Glenmark

to the United States, a market noted for its litigious nature and high awards of damages. While we have a
global product liability insurance policy for products sold by us, if any product liability claim not covered
by insurance or exceeding the policy limits were sustained against us, it could adversely affect our business
and financial condition. A deterioration in our quality controls could also result in product liability claims
against us. The risk of product liability suits is also likely to increase as we develop our own new patented
products in addition to making generic versions of drugs that have been in the market for some time.
If we cannot respond adequately to the increased competition we expect to face in the future in India
and abroad, we will lose market share and our profits will decline.
The Indian Pharmaceutical industry is highly fragmented. Our products face intense competition from
products developed, or under development, by other companies in India and abroad, including major
pharmaceutical companies. We believe some of our competitors have broader product ranges, stronger
sales and R&D teams and better segment positioning than us which enable them to compete more
effectively. Many of our competitors have greater financial resources and marketing capabilities than we
do. Some of our competitors, especially multinational pharmaceutical companies, have greater experience
in clinical testing and human clinical trials of pharmaceutical products and in obtaining international
regulatory approvals. Furthermore, following India’s adoption of the new patent regime in 2005, more
multinational corporations have increased their focus on India and more multinational corporations may
enter the Indian markets. If they do, we may not be able to compete with them effectively. We may also
fail to introduce key products in the market at the relevant time or at a competitive price. Our competitors
may succeed in developing technologies and products that are more effective, more popular or cheaper than
any we may develop or licence. Our Indian competitors, particularly, in the recent past have resorted to
extensive price-based competition. Should this continue, this could render our technologies and products
obsolete or uncompetitive, limit our ability to introduce new products, and could adversely affect our
business and financial results. In addition, APIs are commodity products and their prices can fluctuate
sharply over short periods of time due to changes in demand, the price of raw materials and manufacturing
efficiencies. Price competition among suppliers both in India and abroad is intense, with increasing
competition from pharmaceutical companies in China and elsewhere that often price their products at lower
rates than us. We compete with some of our API customers in the formulations business, which could affect
such customers’ willingness to purchase our products. Increased competition could have a material adverse
effect on our financial condition and results of operations.
Our high leverage and security created in favour of lenders may impair our ability to obtain future
financing.
As at March 31, 2009 we had Rs. 20,943.46 million of total debt on a consolidated basis. As at March 31,
2009, our debt to equity ratio was 1.31:1. After giving effect to the use of proceeds for this offering (on the
basis of the assumptions described in the “As adjusted” column in the table shown under “Capitalization”,
and in “Use of Proceeds”), our as adjusted debt to equity ratio would have been [•] as at March 31, 2009.
See also “Capitalization”. In the event that actual net proceeds from the Issue utilized for the repayment of
existing indebtedness are lesser than anticipated, our debt profile may not be reduced to the extent
anticipated. Our relatively high debt to equity ratio is principally due to investments we made in several
strategic projects, the majority of which were funded by borrowings. Our high leverage may continue to
constrain our ability to raise incremental financing or the cost at which we could raise such financing.
In addition, we have granted security in favour of our lenders over, among others, some of our immovable
and movable property and our fixed and current assets pursuant to our loan and security agreements. If we
are unable to fulfill our payment obligations under the loan agreements, our property and assets could be
forfeited or transferred. These security arrangements also restrict our ability to grant security over our
property and assets. The existing security in favor of our lenders over all or substantially all of our
immovable and movable property and our fixed and current assets may furthermore substantially affect our
ability to raise additional money and grant additional security.
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