GLENMARK PHARMACEUTICALS LIMITED

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1 GLENMARK PHARMACEUTICALS LIMITED Glenmark is a research led API & Generic formulations company, with a market presence across eighty countries. Background Glenmark Pharmaceuticals Limited (Glenmark), headquartered at Mumbai (Maharashtra) was incorporated in 1977 by Gracias Saldanha. In the initial years of operation, it focused on manufacturing and marketing formulation products within India and later commenced exports to markets in Africa.With India signing the GATT and the patent regime coming into effect, the company recognised the need to diversify to reduce dependence on the India formulations business alone. It then made a foray into the bulk drug business in 2001.Today, it has generic formulations and API business interests in over 80 countries across the world including the highly regulated markets of USA and Europe. Along side these changes, it has also invested and built a novel pipeline of breakthrough NCE through innovation. Glenmark floated its IPO in 1999 and with the capital raised, set up a state-of-the-art research and development centre in Navi Mumbai (Maharashtra) for drug discovery research. A number of its products have emerged as market leaders in India as well as in other countries. In some countries with significant potential, it has also established subsidiaries to make investments in building a strong generic and branded generic formulations business; for example it has established subsidiaries in the US and Brazil in 2003 and in UK in 2004.The company also incorporated a subsidiary in Switzerland in 2004 that is engaged in research and development for biologics and also coordinates clinical development of its NCE programs. Over the years, Glenmark has strengthened its integration across the pharmaceutical value chain through operations across its various manufacturing plants. Formulations are manufactured at Baddi (Himachal Pradesh), Goa, Nasik (Maharashtra) and Sao Paulo (Brazil).The plant at Goa received approval from the US FDA as well as the MCC, South Africa and TPD, Canada. API are manufactured at Ankleshwar (Gujarat) where the plant has received US FDA approval, as well as in Kurkumbh and Solapur in Maharashtra. Glenmark's API and formulations businesses are backed by strong research teams across its laboratories at Navi Mumbai and Sinnar (near Nasik, Maharashtra). Glenmark has built a visible and growing branded generic formulation presence across all its markets. The company's promoters, the Saldanha family, hold the majority stake in Glenmark (nearly Company Products Established Founder Distribution Production plants 56 Glenmark Pharmaceuticals 1977 Gracias Saldanha India, Americas, India, Brazil Pharmaceuticals Europe, Asia, Africa

2 per cent).the next largest shareholders are the foreign institutional investors (with per cent stake) and Indian public (with per cent stake). Domestic financial institutions, banks, mutual funds, private corporate bodies and non-resident Indians hold the residual shares. Products and brands The company's business segment portfolio broadly comprises both formulation and bulk drug sales. Its formulations business spans more than 80 countries across the globe.the company follows a branded generic model in markets across Asia, Africa, CIS countries, Russia and Latin America. In contrast, in the highly regulated markets of USA and Europe, it has adopted a business model of registering and marketing generic drugs. The formulation business spans several product segments such as dermatology, internal medicine, paediatrics, gynaecology, ENT and diabetes. Ascoril, Candid-B and Altacef, three of Glenmark's top- selling brands, are leaders in their individual therapeutic segments. The bulk drugs business comprises sales of API to customers in over 45 markets across the globe and also serves some of the captive needs of the formulations business within the company. The formulations and bulk drug business jointly contributed the bulk of the company's revenues in the year 2005, with a small share (about 14 per cent) coming from income from licensing deals for NCE. India formulations' sales constitute around 50 per cent of total revenue, while domestic API sales constitute 12 per cent of total revenue. International sales of formulations and API are about 25 per cent of total revenues. Financial Analysis Glenmark registered a healthy CAGR of 32 per cent in revenues and a CAGR of 30 per cent in 57

3 commercial sales, which markets six generic products on date including Fluconazole and Zonisamide (Glenmark's own products), Naproxen (belonging to Interpharm, Inc), Nitroglycerin (belonging to Konec, Inc.), Fosinopril Sodium oral tablets (belonging to InvaGen Inc.) and Esterified Estrogen and Methyl Testosterone. For many of these generic products, GPI has a market share exceeding 20 per cent per cent in the US market. 58 PAT between 1999 and Exports have shown the most impressive growth and currently constitute nearly 30 per cent of total sales. Glenmark's contribution in making Made in India global Glenmark's initial dependence on the Indian market has gradually reduced over the years - from 90 per cent of turnover in the year 2002 to 50 per cent in 2005 and a projected 36 per cent in the year The company has focused on strengthening its product basket with new value-added therapies and product introductions across more countries. Its initial global foray was in the markets of Russia and Africa for marketing formulations.this was later extended to other semi-regulated as well as regulated geographies through organic and inorganic growth. In the important growth markets of the US, Europe and Brazil, Glenmark has established subsidiaries to expand operations. In the US market, its subsidiary Glenmark Pharmaceuticals Inc. (GPI), is responsible for sales and marketing of generic drug formulations in the USA as well as bulk drugs to customers in the regulated markets.the company's previous efforts to accelerate its portfolio build-up have involved in-licensing generics from US based manufacturers, collaboration agreements for joint development with other companies and also acquisition of ANDA. GPI has its own front-end for GPI recently entered into two exclusive marketing agreements with Leigh Valley Technologies, Inc. and Aspen USA, Inc. for 5 controlled substance products which have limited competition. Prior to that, the company had signed a collaboration agreement with InvaGen Inc. for the joint development, filing and marketing of seven generic pharmaceutical products for the US market. Earlier it had also acquired two dossiers from Clonmel Healthcare for the US market. It has also signed a collaboration agreement with an Indian company, Shasun Chemicals and Drugs Ltd., for the joint development and marketing of 13 generic products in the US market. Glenmark has also completed filing a total of 17 Abbreviated New Drug Applications (ANDA) on its own till date, with two approvals till date (which are being marketed) and expects to file an additional ANDA by end of March Glenmark's wholly-owned subsidiary in Switzerland, Glenmark Pharmaceuticals SA (GPSA), plays a key role in managing NCE clinical trials as well as building research skills that complement R&D activities in India. NCE research by the company has made substantial progress with the company's lead molecule for asthma and COPD successfully completing the Phase 1 clinical trials. It has been out-licensed to Forest Laboratories for the North American and Teijin Pharma for the Japanese market in two deals totalling US$ 243 million. Its lead molecule for diabetes has also completed Phase 1 trials and is now entering Phase 2 clinical trials. A third NCE targeting obesity and

4 associated disorders is presently completing pre-clinical studies.the company has three other programmes across inflammation and pain management at the pre-clinical stages. Glenmark Pharmaceuticals (UK) Ltd. [GP(UK)L] was set up to establish and expand Glenmark's business in the European Union. It is currently developing the strategy and working on establishing the front end in Europe and is also exploring opportunities for partnerships with various European companies and establishing licensing and sales contracts.this combined with Glenmark's backward integration into APIs makes for a strong offering to European customers. In Brazil, Glenmark's wholly-owned subsidiary, Glenmark Farmacêutica Limited (GFL), which was incorporated in 2003, acquired a private Brazilian pharmaceutical company called Laboratorios Klinger in Klinger markets 24 branded generic products under registration in Brazil. GFL also acquired a leading hormonal brand, Uno-Ciclo, in March 2006.As of 2006, GFL has 14 approved product registrations and is in the process of registering several new products for commercial launch in It also filed 19 dossiers with ANVISA in GFL, later, acquired an Argentine marketing company Servycal S. A., which with a focused oncology portfolio, owns a basket of seventeen approved product registrations and three products pending registration. Apart from Argentina, Servycal's products are registered in 12 other South American country markets. To facilitate its expansion in one of the largest and fastest growing pharmaceutical markets in the continent of Africa, Glenmark acquired Bouwer Bartlett Pty. Ltd in December Bouwer Bartlett is a South African sales and marketing company with a presence in the dermatology segment, with a basket of 22 products, and a significant marketing force. In all, Glenmark already enjoys a widespread geographic presence in over 30 of the 54 markets in Africa. Factors fuelling Glenmark's global initiatives Focus on Research: Glenmark is among the few Indian pharmaceutical players targeting the development of new molecules. Its NCE programmes are conducted at a state-of-the-art research centre in Navi Mumbai (Maharashtra). The company recently set up a 72-bed clinical trial facility at the same location, which recently received ANVISA approval.the company also operates a second research facility at Sinnar (Maharashtra) that focuses on developing formulations. Apart from new drug development, the company also invests in formulation and process chemistry research to support its generic business. For the financial year ending 2006, it had earmarked between 7.5 per cent and 9.0 per cent of its revenues towards research expenses. Integrated business model: Glenmark has worked towards creating a comprehensive and integrated business model, which covers the entire gamut of activities from drug discovery to the development of API to the marketing of formulations within, as well as out of India. Furthermore, each element in this value pyramid is a revenue generator across an increasing number of markets, which has resulted in improved 59

5 is to push the four molecules which are undergoing pre-clinical studies into Phase I and complete Phase II for Oglemilast and GRC performances and better growth targets for the company. World class manufacturing facilities: Its manufacturing facilities are built to comply with standards of various regulatory agencies. Its plant in Goa has been built to comply with standards of US FDA,TDP, Canada and MCC, South Africa and caters to the US and other regulated markets. The plant at Nasik has been approved by WHO- GMP and caters to the requirements of semiregulated markets in Asia, Africa, CIS countries, Russia and Latin America.The facility in Brazil is ANVISA-approved and caters to the requirements of Brazil and other Latin American countries. The company's API manufacturing plant at Ankleshwar, too, has US FDA approval and it is constructing another API plant in Aurangabad that will be US FDA approvable. Future plans Glenmark has aggressive growth plans for the future. Consolidated revenues were targeted to grow to US$ 200 million by 2006 and net profits are expected to grow to US$ 50 million; with the licensing income contributing to 20 per cent.the share of exports in overall revenues is expected to grow to 45 per cent in the next two years.the company will continue to focus on building and accelerating its NCE pipeline.the plan for FY 2007 The company has also commenced in-licensing in order to combat pipeline challenges in the product patent regime. It is looking at several in-licensing opportunities for patent protected drugs either in late stage trials or recently launched in global markets. A recent example is a collaboration agreement concluded with a US company, Napo Pharmaceuticals Inc. for a novel drug, Crofelemer, which is in late stage trials for several diarrhoea indications. Glenmark has been granted an exclusive license to develop the product, register and launch it in about 140 countries including India. For growth in Europe, Glenmark is looking at acquisitions of front ends in various markets. Globalisation at a glance Exports constitute 30 per cent of sales Subsidiaries in US, Europe and Brazil, with own front-end for sales in the US Marketing agreements with Leigh Valley Technologies, InvaGen and Aspen in the US Acquisition of Laboratorios Klinger, a marketing company selling branded generic products in Brazil, Servycal S.A., Argentina having a focused oncology portfolio and Bouwer Bartlett, a South African sales and marketing company with a presence in the dermatology segment