LAURUSLABS

Laurus Labs Limited Corporate Office LAURUS Labs 2'"" Floor. Serene Chambers. Road No. 7 Banjara Hills. Hyderabod · S0003t,, Telangana, India T +91 t,O 3980t.333/23£.2 0500 I SO I F +91 t,Q 3980 t.320 Knowledge . Innovation . Excellence August 2, 2019 To To The Corporate Relations Department The Listing Department BSE Limited National Stock Exchange oflndia Limited Phiroz Jeejeebhoy Towers, 25111 Floor, Exchange Plaza, Dalal Street Bandra Kurla Complex, Bandra (East) Mumbai - 400001 Mumbai-400 051 Code: 540222 Code: LAURUSLABS Dear Sirs, Sub: Investors/A nalysts Presentation We enclose herewith the presentation to the Investors/Analysts on the Unaudited Financial Results of the Company for the Quarter ended June 30, 2019, for the Investors/Analysts call scheduled on August 05, 2019, which was already intimated on July 30, 2019. The presentation is also being uploaded on the website of the Company www.lauruslabs.com. Please take the information on record. Thanking you, Yours sincerely, For Lam·us Labs Limited Company Secretary Encl: As above Registered Office : Plot No:21. Jawaharlal Nehru Pharma City. Parawada. Visakhopatnam · 5;1 O fi-:-Andhro Pradesh, India. CIN : L2t.239AP2005PLCOL, 7518 T +91 891 3061222 F +91 891 3061270 E info@lauruslabs.com W lauruslabs.com LAURUS Generics LAURUS Ingredients LAURUS Synthesis ( Active Pharmaceutical Ingredients & Intermediates Specialty Ingredients for Nutraceutical & Allied Industry Contract Development & Manufacturing Services LAURUS LABS LIMITED Q1 FY20 INVESTOR PRESENTATION August 2, 2019 BSE: 540222 NSE : LAURUSLABS Disclaimer This presentation contains statements that constitute “forward looking statements” including and without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to our future business developments and economic performance. While these forward looking statements represent our judgment and future expectations concerning the development of our business, such statements reflect various assumptions concerning future developments and a number of risks, uncertainties and other important factors that could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, regulatory and legislative developments which could adversely affect our business and financial performance. Laurus Labs undertakes no obligation to publicly revise any forward looking statements to reflect future events or circumstances. No part of this presentation may be reproduced, quoted or circulated without prior written approval from Laurus Labs Limited. 2 Business Snapshot Overview • Development, manufacture and sale • Developing and manufacturing • Contract development and • Sale and manufacture of of APIs and Advanced Intermediates oral solid formulations for LMIC, manufacturing services for specialty ingredients for use in • Leadership in various High Value and North America & EU Markets. global pharmaceutical nutraceuticals, dietary Volume APIs with sizeable Global • Backed by in house API strengths companies and several late supplements and cosmeceutical Market share. stage projects executed products • High potent manufacturing capability • Steroids and Hormone • Natural extraction capability in two manufacturing units. manufacturing capability Product and • Anti-retroviral (ARV) • ARVs • Commercial scale contract • Nutraceuticals, dietary Service manufacturing supplements and cosmoceutical • Anti-diabetic • Anti-diabetic Offerings products • Clinical phase supplies • CVS • CVS • Analytical and research • PPIs • PPIs services • Oncology • CNS • Hepatitis C Filings • Commercialized 50+ products • Filed 20 ANDAs with USFDA and • Commenced commercial • Digoxin API validation 5 approved out of 20. In addition supplies from Unit 5 completed • 57 DMFs filed completed 4 products validation • 6 in Canada, 6 in Europe, 8 with WHO, 2 in South Africa, 2 in India & 112 in ROW. Infrastructure • 4 Manufacturing facilities, (3,250 KL) • 5 bn Units / year capacity. • Dedicated manufacturing • Set up a dedicated block in Unit (1) (2) (Unit – 5) Capacity (125 KL) 4 for global partner , C2 Pharma for Aspen. • Manufacturing facilities(2) (1) Includes ingredients products excluding Unit 2 API & Kilo lab (2) APIs , Ingredients and Synthesis (other than Aspen supplies) 3 capacity are manufacturing at Unit 1,3 ,4 & 6 Growth Verticals – Diversified Pharma Company • Leveraging API Cost Advantage for Forward Integration • Targeting various high growth markets like LMIC, US, Canada, & Europe Formulations • Therapeutic Focus Areas remains on key segments of ARV, CVS, CNS, PPI & Anti Diabetic • Focus on supply of key starting materials and intermediates for new chemical entities Synthesis • Completed several projects in various stages from pre clinical to commercial with development & Manufacturing. • Working with Large Global Innovator Pharmaceutical Companies • Working with 9 of the top 10 Large Global Generic Pharma Companies • ARV - Incremental HIV patients added to patient pool will support future Generic APIs revenue growth. Expanding in second line treatment will also add to growth. • Most of the key First Line APIs are fully Backward Integrated • Commenced commercial supplies for Lamivudine. • Oncology - Leadership in select Onco APIs, new products added to support commercial launches on patent expiry. Backward integration is progress for a key API. • Other APIs- Strong opportunity in Other API space on account of diversified products in Anti Diabetic, CVS, CNS & PPIs. • Ingredients - Leverage process chemistry skills to strengthen presence in nutraceutical and cosmeceutical sectors as they adopt quality standards at par with pharma industry 4 Formulations Strategy – Emerging Markets Growth Levers • ARV Tender business from LMIC remains the forefront of our Formulations Strategy. Overview • Formulation Filings are deeply Integrated giving further cost advantage compared to peers Participation via – Global Fund tenders, PEPFAR Tender, WHO Tender, Various LMIC Markets African In-Country Tenders • ~$ 2 Billion in Generic Accessible Markets Addressable Market Size • ~$1.5 Billion First Line Market LONG TERM SUSTAINABLE GROWTH OPPORTUNITY • Strategic Partnership with Global Fund providing access to major tenders • Actively Participating in In-Country Tenders • In Q1 FY20 executed a milestone order worth INR 798 mn for LMIC • Focused on executing such large sized opportunities in coming quarters • Cumulatively filings are 100+ in various RoW markets CURRENT PRODUCT PORTFOLIO & APPROVALS • Filed 4 Triple Combination products – DTL, TLE , TLE & TEE 600 400 • Approvals • DLT Approved in Feb 2019 • DTG & TDF Singles Approved • Key Pending Approvals – TLE , TLE & TEE. 600 400 • Expecting all the approvals in FY 20 6 Formulations Strategy – Developed Markets Current Filings Status Current Approval Status Therapy US ANDA Europe Canada Therapy US ANDA Europe Canada ARV 12 4 3 Final Approval 5 4 2 Anti- Diabetic 3 1 1 Tentative CVS 1 - - Approval 3 - - CNS 1 1 1 Total 8 4 2 Others 3 - 1 Total 20 6 6 US MARKET • Cumulatively filed 20 ANDAs • Launched Pregabalin in July 2019 • The filings include 2 Para IV and 7 FTFs opportunities worth over Billions of Dollars in Annual sales • Almost all the products filed and under development will be marketed by Laurus • Few products filed and under development will be marketed via DRL & Rising Pharma under partnership route • Continue to file around 8-10 ANDAs annually EUROPE MARKET • Cumulatively Filed 6 products in EU Markets. • Entered into a long term partnership with a leading generic player in EU region for Contract Manufacturing Opportunities. • Few products marketed using own front end • Have a strong order book for FY20 CANADA MARKET • Cumulatively Filed 4 products, in partnership with Local Canadian Companies for distribution of products 7 Formulations Business – Geared up for Higher Growth  Extensive Manufacturing capabilities across markets FDF Revenue Split with commitment to maintain highest quality 13% standards – “One Quality Standard for All Markets”  Current FDF Manufacturing Capacity - 5 bn tab/caps with total Capex investment of ~INR 12% 4,325 mn  FDF Opex of INR 429 mn which includes INR 163 mn related to the R&D  Executed a significant order in LMIC in Q1 FY20 worth INR 798 mn showcasing our manufacturing 75% strength and execution ability  Expecting similar sized business opportunity in LMIC North America Europe coming quarters of FY20  4 product validation completed for formulation apart from filling of 20 ANDAs /NDAs 8 Synthesis (CDMO) Business Strategy 2,552 1,541 1,075 761 590 FY 16 FY 17 FY 18 FY19 Q1 FY20 Synthesis Revenue (INR Mn) OVERVIEW • State-of-the-art cGMP facilities to manufacture NCEs • Integrate projects across platforms as the molecule develops from Pre Clinical to Clinical stages • Working with Global Innovator Companies • Current Clientele includes partner Companies from Large Global Innovator Pharma Companies GROWTH POTENTIAL • Commencement of commercial supplies from Unit 5 to ASPEN – Sizeable revenue expected in FY 20 from ASPEN • 2 Projects from CDMO business are commercialized 10 Generic APIs Strategy • Oncology - Growth in the segment will be led by new launches, targeting 1-2 new launches/ year • Strengthening Global Leadership in current products • Other API - Huge growth opportunity on offer with global supply disruptions in the market • Focusing on key therapeutic segments like Anti Diabetic, PPIs, & CNS • Products commercialized for Contract Manufacturing opportunities with an EU Customer • ARV API - Growth in ARV APIs will be driven by • New patients addition • Introduction of new Second Line products • Maintaining Leadership in the existing product portfolio • Launched new First Line Products – Lamivudine & Dolutegravir • Entry into high value developed markets 12 Manufacturing Facilities at Parawada, Vizag Unit-I • Located at Jawaharlal Nehru Pharma City, Vishakhapatnam, India. • API manufacturing facility and includes capacity for ingredients, synthesis and contract manufacturing. • Commenced operations in 2007. • 317 reactors with 1,177 Kilo Liters capacity. • Received approvals from US FDA, WHO-Geneva, NIP – Hungary, KFDA, COFEPRIS & PMDA. Unit-III • Located at Jawaharlal Nehru Pharma City, Vishakhapatnam, India. • API manufacturing facility and includes capacity for ingredients, synthesis and contract manufacturing. • Commenced operations in 2015. • 230 reactors with 1,727 Kilo Litres capacity. • Received approvals from USFDA, WHO – Geneva, & NIP – Hungary . Unit-V • Located at Jawaharlal Nehru Pharma City, Vishakhapatnam, India. (SEZ) • A dedicated Hormone and Steroid facility for Aspen • Commenced operations in 2017. • 46 reactors with 125 Kilo Litres capacity . 14 Manufacturing Facilities at Achutapuram, Vizag Unit-II • Located at APIIC, Achutapuram, Visakhapatnam, India. (SEZ) • FDF and API manufacturing facility • Commenced operations in 2017. • FDF - capacity of 5 bn tablets/capsules per year. • API block with 12 reactors with 83 Kilo Liters capacity. • Received approvals from BVG Hamburg Germany, USFDA, WHO – Geneva, JAZMP – Slovenia and various African Countries Unit-IV • Located at APIIC, Achutapuram, Visakhapatnam, India. (SEZ) • API manufacturing facility and includes capacity for ingredients, synthesis and contract manufacturing. • Commercial operations in 2018 • 32 reactors with 85 Kilo Liters capacity • Received approval from COFEPRIS – Mexico, USFDA audit completed with zero observations. Unit-VI • Located at APIIC, Achutapuram, Visakhapatnam, India. • API manufacturing facility. • Commercial operations in 2018 • 45 reactors with 261 Kilo Liters capacity. • Received approval from USFDA 15 Strong R&D Capabilities 1,659 R&D Centre - Hyd 1,338 1,135 853 7.4% 7.1% 5.6% 418 4.8% 7.6% FY16 FY17 FY18 FY 19 Q1 FY 20 R&D Spend % of Revenue 50+ 57 244 86 20 750+ 54 Products Filed Patents Patents ANDAs/ NDAs Scientists PhDs commercialized DMFs filed granted since inception • R & D spent includes OPEX, CAPEX (Excluding depreciation) and RMC of FDF validation batches. • FY 17 & FY19 numbers are high due to additional CAPEX of INR 248 mn in FY19 and initial FDF validation batches. 16 Quality Focus & Regulatory Audits Laurus’ Philosophy “One Quality Standard for all markets” Regular Inspection at different manufacturing units 2019 USFDA We maintain consistent quality, efficiency and product 2018 USFDA, JAZMP - Slovenia safety. 2017 WHO, USFDA, EU (Germany) We have adopted uniform manufacturing standards across 2016 USFDA all facilities to achieve standardized quality for all markets. 2015 WHO, USFDA, EU (Germany) Good manufacturing practices across all the manufacturing 2014 WHO, USFDA, CDSCO facilities, encompassing all areas of business processes right from supply chain to product delivery. 2013 WHO 2012 USFDA 2011 KFDA, USFDA, WHO 2010 MHRA 2009 TGA, USFDA 17 Drivers of Revenue – Division wise revenue breakup  Total Revenues grown by 2% for the quarter (Y-o-Y) 1% 4% 2% 4% 3% 3%  Generic API 10% 19% 11 % 15% 4% • ARV Segment revenue stood at INR 2,718 mn due to 3% 8% 8% lower off take of Efavirenz, post adoption of TLD based 4% 10% 11% 10% combination and also because of slower pick up in 8% 5% Lamivudine due to approval delays. 11% 8% • HEP-C business registered sales of INR 112 mn in quarter. 7% 2% • Oncology business revenue stood at INR 450 mn. • Other API sales stood at INR 417 mn. The growth has 69% 61% been led by improved volumes & new product 50% 49% introduction.  Synthesis Business continues to report robust revenue at INR 590 mn. Sales from Unit 5 have increased along with improved contribution from CMO business. Q1 FY19 Q4 FY19 Q1 FY20 FY19  Ingredients revenue stood at INR 159 mn ARV HEP-C Oncology Other API Synthesis Ingredients FDF  Generic FDF business recorded significant sales of INR 1,060mn. • The growth had been led by INR 798 mn sales coming Segments (INR mn) Q1 FY19 Q4 FY19 Q1 FY20 FY 19 Growth Q1 (Y-o-Y) from LMIC business, Expecting similar business ARV 3,710 3,153 2,718 13,947 -27% opportunity in coming quarters HEP-C 241 415 112 1,197 -54% • Sales from North America region also showed better pick Oncology 440 708 450 2,182 2% up Other API 217 651 417 1,890 92% Synthesis 541 940 590 2,552 9% • Contract Manufacturing revenues from EU region also Ingredients 190 203 159 606 -16% contributed in Q1 FY20 Generics FDF 51 282 1,060 545 1978% Total Revenue 5,390 6,352 5,506 22,919 2% Note: Consolidated financials as per Ind-AS 19 Performance Highlights - Abridged Profit & Loss statement Growth % Growth % Particulars (Rs. mn) Q1 FY20 Q1 FY19 (Q1 FY20 Vs. Q4 FY19 (Q1 FY20 Vs. Q1 FY 19) Q4 FY19) 5,506 5,390 2.2% 6,352 -13.3% Total Revenues from Operations (Net) 5,357 5,190 5,842 Total Expenditure 870 825 5.5% 1,134 -23.3% EBITDA Margins 15.8% 15.3% 17.9% PBT 194 226 -14.2% 526 -63.1% Margins 3.5% 4.2% 8.3% PAT 151 166 -9.0% 432 -65.0% Margins 2.7% 3.1% 6.8% 1.4 1.6 -12.5% 4.1 -65.9% EPS (Diluted) (Not annualised) (Not annualised) (Not annualised)  Operating expenses increased due to increase in production volume to take care of ramp up in sale from Q2 onwards.  Increase in Insurance expenses due to exorbitant increase by 10 times due to reinsurance premium. Note: Consolidated financials as per Ind-AS 20 Snapshot of Return Ratios Pre Tax Return on Capital Return on Equity(2) (%) Total Debt/Equity Ratio (x) Employed(1) (%) 16.5% 16.5% 17.0% 17.4% 1.2x 1.1x 14.5% 13.7% 12.7% 11.9% 0.8x 0.7x 0.7x 8.2% 0.6x 6.1% 6.2% 3.9% FY15 FY16 FY17 FY 18 FY 19 FY 20 FY15 FY16 FY17 FY 18 FY 19 FY 20 FY15 FY16 FY17 FY 18 FY 19 FY 20 Q1 Q1 Q1 Significant investments in FDF, Unit 4 and Unit 6. Note: Based on consolidated financials as per Ind AS (1) Pre-tax RoCE is calculated as EBIT/Average Capital Employed. Capital employed is defined as Net Worth + Long Term and Short Term Borrowings + Current Portion of Long Term Borrowing - Cash (2) RoE is calculated as PAT/Average Net Worth FY 20 Q1 ratios are calculated based on Q1 annualised numbers. 21 Key Milestones • Investment of INR 3000 mn by • Investment of INR Warburg Pincus • Crossed INR 20 billion of revenue 600 mn by FIL • Incorporated First • Commenced commercial operations • Set up the R&D Capital Subsidiary in USA. • Successfully listed on BSE &NSE from Unit 4 Centre at IKP, Management and • Forged partnership • Filed first ANDA for US market • Incorporated a subsidiary in Germany Knowledge Park, Promoters. with ASPEN for • Acquired 100% stake • Commenced FDF supplies. Hyderabad CRAMS in Sriam Labs Pvt Ltd. • Commenced commercial • Crossed INR 10 billion • Commenced commercial • Commenced commercial • Entered into Strategic operations at Unit 1 of revenues operations at Unit 3, operations at Unit 2 partnership with Global • Forged partnership with • Commenced commercial Fund for 3.5 years. NATCO supplies from Unit 5 for Aspen • Executed a major • Incorporated subsidiaries in tender order and UK & USA delivered ahead of schedule 22 Management Team Mr. Tom Versosky Mr. Chandrakanth Chereddi President FDF North America ED & Head, Generics FDF & Strategy Dr. Prafulla Kumar Nandi SVP, Global Regulatory Affairs Mr. Ravi kumar V V Mr. G Venkateshwar Reddy (Formulations) ED &CFO CS and Sr. GM – Legal & Secretarial Dr. Satyanarayana Chava Founder & CEO Mr. Sumeet Sobti VP – SCM Dr. V Uma Maheswer Rao Mr. C. Krishna Chaitanya Exec. VP & Head, Chemical R&D Head, Synthesis & Ingredients Mr. Srinivasa Rao S Exec. VP – Operations Mr. Martyn Peck Dr. Lakshmana Rao C V SVP – Business Development, Generics - API ED & Head, Quality 23 Corporate Governance Executive Directors Name Background Dr Satyanarayana Chava  Whole-time Director, Founder and Chief Executive Officer Ravi Kumar V V  Whole-time Director and CFO Chandrakanth Chereddi  Whole-time Director and Head of Generic FDF and Strategy Dr Lakshmana Rao C V  Whole-time Director and Head, Quality Non-Executive Directors Name Background Dr. M. Venu Gopala Rao  Non Executive Chairman and Independent Director Narendra Ostawal  Managing Director of Warburg Pincus India Private Limited Aruna Rajendra Bhinge  Independent Director; Former Head of Food Security Agenda, APAC at Syngenta India Limited Dr. Rajesh Koshy Chandy  Independent Director; Professor of Marketing at the London Business School Ramesh Subrahmanian  Independent Director; Founder and Director of Alchemy Advisors  Independent Director and Founder-Member and Treasurer of ELSA of Asia in Singapore and Dr. Ravindranath Kancherla Chairman of Global Hospitals 24 Ownership Structure Corporate Structure Laurus Labs Limited India Laurus Synthesis Laurus Holdings All are 100% Sriam Labs Pvt Ltd. Inc. Ltd. Subsidiaries India USA UK Laurus Generics Laurus Generics Inc. GmbH. USA Germany Shareholding pattern * 32.8% 5.1% 12.4% 1.3% 0.03% 19.72% 5.75% 22.6% Promoter Financial Non- Foreign and Mutual Alternate Institutions/ Warburg FIL Capital Institutions Portfolio Promoter Fund Inv Funds Banks / Ins Pincus Management (Individuals + Investors Cos Others) Group 25 * As of 30st June2019 Results Conference Call Results conference call on Monday August 05, 2019 at 11:00 AM IST Details of the conference call are as follows: Timing 11:00 AM IST on Monday, August 05, 2019 Conference dial-in Universal Dial-In +91 22 6280 1214 +91 7045671221 India Local access Number Available all over India Singapore + 6531575746 Hong Kong + 85230186877 USA + 13233868721 UK + 442034785524 26 Contact us About Laurus Labs Ltd. Laurus Labs is a leading research & development driven and fully integrated pharmaceutical company in India. The Company has grown consistently to become one of the leading manufacturers of Active Pharmaceutical Ingredients (APIs) for anti-retroviral (ARV) and Hepatitis C. Laurus also manufactures APIs in Oncology and other therapeutic areas. Its strategic and early investments in R&D and manufacturing infrastructure have enabled it to become one of the leading suppliers of APIs in the ARV therapeutic area. The company has also ventured into develop a Finished Dosages Forms on the back of existing strengths in APIs with a current capacity of 5 billion units per year, expandable up to 8 billion units per year. The Company is also driving growth opportunities in the Synthesis and Ingredients businesses. Corporate Identification No: L24239AP2005PLC047518. For more information about us, please visit www.lauruslabs.com or contact: Monish Shah Pavan Kumar N Tel: +91 040 3980 4366 Tel: +91 040 3980 4380 Email: investorrelations@lauruslabs.com Email: mediarelations@lauruslabs.com 27