Lupin Pharma Annual Report,

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There is only one reason why we exist;to treat disease, to heal and enrichhuman life. The bottomline, then, isjust one.Happiness.Dr. Desh Bandhu Gupta, Founder & Chairman, Lupin Limited


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2 | Lupin Limited

H A P P I N E S ST H E B O T T O M L I N E I S


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Annual Report 2013 | 3

CHAIRMANS MESSAGE

My Dear Shareowners, As a young entrepreneur, I was always driven by ideas that would help improvepeoples lives, which is what led me to set up Lupin in 1968. Lupin embodies myvision to fight life-threatening diseases by manufacturing drugs of the highestsocial priority and quality medicines at affordable prices. It personifies the deepinter-connect between what we do and what society needs.

I am proud to say that today Lupin develops and manufactures drugs with theobjective to treat disease, to heal and enrich human life. The better we do this, thebetter we are able to serve the community, the happier we are able to make people.

As a result, happiness is not a business by-product, it is the critical bottomline ofall that we have ever done and will continue to do at Lupin.

This overarching bottomline is the sum of all that every Lupinytt works towardsat every level, function and location of our business, globally.

Some would measure our success by our leadership credentials, growthin revenues, profits, market shares, customer service records and marketcapitalisation. We, at Lupin, measure it by looking at how many new products andtechnology platforms we develop, how many lives we touch, how we make qualitymedicines more accessible and affordable to the common man globally. This is ourindex of success and happiness.

My vision for Lupin, from ` 5000 to USD 5 billion in 50 years, is but thebeginning for a bigger more pertinent goal, a happier tomorrow.

Best Wishes,

Dr. Desh Bandhu GuptaFounder and ChairmanLupin Limited


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4 | Lupin Limited

C O R P O R AT E I N F O R M AT I O N

DIRECTORSDr. Desh Bandhu Gupta, Chairman

Dr. Kamal K. Sharma, Managing Director

Mrs. M. D. Gupta, Executive Director

Ms. Vinita Gupta

Mr. Nilesh Gupta, Executive Director

Dr. Vijay Kelkar

Mr. Richard Zahn

Mr. R. A. Shah

Dr. K. U. Mada

Mr. Dileep C. Choksi, Additional Director(w.e.f. October 23, 2012)

Mr. D. K. Contractor(up to October 23, 2012)

COMPANY SECRETARY & COMPLIANCEOFFICERMr. R. V. Satam

AUDITORSDeloitte Haskins & SellsChartered Accountants

AUDIT COMMITTEEDr. K. U. Mada , ChairmanDr. Kamal K. Sharma Mr. Dileep C. Choksi(w.e.f. October 23, 2012)Mr. D. K. Contractor(up to October 23, 2012)

INVESTORS GRIEVANCES COMMITTEEDr. Vijay Kelkar , Chairman(w.e.f. October 23, 2012)Dr. K. U. Mada Mr. D. K. Contractor(up to October 23, 2012)

REMUNERATION COMMITTEEDr. K. U. Mada , ChairmanMr. R. A. Shah

BANKERSCentral Bank of IndiaBank of BarodaState Bank of IndiaCitibank N.A.The Hongkong and Shanghai BankingCorporation LimitedStandard Chartered Bank ICICI Bank LimitedKotak Mahindra Bank LimitedJP Morgan Chase Bank, N.A.

SENIOR MANAGEMENT TEAMDr. Desh Bandhu GuptaChairman

Dr. Kamal K. SharmaManaging Director

Ms. Vinita GuptaGroup President & CEO - LupinPharmaceuticals Inc., USA

Mr. Nilesh GuptaGroup President & Executive Director

Mr. Shakti ChakrabortyGroup President -India Region Formulations & CIS

Mr. Vinod DhawanGroup President -

AAMLA & Business Development

Dr. Rajender KambojPresident - Novel Drug Discovery &Development

Mr. Ramesh SwaminathanPresident - Finance & Planning

Mr. Naresh GuptaPresident - API & Global TB

Mr. Divakar KazaPresident - Human Resources

Mr. Alok GhoshPresident - Technical Operations

Dr. Cyrus KarkariaPresident - Biotechnology

Mr. Paul McGartyPresident - Lupin Pharmaceuticals Inc., USA

Dr. Sofia MumtazPresident - IPMG

Mr. Sunil MakhariaExecutive Vice President - Finance

Mr. Debabrata ChakravortyExecutive Vice President - Supply Planning &

Strategic Sourcing

Dr. Dhananjay BakhleExecutive Vice President - Medical Research

Mr. Rajendra B. ChunodkarExecutive Vice President - Technical

Mr. R. S. RaghavExecutive Vice President - Marketing & Sales

Mr. Vilas S. SatputeExecutive Vice President -

API Manufacturing

Mr. Ganadish KamathExecutive Vice President -Corporate Quality Assurance

REGISTERED OFFICE159, C.S.T. Road, Kalina,Santacruz (East), Mumbai - 400 098.Tel:+ 91 22 6640 2323Fax:+ 91 22 2652 8806

CORPORATE OFFICELaxmi Towers, B Wing,Bandra Kurla Complex,Bandra (East),Mumbai - 400 051.Tel: + 91 22 6640 2222

Fax: + 91 22 6640 2130www.lupinworld.com

[email protected]

KEY CONTACTSShamsher GorawaraHead Corporate CommunicationsLupin LimitedTel: +91 98 20 338 555Email: [email protected]

Pradeep S. Bhagwat

General Manager - Investor Services,Lupin LimitedTel:+91-22-66402404Email: [email protected]

Rajvardhan V. SatamCompany Secretary, Lupin LimitedTel: +91-22- 66402445Email: [email protected]

Rajiv PillaiHead Investor RelationsLupin LimitedTel: +91 98 20 552 083Email: [email protected]


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B OA R D O F D I R E C T O R S

AWA R D S 2 0 1 2 - 1 3

Dr. Desh Bandhu Gupta, ChairmanDr. Kamal K. Sharma, Managing Director Mrs. M. D. Gupta, Executive Director Ms. Vinita Gupta Mr. Nilesh Gupta, Executive Director Dr. Vijay Kelkar

Mr. Richard Zahn

Mr. R. A. ShahDr. K. U. Mada Mr. Dileep C. Choksi, Additional Director (w.e.f. October 23, 2012)Mr. D. K. Contractor, (up to October 23, 2012)

The National Stock Exchange included Lupin in theStandard & Poors CNX NIFTY Index

The Economic Times 500 Indias 10 Most ResilientCompanies 2012

Great Place to Work Best Companies to Work for,2012, India

Forbes India, Business Leadership Awards, Top 5 CEOs Private Sector, 2012, Dr. Kamal K. Sharma

The Inaugural Ernst & Young Family Business Award2012, US, Ms. Vinita Gupta

Ernst & Young Entrepreneur of the Year 2012 Award winner in Maryland, Ms. Vinita Gupta

CNBC TV 18 Best Performing CFO in the Pharma &Health Care sector, Mr. Ramesh Swaminathan


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F I N A N C I A L H I G H L I G H T S

EBITDA margin(%)

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Business analysis Revenue and Profitability

Business mix(% contribution)

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API Formulation

Exports( ` million)

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Revenue composition(%)

10%

25%

56%

9%

Domestic formulations API

Advanced MarketsFormulationsEmerging MarketFormulations

Geographic break down(% contribution)

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Net sales( ` million)

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6 9

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CAGR25.7%

EBITDA( ` million)

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CAGR32.6%

Net profit( ` million)

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CAGR27.2%

Profit before tax( ` million)

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2 0 1 3

Dividend(%)

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Business critical investments Financial leverage

Shareholder value growth

Cumulative R&D spend( ` million)

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Cumulative Capex( ` million)

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8th

5th

3rd

7th

Largest generics player globallyby market capitalisation

Largest and fastest growinggenerics player in the US byprescription

Largest Indian Pharmaceuticalcompany

Largest generics player in Japan

Earning per share( ` )

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CAGR24.7%

Market capitalisation( ` million)

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CAGR49.2%

Debt equity ratio

F Y

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0 . 3

9

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T H E B O T T O M L I N E I SE X C E L L E N C E

Dr. Kamal K. SharmaManaging Director


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MANAGING DIRECTORS LETTER

It has been another strong year forus. A year, where we continued tomaintain and grow our leadershippositions in all markets of directoperations. A year of heightenedactivity where we launched newproducts, expanded our productpipelines and consolidated ouroperations globally. This has notonly helped us create one of the mostdifferentiated, quality businessesbut also arguably one of the bestand most exciting companies in thepharmaceutical industry globally.

Growth and Performance at Lupinis a never - ending quest forExcellence, engineered to delivervalue; value that has enabled 8 yearsof sustained growth and leadership. At Lupin, excellence is derived froma culture that is engineered towardscreating value across the entireorganisation eco-system throughperceptible differentiation. We havefocused on three distinct elements of

business for creating a differentiatedparadigm products, processesand people. Operational excellenceand incremental innovation arecommon threads that run across ourentire fabric and help us translateconceptual constructs into value -enhancing outcomes. An approach,that has not only made the Companyone of the most innovative from aresearch and technical operations

standpoint, but also an employerof choice. An Excellence ethic, thathas helped Lupin plug in some ofthe best growth numbers in thepharmaceutical world; a CAGR of27.3% in Gross Sales, 33.9% inEBITDA and 33.6% in Net Profitsfor the last 8 Years. Sustainedperformance, that has made theCompany the 8th largest genericspharmaceutical company globallyby market capitalisation andthe 3rd largest Indianpharmaceutical company.

Trends & PerformanceOver the last 5 years, the globalpharmaceutical environment hasbecome increasingly volatile andchallenging due to pressures createdby drying research pipelines which hasled to hyper-competition, the blurringof boundaries between erstwhileinnovator companies and genericplayers as they rush to compete ineach others spaces. Higher input

costs, the high cost of bringingproducts to the marketplace coupledwith gradual decline in realisationsis also affecting financial viability.Increased regulatory rigor, disciplinetherein and market diversity havealso led to increased complexity interms of business opportunities thatone chooses to address; the choice ofmarkets, the business and the productmix therein.

Gross sales ( ` million)

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, 1 4 2

Dear Shareholders,


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T H E B O T T O M L I N E I SL E A D E R S H I P

Vinita GuptaGroup President & CEO, Lupin Pharmaceuticals Inc.


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Lupins high growth performanceis a direct result of the Companysconsistent focus on the creation of ahigh-value pipeline and its successfulcommercialisation, backed up by aseamless manufacturing and supplychain operation.

The journey over the past 10 years hasbeen very exciting and rewarding. LPIstarted from scratch 10 years ago and isnow over USD 700 million in revenues. We have grown in scale, breadth anddepth. This past year, we focusedon building systems and processes,expanding our management bandwidthand most importantly maintaining ourentrepreneurial culture. We broughtimportant high quality, affordablemedicines to the market that fuelledthe growth of our business. With asignificant pipeline in hand, continuedinvestments to expand our technologycapabilities and aspiration to grow ourbusiness through organic efforts andacquisitions, we are just getting started.

US & Europe Formulation salescontributed 42% to the Companysoverall consolidated revenues for

FY 2013. Formulations sales for US& Europe grew by 47% to ` 40,051million during FY 2013 up from

` 27,278 million in FY 2012. For thefourth year running, Lupin remains the5th largest and fastest growing top 5generics player in the US (5.3% marketshare by prescriptions, IMS HealthDecember 2012). The Europeanbusiness grew by 19% during FY 2013.

United StatesHeadquartered in Baltimore, Maryland,the Companys US subsidiary, LupinPharmaceuticals, Inc. (LPI), isdedicated to delivering high-quality,

branded and generics medicinestrusted by healthcare professionalsand patients across the US. LPI hasbuilt strong relationships in the USRetail channel with a solid reputationas a reliable supplier of qualitygenerics. In addition, LPI continues todevelop and grow a meaningful brandfranchise amongst US Pediatriciansand Primary Care Physicians with a170 strong specialised field sales forcepromoting its entire product line.Strong commercialisation capabilities

Lupins achievements in US and Europe continue tofuel its rapid ascension to leadership position withinthe global pharmaceutical industry. These marketsremain the major contributors to the Companysglobal revenues and overall profitability.

US & EUROPE

5th

7th

47%

42%USD80

largest generics player in theUS (by prescriptions)

largest player by dispensedprescriptions in the US

formulation sales growth inthe US and Europe

US & Europe contribution toglobal revenues in FY 2013

billion value of marketopportunity being addressedby Lupins generics pipelinefor US


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14 | Lupin Limited

for the branded and the generics marketposition LPI to take full advantage ofemerging opportunities arising out ofthe Companys growth strategy builtaround high quality niche products,world-class research, intellectualproperty, robust manufacturing andnimble supply chain capabilities. TheCompanys US revenues grew by 54%to ` 36,830 million during FY 2013,up from ` 23,930 million in FY 2012.

The Brands business contributed 21%of total US sales whereas the Genericsbusiness contributed 79% duringFY 2013.

The Company aims to strengthen itsbranded portfolio with the launch ofadditional products developed and filedwith the US FDA from its own pipelineas well as through strategic brandacquisitions.

US Generics BusinessLPI remains the 5th largest genericplayer in the US (by prescriptions) andalso the fastest growing generic pharmaplayer in the Top 5 for the fourth yearrunning, growing at 6.3% (IMS Health,National Prescription Audit,December - 2012).

OutlookUS healthcare spending at 17% of aUSD 15 trillion GDP is the secondhighest in the world. US genericsaccount for 14% of total US spending,making it the worlds second largestgenerics market. Over the last decade,the US government implementeddefinitive steps to enhance healthcarespending effectiveness. Through thePatient Protection and Affordable Care

Act, the country intends to bring 30million more Americans under healthinsurance through the increased use ofgenerics. The result is that US genericsspending is expected to nearly doubleby 2016 (to more than USD 80 billionfrom ~USD 46 billion currently) asper IMS estimates.

Over the last few years, LPI has builtone of the best generic products pipeline

for the US market addressing a marketopportunity valued at over USD 80billion. Cumulative ANDA filings withthe US FDA stood at 176 with thecompany having received 78 approvalsas of 31st March, 2013. This is in spiteof the fact that the Company withdrew16 ANDAs during the year after re-evaluating their business potential.

Dispensed prescriptions - US Industry - Unbranded Generics, MAT December 2012

MAT September 2012 MAT December 2012Leading corporations Rank % Market share TRx mn % Market share % Growth

US industry 100% 3,137 100.0 7.21. Teva 1 15.6 498 15.9 2.02. Mylan Labs,Inc. 2 11.9 365 11.6 0.8

3. Actavis U.S (Watson) 3 7.4 290 9.3 3.44. Sandoz (Novartis) 4 6.3 187 6.0 -17.15. Lupin 5 5.3 165 5.3 9.3

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3 7

, 6 1 6

Formulation sales in the US( ` million)

CAGR33.4%

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US Generics Revenue(USD million)

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LPI is best characterised by its abilityto achieve leading market share inalmost all of the products it haslaunched. 24 out of the 46 generic

products marketed by the Company inthe US rank No. 1 by market share andas many as 37 of these 46 are in theTop 3 by market share (IMS Health March 2013). We have focusedon increasing our market shares byexecuting well, by making sure that

we are constantly engaged with ourtrade partners and customers andcontinuously strengthening our supplychain by creating efficiencies thatensure a cutting-edge response time.

During the year, the Company filed21 ANDAs for the US market andreceived approval for 14 ANDAs fromthe US FDA. The Company has apipeline of 116 products (includingproducts approved but not launched)that address a market opportunity ofclose to USD 80 billion. Of these, 29 ANDAs are first-to-file opportunitiesaddressing a market size of close toUSD 15 billion. The Company has 12exclusive first-to-file opportunitiesaddressing a market opportunity valuedat around USD 2 billion.

The US Generics business in FY 2013can be best summarised as a year of

milestones. The Company surpassedUSD 500 million in revenues fromits Generics business for the firsttime, clocking in growth of 70%.New launches contributed 42% of theUS generics revenues. Key launchesincluded products like Ziprasidone

21%

24

42%

revenue contribution ofthe US Branded businessin FY 2013

Lupins products ranked No. 1by market share in the US(out of a basket of 46)

revenues from new productlaunches in FY 2013

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ANDA pipeline

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* Company withdrew 16 ANDAs during the year afterre-evaluating their business potential

Goa


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16 | Lupin Limited

and the generic for Tricor. Wemade further inroads into the OralContraceptives (OC) segment in theUS by launching 4 OC products,having received approvals for 7 OCfrom the US FDA. The Companysuccessfully litigated against Shionogiand re-launched its generic Fortamet in the US market.

US Branded BusinessLPI maintains a balanced approach tothe US market by participating in boththe Brand and the Generic market. InFY 2013, LPI continued to expand theSuprax franchise with the launch ofSuprax chewable tablets. Additionalline extensions of a more concentratedsuspension form and a capsule formhave been approved and planned forlaunch in FY 2014.

During the year, the Company put inplace a unique set of strategies witha focus on maintaining market sharefor its brand Antara (FenofibrateCapsules 43mg and 130mg) as one

of its competitors prepared to launcha generic variant of the product inFebruary, 2013. Leveraging LPIscapabilities, the Company has beenable to maintain a significant shareof the market with its brand andauthorised generic products.

LPIs strategy is to prudently investin its specialty sales force targetingPediatricians and select high-prescribing Primary Care Physicians.The Company aims to strengthen itsbranded portfolio with the launch ofadditional products developed andfiled with the US FDA from its ownpipeline as well as through strategicbrand acquisitions.

EuropeThe EU finished dosage businessrecorded Net Sales of ` 2,356 millionduring FY 2013 as against ` 1,975million in the previous year, a growthof 19.3%. The Company continues tofocus on building its product offeringsin the EU market and forging deeper

MAT September 2012 MAT December 2012

Leading corporations Rank % Market share TRx mn % Market share % GrowthUS Industry 100% 4,074 100.0 1.2

1. Teva 1 13.6 564 13.9 1.6

2. Mylan Labs,Inc. 2 9.0 369 9.1 0.9

3. Actavis U.S (Watson) 3 6.2 322 7.9 1.9

4. Novartis (Inc Sandoz) 4 6.1 252 6.2 -15.2

5. Endo Pharma Inc 5 4.1 172 4.2 5.7

6. Pflzer (Inc Greenstone) 6 4.5 170 4.2 -23.5

7. Lupin 7 4.0 166 4.1 6.3

Dispensed TRx US Industry - Total Industry, MAT December 2012 -Source: IMS Health, National Prescription Audit, December 2012


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T H E B O T T O M L I N E I SPA S S I O N

Shakti ChakrabortyGroup President India Region Formulations & CIS


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Lupin brings to the Indian PharmaceuticalMarket (IPM) a distinctive differentiator our Passion. At Lupin, this passionhas been reflected in our ability tocounter industry challenges with a go-

getting spirit; the ability to challenge aregulated, hyper-competitive fragmentedmarket environment by providing ourcustomers and the common man with anever-widening product choice of quality,affordable medicines.

The Drug Price Control Order and theevolving regulatory framework continueto pose challenges. The market continuesto become more fragmented, regionallydiverse and localised. Over the years, Lupinhas countered these challenges in theIndian Pharmaceutical Market by

Continuing to create new markets innew therapy areas as opposed to havinga singular focus on just growing marketshares in existing market spaces

A singular focus on recalibrating ourproduct mix by adding new products;moving from acute to chronic therapysegments

Focusing on offering new innovativeproducts

In-licensing products and entering intostrategic alliances with leading globalplayers with the objective to widen ourproduct basket and address unmet needs

Consistently focusing on creating and

developing a specialty product marketingand sales force comprising of talented andexperienced professionals to cater to thecomplex needs of niche market spaces;reinforced by structured training inputs

Leveraging reach and scale; the Companyhas combined the benefits of scale (itsnationwide presence) with a short mind-to-market cycle that makes it possible toaddress local opportunities with speed andeffectiveness

The passion which we have nurtured andgrown, is reflected in the fact that theCompanys India formulations businessgrew by 23%, clocking in revenues of

` 23,840 million during FY 2013, ascompared to ` 19,374 million in FY 2012.The business has grown at a CAGR of20.2% over the last five years.

The Companys product and therapy

segment mix for the IPM coupled witheffective marketing has resulted in Lupinemerging as not only a market leader

We are proud to be an Indian company and India is amarket of strategic focus. It remains Lupins 2nd largestbusiness by revenues, a market which is at the very heartof the Companys growth plans.

INDIA

2.8%

5,200

23%

25%

8

37

Lupins overall market share

specialty field force in theIndian Pharmaceutical market

business growth overFY 2012

contribution to consolidatedrevenues in FY 2013

products which were first to beintroduced in India in the lastfour years

products in-licensed in the lastfour years

of the IPM (as per IMS TSAMAT, March, 2013)


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20 | Lupin Limited

but more importantly, one of thefastest growing players in high growththerapies like Cardiology, CentralNervous System (CNS), Diabetology, Anti-Asthma, Gynaecology, Anti-Infective, Gastro Intestinaland Oncology.

The Company demonstrated adistinctive capability to emerge amongleading players in niche therapy areaswithin a few years of entry. For instance,

the Company emerged as the thirdlargest player in Indias respiratory(anti-asthma) segment even though itentered the space less than five years

in diabetes even though it enteredthis segment in 2008. The Companyentered the cardiology segment in 2003and has within a decade emerged as the

third largest player in the segment too. We entered the Nephrology segment in

F Y

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1 3

2 3

, 8 4 0

1 9

, 3 7 4

1 5

, 7 3 4

1 3

, 5 0 2

1 1

, 4 1 2

Domestic formulations ( `

million)CVS Anti-TB

Anti-Asthama

Anti DiabeticGastro Instestinal (GI)CNSGynaecologyOthers

Anti-Biotics+CephalosporinsOral+Cephalosporin Inj

IRF therapeutic contribution (%)

2010 and have already emerged asthe third largest Indian player withinthe space.

Over the last decade, the Companyhas transitioned from a completedependence on acute therapies togenerating more than half of ourrevenues (on a significantly enlargedrevenue base) from the higher value andmore frequently used chronic therapies.

10 Brands with sales of over

` 400 millioneach with an average growthof 27%

ago; it is today the fifth largest player

16%15%

8%

5%

9%

11%


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Proportion of revenues

derived from the segment

Acute segment Chronic segment

2012- 2013 37% 63%

2007-2008 56% 44%

2005-2006 69% 31%

Pinnacle Cardiology The largest division within LupinsIndia formulations business grew by

20% during FY 2013. In keeping withits track record of launching first-in-class products, Lupin expanded itsassociation with the American Collegeof Cardiology (ACC) by creatingtraining and accreditation programsfor its field force covering not onlyinputs on the latest developmentsin the Cardiology space but by alsoensuring that its marketing and sales

force receive the ACC Industry TrainingGraduate certification from ACC.

Pinnacle Blue Eyes The division continues to gaintraction in the ophthalmologymarket and is building up acomprehensive product portfolio.

Lupin Diabetic CareIt is estimated that by 2030, every

fifth diabetic in the world is likely

to be an Indian. The Lupin DiabetesCare division was set up as a responseto this emerging reality five years

ago. Since then it has not only builta sizeable product portfolio to fightthe disease but has also emerged as thefourth largest player in the participatedmarket, growing by 25% in FY 2013.Lupins Gluconorm continues to bethe Companys largest brand in thesegment. The Division continues tomanage the International Symposia onDiabetes, a leading scientific forum.

Lupin MetabolicsThis division addresses the Companysbusiness in metabolic diseases likehypertension and obesity. LupinMetabolics continues to grow and ispoised to emerge as a leader in theIndian Metabolics segment followingthe introduction of new products in thearea of Endocrinology and Metaboliccare. The division is also responsible

for promoting and distributing Eli

Lillys Insulin range of products in theIndian market.

Lupin CVNSet up in FY 2010, Lupin CVN isresponsible for Lupins businessin the Nephrology and Urologysegments. The division hasconsistently outperformed themarket and trebled sales in the lastthree years.

LupinThe Lupin division continued to

lead the countrys Anti-Tuberculosissegment with a 44.7% market share.Lupins Anti-TB business grew 5.3%in FY 2013. Lupin takes pride andresponsibility in its role as a leaderin the Anti-TB space, an area of thehighest national priority.

Lupin GynaecologyLupins Gynaecology business wasranked third in the participatedmarket of IVF+Gynaec portfolio.

Therapy Segments & Key Divisions

In the last few years, the Company has

introduced 37 in-licensed products,of which eight were the first to beintroduced in India. During FY 2013,the Company launched four in-licensedproducts.

Going ahead, the Company intendsto emerge as a Top 5 specialtypharmaceutical powerhouse within theIndian Pharmaceutical Market.


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22 | Lupin Limited

The division offers a wide basket ofwomens healthcare products includingan Obstetrics and Gynaecologyrange, IVF/Anti-Infertility products

and Nutrition product preparations.The divisions alliance with theRoyal College of Obstetrics andGynaecology continues to offer IndianGynaecologists and Obstetriciansaccess to the latest medical journals andscientific information.

RespiraThe Lupin Respira division covers theCompanys presence across the Asthma, Allergy, COPD and Respiratory TractInfections segments. The division hassustained overall market share growthand growth in its leading brands. Lupincontinued to be ranked third in the

TSA MAT 2013). Lupin collaboratedwith the American College of ChestPhysicians to enhance awareness inrespiratory disease management through

symposia and workshops conductedacross the country.

EndeavourLupins Endeavour division is focusedon the Anti-Infective, Gastroenterology

Maxter

during FY 2013, a result of its focuson introducing high-end injectablesand other life-saving medicines. LupinMaxter continues to partner with theInfectious Disease Society of America,one of the worlds leading societies inthe Intensive and Critical Care

segment to offer Indian doctorswith the latest scientific breakthroughsand journals.

Lupin MindvisionIn 2007, Lupin entered the areaof Neuropsychiatry by setting upLupin Mindvision. Lupin is ranked8th in the CNS segment, having

registered prescription growth of 19%in Neurology (ORG ESPRIT Rxdata MAT March 2013). Cognistar(Cerebroprotein Hydrolysate) was one

management of stroke, traumatic braininjury and dementia. Cognistar salescrossed ` 200 million in just 18 monthsand was rated as the best launch in theCNS segment within the IPM.

Lupin Ikonic The World Health Organisation hasindicated a rise in the incidence ofneurological and psychiatric disordersin India owing to increased stress,sedentary lifestyle and chronic disorders(diabetes and cardiovascular). Lupinlaunched one more CNS divisionnamed Lupin Ikonic in FY 2013 toprogressively invest in research anddevelopment and in-licensing in newertherapies like Neurological Disorders.Lupin Ikonic will cater to chronicdisorders like epilepsy, migraine, braintrauma, neuropathic pain, anxietyand stroke.

Indian Anti-Asthma market (IMS

and Osteoarthritis businesses and acutetherapy areas like Antibiotics and PainManagement. The Endeavour business

the participated market, whic grewgrew by 23% in FY 2013, outperforming

by 7% (IMS TSA MAT March 2013).

The Gastroenterology segment grew26% as against the participated

Lupins Critical Care division grew 21%

grown 16% in FY 2013 as against

MAT March 2013). The divisionthe market growth of 11% (IMS TSA

of the key launches of FY 2012 for the

market growth of 13% (IMS TSAMarch 2013).


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Specialty fieldforce in the IndianPharmaceutical market

5,200

Lupins growth versus the Indian Pharmaceutical Market (ORG IMS, March 2013)

Therapeutic segment Lupin growth % Market growth %(IMS)

CVS 21.0% 12.2%

Anti-Infective 17.8% 7.4%Respiratory 4.4% Anti-Diabetic 47.7%* 18.6%Gastrointestinal+Hepatoprotective 27.7% 12.8%Neuro/Central Nervous System (CNS) 24.6% 11.0%Pain/Analgesic 29.1% 8.6%Nutraceutical 25.6% 10.7%Gynaecology 6.7% Anti-TB 2.5%

*Growth of Anti-diabetes portfolio is inclusive of Huminsulin

13.2%

13.8%5.3%


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T H E B O T T O M L I N E I SD E P T H

Vinod DhawanGroup President AAMLA and Business Development


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Today, the ROW business spansmarkets across Asia Pacific, Africa,Middle-East and Latin America withleadership and growing businesspresence in key markets such as Japan, Australia, South Africa andthe Philippines.

IMS Health predicts that these marketswill see their pharmaceutical spendingrise from USD 154 billion in 2010to over USD 300 billion by 2015registering even more growth than theadvanced markets of US and Europe.

Today, the Company is consolidatingits presence to build depth within thesemarkets by drawing on and leveragingour global research, manufacturing andsupply chain strengths. By depth, wemean building prudent, well-planned,localised strategies that would not onlyextend Lupins presence in these marketsbut ensure long-term growth by

Growing and building our existingmarkets. Lupin has enjoyed a goodtrack record of building leadershipcredentials in markets like Japan andSouth Africa and turning them intogrowth assets that increase andprovide stability

Balancing our global capabilities andcalibrating them to address the rightopportunity. Focusing on markets,therapies and products which offerthe greatest opportunities to buildlong-term competitiveness andsuperior realisations

Building and implementingdevelopment and marketing plansthat help identify and address market-specific demands

Improving operational performanceand cost effectiveness

This focus on building depth hasresulted in the Companys ROWbusiness clocking in a growth of 45%,

Lupins Rest of The World (ROW) business is notonly the 3rd largest contributor to the Companysrevenues globally but also the youngest and thefastest growing business within the Company.

REST OF THE WORLD

7

45%

23%

7th5th

690

years of uninterruptedbusiness growth

business growth overFY 2012

contribution to overallcompany revenues inFY 2013

largest generics playerin Japan

largest generics playerin South Africa

products filed for theROW markets

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ROW sales ( ` million)

CAGR38.3%


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Finished dosages filings(Rest of World)

registering revenues of ` 21,424million during FY 2013.The business contributed 23% toLupins total consolidated revenues.

We continue to ramp up filings andbuild the pipeline across key and newmarkets within the ROW business. With 16 new product filings, the

cumulative filings for ROW marketsnow stand at 690 product applications a USD 100 billion opportunity overthe next 5 years.

JAPANDuring FY 2013, Lupin maintained itsupward growth trajectory, clocking insales of JPY 19,785 million, growingby 39% over the previous year. Lupin,today is the 7th largest generic playerin the Japanese market and has overthe years, built a strong presencein the Neurology, Cardiovascular,Gastroenterology, Respiratory andInjectables segments.

During the year, the Company alsoconsolidated and focused on integratingIrom Pharmaceutical Co., Ltd (IP),

a niche injectables company thatit had acquired during FY 2012.IP has a significant presence in theDPC hospital segment within the Japanese pharmaceutical market. IP isin the business of manufacturing andmarketing injectable products, mainlyampoules and bags. The IP marketingand sales team covers roughly about 80%of the DPC hospitals in the country.

OutlookThe Japanese pharmaceutical marketis the second largest pharmaceuticalmarket in the world and is valued atover USD 110 billion. The Japanesegenerics pharmaceutical industry haswitnessed a lot of changes over the last7 years; developments like incentivesannounced by government to promotegenerics, increased competition frominternational generics players and entryof innovator pharma companies into the Japanese generics space, which led to notonly enhawnced opportunities but alsoheightened activity and competition.

At the end of March 2013, Japanesegenerics market penetration was

at 26.5%, lower than the Japanesegovernments stated target of achievinga 30% generics penetration by FY 2012.In March, the Japanese government seta new target of 34.3% generics marketpenetration by the year 2017, whichtranslates into an additional 30-35%volumes getting genericised over thenext 4-5 years. In addition, patents formolecules worth USD 14-16 billionare likely to expire by 2017. Both theseopportunities translate into significantmarket opportunities for Lupin.

The Company expects to address theseopportunities by investing in creatinga robust pipeline of niche products andback-ending manufacturing of a few keyproducts to its plants in India. Lupinexpects to file 15 new products in Japan

over the next two years. During the year,Lupin received three product approvals ofits Goa plant from the Japanese HealthMinistry and the commercialisation ofthese products has already commenced.Lupin also commercialised two APIs in Japan during the year and expects to fileclose to ten DMFs for the market in thenext two years.

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Japan sales ( million) Key Markets - ROW (%)

61%15%

6%

4%

14%

Japan South Africa Australia

Philippines Others


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Kyowa Kyowa reported sales of JPY 13,984

million, growing by 13% during the year

The Company has been consistentlyexpanding its product portfolio andlaunched 11 new products including 4CNS products. Kyowa has a portfolioof 350+ products

The Company set up a dedicated fieldforce to target CNS hospitals and clinics

Dedicated key account managers andsales teams to target wholesalers andpharmacies

Commissioned a new packagingfacility at its existing manufacturinglocation to meet growing market demand

Irom Pharmaceuticals IP posted Sales of JPY 5,833 millionfor the year ended March 31, 2013

Added Oncology Injectables to itsportfolio

Strengthened and expanded its salesand marketing team

SOUTH AFRICAThe South African pharmaceuticalmarket is valued at about USD 3.5billion. The South African genericmarket grew by 7% in value termsand 5% by volumes during FY 2013.Lupins South African subsidiaryPharma Dynamics (PD) recordedrevenues of ZAR 499 million ( ` 3,210million), registering growth of 26%over the previous year.

As per IMS reports, PD remains the5th largest generic company and the

14th largest pharmaceutical companyin the South African market. PharmaDynamics emerged as the number onecompany in the Cardiovascular segmentoverall. PD maintained its leadershipin the prescription segment and has8 brands that are market leaders andanother 12 which are amongst the top3 brands in their respective segments.

PD also focused on growing exportsto the larger African markets andcontinues to make new registrations inneighbouring markets; 50 products arecurrently under registration.

During the year, the company launched10 new products and remains focusedon building and growing into theCNS & OTC segments withinthe South African market. Lupins

planned efforts to move productionto its manufacturing facilities in Indiacontinues with an additional 4 productsbeing filed by the Company.

AUSTRALIAThe total Australian Pharmaceuticalmarket is valued at USD 13.5 billion.The Generics market is estimatedto be USD 2.2 billion, growing atapproximately 8%. Lupin operates

in the Australian market through itssubsidiary Generic Health Pty Ltd.Over the years, Lupin has focusedon the creation of a robust productportfolio, increasing market depth andreach, entering new therapy segmentsand acquiring brands to make inroadsinto the Australian market. Thesestrategic initiatives enabled GenericHealth to record revenues of AUD 24 million ( ` 1,367 million)during FY 2013, clocking in a growth

when Generic Health turned EBITDA-positive. During the year, Lupinincreased its stake in Generic Healthto 91.04%.

PHILIPPINESThe Philippines pharma market is

valued at USD 3.3 billion and grewby 4.6% for FY 2013 (IMS Health).Lupins Philippines subsidiaryMulticare Pharmaceuticals (Multicare)continues to outpace the market,having grown 30%, clocking inrevenues of Php 659 million ( ` 859million) during FY 2013 as comparedto Php 597 million ( ` 663 million) inthe last fiscal.

Building depthThe focus on the ROW marketsis to build depth to leverage ourresearch and IP strengths, use ourmanufacturing muscle, build strategicalliances and make the right inorganicmoves to increase our presence andparticipation in these markets. Lupinhas also actively sought in-licensingarrangements and strategic partnerships

to enter new segments and grow inthese markets.

Lupin continues its efforts to makeinroads into the Latin American market.In addition, the Company entered andinitiated business in Taiwan duringFY 2013. The Company remainscommitted to further growing itspresence in these markets and buildingdepth; a large part of the future growth

will come from these markets.of 106% over the previous year.

in Australia as it was also the first yearFY 2013 was a hallmark year for Lupin


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T H E B O T T O M L I N E I SE F F I C I E N C Y

Naresh GuptaPresident API & Global TB


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The global API market continues togrow and is currently valued at overUSD 110 billion. Patent expiries inadvanced markets like the US andEurope, growth emerging markets anddemand for new bio-generic drugs areboosting the growth of the global API industry.

Lupin brings to its API business adistinctive focus. Right from the1980s, the Company recognised thatthere were two ways of growing the API business: manufacture a large APIproduct basket, or pick a handful ofpromising APIs in select therapeuticcategories and grow them over thelong-term. Lupin consciously chosethe latter option and focused on not

only building competencies and addingscale in those segments but moreimportantly, building efficiencies thatwould make it the undisputed leader inthese products of choice. Operationalefficiencies built not only with a viewto protect market share and improvemargins but also to add scale toforge better synergies with our globalformulations business. Efficiencies thathave enabled us to emerge as one of the

most vertically integrated global genericformulations majors.

This focus has ensured that Lupinremains the global leader in therapeuticsegments such as Cephalosporins,CVS and the Anti-TB space for morethan a decade. The Company remains

the undisputed No. 1 globally in Anti-TB products such as Rifampicin,Pyrazinamide and Ethambutol, andCephalosporins such as Cephalexin andCefaclor and their intermediates.

FY 2013 was a record year for theCompanys API business. The businessclocked in revenues of ` 9,498 millionin FY 2013. We service some theleading pharmaceutical companies in

the world; clients who have stayedwith us for over a decade which isa testament to the quality of ourproducts and the depth of ourrelationships. We continue to add morecompanies to our growing customerlist and have also made rapid inroadsinto new markets like Latin America,Russia and other East Europeancountries. Add to this, a deeper diveinto existing markets like US & Europe

Active pharmaceutical ingredients (APIs) are thefoundation of the pharmaceutical industry and thebackbone of Lupins formulations business.

API AND GLOBAL TB

No. 1

40%

10%

in Anti-TB and Cephalosporinssegments globally

90%captive consumption - APIs

growth in Institutionalbusiness for Anti-TBin FY 2013

contribution to global revenuesin FY 2013


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5 API facilities approved by

US FDA

All


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and the API business are slated to bea sustainable growth opportunities forthe Company.

The Company continues to grow itsvalue-added finished formulationbusiness, the Principal-to-Principal(P2P) business. Lupins P2P businessleverages our rich expertise in APIresearch and formulation development.The Company has commissioned afully integrated state-of-the-art APIresearch, formulation developmentand manufacturing facility and hassuccessfully rolled-out over 10 uniquefirst-to-market products in India. InFY 2013, the GTB + P2P businessgrew by 49%.

The Company also consolidated itsposition as one of the leading suppliersof Anti-TB products to the WorldHealth Organisations (WHOs)

Global Drug Facility. Seven of thecompanys finished formulations andthree Anti-TB APIs were pre-qualifiedby the WHO during FY 2013. Lupin isthe only company to have both its APIsand formulations for TB products pre-qualified by the WHO globally. Lupinsinstitutional Anti-TB business grew by40% during FY 2013. The Companystands committed to be a responsiblepartner in managing the preventionand treatment of tuberculosis in closecollaboration with various healthcareinstitutions.

Anti TB Family Cardio VascularCeps Others

API therapeutic contribution

22%22%

4%

52%


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T H E B O T T O M L I N E I SD I F F E R E N T I AT I O N

Nilesh GuptaGroup President & Executive Director


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A sturdy foundation shoulders toweringgrowth. At Lupin, our Research &Development program has been the keyto our sustained growth over the past

ten years; growth that has made us oneof the most exciting research drivenpharmaceutical companies globally; ahotbed of differentiation and innovation.

In looking back at our research efforts,what stands out clearly is that we havealways looked beyond the obvious. Wehave identified opportunities earlyon and turned them into distinctivedifferentiated growth drivers, whether it

was in the early choices that we made ofdeveloping complex APIs or be it in thevery nature of our product filings forboth advanced and emerging markets;to the therapies that we soughtto address; to the brave choice wemade in overhauling and expandingour drug discovery pipeline withmeaningful targets.

Today, we stand differentiated. The

focus that we have built over the pastten years has enabled the Company tosuccessfully adapt to, and understandan ever-changing complex intellectual

property environment as well as marketconditions, helping us proactivelyidentify new products, technologies andtherapy areas that the Company should

get into.Today we are building the future bystrengthening our research foundationthrough prudent investments thatposition us at the cutting-edge oftechnology, helping us deliver complexproducts that very few in the world can.

Headquartered at the state-of-the-artLupin Research Park in Pune, India, theCompanys research program is home to

over 1,400 scientists. The Companysglobal research operations are spreadover multiple research facilities in Indiaand Japan.

During FY 2013, the Company invested7.5% of its net sales in Research &Development and related spends,amounting to ` 7,098 million. FY 2013was a record year in terms of progressmade all around, be it our pace of filing

DMFs (Drug Master Files) and ANDAs(Abbreviated New Drug Applications),progress in our drug discovery anddevelopment program, milestones in our

Differentiation is the heart of our research effortsat Lupin. We have created a truly unique world-classresearch program, designed to ensure a sustainablepipeline of high-value opportunities to maximisegrowth.

RESEARCH AND DEVELOPMENT

7.5%R&D expenditure as apercentage of Net Sales

29first-to-file products

1,181cumulative patents filedas on March 31, 2013

` 27,775million cumulative R&D spendin the last 6 years

10pipeline of biosimilar products

10pipeline of NDDD / NCEprograms in various phases ofdrug discovery & development


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34 | Lupin Limited

drug delivery program and approvals inour biotechnology program.

Highlights, FY 2013 Filed 15 DMFs and 21 ANDAs

in the US; received approvals for 16 ANDAs including 2 NDAs (NewDrug Applications) during FY2013. The Company also filed 10MAAs (Marketing Authorisation

Applications) with European Authorities, including nine DCPs(Decentralised Procedure Applications)

Filed two exclusive first-to-filesfor the generic version of Apriso and Viread 150mg, 200mg & 250mgstrengths

Received initial project milestonespayments aggregating over USD 6.5million for two drug delivery products

Completed Phase-I studies in Europefor a program in the CNS area, whichis being advanced to Phase II clinicaltrial now

Lupins biotechnology group receivedits first marketing authorisation foran oncology product following thesuccessful completion of a Phase IIIclinical trial in India

Lupins research and developmentprograms cover the followingdisciplines:

Generics Research Process Research Formulations Research

Drug Delivery Systems Novel Drug Discovery and Development (NDDD) Biotechnology Research

GENERICS RESEARCH ANDDEVELOPMENTLupins Generic products R&D

Program is focused on developing APIs and pharmaceutical products forthe US, European, Japanese and otheradvanced markets. It also focuses ondeveloping differentiated products foremerging markets.

API PROCESS RESEARCH API Process research capabilities are avital component of the business strategythat provides a sustainable, long-termcompetitive advantage. The programsupports the companys generic researchprogram by developing non-infringingand cost competitive APIs.

Highlights, FY 2013 In FY 2013, the Company filed 15

US DMFs taking the cumulative totalto 138 DMF filings. The Company alsofiled 5 EDMFs, 3 COSs, 2 AustraliaDMFs and 1 Japan DMF during the year

Development of specialised andcomplex APIs like Prostaglandinsand a new class of Anti-Retro Viralsmeant for the US, EU, Japan and otheradvanced markets

PHARMACEUTICALRESEARCHFY 2013 was a landmark year forthe Pharmaceutical Research Group

Diploma DoctorateMBBS Post Graduation

Graduation

R&D Scientific pool2% 7%

5%

1%

85%

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R&D Trends ( ` million)

API Process Research

Pharmaceutical Research

Biotechnology ResearchDrug Delivery Systems

Intellectual Property ManagementNovel Drug Discovery and

DevelopmentLupin Bio-research Centre

Lupin R&D


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as it continued in its single-mindedfocus to create a meaningful pipelineof differentiated products for bothadvanced and emerging markets.The group focuses on working ondifficult to develop products, firstto file products and differentiatedtherapy areas. In the past five years,

the group has added therapy areas likeOral Contraceptives, Ophthalmics,Inhalation (MDIs, DPIs and NasalSprays) and Dermatology. The Groupensures that its filings are in line withall global regulatory requirements andone of the key initiatives in FY 2013was adopting processes and proceduresin line with the US FDAs Quality ByDesign (QBD) requirements.

Highlights, FY 2013 Filed 21 ANDAs with the

US FDA and 10 European Unionapplications

The cumulative number of ANDAfilings with the US FDA now stands at176, with 78 approvals received to date.This is in spite of the fact that theCompany withdrew 16 ANDAsduring the year after re-evaluating

their business potential

Cumulative first-to-filesopportunities now stand at 29

Total cumulative filings within theEuropean Union stands at 53, with 38approvals received so far

Ramped up filings for key marketslike Japan, Australia, India, South Africaand other emerging markets

DRUG DELIVERY SYSTEMSRESEARCHLupins Drug Delivery program focuseson creating and leveraging technologiesthat provide clinical advantage andpatient convenience. The Company hasnot only successfully out-licensed itsdrug delivery technologies and platformsbut also leveraged them to provide

significant product life-cycle advantagesto build a differentiated pipeline ofbranded products.

Highlights, FY 2013 The team hit initial project

milestones resulting in the Companyreceiving payments of over USD 6.5million for two products being jointlydeveloped with Medicis PharmaceuticalCorporation. These projects continue

to be on track for further development

The Company filed two 505(b)(2)products in FY 2013 which will help itfurther its branded offerings in the US

ANALYTICAL RESEARCHThe Analytical Research Group isresponsible for ensuring all processesand products transferred to Lupinsglobal manufacturing operations meetregulatory guidelines. The group isresponsible for the development andvalidation of the right testing methodsand systems and ensuring that alldevelopment and documentation is

in line with regulatory expectations.The Companys Analytical researchfacility is fully automated and equippedwith state-of-the-art technology andinstrumentation needed to supporta top-notch global research program,for example, equipment like PowderX-ray Diffraction, Solid State NMRand Differential Scanning Calorimetryto study physical properties such aspolymorphism and the latest LC/MS-MS systems and automated preparativeHPLCs for the isolation/synthesis andcharacterisation of impurities in APIsand drug products.

LUPIN BIORESEARCHCENTERThe Lupin Bioresearch Center (LBC)located in Pune, India is responsible forconducting bioequivalence studies forLupins generic products and brandedformulations. LBC also manages out-sourced Bioequivalence studies, clinicalend-point studies as well as studies forthe Companys drug delivery program.The center has both Clinical andBioanalytical capabilities and houses2 clinics, a bioanalytical lab with 12state-of-the-art LC/MS-MS systemsand its own clinical chemistry lab whichis accredited by National Accreditation

Board of Laboratories (NABL).

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Cumulative DMF Filings

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1 0 4

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Cumulative ANDA Filings

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Highlights, FY 2013 The team completed 19 full studies

during the year under review, taking the

cumulative tally to 83 full studies In FY 2013, LBC was inspected and

studies were approved by the Frenchregulatory authorities (ANSM) andthe US FDA for both Bioanalytical andClinical areas

INTELLECTUAL PROPERTYMANAGEMENT At the very core of Lupins Research isthe Companys Intellectual PropertyManagement Group (IPMG) whichis not only responsible for its globalproduct pipeline but also creates andmanages a high-value patent portfoliothat protects our business, researchand technology assets. Lupins IPMGhas built one of the best track recordswithin the global generic pharmaceuticalindustry for wins when it comes tosuccessfully litigating and protecting

Lupins filings in key markets.The IP group played a pivotal role inthe US launch of the generic version

of Fortamet tablets (MetforminHydrochloride XR) in September2011. In December, 2011 Shionogis

request for a preliminary injunctionwas granted and prevented Lupin fromsupplying additional quantities. A winat the US Court of Appeals for theFederal Circuit resulted in Lupinre-launching the product in April 2012.

Highlights, FY2013 The cumulative first to file products

now stands at 29 During FY 2013, Lupin had 2

exclusive first-to-files for the genericversions of Apriso and Viread 150mg,200mg & 250mg strengths. TheCompany also believes that it wouldhave 4 non-exclusive first to filesfor the generic versions of Toviaz,Savella, Uloric and Banzel. Based onIMS MAT Mar 2013 data, the BrandSales for these collective 6 first-to-filestands at USD 677 million

Lupin successfully launched genericversions of Combivir, Tricor,Seasonale and Diovan-HCT

During the year, the Company settled7 pending litigations with variousglobal pharmaceutical companies

The Company had three patent winsin FY 2013. In Bayer vs. Lupin on Yasmin and Yaz at the Federal Circuitand in Teva vs Lupin on Seasonique atthe District Court

During FY 2013, the Company filed157 new patents, taking the cumulativetotal to 1181 patents filed to date. Thisincluded 60 Formulation patents, 41 API/Process patents, 6 Biotech, and 47

NCE patents. The Company receivedapprovals for 8 Formulation patents, 10 API patents and 2 NCE patents.

NOVEL DRUG DISCOVERY AND DEVELOPMENTLong-term, one of the Companysbiggest differentiators will be its NovelDrug Discovery and Development(NDDD) program. The Programfocuses on the discovery, developmentand commercialisation of new drugsthat address disease areas withsignificantly unmet medical need.


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Patents filed1181

API/Process435

NCE328

Formulations409

Others9

Lupins NDDD efforts are directed

towards identifying and developing newtherapies for disease areas that includemetabolic/endocrine disorders, painand inflammation, autoimmunediseases, CNS disorders, cancer andinfectious diseases.

Scientists at NDDD have beenable to create a portfolio of novelcompounds that are moving througha robust pipeline from discovery to

development. This steady movementwill ensure that at least one compoundenters the clinical phase in terms offirst-in-human studies each year.

Lupin has adopted a Quick-win,fail-fast cost-efficient developmentapproach, in which novel compounds arefiltered at every stage before enteringdevelopment and differentiated byefficacy with a focus on enhanced safety.

Highlights, FY 2013 Successfully completed Phase I

studies in Europe for a program in theCNS area, which is being advanced toPhase II clinical trials in Europe now

Candidates from two programs in thearea of endocrine disorders and cancerwill enter clinical development inFY 2014

Six other programs in various

stages of discovery across differenttherapy areas

Strong intellectual property creationand management strategy in place, witha total of over 80 patent applicationsfiled to date

LUPIN BIOTECHNOLOGYThe Lupin Biotechnology ResearchGroup was established 5 years agowith a vision to provide affordable,high quality biopharmaceuticals witha focus on biosimilars. In a short spanof 5 years, Lupin Biotech scientistshave created and developed a basketof 10 biosimilars, which are nowin various stages of development. 8of these are potential blockbustersaddressing diverse and nichetherapeutic indications like Oncology,

Inflammation, Antivirals, Osteoporosisand Rheumatoid arthritis.

Highlights, FY 2013 Lupin Biotech received marketing

authorisation for its first oncologyproduct following the successfulcompletion of its multi-centric, PhaseIII Clinical Trial in India

Another long-acting oncology

product is close to receiving marketingauthorisation and has demonstratedexcellent biosimilarity in Phase IIIClinical Trials in India

5 biosimilar products, including abasket of Blockbuster Monoclonal Antibodies and therapeuticRecombinant Proteins are in advancedstages of development, havingsuccessfully completed pre-clinicalstudies

3 process patents have been filed for2 of these products

The product development processadopted in Lupins biosimilar productsconforms to ICH and biosimilarguidelines issued by the Indianregulatory bodies and also in keepingwith global regulatory requirements.The products have been designedwith proprietary expression systems,innovative processes and novelformulations, encompassing 15 patentsfiled and 23 publications so far. Novelformulations have been successfullydeveloped for three of the products,thus providing a competitive advantage.Lupin Biotech teams efforts positionthe Company well in the lucrative butchallenging global Biosimilars space.

Lupin Research Park, Pune


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In a business marked by rapid growth,increasing complexity and an expandingglobal footprint, success is not onlyderived from ones ability to deliverquality products consistently butby ensuring that the Company isdelivering in line with ever-evolvingregulatory and quality standards.

This deep compliance discipline iswhat drives our global manufacturingoperations and supply chain; right fromthe markets we choose to serve, to theproducts we develop and manufacture;

and how we supply them.Lupins global manufacturingoperations are spread across India and Japan. The Company has 12 world-class facilities (ten in India and two in Japan) manufacturing and supplying APIs and formulations approved byleading pharmaceutical regulatoryauthorities like the US FDA, WorldHealth Organisation, MHRA (UK),

TGA (Australia), MHLW (Japan), ANVISA (Brazil) and MCC (South Africa). These world-class facilitiesembody a culture of continuous

improvement to deliver complexproducts with optimum efficiency. With a focus on maintaining the rightefficiencies, Lupin has continued onits quest for manufacturing excellence,focusing on cost reduction usingprinciples of six sigma and leanmanufacturing.

We believe Quality and RegulatoryCompliance not only have to beembedded into the product but haveto be built into people, systems, andprocesses through a systematic process

of continuous training and knowledgesharing. The Company today hasover 700 Global Corporate Quality Assurance professionals spread acrossall manufacturing locations engaged indeveloping and implementing policiesthat ensure quality and compliance withglobal regulatory standards.

Consistency in meeting customerexpectations and meeting regulatoryquality and compliance norms arethe true enablers and the criticaldifferentiator that has made Lupin theglobal generic powerhouse it is today.

At Lupin, we believe that there are no shortcuts toQuality and constant compliance is the only way tobuild a global manufacturing operation; the onlyway that a company can do meaningful business inany market within the pharmaceutical world.

MANUFACTURING, SUPPLY CHAIN AND QUALITY

12

5,000

No. 1

` 25,480

manufacturing facilitiesacross India & Japan

lupinytts engaged inmanufacturing and quality

million cumulative capital

expenditure over the last6 years

within US generics playerswith 99.6% fill rates


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40 | Lupin Limited

The Road Ahead As we aspire to further accelerate andscale higher orbits of growth, we areconscious of the fact that productand market complexity will increaseexponentially. We are aware that theCompany needs to stay ahead ofthe curve by continuously investingin new technology, automation andsystems to create better efficienciesthat enhance profitability. We are alsoinvesting prudently in expanding ourmanufacturing operations by setting up

new facilities and plants to meet futuredemand. As a result, the Companyscapital expenditure increased to ` 4,871million for FY 2013.

We actively engage with leadingconsulting organisations to build amanufacturing operation second tonone and continuously sharpen ourcompliance ethic. As we aspire tofurther accelerate our growth and inorder to ensure that we consistentlymeet our customer expectations, we haverealised that we must invest in buildinga future-ready, nimble and strong supplychain. With that objective in mind, the

Company launched its Supply ChainOperations Re-Engineering (SCORE)program covering its manufacturingfacilities, supply chain and all marketsduring FY 2013.

Highlights, FY 2013Operations

Received Platinum (for our Goafinished product facility) and Gold(for our Tarapur API facility) awardsat the India Manufacturing Excellence Awards (IMEA) instituted by The

Economic Times in partnership withFrost and Sullivan for manufacturingexcellence

Successful audits of all facilities byglobal regulatory authorities withoutany critical or major observations

Focused on optimising ourmanufacturing costs and enhancingproductivity with the rollout of theDISHA program (based on Lean and

Six Sigma principles) Expanded / commissioned new

plants in our Tarapur, Dabhasha andIndore facilities

Set up a new formulationsmanufacturing facility in Nagpur toservice advanced markets like the USand Europe. The plant is expected to beoperational by Quarter III, FY 2014

Launched a dedicated global programchristened SCORE (Supply ChainOperations Re-Engineering) tostreamline processes that strengthenour global supply chain and develop acost-optimised supply chain

Cumulative Capital Expenditure( ` million)

F Y

1 3

2 5

, 4 8 0

F Y

1 2

2 0

, 6 0 9

F Y

1 1

1 5

, 0 9 5

F Y

1 0

1 0

, 2 8 7

F Y

0 8

2 , 3

6 5

F Y

0 9

5 , 8

5 4


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Indore

Goa

Mandideep

Sanda, Japan


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42 | Lupin Limited

T H E B O T T O M L I N E I SP E O P L E

Divakar KazaPresident Human Resources


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Being a great workplace is not anisolated event. Neither is it the

beginning or the end of a goodHR story. It is in fact a journey, acontinuous quest for creating anorganisation that thrives on valuesof innovation, people development,continuous improvement andentrepreneurship. At Lupin, everyday brings with it new horizons,new challenges and new opportunitiesfor employees to excel, outperformand outshine.

The Lupin DNA As a company with a large numberof young professionals, our HRpractices revolve around one centraltheme: to be in sync with the needsand aspirations of the millennialgeneration. We value the contributionof our 13,000 + workforce, be it inSales, Manufacturing or R&D, and

ensure that similar job-holders at thejunior and middle management levels,

have a common understanding of theirrespective roles and their departmental

and functional objectives, which are asclosely aligned with the organisationsbusiness priorities. The focus is onproviding clarity to employees on whatthey are expected to do and eliminateambiguity from how their performanceis evaluated. Further, there is also astrong focus on learning on the job andworking on cross-functional projects.This forms the basis of a collaborativeand coherent global work culture,fostering engagement and augmentingone of our core values, Team Work.

Integrity is perhaps one of our mostimportant core values and we have well-established processes to ensure thatour employees and management upholdthis value in their professional conduct.Our universally applicable Code ofConduct and Whistleblower Policy,standardised antecedent verification

process, transparent performancemanagement process and fair and

Our recognition as one of Indias best companies towork for in the pharmaceutical space for the thirdyear running is a testimony to our people-centricwork practices and trust-based culture. A culturethat has built a truly engaged and inspired globalworkforce.

HUMAN RESOURCES

13,000+lupinytts globally

28 years

` 150

Top3

70%

60%

1,929 Lupinytts

average age of a lupinytt

million invested in training anddevelopment in FY 2013

rank in the Great Place to Work survey amongst Indianpharma companies for 3 yearsrunning

employee retention of the teamwith Lupin for more than 3years.

of Lupins global workforce isless than 30 years of age

covered under the Lupinemployee stock option plan


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44 | Lupin Limited

equitable reward opportunities give ourpeople the confidence and comfort tofunction effectively. These practiceshave built trust over the years and havecontinuously provided guidance on themanner in which to conduct business.

Our culture also inculcatesEntreprenurial Spirit, empoweringemployees to stretch beyond what theythought was possible and achieve morethan just business goals. In order toprovide the required impetus, we offer

a wide array of educational programs,development initiatives and careerprogression opportunities. Today, Lupinhas created advanced and customisedcurriculum in collaboration withprestigious educational institutionssuch as IIM-A, BITS (Pilani), TheIndian School of Business, SP JainInstitute, NMIMS and more. Theseprograms not only help Lupinyttsenhance their skills but have also helpedbuild an internal pool of talent. TheHR function lays significant emphasison training in other areas as well,encompassing technical, functional andbehavioral training modules.

At the top of it all, is our leadershipteam and our employees havetremendous faith in the direction inwhich they steer our organisation.Developing managers has always beena prime focus area for us. We offerstructured inputs at different levels,in the form of programs such asLeader Plus, Managers ExcellenceProgram, Business Leaders Program

and others that groom employees intosuperior People Managers and in turn,these managers into astute, business-oriented, Strategists.

Lupins intellectual capital is its people,our most invaluable asset, extendingfrom its Board Room to its innovationand business implementation teamsglobally. Our all-inclusive EmployeeStock Option Program aptly namedPartners in Progress extends acrossthe organisational hierarchy right fromthe leadership team to the junior-most levels of the Company. A totalof 1,27,27,730 stock options weregranted under five separate employeestock option plans through 37 distincttranches at an average exercise price of

` 339.112 between 17.02.2005 and12.03.2013, covering 1,929 employees.This, we believe, is one of the largeststock option grant program ever

offered by any company across sectors. As a true transnational organisation,we ensure that our global subsidiarieswith Lupinytts spread across 21geographies also benefit from thesestructured, systemised and standardisedHR practices, processes and programs.Today, around 18% of Lupinsoverall global workforces are women,one of the highest in the generic

pharmaceutical industry up from 6% in2004. The focus of Lupins HR is ourPeople, to ensure that our people enjoythe work they do, remain committedand contribute meaningfully.

Today, around 18% ofLupins overall globalworkforce are women,one of the highest in thegeneric pharmaceuticalindustry up from 6% in

2004.


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Lupin employee demographics2011 2012 2013

Age Group No. ofEmployees

% ofEmployees

No. ofEmployees

% ofEmployees

No. ofEmployees

% ofEmployees

Under 25 419 4% 1026 9% 1542 12%

25-30 4901 47% 5733 48% 6112 48%

31-35 2526 24% 2543 21% 2490 20%

36-40 1063 10% 1062 9% 1057 8%

Above 40 1581 15% 1550 13% 1509 12%

Total 10490 11914 12710

of total employees covered under theEmployee Stock Option Program15%

million stock options granted so far

over

12


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46 | Lupin Limited

T H E B O T T O M L I N E I SR E S P O N S I B I L I T Y

Ramesh SwaminathanPresident Finance & Planning


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48 | Lupin Limited

The Company has increased its reservesand surplus by ` 11,911 million to

` 51,147 million. Lupins AdvancedMarkets Formulation sales (US, Europeand Japan) increased by 48% to

` 53,092 million for FY 2013, up from ` 35,885 million the previous year.Lupin remains the 5th largest genericplayer in the US (by prescriptions,IMS Health December 2012) for thefourth year running.

Lupins Japanese subsidiary, Kyowa grewby 52% to ` 13,040 million duringFY 2013 and contributed 14% of theCompanys overall revenues.

Lupins India Region Formulationsbusiness grew by 24%, recording NetSales of ` 23,644 million duringFY 2013.

Lupins South African subsidiary,Pharma Dynamics, grew by 26% to

` 3,210 million as against ` 2,554million in FY 2012.

A STRONG BALANCE SHEET We have delivered a strong balancesheet year after year; a balance sheetthat can be leveraged to add newdimensions to the Companys businessglobally. Backed by prudent financialplanning and tight financial control, wehave ensured strong and positive cashflows for the Company. The abilityof the Company to raise credit isstronger than ever. Lupins short-termdebt program continued to receive thehighest rating from ICRA.

Net operating working capital increasedto ` 24,312 million as on 31st March,2013 as against ` 19,028 millionthe previous year. Lupin continues toinvest in manufacturing and buildingnew facilities and FY 2013 saw capitalexpenditure of ` 4,871 million. The

debt equity ratio stood at 0.14 as on31st March, 2013 as compared to 0.30as on 31st March 2012.

RESEARCH &DEVELOPMENT INVESTING IN OURFUTURERevenue Expenditure on R&Dincreased to ` 7,098 million, 7.5%of net sales, which indicates how

aggressively we are investing in ourfuture by creating meaningful anddifferentiated product pipelines foradvanced and emerging markets, agreat pointer to the quality of ourfuture earnings. We are also focusingon creating value-added productsbuilt on proprietary advanced drugdelivery platforms. We are investing inexpanding our Novel Drug Discoveryand Development pipeline; investingin clinical trials as our lead candidatesprogress from Phase I to Phase II inEurope. We continue to ramp up ourinvestments in our Biotechnology foray. We believe that the products comingout of our R&D efforts would berevenue multipliers for the future thatwill take the Company into a differentorbit of growth and leadership.

BUSINESS EXCELLENCE We continue to calibrate and fine-tuneprocesses across business operationsglobally, sharing and integrating bestpractices and ensuring technologyabsorption across all our businessfunctions, i.e. manufacturing, logistics,finance and human resources. Thisconstant focus and discipline vis`avis operational excellence has resultedin a marked improvement in margins,where FY 2013 witnessed our bestever EBITDA margins. We also realise

that excellence in business cannotbe achieved in isolation and Lupinhas actively sought knowledge andcollaborated with consultants inthe pharmaceutical space as well asexternal domain experts, be it legal,regulatory or financial experts. We havepartnered with consulting powerhouseslike the Boston Consulting Group, Accenture and others in areas such asglobal supply chain and streamlining

manufacturing operations successfully. We partnered to absorb newmethodologies and techniques likeSix Sigma and Lean Manufacturing inour quest for quality and excellencein manufacturing.

INTERNAL CONTROLSYSTEMS & INFORMATIONTECHNOLOGY (IT) At Lupin, we are in the process of

continuously creating new and fine-tuning existing automated internalbusiness controls; a process frameworkthat integrates the entire organisation;from strategic support functions likefinance, human resources, regulatoryaffairs to core operations and deliveryunits like global procurement, research,manufacturing and supply chain. A well-established and empoweredsystem of internal financial audits andautomated control procedures ensuresprudent financial control but moreimportantly ensures accountabilityand integrity in every part of ourorganisation. Embedded controlsensure instant reporting of violationsand exceptions.

Chartered Accountants M/s KhimjiKunverji and Co. are our internalauditors and submit reports andupdates to the Audit Committee ofthe Board, which conducts frequent


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reviews and provides direction andoperational guidance on how we canfurther enhance efficiencies withinthe Company.

Lupin continues to remain investedin building a truly scalable;technologically balanced; process-drivenIT environment to support businessand growth globally. This assumes amore critical tone given the rapid ramp-up that we have and will continue towitness in key markets globally.

Global ERP - The SAP RolloutProgram: We successfuly expanded therollout of our core SAP ERP systemto include all subsidiaries in the US, Japan, UK, Switzerland and Germany.The program also included the creationof a fully secure global telecom networkto operate SAP and other criticalapplications. This has created a singleunified platform for Lupin to notonly operate, manage and monitorits global businesses but has alsoenabled superior business reportingand analytics through the Business Warehouse system.

This set the tone for the Companyto re-engineer its supply chain matrixto enable better Sales Support &Operations Readiness Planning. TheCompany launched the SCOREProgram in FY 2013, Lupins globalinitiative to create a future-readySupply Chain.

Global Messaging and CollaborationPlatform: The Company migratedits messaging and collaborationinfrastructure to Office 365, acloud-based messaging platformbased on Microsoft technology. Thismigration has been completed for fivesubsidiaries, including India.

Information Security and Protection- The Kavach Program: The Companyimplemented a major program withthe objective of protecting all itsIntellectual Property assets, andenhancing enterprise security. Thisongoing project required significantaltering and re-alignment of technology,processes, policies and people practicesto help build a corporate culture andsystem consistent with the objective of

managing information security risk.

RISKS CONCERNS &THREATSOver the last 7 years, Lupin has evolvedas a world-class financial organisationwith strong risk managementframeworks enabled by a strongforecasting discipline

Lupin Pharma Annual Report,

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