02 Leadership In A Changing World Chairman’s Letter Dear Shareholders, When I founded Lupin over 48 years ago, the goal was simple; to manufacture and deliver quality, affordable medicines of the highest national and social priority. It has been the core principle and guiding philosophy behind everything we have undertaken and achieved over now close to five decades. This is reflected in how Lupin has expanded over the years, the markets that we have chosen to focus on and in how we have nurtured and grown them. It is also reflected in how Lupin has gone about investing in and growing our research programs to build an impressive product pipeline and in how we have created a quality driven global manufacturing organization, second to none in the pharmaceutical industry. FY 2016 saw us invest the highest ever in Research & Development to date. Today, it is clear to me that the unassuming choice that we made of being inclusive in creating relevant products that people need is what has made Lupin the global pharmaceutical powerhouse that it is. It has also been the key trigger driving Lupinytts to be creative in working together to innovate, execute and deliver efficacious products to our communities. This differentiator has ensured Lupin’s continued progression and ascendance as a global leader and a true innovator. At Lupin, success is not just about growth or performance, it has always been about doing the right thing no matter how challenging the environment; about backing our ideas and having the conviction to see them through. It is about being the transformation ourselves. That is the only thing that ensures leadership in a changing world. At Lupin, leadership is a given and numbers are just milestones on a glorious path. Dr. Desh Bandhu Gupta Founder & Chairman Lupin Limited 04 Corporate Information DIRECTORS CORPORATE SOCIAL RESPONSIBILITY COMMITTEE Dr. Desh Bandhu Gupta, Chairman Dr. Desh Bandhu Gupta, Chairman Dr. Kamal K. Sharma, Vice Chairman Dr. Kamal K. Sharma Ms. Vinita Gupta, Chief Executive Officer Mr. Nilesh Gupta Mr. Nilesh Gupta, Managing Director Dr. Vijay Kelkar Mrs. Manju D. Gupta, Executive Director Mr. Ramesh Swaminathan, RISK MANAGEMENT COMMITTEE Chief Financial Officer & Executive Director Dr. Kamal K. Sharma, Chairman Dr. Vijay Kelkar, Independent Director Ms. Vinita Gupta Mr. R. A. Shah, Independent Director Mr. Nilesh Gupta Mr. Richard Zahn, Independent Director Mr. Ramesh Swaminathan Dr. K. U. Mada, Independent Director Mr. Sunil Makharia Mr. Dileep C. Choksi, Independent Director Mr. Jean-Luc Belingard, Independent Director SENIOR MANAGEMENT TEAM Dr. Desh Bandhu Gupta, Chairman COMPANY SECRETARY Dr. Kamal K. Sharma, Vice Chairman Mr. R. V. Satam Ms. Vinita Gupta, Chief Executive Officer Mr. Nilesh Gupta, Managing Director AUDITORS Mr. Ramesh Swaminathan, Chief Financial Officer & Executive Director Deloitte Haskins & Sells LLP Mr. Shakti Chakraborty, Group President - India Region Formulations Chartered Accountants Dr. Rajender Kamboj, President - Novel Drug Discovery & Development Mr. Naresh Gupta, President - API & Global TB AUDIT COMMITTEE Mr. Divakar Kaza, President - Human Resources Dr. K. U. Mada, Chairman Mr. Alok Ghosh, President - Technical Operations Dr. Kamal K. Sharma Dr. Cyrus Karkaria, President - Biotechnology Mr. Dileep C. Choksi Mr. Sunil Makharia, President - Finance STAKEHOLDERS Mr. Debabrata Chakravorty, President - Global Sourcing RELATIONSHIP COMMITTEE & Contract Manufacturing Dr. Vijay Kelkar, Chairman Mr. Rajeev Sibal, President - India Region Formulations Dr. K. U. Mada Mr. Paul McGarty, President - Lupin Pharmaceuticals Inc., USA Dr. Sofia Mumtaz, Head - Pipeline Management & Legal NOMINATION AND Mr. Martin Mercer, President - Latin America REMUNERATION COMMITTEE Dr. Thierry Volle, President - Europe, Middle-East & Africa Dr. K. U. Mada, Chairman Dr. Fabrice Egros, President - Asia Pacific & Japan Mr. R. A. Shah Dr. Kurt Nielsen, President - Somerset, USA Mr. Richard Zahn Mr. Noriaki Tsunoda, President - Kyowa Pharmaceutical Co. Ltd., Japan STRATEGIC Website ADVISORY BOARD www.lupin.com Mr. Jean-Luc Belingard Mr. Franceso Granata E-Mail Ms. Yvonne Greenstreet [email protected] Mr. Dipak Jain CORPORATE INTERNAL AUDITORS IDENTITY NUMBER Ernst & Young LLP L24100MH1983PLC029442 KPMG REGISTERED OFFICE KEY CONTACTS Mr. Shamsher Gorawara Kalpataru Inspire, 3rd Floor Head - Corporate Communications Off Western Express Highway Email: [email protected] Santacruz (East), Mumbai - 400 055 Tel.: +91 22 6640 2323 Mr. Pradeep Bhagwat Fax: +91 22 6640 8131 General Manager, Investors’ Services CORPORATE OFFICE Email: [email protected] Laxmi Towers, ‘B’ Wing, 5th Floor Bandra Kurla Complex, Bandra (East) Mumbai - 400 051 Tel.: +91 22 6640 2222 Fax: +91 22 6640 2130 07 Taking Centerstage Awards Lupin named in the Forbes Global 2000 – Lupin in AON Best Employers India 2016 – World’s Most Powerful Public Companies amongst the Top 25 Employers Lupin named amongst the Top 3 Research Vinita Gupta, CEO & Nilesh Gupta, MD Organizations in the country – Thomson awarded the Ernst & Young Entrepreneur Reuters India Innovation Awards 2015 of the Year, India, 2015 CNBC TV18 Firm of the Year in Pharma Sector: Vinita Gupta awarded Outstanding Woman Business India Risk Management Awards – 2015 Leader of the Year – CNBC India Business Leader Awards (IBLA) FY 2015-16 Lupin named in Forbes Asia Fab 50 companies Vinita Gupta named in Forbes Asia Business 2015 for the second year running Women – Power 50 list Lupin Limited ranked 5th in Best at Investor Vinita Gupta named amongst The Most Powerful Relations by FinanceAsia Business Women 2015 by Business Today Lupin ranked 15th in the Great Places to Work Ramesh Swaminathan, CFO, Lupin Limited wins the Institute’s Best Companies to Work for in Asia Best CFO by FinanceAsia 08 The Transformation Dynamic Vice Chairman’s Letter Dear Shareholders, As I write to you, what is certain and a given is that we are living in an increasingly uncertain and volatile world leading to huge amount of complexity and ambiguity with enhanced amplitude and frequency. This poses a special challenge to the process of designing growth strategies and planning of operations. Institutions around the globe are continuously being pushed to change; if they do not proactively do so. Pharmaceutical industry being a knowledge intensive industry faces its own share of challenges. We, at Lupin, were quick to grasp this early on. We realized that spate of rapid changes demand both being adaptive and proactive. Hence, we have been investing ahead of the curve in building competencies and further sharpening our execution capabilities. We have been intuitive in our abilities to forecast changes and agile and swift in responding to them. The accent is on developing and adopting new technologies, expanding on our global footprint, building alliances, and enhancing operational excellence. We are continuously upgrading our processes to facilitate sharing of knowledge, information, and feedback seamlessly across the organization. Our network of global teams is working in tandem to serve customers and communities better in participated geographies. This Transformation Dynamic, be it in the environment or within the Company, has brought forth extraordinary opportunities of growth. We at Lupin are seizing these opportunities to create greater value. This is clearly visible in how Lupin has navigated its way through a rapidly changing world. Our growth performance, duly supported by execution excellence over the last decade, has given us deep insight and confidence to be market leaders. Confidence in people; in leadership and in innovation; We are the Transformation. Dr. Kamal K. Sharma Vice Chairman Lupin Limited Confidence in people; in leadership and in innovation; We are the Transformation 11 12 Powering Up Chief Executive Officer and Managing Director’s Letter Dear Shareholders, FY 2016 was a very important year for Lupin and marked the beginning of a new era in Lupin’s evolution as a global pharmaceutical powerhouse. A transformational year, which saw us accelerate our efforts to increase depth and expand our presence in key markets such as US, India and Japan thus adding to our leadership credentials. It was a tough year for the Industry, but record approvals and significant launches enabled Lupin to deliver strong operational performance, countering a volatile economic environment, price erosion, customer consolidation and price cuts and controls. Lupin’s Net Sales grew to ` 137,016 million; EBITDA stood at ` 39,412 million while our Net Profits were ` 22,707 million during FY 2016. The Company has delivered a Compounded Annual Growth Rate (CAGR) of 19% in Net Sales, 27% in EBITDA and 21% in Net Profits for the last 5 years. Lupin is today the 7th and the 9th largest generic pharmaceutical company by market capitalization and sales globally (Bloomberg, FY 2016). The Company is also the 5th largest pharmaceutical player in the US (by prescriptions, IMS Health); the 3rd largest Indian pharmaceutical company by revenues and the 9th largest generic pharmaceutical company in Japan. FY 2016 saw the Company make its highest investment in research so far, as we focused on building a pipeline in niche high-barrier segments such as Inhalation, Biosimilars and Complex Injectables. Lupin also added and operationalized 3 new manufacturing facilities (2 Formulations and 1 API facility) in India to meet future market demand. Importantly, we completed the acquisition of US based Gavis Pharmaceuticals