Information Memorandum

Investment Overview

Manufacturers of Empty hard gelatine capsules (EHGC) mainly used by Pharmaceutical & nutraceutical companies

Company started commercial production in September 2009

Promoters have over 35 years of experience in the Pharmaceutical and chemical industry

Manufacturing facility spread over 130,000 sq. ft. in Vadodara, Gujarat

Company has 6 lines with capacity to manufacture 3 bn capsules pa, making it one of the top 6 producers of capsules in India.

WHO, US FDA and EU EDQM standards based plant. The company has already received GMP certification and US DMF no. 23912 registration is complete. 

Company’s sales have grown at a CAGR of ~45% . Given that it has now gathered critical mass, the

company now plans to grow aggressively by adding more capacities to become one of the top 3 EHGC manufacturers in India.

Business Overview

Company Overview

Promoted by Mr. Chandrakant Patel and his two sons.

The family members migrated from Australia and Netherlands during the period 2005-2008 to set up state-of-the-art manufacturing facility in India, to manufacture Empty Hard Gelatine Capsules (EHGC).

The Company was incorporated in June 2005 and the commercial production started in September 2009.

The Company started with two manufacturing lines (Machine) in the year 2009. Further lines were added as under:

3rd machine was commissioned in August 2013 4th machine was commissioned in November 2013 5th machine was commissioned in November 2014 6th machine was commissioned in December 2014

 At present, the Company has 6 lines with capacity to manufacture 3,000 Million Capsules per annum. In terms of capacity, TPPL is the 6th largest manufacturer in India.

Team

Chandrakant Patel•Over 40 years of experience in Pharmaceutical and Chemical Industry•Achieved production and commercialization of Chlorpropamide and Solanesol, in his professional career

•Between 1998 to 2007, represented Australia at the Organization for theProhibition of Chemical Weapons (OPCW, UN) in the Netherlands

Devang Patel• Prior to co-founding Terrene Pharma, worked as Business Consultant at a Anglo-Dutch steel conglomerate where he was the principle architect of the group’s multi-platform knowledge and learning system

• Expertise lies in designing content and manufacturing management systems, reengineering business process and providing due diligence prior to implementing production systems across an organisation.

Bhavin Patel• Prior to co-founding Terrene, he worked as investment analyst at Lasalle Investments (a subsidiary of Jones Lang LaSalle) and Financial Accountant at Rhubarb Enterprise

•At Rhubarb he successfully redesigned the accounting practices in-order to timely account for cost of sales and inventory.

•He was responsible for managing LaSalle’s USD 1 Billon exposure to UK listed Real Estate market

Infrastructure

Company facilities are spread over 130,000 sq. ft. in a prime industrial park in Vadodara, Gujarat with sufficient space available for future expansions.

Key highlights of facility are: Class 100,000 environment right from raw

material preparation to packing. Class 10,000 environment for the main

manufacturing area of hard capsules. Purified water system meeting USPXXIII

(conductivity less than 1.25 microS/cm) amongst other stringent standards.

Independent Instrument, Chemical, Micro, Laminar Flow and packing material test Lab with all required instruments/testing apparatus

Kathabar dehumidification system which will provide a virtual bacteria free environment.

Manufacturing Process

Gelatin Melting using sterilized water in stainless steel vacuum melter.

Forming Capsules using fully automated machines

Inspection to check size, wall thickness, moisture content, color and possible microbial contamination

Printing and Packing

Product Design

Capsules are manufactured using novel design features in sizes 00 to 4  

All capsules incorporate a self-lock mechanism with: 6 pre-locks - prevents separation

caused by external forces and maintains the cap's diameter; improving filling machine performance

2 air channels - allows air to escape; critical when operating on high speed filling machines

2 radial locking indentures - provides circular locking; prevents leakage of content and separation of cap and body after filling

Bevelled edges - ensures the cap and body connect easily

Product Range

Leak & Tamper ProofNo organic Solvents

Liquid filled Capsules

Client/brand name engraved

Anti Counterfeit HGC

For Cosmeceutical market

Pearl Capsules

Other ProductsSLS Free Capsules, Halal Capsules, Kosher Capsules, Fortified

Capsules, Flavored Capsules, Time Release Capsules

Product Features

Customized colorsColorants accepted by regulatory agencies worldwide are usedColor Consistency

Special characters/patterns/trademarks printed on CapsulesPrinting both linear and axialPrinting using single or double color

Made from BSE Free GelatinRaw material conform to Indian, US and European StandardsQuarantined and checked to ensure strict compliance with Pharmacopeia standards

Site Tour

Site Tour

QC

GELATIN, FOOD COLOURS,

CATALYST & PRESERVATIVES

GELATIN

FOOD COLOURS IF REQUIRED

CATALYST & PRESERVATIVES IF REQUIRED

HOT WATER

GELATIN

MIXING AND MELTING TANKS FILTERING

HOLDING TANKS

AUTOMATIC CAPSULE

MANUFACTURING MACHINE

CAPSULESCOLLECTING BOX

CUTTING WASTE

SORTING & QUALITY

CONTROL

PRINTING SORTING & QC PACKING AND STORAGE

SALES AND DISPATCH

Site Tour

Quality Control

• All pre-production, in-process and post-production activities undergo a continuous series of inspections in accordance with US FDA, EU EDQM and WHO GMP standards.

• Online monitoring for various defects

• Production processes are tightly controlled to ensure consistency and subsequent performance on various high-speed capsule filling machines.

Global Presence

Our capsules are running successfully across the world!

Key Markets:

Asia: North America:India USA1 Europe: Middle East:Russia Syria

IraqAfrica:GhanaKenya1

NigeriaUganda1

1 Indirect export – our capsules are formulated in India for end-use in that market

SWOT Analysis

S• State of art manufacturing facility• Novel Capsule Design (Opti-Ring)• In House expertise to develop a unique dosage system for liquid capsule

• Skilled and Experienced manpower

W• Lack of production capacity• Lack of approvals by MNCs/Large Pharma• Lack of elaborate marketing / distribution network

O• There is no. number 2 supplier in large pharma companies• Providing an end-to-end hard capsule dosage manufacturing solution

• Sufficient domestic demand and growing international market

T•Availability of key raw material – Gelatin• Potential aggressive pricing by competitors• Capacity expansion of competitors

Industry Overview

Overview - Indian Pharmaceuticals Market

The Indian pharmaceuticals market increased at a CAGR of 9.4% in 2013 from USD6 billion in 2005, and is expected to grow at a CAGR of 23.9% to USD 55 billion by 2020

By 2020, India is likely to be among the top three pharmaceutical market by incremental growth and sixth largest market globally in absolute size

Indian Pharmaceutical sector accounts for about 1.4% of the global pharmaceutical industry in value terms and 10% in volume terms

With 72% market share (value terms), generic drugs form the largest segment.

India is the world’s largest provider of generic medicines accounting for 20% of global generic drugs (volume terms).

* - Source – www.ibef.org

Growth Drivers - Indian Pharmaceuticals Market

* - Source – www.ibef.org

Growth

Drivers

Demand-side drivers

Policy Support

Supply-side

drivers

• Accessibility of drugs to greatly improve

• Increasing penetration of health insurance

• Growing number of stress- related diseases due to change in lifestyle

• Better diagnostic facilities

• Reduction in approval time for new facilities

• Focus on specialized pharma education

• Improved accessibility for BPL people

• Exemption of drugs manufactured through indigenous R&D from price control under NPPP-2012

• Cost Advantage• India a major manufacturing

hub for generics• 546 sites registered at

USFDA• Increasing penetration of

chemists

Overview – Empty Capsules Industry

The global empty capsules market is estimated to be USD1.3 billion in 2014.

The global market is expected to grow at a 7% CAGR during 2014 to 2019 i.e. market size is estimated to be USD1.8 billion by 2019.

Hard Gelatin capsules segment accounted for the largest share of the global empty capsules market. This segment is expected to dominate the market.

The market is mainly driven by growing ageing population, increasing therapeutic applications of capsules in pharmaceutical, nutraceutical and cosmetic industries and technological advancements in drug delivery formulations.

Asia-Pacific region represents the fastest growing market for capsules. This can be attributed to increasing health awareness and growing affordability.

Overview – EHGC Industry

Till 1958 EHGC were imported in India from the American Companies. C&S Laboratories started the first commercial production in 1958

First fully automatic machine was imported in 1962-63

At present there are 16 active EHGC manufacturing companies in India with 77 billion units manufacturing capacity

High quality capsules are being imported for formulations which are to be exported

Labs are generally reluctant to change suppliers as any quality problem can have severe consequences

Generics with shake this intransigence as margins are far more compressed

Global Capsule Market

Capsugel accounts for 55% of the world market share with Qualicaps is a distant second with market share of ~10%

Regulated markets is characterized by high margins, long term relationships between supplier and buyer.

Buying is based on quality.

Major International PlayersCapsugel USA and WorldwideQualicaps Japan, USA and EuropeAssociated Capsules

India, East Europe, South America

Roxlor FranceSe-Heung South KoreaCaps Canada Canada, South America

Business Plan

Growth Strategy

• Become India’s top 3 hard capsule manufacturing company

• Partner with growing, cost and quality conscious companies and expand through mutual synergies

Focus on India

Advantage

• USD FDA, cGMP and EU EDQM compliant manufacturing facilities

• Employ innovative approaches for quality control

Quality Manufacturi

ng Capabilities

• Cater to the US and European Markets after establishing sizeable presence in Indian Market

Focus on Regulated Markets