Ranbaxy Laboratories

Dear Shareholders,
 
 The year 2008 has been a significant one for Ranbaxy.  The
 path-breaking partnership between Ranbaxy and Daiichi Sankyo has been
 recognised for its visionary and strategic intent and has opened up a
 new paradigm for the future of the global pharmaceutical industry. This
 combination has resulted in an innovator and generic powerhouse, which
 now ranks among the top 15 pharmaceutical companies, globally. The
 partnership will unlock significant and sustained operational and
 strategic synergies, thereby elevating Ranbaxy onto a faster growth
 trajectory.
 
 The Energy of Synergy
 
 Ranbaxy and Daiichi Sankyo share a common view on the nature of
 fundamental changes underway in the dynamics of the industry.  We
 strongly believe that the future environment can be successfully
 leveraged through a hybrid model, combining the capabilities of an
 innovator and generics pharmaceutical company.
 
 The partnership between Ranbaxy and Daiichi Sankyo has created a
 powerful hybrid business model, with complementary strengths ranging
 from excellence in new drug research & development to extensive reach
 across global markets. There is tremendous growth potential for both
 organisations which will be driven and realised in the form of
 synergies across the front and back ends of the pharmaceuticals
 business.
 
 In November 2008, Daiichi Sankyo completed the acquisition of 63.92%
 shares of Ranbaxy and in the process infused US $ 736 Mn into Ranbaxys
 Balance Sheet. The current global business environment is under
 significant financial strain owing to the turmoil and uncertainty of
 the economic environment globally. Against this backdrop, Ranbaxy is in
 a relatively stronger position to supplement its organic growth
 momentum with inorganic growth opportunities.
 
 Business Performance
 
 Amidst a challenging business environment, Ranbaxy has achieved a
 growth of 4% on its top line. This was supported by the Companys focus
 on emerging markets, that contributed 54% to the business;
 consolidation in the business in developed markets and continued
 investment in building a high-value new product pipeline.
 
 Russia, Ukraine, Brazil and India led the growth in the emerging
 markets.  The Company recorded a strong performance in these markets
 that was higher than the industry averages. Amongst the developed
 markets, Canada and Japan outperformed while Germany and France
 delivered good results. For the first time, Ranbaxy launched Authorised
 Generics, Omeprazole and Felodipine, in USA. On both these products, we
 performed well and garnered good market positions.
 
 The business in both emerging and developed markets was supported by
 increased number of new product launches and continuous focus on key
 emerging therapies.
 
 On the innovation front, R&D saw a series of positive developments
 during the year. We expanded our Drug Discovery & Development
 collaboration model by successfully entering into a new collaboration
 with Merck in the field of anti-infectives. In our GSK alliance, we
 maintained steady progress during the year, filing an IND
 (Investigational New Drug) application in India for Phase I trials on
 the Respiratory molecule.  Our Anti-Malaria combination molecule,
 Arterolane, progressed well, having successfully completed Phase II
 studies and obtained approval for Phase III studies in India. On the
 generics side, we continue to drive a high value pipeline of
 differentiated and niche products to achieve greater productivity at
 the business end.
 
 The year 2008 witnessed an unprecedented economic downturn across all
 markets globally. The volatility and uncertainty in the financial
 environment was exceptionally high and led to sharp fluctuation in
 foreign currency rates. Since our business is spread widely across
 multiple geographies and foreign currencies, the weakened and
 fluctuating financial and Forex environment created a substantial
 negative impact on our profitability for the year inspite of sustained
 performance, at an operating level.
 
 In addition, the US FDA issued warning letters on two of our dosage
 form plants in India. As a precautionary measure, the US FDA also
 imposed an import alert on these facilities, which impacted our
 business performance in USA. There has however been a renewed and
 concerted effort by us on the technical and regulatory front to resolve
 these issues. The internal team along with a set of experts is engaged
 with a high degree of focus and commitment towards implementing a
 comprehensive plan of corrective actions. Our multi-pronged strategy
 currently underway will also enable restore and safeguard the current
 and future product portfolio in the US market.
 
 Corporate Governance
 
 Our strong Board with Independent Directors guides and works through
 Corporate Governance Committees that focus on aspects like Audit,
 Compensation, Science, Share transfer, Shareholder grievances etc. The
 Board Committees regularly scrutinize the policies and proposals made
 by the Operating Management and also provide an unbiased independent
 assessment of the state of robustness of the business processes in
 place. They also guide the management to continuously upgrade standards
 and proactively address potential vulnerability areas.
 
 Ranbaxy, in 2008, proactively adopted the latest financial guidelines
 (AS-30) related with foreign currency instruments and harmonised its
 financial reporting accordingly. We were amongst the earliest companies
 in India to adopt these guidelines, ahead of time, thus aligning our
 Company with the global reporting norms while maintaining high
 standards of disclosure and complete transparency.
 
 The Road Ahead
 
 For the year 2009, Ranbaxy has a clear strategy to harness its growth
 potential in emerging markets, rebuild the US business through a series
 of actions on products and facilities; actualise significant revenue
 upsides through First-to-File and Day-1 launches; strengthen the
 product / therapeutic pipeline and look for M & A opportunities,
 complementing our geographic and therapeutic basket. Our focus will be
 to resolve regulatory compliance issues and continue to strengthen cGMP
 across all locations. Besides this, Ranbaxy and Daiichi Sankyo will
 identify key projects to realise synergies at both the front and back
 ends of the business, although, there will be much to contend with,
 considering mat the industry is projected to grow at around 5% in 2009.
 
 Conclusion
 
 Before closing my remarks, I would like to acknowledge the substantial
 contribution made by the erstwhile Board in guiding Ranbaxy to its
 current position of leadership.  A special and sincere thanks to my
 predecessor Chairman, Mr. Harpal Singh, who led the Board in the most
 exemplary and professional manner.  His natural style of heeding
 business ethics, focusing on corporate governance and above all, taking
 care of people, has strengthened the very foundation from which the
 Company aspires to grow.
 
 I also take this opportunity to welcome Mr. Takashi Shoda, Dr. Tsutomu
 Une, Mr. Balinder Singh Dhillon, Dr. Anthony H. Wild, Mr. Rajesh V.
 Shah, Mr. Akihiro Watanabe and Mr. Percy K. Shroff to the Board of
 Ranbaxy. With an enriched, international and experienced Board, Ranbaxy
 is truly set to establish itself as a research based international
 pharmaceutical Company.
 
 Ranbaxys strong multicultural work force has been the bedrock of the
 Companys glorious past.  I am confident that with the commitment and
 passion of our people, we will shape a bright future for the
 organisation.
 
 On behalf of the Board, I would like to thank all our shareholders for
 their continuous and unstinting support. I also look forward with
 confidence, as before, to your support in the coming years.
 
 With Best Wishes,
 
                                             Malvinder Mohan Singh
                                 Chairman, CEO & Managing Director
 March 29,2009