BOB CAPITAL MARKETS LTD.A wholly owned subsidiary of Bank of Baroda

BOBCAPS ELIXIRPharmaceuticals and HealthcareInvestment Banking Newsletter

Inaugural EditionApril – September 2018

Dear Reader,

It gives me immense pleasure to share the inaugural edition ofBOBCAPS ELIXIR, Investment Banking Newsletter coveringPharmaceuticals and Healthcare sectors. Our endeavour is topublish ELIXIR as a quarterly newsletter covering the industrydeal dynamics, trends and events that has shaped the industry inrecent times.

We have covered the following key subsectors –Pharmaceuticals, Biotechnology & Life Sciences, Healthcare &Diagnostics and Medical Devices & Consumables.

We hope you find this newsletter interesting and we look forwardto receiving your feedback to help us improvise on our futureeditions.

Please get in touch with us: ib.equity@bobcaps.in

Warm Regards,Avdhoot DeshpandePresident, Investment Banking – Equity

Inside this Edition

President’s Note

Company News

Industry News

Public Market Data

Key Transactions

Select Deals – Case Study

Team

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Product Launch

Glenmark launches Akynzeo in India under licensing pact with Helsinn

Glenmark Pharmaceuticals launched Akynzeo, a drug used for prevention ofchemotherapy-induced nausea and vomiting, in India and Nepal under anexclusive licensing pact with Swiss pharma group Helsinn. Akynzeo is an oral fixedcombination of netupitant (300 mg) and palonosetron (0.5 mg).

Sanofi Pasteur launches quadrivalent influenza vaccine, FluQuadri in India

Sanofi Pasteur announced the launch of its 4-strain influenza vaccine FluQuadri inIndia – this will be India’s first quadrivalent vaccine to provide broader protectionagainst influenza to population above 3 years of age.

Sanofi launches multiple sclerosis drug, Aubagio in India

Sanofi Genzyme, the specialty care global business unit of Sanofi, has launchedAubagio from its international Multiple Sclerosis (MS) portfolio. A chronic anddebilitating disease of the nervous system, Multiple Sclerosis has varied symptomslike weakness in the limbs, poor vision, fatigue or slurred speech

Dr Reddy's Labs launches generic Bloxiverz injection in US market

Dr Reddy’s Laboratories has launched the US FDA approved neostigminemethylsulfate injection, USP, a therapeutic equivalent generic version of Bloxiverzinjection. Dr Reddy’s neostigmine methylsulfate injection, USP is available in 5mg/10 mL and 10 mg/10 mL multi-dose vials.

Regulatory Approvals

Zydus gets US FDA marketing approval for Nystatin ointment, omeprazole andsodium bicarbonate capsules

Zydus Cadila has received the final approval from the US FDA to market Nystatinointment USP, 100,000 units per gram. It will be manufactured at its topicalmanufacturing facility at Ahmedabad. The Company has also received the finalapproval to market omeprazole and sodium bicarbonate capsules, 20 mg/1100 mgand 40 mg/1100 mg.

Cipla receives US FDA approval for generic Albenza

Cipla has received final approval for its ANDA for albendazole tablets (200 mg)from the US FDA. Cipla’s albendazole tablets (200 mg) is AB-rated generictherapeutic equivalent version of Impax Laboratories Inc.’s, Albenza. Albendazole isan anthelmintic drug indicated for use in treatment of parenchymalneurocysticercosis.

Zydus receives US FDA approval for generic Atelvia delayed-release tablets

Zydus Cadila has received the final approval from the US FDA to marketRisedronate sodium delayed-release tablets (US RLD – Atelvia delayed-releasetablets), 35 mg. This medicine is used to treat osteoporosis in women, caused bymenopause.

Company NewsProduct & Regulatory (1/2)

Source: Industry websites, Deal Databases3

Glenmark receives US FDA approval for generic Vagifem 10 mcg

Glenmark Pharmaceuticals Inc, USA (Glenmark) has announced that USFDA hasgranted final approval for Estradiol Vaginal Inserts USP, 10 mcg, the generic versionof Vagifem, 10 mcg, of Novo Nordisk which is used for providing relief frommenopause symptoms.

Glenmark receives marketing approval for generic Seretide Accuhaler

Glenmark’s subsidiary Glenmark Arzneimittel GmbH has secured marketingauthorization in Germany for fluticasone/salmeterol dry powder inhaler (DPI), ageneric version of GlaxoSmithKline’s Seretide Accuhaler. It is use for the treatmentof asthma and chronic obstructive pulmonary disease (COPD). Glenmark will sell theproduct in Germany under the name “Salflutin”.

US FDA nod to Sun Pharma’s glaucoma drug

Sun Pharma has received the USFDA approval for its new drug application ofXELPROS, which is used to reduce open-angle glaucoma or ocular hypertension.

Expansion and Diversification

China’s medical devices company Lepu Medical to foray into Indian market

Lepu Medical Technology, the leading manufacturer and innovator is all set to makeits foray into Indian medical devices and equipment market through an overseassubsidiary company. Lepu will set up a fully functional operation organization with95% Indian employees and will be soon launching the whole range of PCI products.

Wockhardt sets up its first manufacturing facility in the Middle East

Drug firm Wockhardt has set up its first facility in the Middle East in Dubai tomanufacture new chemical entities (NCEs) for catering to global markets. Thefacility is spread over 10,000 sq. meters.

Glenmark to market generic tiotropium bromide powder inhaler in West Europe

Glenmark Pharmaceuticals Europe has entered into a strategic, exclusive licensingagreement for marketing generic tiotropium bromide dry powder inhaler (DPI) inWestern Europe. The product is used in the treatment of chronic obstructivepulmonary disease (COPD).

AstraZeneca open GMD Centre in India

AstraZeneca opened its new Global Medicines Development (GMD) Centre inBengaluru – the unit is one of its 9 GMD centers globally that transformsbreakthrough molecules into medicines and monitor its use and safety.

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Company NewsProduct & Regulatory (2/2)

...Expansion and Diversification

Manipal-backed iGenetic to branch out into B2C mass diagnostics vertical

iGenetic Diagnostics, a healthcare diagnostics firm with a focus on specialized anddifferentiated tests will soon offer routine assessments for consumers under adifferent brand.

Novartis to pay as much as USD 1 bn for skin drug rights

Novartis AG agreed to buy the rights to a skin-disease drug from developersGalapagos NV and MorphoSys AG for ~USD 1 bn. Novartis will pay EUR 95 mn(USD 111 mn) upfront and deferred payments of up to EUR 850 mn based on thedrug reaching certain regulatory, commercial and sales goals.

Mitra Biotech, Glenmark partner for advancing immuno-oncology drug pipelineutilizing CANscript platform

Mitra Biotech, a Massachusetts-based global leader in advancing personalizedoncology treatment has entered into a partnership with Glenmark Pharmaceuticalsfocused on advancing Glenmark's proprietary immuno-oncology drug pipelineutilizing Mitra’s CANscript platform. CANscript is a human, immune-relevant ex vivoplatform that allows drug developers to understand drug performance in humantissue, which in turn allows for an informed approach to clinical development andpatient response.

Lupin, Japan’s Nichi-Iko tie up to distribute biosimilar drug

Lupin, India’s third-largest drug maker has tied up with Japan’s Nichi-Iko for thedistribution, promotion and sale of Lupin’s recently filed biosimilar Etanercept inJapan. Etanercept is used for the treatment of several auto immune diseases.

Recalls / Exits / Regulatory Radar

Abbott discontinues Xience Alpine stents in India

National Pharmaceutical Pricing Authority (NPPA) has permitted Abbott Healthcareto discontinue selling its premium metallic stent Xience Alpine Premium from theIndian market. Due to the regulatory intervention on stent prices, Abbott hadapplied for withdrawal of its high-end stents last year.

Sun Pharma recalls testosterone cypionate injections from US

Sun Pharmaceutical has recalled more than 5,200 units of testosterone cypionateinjections from the US – the company is recalling 5,215 units of 10 ml vials oftestosterone cypionate injections on account of “presence of particulate matter:organic and inorganic compounds detected in vials of product”.

Hetero Labs recalls over 1.59 mn bottles of hypertension drug from US

Indian drug firm Hetero Labs is recalling over 1.59 mn bottles of Valsartan Tabletsused for treatment of hypertension from the US market due to deviations from thegood manufacturing norms. The Company is recalling Valsartan Tablets USP in thestrengths of 40 mg, 80 mg, 160 mg and 320 mg, manufactured by the company forCamber Pharmaceuticals.

Sun Pharma again faces FDA heat on Halol plant

Drug major Sun Pharmaceutical Industries has come under the US Food and DrugAdministration (FDA) scanner with the regulator issuing six observations related todeficient procedures at its Halol manufacturing facility. The facility in Gujaratreceived its first approval in four years from the FDA for a product used to treatcancer only in June. The Halol plant had been under FDA scanner since September2014.

Fundraise/ IPO

Carlyle-backed pathology firm Metropolis Healthcare files for IPO

Metropolis Healthcare one of the leading diagnostics companies in India, has filed aDRHP for an IPO comprising 15.16 mn shares consisting of an offer for sale of up to5.01 mn shares by the Promoter Dr. Sushil Shah and upto 10.25 mn shares byCarlyle. The company reported consolidated revenue of ~INR 6.5 bn and PAT of~INR 1.1 bn for the year ended 31 March 2018.

PE fund Jacob Ballas to exit Inventia Healthcare through INR 4,500 mn IPO

Inventia Healthcare backed by private equity fund Jacob Ballas, filed DRHP for anIPO. Inventia focuses on developing oral solid dosage formations (OSDFs), The sharesale will see Jacob Ballas exit Inventia by selling its entire 23.4% stake. The firmplans to raise fresh capital of INR 1250 mn which will be used to retire outstandingloans and for general corporate purposes, as per the draft documents.

Source: Industry websites, Deal Databases

Strategic Mergers and Acquisitions

Cipla's subsidiary to buy South Africa's Mirren for ZAR 450 mn

Drug major Cipla's subsidiary has signed an agreement to acquire South Africa's Mirrenfor a cash consideration of ZAR 450 mn (approx. INR 2,280 mn). The acquisition ofMirren, which specializes in over the counter (OTC) pharmaceutical products willstrengthen its market position and will help it to accelerate growth within OTC space.

Cadila Healthcare to buy 51% stake in Windlass for ~INR 1,555 mn

Cadila Healthcare has entered into an agreement to acquire 51% in WindlassHealthcare for ~INR 1,555 mn. The acquisition will help Cadila to ramp up operationsand increase product offerings.

Aurobindo acquires Apotex Inc's biz in 5 European countries for EUR 74 mn

Aurobindo Pharma has signed a definitive agreement to acquire Canadianpharmaceuticals company Apotex International’s commercial operations and certainsupporting infrastructure in five European countries for EUR 74 mn (INR 5.93 bn) in anall-cash deal. The acquisition will extend and diversify Aurobindo’s European productportfolio by adding over 200 generics and more than 80 over-the-counter products thathad total sales of EUR 133 mn.

Aurobindo to acquire dermatology and oral solids businesses from Sandoz for USD900 mn

Aurobindo Pharma's US based subsidiary Aurobindo Pharma USA has entered into adefinitive agreement with Sandoz Inc., USA, a Novartis division, to acquire itsdermatology and oral solids businesses for a consideration of US$ 900 mn.

Apollo Hospitals enters Lucknow with acquisition of Medics for INR 910 mn

Apollo Hospital Enterprise a multi-speciality chain of hospitals has acquired a 50%stake in Medics International Lifesciences (Medics), a 330 bedded super-specialityhospital in Lucknow. The Apollo Medics Super Speciality Hospital would strengthenApollo Hospitals’ leadership position in the hospital space as well as enhance itspresence in the state of Uttar Pradesh where it already has a strong brand equity.

Olon buys API manufacturing facility in Mahad, India

Olon, an active pharmaceutical ingredients (API) contract development andmanufacturing organization (CDMO) and generics supplier, announced the acquisitionof a local generics chemical operations API manufacturing facility in Mahad, India, aspart of a continuing expansion of its global footprint.

Private Equity Investments

Epygen looking to raise INR 3,000 mn to propel biosimilar in India

Epygen Biotech, one of the leading privately held biotechnology companies in Indiaplans to raise INR 3000 mn in the next three years to fuel launch of its biosimilarpipeline. The funding will provide Epygen to propel clinical trial programmes of itspipeline molecules in the field of oncology and cardiology, which are showingsubstantial promise in protein expression and purification.

Advanced Enzyme raises INR 1,080 mn structured debt

Advanced Enzyme Technologies has raised INR 1,080 mn as structured debt fromAvendus Finance, the non-banking finance company (NBFC) business of KKRbacked Avendus Capital. Advanced Enzyme provides enzyme-based solutions for avariety of industries, including pharmaceuticals, nutraceuticals, animal nutritionand food processing. Its clientele includes Indian pharmaceutical companies in thenutraceutical and nutrition segment across the globe.

Cytecare Hospitals gets fund infusion of USD 31 mn from Goldman Sachs

Bengaluru Cytecare Hospitals has received a Series-A round infusion to the tune ofUSD 31 million from Goldman Sachs. The investment will be used towards a longterm growth strategy focused on establishing an oncology franchisee across 4 to 5cities across India. These will be centre of excellence providing the best of carewhich will pursue research on the disease.

Online pharmacy NetMeds secures USD 35 mn

Online pharmacy NetMeds Marketplace has raised USD 35 million in a Series Cfunding round from Southeast Asian business conglomerate Daun Penh CambodiaGroup based in Singapore. Netmeds will use the funds to expand its reach throughmarketing efforts and enhance customer experience by expediting delivery and forworking capital purposes.

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Company NewsStrategic M&As and Private Equity Investments

Source: Industry websites, Deal Databases

Drug firms corner export incentives

Pharmaceutical companies have emerged as big beneficiaries of the commerceministry’s export incentive scheme MEIS, having received the major portion of thedisbursals. Under the Merchandise Exports from India Scheme (MEIS), thegovernment provides duty benefits at different rates depending on product andcountry. Rewards are payable as percentage of realized free-on-board value and theMEIS duty credit scrip can be transferred or used for payment of a number of dutiesincluding the basic customs duty based on the drug reaching certain regulatory,commercial and sales goals.

Health ministry set to frame guidelines for standards of point of care test andcollection centers

Alarmed by rising cases of misdiagnosis and wrong diagnosis in the country which inturn leads to long-term complications, the Union health ministry is set to frameguidelines for standards of point of care test and collection centers. The guidelines willprescribe minimum standards for point of care testing, collection centers, standards ofquality of testing kits, quality of above point of care testing and collection centersincluding training of personal performing these tests. It will be incorporated in ClinicalEstablishments (Central Government) Rules.

Maharashtra FDA cancels 47 drug manufacturing licenses, 636 sale licensesacross state for non-compliance to norms

Having served 155 notices to drug manufacturers in the state for non-compliance inthe past six months, the Maharashtra Food and Drug Administration (FDA) hasrecently canceled 47 manufacturing licenses, 636 sale licenses and lodged 4 FIRs incertain cases for non-compliance to norms. The state regulator also suspended 2,490sale licenses and 79 manufacturing licenses. This comes close on the heels of CentralDrugs Standard Control Organization (CDSCO)'s proactive approach to conduct riskbased inspections of Schedule M units in collaboration with the state drug regulatorfor effective oversight on compliance to good manufacturing practices (GMP).

Pharma industry associations seek hike in ceiling prices of NLEM drugs as APIprices rise significantly

Worried by extraordinary rise in prices of raw materials pushing up formulation pricessignificantly, pharmaceutical industry associations have urged the Central governmentto increase ceiling prices of drugs under National List of Essential Medicines (NLEM).A delegation of Indian Drugs Manufacturers Association (IDMA) is set to meet theCentral government in this regard.

Health ministry bans 328 controversial FDC drugs with immediate effect

The ministry of health and family welfare has prohibited the manufacture for sale, saleor distribution for human use of 328 fixed dose combinations (FDCs) with immediateeffect. It has also restricted the manufacture, sale or distribution of six FDCs subjectto certain conditions.

More Medical devices may come under drug law

The Central Drugs Standard Control Organization (CDSCO), the drug qualityregulator under the ministry, has suggested to add 8 new categories of medicaldevices under the definition of drug, which will be directly regulated under theDrugs and Cosmetics Act. At present, only 23 medical devices qualify as drugs andare monitored for quality by the Drugs Controller General of India (DCGI). The listproposed by CDSCO includes implantable medical devices, MRI equipment, CTscan equipment, defibrillators, dialysis machines, PET equipment, X-ray machinesand bone marrow cell separator.

MTaI backs govt plan to regulate critical care medical devices

The Medical Technology Association of India (MTaI), which represents leadingresearch-based medical technology companies with significant manufacturinginvestments in India, has welcomed the central government’s plan to regulatemanufacture, import and sale of critical medical devices such as pacemakers, CTscanners and X-ray machines in the country.

Govt plans cap on trade margins of medical devices

Government plans to bring down prices of commonly used medical devices bycapping the trade margin at 30% on the first point of sale, a move likely totrim irrational profits made by distributors, wholesalers, retailers andeven hospitals by selling such products to patients.

Exporters face hiccups in Vietnam market due to tightening of regulatoryrequirements

Indian pharmaceutical exporters are facing hiccups in Vietnam market due totightening of regulatory requirements for drugs imported into the country and theVietnam government's push to promote domestic drug industry. Another challengefor Indian exporters is change in Vietnam's bidding criteria for imported drugs lastyear, giving top priority on EU’s GMP certified drugs or Pharmaceutical InspectionCo-operation Scheme Good Manufacturing Practice (PIC/S GMP) certified drugs

1,000 medical devices to have BIS quality seal soon; standardization tocomplete in 2 months

A range of medical devices will soon have an 'Indian standard' and nearly 1,000products are currently being benchmarked. The standardization is expected to becompleted in the next 2 months. Most of the important devices will carry Indianstandardization from the Bureau of Indian Standards (BIS) as per NITI Aayog.

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Industry NewsGovernment Regulations & Notifications

Source: Industry websites, Deal Databases

Date Target Company Name Investor (s) / Buyer (s) Deal TypeDeal Value

($ mn)% Sought

Pharmaceuticals, Biotechnology and Lifesciences

2018-08-13 Windlas Healthcare Cadila Healthcare M & A – Domestic 22.5 51.0

2018-08-10 Glenmark Pharmaceuticals True North Managers Private Equity 92.6 100.0

2018-07-23 Koye Pharmaceuticals PI Opportunities Fund Venture Capital - -

2018-07-19 Alniche Lifesciences India Life Sciences Fund Private Equity 10.0 -

2018-06-21 Fullife Healthcare Sixth Sense Venture Fund Venture Capital 1.5 10.0

2018-06-16 Sai Life Sciences TPG Asia VII SF Private Equity 105.4 35.0

2018-06-09 Ind-Swift Laboratories Edelweiss Alternative Asset Advisors, EC Special Situations Fund PIPE 11.2 19.7

2018-05-18 Neuland Laboratories Malabar India Fund LP, Steadview Capital Master Fund QIP 18.5 -

2018-04-02 Mankind Pharma ChrysCapital, GIC, CPP Investments Private Equity 350.0 10.0

2018-04-19 Merck Procter and Gamble M & A – Inbound 295.1 77.8

2018-04-17 Bremer Pharma Alivira Animal Health M & A – Outbound 2.80 100.0

2018-04-02 Abbott (2 Diabetes and Hyperthyroidism Brands) Corona Remedies M & A – Domestic - -

Healthcare and Diagnostics

2018-08-02 Medall Healthcare Constellation Alpha Capital Corp M&A - Inbound 211.5 100.0

2018-07-13 Fortis Malar Hospitals IHH Healthcare Berhad M&A - Inbound 4.1 26.0

2018-07-13 Fortis Healthcare IHH Healthcare Berhad M&A -Domestic 1,068.2 57.2

2018-07-05 Medics International Lifesciences Apollo Hospitals Enterprise M&A -Domestic 13.2 50.0

2018-07-03 DCDC Health Services Asian Development Bank Others 10.0 -

2018-06-16 Krishna Institute of Medical Sciences General Atlantic Private Equity - 30.0

2018-05-16 Cytecare Hospitals Goldman Sachs (Principal Investments) Venture Capital 31.0 -

2018-05-04 Surya Children's Medicare SeaLink Capital Partners Private Equity 29.5 100.0

2018-04-16 GNRC Avendus Finance Structured Funding 10.2 -

2018-04-22 OSL Healthcare Nayati Healthcare and Research M&A - Domestic 20.0 51.0

Medical Devices and Consumables

2018-07-05 Tarsons Products ADV Partners Private Equity 23.1 49.0

2018-06-15 Ascent Meditech LeapFrog Emerging Consumer Fund III Private Equity - -

2018-05-14 Tynor Orthotics Lighthouse Advisors India Private Equity 21.2 -

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Key TransactionsM&A and Private Equity

Source: Deal Databases

Constellation Alpha Corp acquires Medall Healthcare

Strategic Rationale Future Plans

• Geographical Expansion –Enter New Markets• Penetrate regions with

limited coverage by other National Diagnostics Chains

• Acquire Regional Leaders• Public-Private

Partnerships at the State level

• 3x Deeper Coverage Of Existing Markets in 5 Years (FY22)

Deal Contours

• Fully diluted pro forma Enterprise Value1 - USD 267 mn

• To acquire 93% at Closing, remaining shares in June 2019

• EV/EBITDA2(Current Year): 15.4x

• EV/EBITDA3 (Forward Year): 12.8x

• Large, high growth market in the fastest growing major economy

• Differentiated business model (hub and spoke) positioned to extend

• India’s leading apex lab network provides strong foundation for geographic expansion

• Acquisition strategy to consolidate fragmented industry

• Attractive entry valuation with significant upside

• Margin expansion driven by growing scale

1Fully diluted enterprise value including 1.5 mn rights, 0.6 mn pre-IPO units and 3.6 mn founder shares and excludes unexercised warrants at strike price of $11.50 2Assumes current year EBITDA of $17.4M3Assumes forward year EBITDA of $20.9M

Source: Company Presentation, Deal Databases

Medall Healthcare

• Integrated Indian Radiology & Pathology company offering 900+ pathology & 750+ radiology tests

• 5th pathology company in India with top apex lab network

• Leader in South India with ~25 mn tests conducted on ~9 mn customers per annum

• Network of 48000+ doctors, 570 corporate tie- ups and 7850+ touchpoints

• Exceptional growth metrics 17% Revenue CAGR (FY13-18) and 27% EBITDA CAGR (FY13-18)

• Presence across multiple states with FY18 Revenue of INR 3,544 mn • Pathology (62%), Radiology (38%)• Private payors – 63%, Government contracts – 37%

Constellation Alpha Corp.

• Constellation Alpha Capital Corp. is a special purpose acquisition firm listed on NASDAQ

• Biggest India focused IPO ($143.75 mn) in June 2017

• Only US-listed Indian healthcare services company

• The SPAC is engaged in acquiring businesses and assets, via a merger, capital stock exchange, asset acquisition, stock purchase

• Focuses on healthcare services and manufacturing businesses and conceived as an India-focused, healthcare roll-up platform

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Aurobindo acquires Sandoz’s Dermatology, Oral Solid Business

Future Plans

• Post acquisition Aurobindo will become 2nd largest generic player in the US with 8.6% combined market share2

• Plans to grow its global business and to expand and enhance its product portfolio offerings in key therapeutic areas

• Also to further strengthen its relationship with “Big 3” buying groups along with significant portfolio enhancement in the medium term

Deal Contours • Deal Value – USD 0.9 bn • Upfront purchase price of USD

0.9 bn in cash including potential upside in near term earn-out and additional potential earn-out on pipeline product

• EV/Revenue1 – 1.0x• Acquired portfolio with 70%

revenue contribution by oral solids and 30% by dermatology

Strategic Rationale

• Portfolio diversification • Sandoz being 2nd largest

dermatology player in the US• Presence across Generics, Branded

and OTC• Approx. 300 products under

development • Vertically integrated Infrastructure

• Well established and dermatology focused commercial and manufacturing infrastructure and R&D facilities of Sandoz

• Significant synergies & value creation

Sandoz

• Sandoz is a global leader in generic pharmaceuticals and biosimilars and a division of the Novartis Group

• Sandoz US includes the inline portfolio of dermatology and oral solids, authorized generics and in-licensing products, branded dermatology products and 3 manufacturing facilities at Hicksville, Melville and Wilson

• The business also includes the 100% shareholding in Eon Labs, a wholly owned subsidiary of Sandoz

Aurobindo Pharma

• Aurobindo Pharma USA is engaged in the manufacturing of pharmaceutical products in the form of tablets, capsules, oral contraceptive pills

• The company was founded in 1994 and is based in New Jersey, United States of America

• Operates as a subsidiary of Aurobindo Pharma Ltd (India)

• Aurobindo exports to over 125 countries across the globe with more than 70% of its revenues derived out of international operations

1The portfolio is expected to generate over $0.9 bn in sales for the first 12 months after completion of the transaction for Aurobindo2Market Share in the US by Number of Prescriptions

9Source: Company Presentation, Deal Databases

Company Ent.

Value Market

CapStock Price

Revenue EBITDA margin

PAT margin

EV/Sales(x) EV/EBITDA(x) P/E(x) ROE ROCE

(INR bn) (INR bn) (INR) (INR bn) (%) (%) TTM FY19E FY20E TTM FY19E FY20E TTM FY19E FY20E (%) (%)

Sun Pharmaceuticals 1,442 1,439 600 260 21.6% 8.3% 4.6x 4.8x 4.2x 21.4x 20.9x 16.7x 66.7x 33.6x 25.1x 5.8% 12.3%

Piramal Enterprises 728 415 2,247 59 8.1% 86.9% 12.8x 5.4x 4.3x 157.5x 19.7x 15.7x 8.0x 19.0x 13.6x 24.8% 0.0%

Cipla 546 522 648 147 19.2% 9.6% 3.2x 3.2x 2.8x 16.4x 16.0x 13.3x 37.0x 28.6x 22.7x 10.5% 12.6%

Aurobindo Pharma 476 441 753 162 23.2% 14.9% 2.2x 2.6x 2.2x 9.6x 11.9x 9.7x 18.2x 17.3x 14.5x 23.0% 28.1%

Lupin 456 401 887 156 20.2% 1.6% 2.5x 2.8x 2.4x 12.3x 15.8x 12.2x 159.5x 31.4x 22.5x 1.9% 2.7%

Dr. Reddy's Laboratories 456 426 2,567 142 16.7% 6.9% 2.6x 2.9x 2.6x 15.8x 15.2x 11.9x 43.4x 28.1x 20.7x 7.8% 12.2%

Cadila Healthcare 429 392 383 116 24.6% 15.3% 3.7x 3.4x 3.1x 14.9x 14.8x 13.1x 21.8x 20.7x 18.2x 22.6% 29.0%

Biocon 381 376 626 43 20.3% 10.7% 8.7x 7.3x 5.8x 43.0x 30.4x 20.4x 90.4x 62.0x 36.2x 8.0% 8.3%

Divi's Laboratories 326 345 1,300 38 33.9% 23.0% 7.1x 7.4x 6.5x 20.8x 20.8x 17.5x 39.3x 30.9x 26.1x 15.5% 15.5%

Torrent Pharmaceuticals 324 273 1,611 59 23.0% 11.5% 4.5x 4.2x 3.7x 19.5x 16.5x 14.0x 40.2x 33.9x 24.3x 15.1% 24.0%

Alkem Laboratories 237 235 1,961 63 16.3% 10.0% 3.8x 3.2x 2.8x 23.4x 18.4x 14.7x 37.2x 25.4x 19.9x 13.5% 20.1%

GSK Pharmaceuticals 230 243 1,434 29 17.7% 12.3% 5.7x 7.0x 6.2x 32.3x 34.5x 28.8x 69.2x 52.9x 44.2x 17.3% 19.8%

Glenmark Pharmaceuticals 207 173 612 89 18.1% 8.7% 2.0x 2.1x 1.9x 11.3x 12.3x 10.3x 22.3x 19.7x 16.4x 14.7% 14.2%

Abbott India 148 158 7,430 33 16.0% 12.2% 3.2x NA NA 20.1x NA NA 39.3x NA NA 26.1% 26.4%

Jubilant Life Sciences 140 110 692 75 20.2% 8.6% 2.2x 1.6x 1.4x 10.8x 7.7x 6.6x 16.8x 11.8x 9.6x 17.1% 17.9%

Natco Pharma 132 132 717 22 43.2% 32.4% 6.4x 5.3x 4.9x 14.9x 12.2x 12.5x 18.3x 16.0x 17.0x 29.5% 30.3%

Sanofi India 131 138 5,993 25 21.8% 13.2% 4.1x NA NA 18.9x NA NA 42.3x NA NA 16.7% 21.3%

Alembic Pharmaceuticals 119 113 597 31 20.5% 13.2% 3.5x 3.3x 2.9x 17.0x 16.8x 14.1x 27.3x 25.1x 21.1x 20.0% 18.9%

Pfizer Limited 115 133 2,899 20 25.4% 18.3% 4.2x NA NA 16.4x NA NA 36.8x NA NA 14.1% 24.8%

Eris Lifesciences 98 96 696 9 37.6% 34.4% 13.1x 8.7x 7.5x 34.8x 22.7x 19.0x 32.6x 26.9x 21.7x 41.2% 189.2%

IPCA Laboratories 90 86 678 32 14.1% 7.4% 2.7x 2.5x 2.1x 19.1x 14.6x 11.5x 35.8x 24.4x 17.7x 9.3% 9.2%

Ajanta Pharma 88 91 1,030 21 31.9% 22.7% 5.8x 4.1x 3.6x 18.2x 14.5x 12.1x 19.3x 21.6x 17.5x 26.0% 26.7%

Wockhardt 86 58 522 39 NM NM 2.8x NA NA 32.9x NA NA NA NA NA NM NM

Strides Pharma Science 59 39 436 28 15.4% 23.3% 2.8x 2.0x 1.7x 18.4x 12.9x 10.0x 58.9x 25.5x 14.8x 25.4% 44.7%

Laurus Labs 53 43 410 20 20.7% 8.4% 3.2x 2.2x 1.9x 15.2x 11.3x 8.2x 25.9x 22.7x 13.8x 11.9% 14.7%

Merck 46 50 3,014 11 12.8% 8.8% 1.8x NA NA 12.7x NA NA 53.2x NA NA 13.4% 15.1%

Astrazeneca Pharma India 41 42 1,691 6 8.6% 4.0% NA NA NA NA NA NA 158.6x NA NA NA NA

NA: Not Available NM: Not Meaningful

Source: Bloomberg as on 16th October, 2018

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Public Market DataPharmaceuticals and Lifesciences (1/2)

Company Ent.

Value Market

CapStock Price

Revenue EBITDA margin

PAT margin

EV/Sales(x) EV/EBITDA(x) P/E(x) ROE ROCE

(INR bn) (INR

bn) (INR) (INR bn) (%) (%) TTM FY19E FY20E TTM FY19E FY20E TTM FY19E FY20E (%) (%)

Granules India 33.7 25.0 98 16.8 16.5% 7.9% 2.1x 1.7x 1.5x 12.5x 10.1x 7.9x 18.0x 13.9x 10.7x 12.0% 14.7%

Shilpa Medicare 32.6 32.7 401 7.5 20.2% 14.0% 5.0x 3.7x 3.0x 24.9x 15.4x 12.2x 30.7x 20.6x 15.6x 10.2% 10.3%

FDC 32.4 36.7 210 10.6 21.3% 16.3% 3.7x 2.7x 2.4x 16.8x 11.0x 8.8x 21.5x 15.0x 11.9x 13.6% 14.6%

Caplin Point Laboratories 31.2 32.0 423 5.3 37.1% 27.5% 8.0x 5.0x 4.1x 21.7x 13.5x 10.8x 22.1x 19.4x 15.3x 49.2% 52.0%

Suven Life Sciences 30.6 33.3 261 6.1 32.9% 20.2% 3.0x 4.6x 4.1x 9.2x 15.5x 12.7x 27.0x 25.4x 20.6x 17.2% 17.2%

Hikal 26.3 20.3 164 12.8 18.9% 6.0% 1.8x NA NA 9.5x NA NA 26.2x NA NA 12.1% 12.5%

Advanced Enzymes 22.8 22.6 202 3.9 42.3% 23.2% 6.2x 5.2x 4.5x 14.7x 11.9x 10.0x 25.0x 19.2x 15.3x 17.6% 36.2%

J.B. Chemicals & Pharma 21.2 24.9 298 13.9 15.7% 10.0% 1.6x 1.3x 1.2x 10.1x 7.9x 6.5x 18.1x 14.6x 11.8x 9.9% 11.4%

Indoco Remedies 20.0 17.8 192 10.2 13.3% 4.0% 2.1x 1.8x 1.5x 16.1x 12.0x 9.7x 43.1x 25.5x 18.5x 6.2% 9.6%

Aarti Drugs 18.7 13.6 578 12.4 16.0% 6.6% 1.4x 1.3x 1.1x 8.6x 8.2x 7.0x 16.8x 13.4x 11.2x 19.0% 15.0%

Bliss GVS Pharma 18.1 17.4 168 3.7 29.2% 15.8% 5.6x NA NA 19.3x NA NA 943.2x NA NA 11.5% 20.5%

Panacea Biotec 17.5 10.4 170 5.9 14.3% NM 4.0x NA NA 27.7x NA NA NA NA NA NM NM

Sequent Scientific 15.5 12.6 51 8.5 11.7% 49.7% 2.6x 1.5x 1.3x 22.0x 13.6x 10.0x NA 43.1x 25.9x 51.9% 111.0%

Marksans Pharma 13.5 12.6 30 9.0 8.7% 4.0% 1.5x 1.2x NA 17.6x 11.8x NA 35.2x NA NA 7.9% 10.7%

Nectar Lifesciences 13.4 5.0 22 18.8 12.6% 2.8% 0.8x NA NA 6.1x NA NA 9.6x NA NA 5.1% 10.5%

Neuland Laboratories 13.2 10.4 598 5.3 9.6% 2.3% 1.7x 2.1x 1.7x 18.2x 16.6x 10.5x 55.4x 23.9x 11.7x 2.2% 8.2%

TTK Healthcare 12.3 12.9 912 5.8 8.2% 3.1% 2.5x NA NA 30.3x NA NA 71.0x NA NA 9.3% 12.2%

Novartis India 10.9 18.7 755 5.2 NM 15.2% 1.4x NA NA NA NA NA 26.6x NA NA 9.5% 11.4%

Ind-Swift Laboratories 10.8 2.6 58 7.7 17.5% 2.9% 1.4x NA NA 8.1x NA NA 11.3x NA NA 4.2% 5.1%

Morepen Laboratories 10.6 10.7 23 6.1 11.3% 4.9% 2.3x NA NA 20.2x NA NA 36.0x NA NA 13.8% 25.5%

Hester Biosciences 10.6 10.0 1,180 1.4 37.6% 17.0% 10.6x NA NA 28.3x NA NA 43.5x NA NA 17.6% 14.6%

Vivimed Labs 9.5 3.3 39 11.9 18.7% 6.6% 1.0x NA NA 5.5x NA NA 4.3x NA NA 8.0% 14.2%

Gufic Biosciences 9.0 8.3 107 3.0 15.1% 5.3% 3.0x NA NA 20.0x NA NA 52.0x NA NA 35.3% 43.9%

SMS Pharmaceuticals 6.7 5.5 65 4.6 20.6% 6.8% 1.6x NA NA 7.7x NA NA 17.4x NA NA 10.3% 10.8%

Lincoln Pharmaceuticals 5.3 5.0 250 3.6 14.5% 9.6% 1.3x NA NA 8.7x NA NA 14.5x NA NA 16.7% 19.0%

Medicamen Biotech 4.9 5.0 428 1.1 14.8% 9.1% 6.2x NA NA 41.8x NA NA 47.4x NA NA N.M. N.M.

RPG Life Sciences 4.5 4.0 242 3.4 10.9% 3.9% 2.0x NA NA 18.1x NA NA 29.8x NA NA 8.7% 11.7%

Themis Medicare 3.7 3.0 329 2.1 12.0% 5.4% 2.8x NA NA 23.3x NA NA 26.7x NA NA 7.0% 15.7%

Anuh Pharma 3.4 3.8 151 2.4 9.1% 6.9% 1.5x NA NA 19.6x NA NA 23.1x NA NA 11.4% 14.7%

NGL Fine-Chem 3.2 3.1 497 1.1 21.0% 11.1% 2.3x NA NA 11.2x NA NA 24.4x NA NA 19.3% 19.5%

Albert David 2.8 3.3 573 2.9 7.6% 3.4% 0.6x NA NA 7.4x NA NA 24.3x NA NA 5.3% 6.0%

Jenburkt Pharmaceuticals 2.6 3.0 641 1.1 20.7% 15.0% 2.1x NA NA 10.3x NA NA 17.1x NA NA 29.8% 29.5%

Kopran 2.4 1.7 38 3.1 12.7% 6.5% 1.0x NA NA 7.9x NA NA 8.1x NA NA 15.2% 17.1%

11

Public Market DataPharmaceuticals and Lifesciences (2/2)

NA: Not Available

Source: Bloomberg as on 16th October, 2018

NM: Not Meaningful

Company Ent.

Value Market

Cap Stock Price

Revenue EBITDA margin

PAT margin

EV/Sales(x) EV/EBITDA(x) ROE ROCE

(INR bn) (INR bn) (INR) (INR bn) (%) (%) TTM FY19E FY20E TTM FY19E FY20E (%) (%)

Healthcare

Apollo Hospitals Enterprise 188.5 157.6 1,133.0 82.4 9.6% 1.4% 2.2x 2.0x 1.8x 22.3x 19.0x 15.7x 3.6% 2.6%

Aster DM Healthcare 105.2 82.7 163.7 66.2 9.3% 4.1% 1.6x 1.3x 1.1x 17.7x 12.6x 10.1x 11.4% 12.3%

Fortis Healthcare 93.0 72.0 138.8 45.6 6.0% N.M. 1.9x 1.9x 1.7x 31.1x 18.4x 12.8x N.M. N.M.

Narayana Hrudayalaya 52.3 45.4 222.0 22.8 9.3% 2.3% 2.8x 1.9x 1.7x 29.7x 20.3x 15.1x 5.1% 5.9%

Max India 27.2 19.6 73.0 15.9 5.4% N.M. 1.9x 1.0x 0.9x 35.0x 10.7x 8.6x N.M. N.M.

Healthcare Global Enterprise 23.4 19.3 219.2 8.3 14.3% 2.5% 3.5x 2.4x 2.0x 24.6x 16.7x 13.1x 4.3% 5.2%

Shalby 16.5 16.5 153.1 3.8 21.8% 11.2% 5.8x NA NA 26.5x NA NA 8.5% 8.0%

Kovai Medical Center And Hospitals 10.8 9.4 860.0 5.9 22.1% 9.9% 2.6x NA NA 11.7x NA NA 22.2% 15.9%

Indraprastha Medical Corp 4.2 3.7 40.6 7.2 10.0% 2.9% 0.7x NA NA 6.8x NA NA 15.1% 8.9%

KMC Speciality Hospitals 2.8 2.8 17.2 0.7 18.6% 9.4% 2.4x NA NA 12.9x NA NA N.M. 9.1%

Fortis Malar Hospitals 0.8 1.0 52.1 1.5 1.2% 2.2% 0.6x NA NA 53.7x NA NA 78.5% 77.4%

Lotus Eye Hospital And Institute 0.6 0.6 28.1 0.4 11.3% 4.5% 0.7x NA NA 11.2x NA NA 0.8% 0.9%

Diagnostics

Dr Lal Pathlabs 77.9 80.0 959.5 10.6 24.9% 16.2% 6.7x 6.3x 5.4x 27.0x 25.0x 21.1x 24.6% 29.1%

Thyrocare Technologies 31.9 33.0 613.8 3.5 41.3% 26.6% 8.8x 7.5x 6.2x 21.4x 19.6x 16.2x 21.9% 30.5%

Medical Devices and Consumables

Poly Medicure 20.5 19.7 222.9 5.2 23.1% 13.6% 4.4x NA NA 19.1x NA NA 23.4% 22.9%

Opto Circuits India 11.5 2.9 10.2 2.3 22.8% 15.2% 4.7x NA NA 20.8x NA NA 3.9% NA

12

Public Market DataHealthcare, Diagnostics and Medical Devices

NA: Not Available

Source: Bloomberg as on 16th October, 2018

NM: Not Meaningful

Saurabh Drolia

Vice President

Over 12 years of investment banking experience in cross border/domestic M&As, PE syndication

and capital markets

Successfully originated & advised several mid and large corporates across Pharmaceuticals,

Healthcare, Consumer, Industrials and Chemicals sectors

He has worked with KPMG, Elara Capital and JP Morgan Services. He was heading the Pharma

and Consumer sectors at Elara Capital and was also a member of the Board

Avdhoot Deshpande

President,Investment Banking -

Equity

With over 25 years of work experience in Equity Capital Markets, he has worked with marquee

names in the Investment Banking space like IL&FS, Avendus Capital, HSBC InvestDirect,

Axis Bank and Centrum Capital

Strong network of relationships with investors and the corporate community over the years has led

to several marquee and successful capital market mandates

Over 2 years of experience in M&A, Private Equity, Debt Syndication transactions across India and

South Asia region

Transaction experience in diverse sectors: Chemicals, Financial Services, Consumer, Plastics and

Renewables

B.Tech (Information Technology) and MBA (Finance) from NMIMS Mumbai

Chirag Vora

Manager

Over a year’s technical experience in the Specialty Chemicals segment

Chemical Technology graduate from the Institute of Chemical Technology (UDCT), Mumbai and

MBA (Finance) from Jamnalal Bajaj Institute of Management Studies (JBIMS), Mumbai

Shradhda Somkuwar

Analyst

BOBCAPS Pharmaceuticals & Healthcare Coverage Team

13

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Disclaimer

14

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