experts in their fields: Mr. Deepak Satwalekar, Mr. A. K. Purwar and Mr. Ajay Piramal Management team with vast banking experience Mr. A. K. Purwar Chairman, PHL Finance:ex-Chairman of SBI with 40+ years of experience in Banking and financial services Mrs. Sudha Ravi CE0, over 30 years of banking experience Specialized team under them specialists in real estate sector, education Sector, relationship managers and compliance officer with deep knowledge Of Banking and compliance Well defined processes Loan Policy approved by Board Independent audit pre and post disbursement 19

20 to benefit from strong parentage and excellent domain knowledge Strong Parentage Piramal Group has significant recall with builder community A company with Ethical values honesty and fair play Domain Knowledge Highly experienced Board members Strong knowledge bank within the Group Shared resources real estate private equity and realty arm with a pulse on the real estate market practice To become profitable niche player in the market through domain knowledge expertise, world class risk management practices and highest ethical standards 20

21 Indiareit - Executive Summary Proven fund management expertise, Best positioned to benefit from emerging Indian real estate Consistent fund raising Proven & consistent investment strategy Strong team with comprehensive investment experience; Successful exits across vehicles Supplemented with key differentiators Realized exits across funds Exits commenced since October 2008 Valuations in sync with guidance and exit delivery Estimate 2.22x pre-tax money multiple on valued portfolio (March 11) Ability to profitably deploy large pools of capital; Over USD 650Mn in 4 years History of firsts in the Indian market First to declare independent valuations First to commence exits in investee projects First to round trip investments across all fund offerings First to manage third party portfolio Comprehensive Experience 5 Top Tier 1 cities 8 Local partners 23 Projects 53.7m sq ft of Saleable area currently under development Domestic Fund Size (Rs. Crs) Offshore Funds Size ($ mn) Fund scheme I 430 Offshore Fund I 200 Fund scheme III 585 Trinity Capital Plc 230 Fund scheme IV 923 Trafalgar/F&C Reit 36 Mumbai Redevelopment Fund

22 Information Management Segment 22

23 Transaction Overview Signed agreement to acquire Decision Resources Group ( DRG ), for approximately $ 635 million (~Rs. 3,400 crores) DRG is expected to have sales of $ 160 million in 2012 Foundation of Piramal s entry into the $ 5.7 billion healthcare information management Business DRG to continue to operate on stand-alone basis with existing management Transaction to be completed by end of Q1FY2013, bridge financing for 18 months for the full amount (finance cost - 5.5%) To be funded by mix of debt and equity in ratio of 1:1 eventually 23

24 Information Management Industry - Overview Business Description Collect data, generally on a vertical-specific basis Organize data into useful information Sell to consumers in industries where information arbitrage is important and decision risks are high Major Players Forrester Research Gartner Group IHS Reed Elsevier Thomson Reuters Wolters Kluwer Low Beta, Highly-Attractive Cash Flows Key attributes Growth rates in excess of GDP (the information economy ) Market Leaders grow at the expense of others Customers are more sensitive to quality and reputation than price Market Comps Trading multiples for publicly listed companies in this space are 3x 5x revenues and 10x 18x EBITDA 24

25 Strong relationships, sticky revenues and high barriers to entry Stable Revenue base Recurring subscription based revenue tied to recurring budgeting cycles DRG data gets embedded into client work flow Proprietary and longitudinal data sets, integrated web-delivered High value offering products High value of insights; the risk far outweighs the price Reputation matters; customers cite and value the DRG brand Lower price sensitivity High barriers to entry High operating leverage Secondary research is small portion of overall R&D spend (2-3% of total) Quality, accessibility and frequency of data and sources is more important than price 290 analysts, with deep industry knowledge and relationships Data collection process, as well as irreplaceable longitudinal data Network of 125,000 advisors and data providers Cost of acquiring and creating specialised products is largely fixed Significant operating leverage after break-even, most of new revenues can be expected to fall to bottom line 25

26 Summary DRG is an Exceptional Company and a Strong Fit for PEL Strong management team with proven ability to: Grow even during a recession and expand margins Identify, execute and integrate acquisitions Great customer loyalty 48 of 50 largest global Pharma clients 95% average customer renewal rate Attractive business model: Highly profitable, with expanding defensible margins Meaningful barriers to entry Low Beta business, with significant growth potential DRG to leverage Piramal s: Relationship with leading pharma and biotechs companies Deep domain knowledge and networks across India and other emerging markets Strong Balance Sheet and M&A track record 26

27 Special Investments 27

28 Special Investments PEL to invest surplus funds in investments that give: o o o o o o minority equity stake global companies in India high growth sectors short to medium term Minimal risk ROE: 17-20% p.a. PEL has increased it s stake in Vodafone Essar to ~11% with the total investment of $ 1.2 billion The partnership underscores trust placed by global companies in Piramal values, ethics, corporate governance and good reputation 28

29 Thank you For further details contact: Sagar Gokani Prasad Mhatre 29

30 Back-up slides 30

31 Business Mix Consolidated Q1 FY2013 No. Net Sales break-up % Sales Rs. Crores Quarter I ended 30-Jun Jun-11 % Gr 1 Pharma Solutions 51.5% % From Assets in India 31.9% % From Assets Outside India 19.5% % 2 Piramal Critical Care 19.7% % 3 OTC & Ophthalmology 9.6% % 4 DRG 7.7% Financial Services 5.7% Investment Income 4.3% % 7 Others 1.6% % Total 100.0% % Notes: 1. DRG revenues are consolidated from 07 th June 2012 onwards 2. Investment income for Q1FY13 is lower due to investment of ~Rs. 5,862 crores for buying ~11% stake in Vodafone India 3. Financial Services revenue includes revenue from NBFC and IndiaReit Fund 4. Revenue in Pharma Solutions and PCC was positively impacted by favourable currency movement 31

32 Profit & Loss Account Consolidated - Q1 FY2013 Notes: Rs. Crores Period ended - Consolidated Q1 Ended 30-Jun Jun-11 % Gr Total operating income % New drug R&D expenses Other operating expenses % OPBIDTA OPM % 10.5% 15.3% - EBIDTA Non operating other income % Exceptional expenses Interest % Depreciation % Profit before tax Income tax Profit after tax EPS (Rs.) EBITDA for Q1FY13 is lower as compared to Q1FY12 due to lower investment income (lower by Rs. 39 crs) and higher NCE R&D spent 2. Non-operating other income is mainly FX gain arising out of restatement of receivables from sales of healthcare solutions business 32

33 Consolidated Balance Sheet Q1 FY2013 Rs. Crores Period ended- Consolidated As at As at 30-Jun Jun-11 Equity capital Reserves & Surplus 11, ,866.9 Networth 11, ,900.3 Minority interest Deferred tax liability Loan funds 5, Total 17, ,944.1 Net fixed assets 5, ,605.6 Investments 6, ,666.3 Deferred tax assets Net current assets 4, ,672.2 Inventories Sundry debtors Other current assets 5, ,029.3 Current liabilities & provisions 2, ,096.0 Total 17, ,

34 Balance Sheet Ratios Q1 FY2013 Rs. Crores No. Period ended- Consolidated As at As at 30-Jun Jun-11 1 Debt/equity ratio Networth 11, ,900.3 Total debt 5, Book value (Rs./share) Net Sales/Net fixed assets ratio* Current assets ratios+ i Inventories ii Receivables Note: * Sales of DRG has been annualized to calculate Net sales to Net fixed asset ratio + Inventories and Receivables days are calculated only for Pharma businesses 34