EXECUTIVE SUMMARY

This report has been made keeping in mind the Indian Pharmaceutical industry, its growth rate as compared to the global Pharmaceutical Industry. India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control.Then, we look at the market and growth scenario of Pharmaceutical companies in India which brings us to research on MATRIX PHARMA LABS.

PHARMACEUTICAL INDUSTRY PROFILE

The pharmaceutical industry develops, produces, and markets drugs licensed for use as medications. Pharmaceutical companies can deal in generic and/or brand medications. They are subject to a variety of laws and regulations regarding the patenting, testing and marketing of drugs. The main aim of a particular Pharmaceutical Industry is to develop research and distribute drugs in order to provide health care for the people in the society. The Pharmaceutical Industry like other industries is subjected to follow certain rules and regulations. The Pharmaceutical Industry needs to follow rules about patent, marketing as well as testing of drugs that are scheduled to come to the market as medicines. Since the inauguration of the Pharmaceutical Industry in the 19th century, it has covered a long way and now it has become one of the most influential and successful industry in the world with both controversy and praise on its part. Pharmaceutical Industry is very much dependent upon the developments and discoveries that are made to search new types of drugs and also to search for new kind of medicines. One can also see differences within the industry regarding the same drug or report and different companies within the Pharmaceutical Industry look to follow different paths for the same thing.

Drug Discovery and Drug Innovation are two very aspects in the Pharmaceutical Industry:

Drug Discovery: Drug Discovery is a process through which potential drugs are designed or discovered. It has been observed in the past that most of the drugs were invented by means of isolating the active component from remedies which are traditional in nature or through another kind of discovery known as serendipitous discovery.

Drug Development: This process is taken forward after the discovery is done and a thing is identified as a potential drug. The development takes place immediately after that as the component is turned into a medicine. So this is also considered as a very important process and has great importance in the Pharmaceutical Industry.

For the first time ever, in 2006, global spending on prescription drugs topped $643 billion, even as growth slowed somewhat in Europe and North America. The United States accounts for almost half of the global pharmaceutical market, with $289 billion in annual sales followed by the EU and Japan. Emerging markets such as China, Russia, South Korea and Mexico outpaced that market, growing a huge 81 percent.

US profit growth was maintained even whilst other top industries saw slowed or no growth. Despite this, the pharmaceutical industry is — and has been for years — the most profitable of all businesses in the

U.S. In the annual Fortune 500 survey, the pharmaceutical industry topped the list of the most profitable industries, with a return of 17% on revenue.

Revenue Rank 2008 Company   Country  

Total Revenues (USD millions)  

Healthcare R&D 2008 (USD millions)  

Net income/ (loss) 2008 (USD millions)

1 Pfizer [3] (with Wyeth [4] ) U.S. 71,130 11,318 14,1112 Johnson & Johnson U.S. 61,095 NA 10,576

3 GlaxoSmithKline United Kingdom

45,447 6,373 10,432

4 Bayer [5] Germany 44,664 3,770 6,4485 Hoffmann–La Roche Switzerland 40,315 NA 8,1356 Sanofi-Aventis France 39,997 NA 7,2047 Novartis Switzerland 39,800 NA 11,9468 AstraZeneca UK/Sweden 29,559 NA 5,9599 Abbott Laboratories [6] U.S. 29,527 2,688 4,88010 Merck & Co. U.S. 23,850 4,678 7,80811 Bristol-Myers Squibb U.S. 19,977 NA 2,16512 Eli Lilly and Company U.S. 18,634 NA9 2,95313 Amgen U.S. 14,268 3,366 2,95014 Boehringer Ingelheim Germany 13,284 1,977 2,16315 Baxter International U.S. 10,378 614 1,397

The Indian Pharmaceutical Industry today is the front runner of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharmaceutical Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously.

Indian Pharmaceutical Industry plays a key role in promoting and sustaining development in the vital field of medicines, boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world.

The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control.

The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations.

Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.

PHARMACEUTICAL INDUSTRIES IN INDIA

Dishman Pharmaceuticals Elder Pharmaceuticals J B Pharmaceuticals Torrent Pharmaceuticals Sun Pharmaceuticals Ranbaxy India Cadila Pharmaceutical Limited Wockhardt Strides Arcolab IPCA Laboratories Alembic

Amrutanjan Virchow Laboratories Polydrug Laboratories Dr. Reddy?s Laboratories Aurobindo Pharma Jubilant Organosys Astrazeneca Pharma Divis Laboratories Merck Ltd. Astrazen Pharma Abbott India Aventis Pharma Limited Glenmark Pharmaceutical Ltd. Clarion Drugs Blue Cross Laboratories Intas Pharmaceuticals Limited Lincoln Pharmaceuticals Ltd Matrix Laboratories

ADVANTAGE INDIA

Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available.

Cost-effective chemical synthesis: Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs.

Legal & Financial Framework: India has a 60 year old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community.

Information & Technology: It has a good network of world-class educational institutions and established strengths in Information Technology.

Globalization: The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is continuously growing.

Consolidation: For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The

process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India.

CURRENT SCENARIO

THE GROWTH SCENARIO

India's US$ 4.1 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries.

Over 20,000 registered pharmaceutical manufacturers exist in the country. The domestic pharmaceuticals industry output is expected to exceed Rs260 billion in the financial year 2002, which accounts for merely 1.3% of the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54 bn (21%) and formulations, the remaining Rs 210 bn (79%).

BREAK UP OF DRUGS IN INDIA

BULK DRUGS21%

FORMULATIONS79%

In financial year 2001, imports were Rs 20 bn while exports were Rs87 bn.

MARKET SHARE

The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control.

The global pharmaceutical market is forecast to grow to $929 billion in 2012, an equivalent compound annual growth rate (CAGR) of 5.5% over the next five years.

In 2007 the leading therapy areas by sales were CNS with 16.5% share and cardiovascular with 15.4%.

Four of the top 10 products in 2007 are forecast to increase sales over the next five years.

The US retail pharmaceutical market grew to $206 billion but growth rates fell due to loss of patent protection on some blockbusters

France, Germany and the UK together accounted for almost 50% of all European pharmaceutical sales in 2007.

The top 100 blockbuster drugs generated sales of $252.5 billion, accounting for 35.5% of the total pharmaceutical market.

The leading blockbuster by increased sales revenues in 2007 was the blood agent product Plavix (clopidogrel bisulfate), marketed by Sanofi-Aventis and Bristol-Myers Squibb.

There were a total of 61 companies generating pharmaceutical sales in excess of $1 billion in 2007

COMPANY PROFILE

MATRIX PHARMA LABS

Matrix Laboratories Limited is a public limited company listed on the major stock exchanges in India and is engaged in the manufacture of Active Pharmaceutical Ingredients (APIs) and Solid Oral Dosage Forms. The development and manufacture of quality intermediates, bulk actives have been critical to our success in delivering innovative and affordable products for both the domestic as well as international markets.

With about 2000 employees, including over 200 R&D scientists, Matrix conducts research & development, and manufacture products at the company's cGMP facilities located near Hyderabad and Visakhapatnam, India. The company's Solid Oral Dosage Forms facility is located near Nashik, about 150 km from Mumbai.

The company's focus on Quality, Safety, Environment and Occupational Health is pronounced and some of its plants are approved by regulatory agencies such as US-FDA, EDQM -EU, TGA (Australia) and some of the largest multinational pharmaceutical companies.

At Matrix our core values are Mutual Respect, Attitude, Teamwork, Responsibility, Innovation and Excellence. Our commitment is to

create a profitable enterprise with due respect to stakeholders interest, corporate governance and social responsibilities.

List of Active Pharmaceutical Ingredients

Anti Bacterials

Ciprofloxacin - CAS No : [ 85721-33-1 ]

Gatifloxacin - CAS No : [ 112811-59-3 ]

Norfloxacin - CAS No : [ 70458-96-7 ]

Levofloxacin Hemihydrate - CAS No : [ 100986-85-4]

Moxifloxacin HCL - CAS No : [ 151096-09-2]

Clarithromycin - CAS No : [ 81103-11-9]

Manufacturing Facilities

Matrix Laboratories has manufacturing facilities at four locations in and around Hyderabad and Visakhapatnam, India, manufacturing a wide range of Active Pharmaceutical Ingredients. The company's Solid Oral Dosage Forms facility is located near Nashik, about 150 km from Mumbai. All the manufacturing facilities in India have been designed to meet the requirements of Drug Regulatory Agencies. All our facilities are US-FDA approved. The facilities also have ISO 9000, ISO 14000 Certifications.

Reaction Capabilities

Alkylations

Metal Hydride Reactions Friedal-Crafts Acylation Nitration Chlorosulphonation Halogenation N - Bu Li Reactions Azide Reactions Hoffmann Reaction Oxidations Grig Nard Reactions Cyanations Reductions Iron/Hcl Raney Nickel Palladium Vitride Sodium Borohydride Sodium Dithionate Zn/Naoh Diborane

API Facilities Hyderabad

  -     Pashamylaram

  -     Jeedimetla

  -     Kazipally

Visakhapatnam

-     Vizianagaram

Quality Policy

We at Matrix Laboratories Limited are committed to meet and by far exceed our customers requirements through well documented Quality Management Systems.

To us, Quality means "a synthesis of world guidelines, Pharmacopoeial requirements, industry standards, laws and regulations governing the manufacture of Active Pharmaceutical Ingredients and Intermediates".

We strive for continuous improvement in everything we do through active involvement of our employees, customers and suppliers.

Quality Assurance

Matrix plants are designed to facilitate world-class manufacture of quality products. Towards this objective, we have set up manufacturing facilities and established quality management systems, as per cGMP guidelines to meet the requirements of drug regulatory agencies worldwide.

We assure quality of our products by regularly inspecting the facilities, systems and procedures to meet the current GMP norms. The employees are trained periodically on GMP requirements.

At Matrix, one of our core values is our commitment towards Environment, Health & Safety measures. We provide proper in-house education and training with an objective to in calculate in every member of the organization, a sincere appreciation for Environmental, Safety & Health concerns.

We provide a safe, accident free operation at our facilities and identify potential hazards before the manufacturing process begins. All manufacturing and R&D locations are subjected to a detailed safety audit and risk assessment exercise. The company organizes Safety day week and Clean and Green environment day at all its manufacturing units.

We strive to prevent pollution of land, atmosphere and water and are committed to reduce, recycle and re-use all resources for conservation and waste reduction, wherever feasible. To monitor and continuously improve our Environmental Management Systems, our employees are trained regarding health hazards; whether it is in handling materials, operating various processes, or waste generation and effluent treatment. We provide personal protective clothing and devices to our employees to protect people from product and process, and product from people. All employees go through a pre-employment medical examination and thereafter, periodical medical check-ups.

RECOMMENDATIONS

STEPS TO STRENGTHEN THE INDUSTRYIndian companies need to attain the right product-mix for sustained future growth. Core competencies will play an important role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 2005. Indian companies, in an effort to consolidate their position, will have to increasingly look at merger and acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets.

Research and development has always taken the back seat amongst Indian pharmaceutical companies. In order to stay competitive in the future, Indian companies will have to refocus and invest heavily in R&D.

The Indian pharmaceutical industry also needs to take advantage of the recent advances in biotechnology and information technology.

CONCLUSION

The future of the industry will be determined by

how well it markets its products to several regions and distributes risks,

its forward and backward integration capabilities, its R&D,

its consolidation through mergers and acquisitions, co-marketing and licensing agreements.