After two consecutive years of gloom, some cheer returned to the global economy in 2010-11, though not enough to qualify as a sustained recovery yet. India was shielded against the worst economic headwinds, and our GDP responded with a robust growth performance. This stability is expected to continue, with GDP growth estimates ranging from 8.2% to 8.6%. Notwithstanding the optimism, inflationary pressures, a policy initiative slowdown, as well as an overheated commodity price ecosystem are matters of considerable concern.

This sets the context for the performance of the global pharmaceutical industry, which grew by 4.1% to USD 856 billion, and is expected to touch USD 880 billion in 2011, growing from 5% to 7%. The global pharma market is expected to cross the trillion dollar milestone by 2014, reflecting a significant market expansion. A substantial part of this growth will be contributed by generics at a product level, and by the ‘pharmerging’ markets like China, Brazil, Turkey, Mexico, Russia etc. at a geography level.

These economies are expected to double their spending on medicines by 2015 – to almost USD 300 billion, contributing 28% of the global pharma market. India will be an important participant in this growth. Not only will there be a significant growth in chronic therapies, such as diabetes and hypertension, but also a high degree of government expenditure (approximately 1.5% of GDP) is expected.

Today, Elder Pharmaceuticals ranks among the top five fastest growing pharmaceutical companies in India by virtue of strategic alliances, synergetic acquisitions, globally accredited manufacturing facilities, and above all an extensive marketing and distribution network. We concluded the 100% acquisition in the UK-based Nutraceutical major NeutraHealth PLC’ in November 2010. NeutraHealth offers advanced Vitamins and Mineral Supplements (VMS) and Probiotics. On the one hand, Neutrahealth will provide raw materials for certain Elder brands, while Elder will provide the API to them on the other. We have also enhanced our stake in Biomeda Bulgaria. Elder currently holds 92.2% stake in Elder Biomeda. It is primarily involved in two sets of businesses that include distribution and products manufacturing. We are building an enormous plant in Bulgaria which will act as a large manufacturing base.

Our financial performance reflects our growing strength. The organization registered a topline growth of 33% from Rs.7,208.98 million to Rs.9,592.03 million.

This growth can be primarily attributed to revenue generation from our own brands, such as Shelcal, Chymoral, Formic and Eldervit, among others.

These brands delivered robust growth. Operating in a highly inflationary regime the bottom line growth was 11% from Rs.553.92 million to Rs.616.76 million.

We also witnessed attractive growth across all divisions. We intend to double the turnover within the next two-and-a-half years. Our subsidiaries overseas will contribute signifcantly in revenue generation in the years to come.

Elder’s business strategy is simple: we believe in innovation and introduction of new concepts, rather than competing in an already fiercely competitive market.

This strategy of building a niche for our brands is challenging, but in the long run it generates enhanced revenues and drives higher market recall than operating in a ‘me-too’ market. Since inception, we have always followed this principle, which helped carve a niche for our products. Over the preceding two decades, Elder has created an extensive intellectual asset base and a powerful research and development division. Intellectual capital represents our principal asset, which creates and sustains our brand leadership in the markets of our presence.

Elder’s domestic operations are growing significantly. In the domestic market, the Women’s Healthcare division is performing exceedingly well. Going forward, our objective is to foray into the segment of women’s hygiene as well. In addition to urban markets, Elder is also focusing on growth opportunities in the rural and semi-urban markets through its rural marketing team ELVISTA. We also launched the Mass Market Initiative-Adventus. Besides, there will be a greater thrust on exports in future. We received accreditation from Ministry of Health-Japan for our Active Pharmaceutical Ingredients (API) plant at Patalganga, Maharashtra, opening up the fast growing Japanese markets for the company’s products, which is a positive step towards strengthening the organization’s position as a supplier of APIs and intermediates in the Japanese market.

I am confident that despite all our past achievements and milestones, our best is still to come. Our vision is to enhance the quality of life of patients by focusing on better health outcomes through our products. With our motivated employees, we will keep raising the standards of our performance in all spheres of activities so as to generate more value for all the stakeholders.

I take this opportunity to convey my sincere gratitude and thanks to all the lenders, vendors, the doctor fraternity and service providers for their continuous patronage and faith in the company.

Thanks for your enduring faith in our efforts. That’s our biggest motivation.

Warm Regards,

Jagdish Saxena

Chairman