Cadila Health - Update on FDA Warning - MOS - 31Dec2015

31 December 2015

Update | Sector: Healthcare

Cadila Health

Kumar Saurabh ([email protected]); +91 22 3982 5584 Amey Chalke ([email protected]); +91 22 39825423

BSE SENSEX S&P CNX CMP: INR328 TP: INR380 (+16%) Buy 26,118 7,946

Bloomberg CDH IN Equity Shares (m) 1,023.7

M.Cap. (INR b) / (USD b) 335.8/5.1 52-Week Range (INR) 454/285 1, 6, 12 Rel.Per (%) -18/-4/8

Avg Val (INR m) 284 Free float (%) 25.2

Financials & Valuation (INR billion) Y/E MAR 2016E 2017E 2018E

Sales 97.6 111.5 133.2 EBITDA 22.4 23.4 32.0 Net Profit 15.5 14.9 21.5

Adj.EPS (INR) 15.1 14.5 21.0 EPS Gr. (%) 29.4 -3.7 44.5 BV/Sh. (INR) 52.6 62.8 79.5

RoE (%) 31.2 25.2 29.5 RoCE (%) 29.7 26.7 33.2 Payout (%) 23.9 29.0 20.2

Valuations P/E (x) 21.7 22.6 15.6 P/BV (x) 6.2 5.2 4.1

EV/EBITDA(x) 15.4 14.6 10.3 Div. Yield (%) 0.9 1.1 1.1

Moraiya facility receives warning letter; earnings to be hit Early resolution is critical, given that Moraiya remains one of the key facilities for CDH

with 60% of US sales. Even though corrective plans were in place, warning letter means additional efforts are

needed for plant to become USFDA compliant. Apart from Moraiya facility, CDH has also received warning letter for Ahmedabad-based

API facility. However, it currently does not supply any product from this plant and has withdrawn all DMF filings.

Delay in key product approvals due to warning letters is likely to result in ~23% cut in FY17 EPS and 18% cut in FY18 EPS.

Slowdown in product approvals to continue The management stated that warning letter includes two main observations: 1) Product-specific batch failure, 2) SOP-related issue. USFDA had inspected Moraiya facility in September 2014 and noted four key 483 observations. Since then, CDH has not received any approval for Moraiya plant products. Though no new approvals are expected for products from Moraiya facility in FY17, management expects ~15 ANDA approvals over the next 15-18 months (v/s the earlier expectation of ~25-30 ANDA approvals)—primarily from other USFDA approved facilities.

Moraiya the largest USFDA-approved facility for Cadila Apart from Nesher and JVs, Cadila has three USFDA-approved formulation facilities— Moraiya, SEZ and Baddi. Moraiya facility remains the biggest and contributes more than 60% of US sales. Of the total 159 pending ANDAs, 74 are from this facility, reflecting huge dependence on one facility. The Baddi-based facility was approved recently (May-15) by USFDA and production is expected to ramp up going ahead. USFDA also approved the SEZ facility in 2QFY16 and product approvals are expected to start coming through from this facility in coming quarters.

Site transfer plan in place; to transfer four key products Management highlighted that it has already site transferred nine products from marketed portfolio and is likely to file for four more products in 1HCY16, including Asacol HD and Prevacid ODT. Given that Asacol HD’s AG version would be launched in July 16, probability of FTF launch of this drug is low in our view. Having said that, transdermal patches that are expected to get approvals over next two years would not be transferred to any other facility.

Delay in key US launches to impact earnings We have cut our FY17/18 EPS by 23%/8%, as we believe Moraiya resolution will take another 12 months. Deferral of key launches to 2HCY16 and incremental hit on margins would lead to earnings cut over the next two years. Having said that, site transfers and launches from other facilities in the US and steady growth in Indian-branded business would drive growth in near term. We maintain Buy on CDH but with lower TP of INR380 @ 18x FY18E P/E (v/s INR505 @ 22x 1H FY17E P/E earlier).

Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Estimate change

TP change

Rating change

31 December 2015 2

Cadila Health

Key takeaways from the conference call Warning letters: The company’s facilities in Moraiya and Ahmedabad were

inspected in September 2015 and February 2015, respectively. The inspection culminated into several 483 observations for these facilities. However, as the CDH’s response to these 483 observations was found unsatisfactory, the USFDA issued warning letters to both the facilities.

483 observations: Warning letter highlighted two points for Moraiya facility: 1) Repeated product-specific batch failure (Warfarin supplies were discontinued due to this failure) and 2) SOP-related issues. The Ahmedabad plant witnessed GMP violations; the company has withdrawn all DMFs from the facility and is no longer supplying to the US market.

Priorities post the warning letters: 1) Remediation of both facilities and 2) filing for site transfer of key future products.

Asacol HD: CDH is in the process of filing for site transfer of this product. The company has option to launch Asacol HD AG in market in July 2016. However, in such circumstances, it will lose its right to launch generic Asacol HD under exclusivity. The Management highlighted that generic opportunity could be extended beyond the exclusivity period due to lack of filings. As a result, CDH may choose to file for site transfer rather than launching AG in the market.

Site transfer: CDH has currently transferred nine products from Moraiya facility to Ahmedabad-based SEZ facility from the existing product portfolio. The company is also expected to site transfer four more products from future pipeline, including Asacol HD and Prevacid ODT. CDH also clarified that it might not site transfer transdermal patches that were expected to receive approval over the next two years and wait for Moraiya facility to get FDA clearance.

Revenue exposure: The Moraiya facility currently supplies 60% of the total US sales. In terms of pending product approvals, CDH has filed 74 products from Moraiya facility—which includes 40% of total oral solid filings.

Other inspections: Four other key facilities (Dabasa API, Ankleshwar API, Baddi Formulations and SEZ formulations) were also inspected in 2014/2015 and have not received critical observations from USFDA. The SEZ facility has already received EIR from USFDA and is expected to get product approvals very soon.

Filing and launch timelines delayed: The company indicated that ANDAs filing and launches will be delayed until the issue is resolved. However, the company could continue its filing from other facilities.

31 December 2015 3

Cadila Health

Exhibit 1: Past US FDA enforcement action on Indian companies

Company FDA Action Unit Nature of facility

Date of action

Date of resolution

Resolution in (months)

Cadila Warning Letter Ahmedabad API 31-Dec-2015 x NA

Cadila Warning Letter Moraiya Formulations 31-Dec-2015 x NA

Sun pharma Warning Letter Halol Formulations 19-Dec-2015 X NA

Dr. Reddy's Warning Letter Srikakulam, AP API 6-Nov-15 x NA

Dr. Reddy's Warning Letter Miryalaguda, TL API 6-Nov-15 x NA

Dr. Reddy's Warning Letter Visakhapatnam, AP Formulations 6-Nov-15 x NA

IPCA Labs Import Alert Silvassa, Gujrat Formulations 25-Mar-15 x NA

IPCA Labs Import Alert Pithampur, MP Formulations 25-Mar-15 x NA

Sun Pharma Import Alert Karkhadi, Gujarat API 13-Mar-14 x NA

IPCA Labs Import Alert Ratlam, MP API 23-Jan-15 x NA

Ranbaxy Ban Taonsa API 24-Jan-14 x NA

Ranbaxy Import Alert Mohali Formulations 13-Sep-13 x NA Strides Arcolab Warning Letter Bangalore Injectable formulations 11-Sep-13 x NA

Wockhardt Import Alert Waluj, India Formulations 24-May-13 x NA Jubilant Life Sciences Warning Letter Canada Formulations 27-Feb-13 x NA

Dr. Reddy's Import Alert Mexico API 6-Jul-11 27-Jul-12 12.9

Cadila Warning Letter Moraiya Formulations 6-Jun-11 17-Jul-12 13.6

Aurobindo Warning Letter Unit III Formulations 23-May-11 4-Jun-12 12.6

Aurobindo Import Alert Unit VI Formulations 27-Feb-11 28-Mar-13 25.3

Sun Pharma Warning Letter Able Labs 31-Aug-10 19-Sep-11 12.8

Ranbaxy Warning Letter Ohm Labs Formulations 24-Dec-09 x NA

Sun Pharma Product Seizure Michigan, Caraco Formulations 26-Jun-09 28-Aug-12 38.6

Lupin Warning Letter Mandideep Formulations 14-May-09 20-Jan-10 8.4

Cipla Form '483 Bangalore API 20-Apr-09 31-Aug-09 4.4

Ranbaxy AIP Paonta Sahib Formulations 26-Feb-09 x NA Taro Pharma Warning Letter Brampton,

Canada Formulations 5-Feb-09 25-Apr-11 27.0

Ranbaxy Warning Letter Batamandi API 17-Sep-08 x NA

Ranbaxy Import Alert Dewas Formulations 17-Sep-08 x NA

Source: Company, MOSL

31 December 2015 4

Cadila Health

Story in charts

Exhibit 2: Sales trend


Exhibit 3: India business to grow at 12% CAGR


Exhibit 4: US business to bounce back in FY18E


Exhibit 5: Brazil business to recover from regulatory issues


Exhibit 6: Margins to be impacted in FY17E


Exhibit 7: Earnings to recover in FY18E (post FDA resolution)


28 33 39 48 57 71 79 106 126 3 3 3 3 3

4 4

5 5

FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Formulations (INR b) API (INR b)

14 16 19 23 25 27 30 34 38

12.2 12.1

16.9 22.6

6.1 8.6

12.5 12.0 12.0


DF Revenues (INR b) YoY Growth (%)

142 212 261

277

357 560

593 652

802

63

50

23

6

29

57

6 10

23


US Revenues (USD m) Growth (%)

2 2 2 2 2 2 2 3 3

12

24

10

-4 -1 0 -4

17 17


Brazil Revenues (INR b) YoY Growth (%)

8 10 11 11 12 18

22 23 32

21.9 22.2 20.6 17.7 16.6

20.6 22.9

21.0 24.1


EBITDA (INR b) EBITDA Margin

5 6 6 6 8 12 15 15 21 2 1 1 0

0

0

FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16E FY 17E FY 18E

Core EPS (INR/ share) One Off

31 December 2015 5

Cadila Health

Exhibit 8: Rich ANDA pipeline


Exhibit 9: R&D expense to remain elevated


Exhibit 10: Return ratios to be impacted in FY17E


Exhibit 11: Steady asset turnover ratio


92 106 131 148

176 227

270

47 52 66 81 100 139

159

FY09 FY10 FY11 FY12 FY13 FY14 YTD

ANDA filed ANDA pending

2 2 3 4 4 6 7 8 10

5 4 6 6

5 6

7 8 8


R&D expense (INR b) % of sales

35.8 37.4

27.5 23.7 25.2

30.8 31.2 25.2

29.5

26.7 30.4

22.9 17.9 18.6

24.9 29.7

26.7 33.2


RoE (%) RoCE (%)

16 18 25 29 32 37 46 54 61

2.3 2.5

2.1 2.2 2.3 2.3 2.1 2.0 2.2


Gross Block (INR b) Fixed Asset turnover

31 December 2015 6

Cadila Health

Financials and valuations

Income Statement (INR Million) Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E Net Sales 46,306 52,633 63,579 72,241 86,514 97,596 111,496 133,153 Change (%) 25.6 13.7 20.8 13.6 19.8 12.8 14.2 19.4 Total Expenditure 36,044 41,795 52,327 60,239 68,672 75,232 88,082 101,130

% of Sales 77.8 79.4 82.3 83.4 79.4 77.1 79.0 76.0 EBITDA 10,262 10,838 11,252 12,001 17,841 22,364 23,414 32,023 Margin (%) 22.2 20.6 17.7 16.6 20.6 22.9 21.0 24.1 Depreciation 1,269 1,579 1,847 2,012 2,873 2,962 3,324 3,590 EBIT 8,993 9,259 9,405 9,989 14,969 19,401 20,090 28,433 Int. and Finance Charges 699 1,211 1,262 1,181 613 452 412 367 Other Income - Rec. 131 -107 -55 786 554 1,719 1,267 1,985 PBT before EO Expense 8,425 7,941 8,088 9,594 14,910 20,668 20,945 30,052 EO Expense/(Income) 0 0 0 172 83 -429 0 0 PBT after EO Expense 8,425 7,941 8,088 9,423 14,827 21,097 20,945 30,052 Current Tax 1,064 1,130 1,188 1,060 2,594 5,676 5,655 8,114 Deferred Tax 0 0 0 0 0 0 0 0 Tax 1,064 1,130 1,188 1,060 2,594 5,676 5,655 8,114 Tax Rate (%) 12.6 14.2 14.7 11.2 17.5 26.9 27.0 27.0 Reported PAT 7,361 6,811 6,900 8,363 12,233 15,421 15,290 21,938 Less: Minority Interest 251 286 364 326 377 395 415 436 Net Profit 7,110 6,525 6,536 8,037 11,856 15,025 14,875 21,502 PAT Adj for EO Items 6,333 5,660 6,536 8,208 11,939 15,454 14,875 21,502 Change (%) 24.6 -10.6 15.5 25.6 45.5 29.4 -3.7 44.5 Margin (%) 13.7 10.8 10.3 11.4 13.8 15.8 13.3 16.1

Balance Sheet (INR Million) Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E Equity Share Capital 1,024 1,024 1,024 1,024 1,024 1,024 1,024 1,024 Total Reserves 20,691 24,712 28,421 33,366 41,492 52,827 63,274 80,348 Net Worth 21,715 25,736 29,445 34,390 42,516 53,851 64,298 81,372 Minority Interest 669 904 1193 1443 1689 2084 2500 2935 Deferred liabilities 1127 1185 1005 961 586 586 586 586 Total Loans 11,034 21,307 27,946 23,955 23,760 22,260 19,760 17,760 Capital Employed 34,545 49,132 59,589 60,748 68,551 78,782 87,144 102,654

Gross Block 24,004 35,612 38,726 41,380 46,259 55,749 63,493 70,366 Less: Accum. Deprn. 5,331 6,786 8,470 10,142 12,737 15,497 18,783 22,373 Net Fixed Assets 18,673 28,826 30,256 31,238 33,522 40,251 44,711 47,993 Capital WIP 3,963 4,492 7,356 8,915 7,979 4,490 2,745 1,872 Investments 207 242 1,145 866 1,544 1,544 1,544 1,544

Curr. Assets 23,263 30,232 34,965 38,845 47,426 58,543 64,179 80,034 Inventory 8,119 10,905 12,136 13,675 15,357 17,951 20,801 23,571 Account Receivables 7,652 8,863 9,551 11,337 15,884 17,860 20,404 24,367 Cash and Bank Balance 2,952 4,666 5,838 5,488 6,699 13,006 12,982 21,813 Loans & Advances 4,540 5,798 7,440 8,345 9,486 9,727 9,992 10,283 Curr. Liability & Prov. 11,561 14,660 14,133 19,116 21,920 26,046 26,035 28,790 Account Payables 9,379 12,379 11,660 16,189 17,191 19,540 18,680 20,808 Provisions 2,182 2,281 2,473 2,927 4,729 6,506 7,354 7,983 Net Current Assets 11,702 15,572 20,832 19,730 25,506 32,497 38,144 51,244 Appl. of Funds 34,545 49,132 59,589 60,749 68,551 78,781 87,143 102,653 E: MOSL Estimates

31 December 2015 7

Cadila Health

Financials and valuations

Ratios Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E Basic (INR)

EPS 6.2 5.5 6.4 8.0 11.7 15.1 14.5 21.0 Cash EPS 8.2 7.9 8.2 9.8 14.4 17.6 17.8 24.5 BV/Share 21.2 25.1 28.8 33.6 41.5 52.6 62.8 79.5 DPS 1.3 1.5 1.5 1.8 2.4 3.0 3.6 3.6 Payout (%) 20.8 27.1 30.5 27.1 24.1 23.9 29.0 20.2

Valuation (x)

P/E 52.5 58.8 40.5 27.9 21.5 22.4 15.5 Cash P/E 39.7 41.1 33.1 22.6 18.5 18.3 13.3 P/BV 15.3 12.9 9.7 7.8 6.2 5.2 4.1 EV/Sales 7.4 6.6 4.8 4.0 3.5 3.0 2.5 EV/EBITDA 33.2 32.2 29.2 19.5 15.2 14.4 10.2 Dividend Yield (%) 0.4 0.5 0.6 0.7 0.9 1.1 1.1

Return Ratios (%)

RoE 37.4 27.5 23.7 25.2 30.8 31.2 25.2 29.5 RoCE 30.4 22.9 17.9 18.6 24.9 29.7 26.7 33.2

Working Capital Ratios

Asset Turnover (x) 1.3 1.1 1.1 1.2 1.3 1.2 1.3 1.3 Fixed Asset Turnover (x) 2.6 2.2 2.2 2.3 2.7 2.6 2.6 2.9 Debtor (Days) 60 60 54 56 66 66 66 66 Inventory (Days) 64 76 70 69 65 67 68 65 Working Capital T/O (Days) 69 76 86 72 79 73 82 81

Leverage Ratio (x)

Debt/Equity 0.4 0.9 1.0 0.7 0.6 0.4 0.3 0.2 E: MOSL Estimates

Cash Flow Statement (INR Million) Y/E March 2011 2012 2013 2014 2015 2016E 2017E 2018E Oper. Profit/(Loss) bef.Tax 10,262 10,838 11,252 12,001 17,841 22,364 23,414 32,023 Interest/Dividends Recd. 131 -107 -55 786 554 1,719 1,267 1,985 Direct Taxes Paid -1,064 -1,130 -1,188 -1,060 -2,594 -5,676 -5,655 -8,114 (Inc)/Dec in WC -2,067 -2,156 -4,088 752 -4,566 -684 -5,670 -4,269 CF from Operations 7,262 7,445 5,921 12,480 11,235 17,722 13,355 21,625 EO Expense / (Income) 0 0 0 172 84 -429 0 0 CF from Operating incl EO Exp. 7,262 7,445 5,921 12,308 11,151 18,151 13,355 21,625

(inc)/dec in FA -4,579 -12,261 -6,141 -4,553 -4,221 -6,202 -6,039 -6,000 Free Cash Flow 2,683 -4,816 -220 7,755 6,931 11,949 7,317 15,625 (Pur)/Sale of Investments 0 -35 -903 279 -678 0 0 0 CF from Investments -4,579 -12,296 -7,044 -4,274 -4,899 -6,202 -6,039 -6,000

Change in Networth -401 -945 -1,086 -1,152 -1,154 -395 -415 -436 Inc/(Dec) in Debt 406 10,508 6,928 -3,741 52 -1,105 -2,085 -1,564 Interest Paid -699 -1,211 -1,262 -1,181 -613 -452 -412 -367 Dividend Paid -1,530 -1,845 -2,105 -2,266 -2,952 -3,690 -4,428 -4,428 Others -132 58 -180 -44 -374 0 0 0 CF from Fin. Activity -2,356 6,565 2,294 -8,384 -5,041 -5,642 -7,340 -6,795

Inc/Dec of Cash 326 1,714 1,172 -350 1,211 6,307 -23 8,831 Add: Beginning Balance 2,507 2,952 4,666 5,838 5,488 6,699 13,006 12,982 Closing Balance 2,833 4,666 5,838 5,488 6,699 13,006 12,983 21,813 E: MOSL Estimates

31 December 2015 8

Cadila Health

Corporate profile: Cadila Healthcare

Exhibit 13: Shareholding pattern (%) Sep-15 Jun-15 Sep-14

Promoter 74.8 74.8 74.8

DII 8.4 8.0 8.1

FII 6.7 7.0 6.4

Others 10.1 10.2 10.7

Note: FII Includes depository receipts

Exhibit 14: Top holders Holder Name % Holding

Life Insurance Corporation of India Ltd 3.0 Government Pension Fund Global 1.1

Exhibit 15: Top management Name Designation

Pankaj R Patel Chairman & Managing Director

Sharvil P Patel Deputy Managing Director

Exhibit 16: Directors Name Name

Pankaj R Patel Mukesh M Patel*

Sharvil P Patel Nitin Raojibhai Desai*

H Dhanrajgir* Dharmishta N Rawal*

*Independent

Exhibit 17: Auditors

Name Type

Mukesh M Shah & Co Statutory Dalwadi & Associates Cost Auditor

Exhibit 18: MOSL forecast v/s consensus EPS

(INR) MOSL

forecast Consensus

forecast Variation

(%) FY16 15.1 14.9 1.3 FY17 14.5 18.4 -21.2 FY18 21.0 22.6 -7.2

Company description Cadila is one of the largest domestic pharma companies in India with a strong focus on the global generics opportunity. The company is gradually building its presence in the regulated generic markets beginning with the US and France. It also plans to tap some unique opportunities through its JVs with Takeda, Hospira, Bayer and Bharat Serums.

Exhibit 12: Sensex rebased

31 December 2015 9

Cadila Health

N O T E S

31 December 2015 10

Cadila Health

Disclosures This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.

MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on the profitability of MOSt which may include earnings from investment banking and other business.

MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents.

Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report

MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.

Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412

There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities

Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues

Disclosure of Interest Statement Cadila Health Analyst ownership of the stock No Served as an officer, director or employee No

A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes

Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Kadambari Balachandran Email : [email protected] Contact : (+65) 68189233 / 65249115 Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931

Motilal Oswal Securities Ltd

Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025 Phone: +91 22 3982 5500 E-mail: [email protected]

Cadila Health - Update on FDA Warning - MOS - 31Dec2015

Documents

Transcript of Cadila Health - Update on FDA Warning - MOS - 31Dec2015