Indian Pharmaceutical Industry

Evolution, Trends & Opportunities

Presentation Structure

Indian Pharmaceutical Evolution

India Advantage
Emerging Trends & Opportunities Key Partnership Considerations

Indian Pharmaceutical Evolution

Phase V

Phase IV
Phase III Development Phase Phase II Government Control Phase I Early Years Market share domination by foreign companies Indian Patent Act 1970 Drug prices capped Local companies begin to make an impact Process development Production infrastructure creation Export initiatives Growth Phase Rapid expansion of domestic market International market development Research orientation

Innovation and Research

New IP law Discovery Research Convergence

Relative absence of organized Indian companies

1970

1980

1990

2000

2010

Moving up the Value Chain

VALUE

Innovative Products Specialty Products

API Exports

Generic exports to underdeveloped & developing countries

Generic exports to developed countries

TIME

India Advantage

Large skill base

Experts in process chemistry Long history of reverse engineering

Vast talent pool

Sheer number of scientists Motivated & English speaking Large number of trained Indians returning home from North America and Europe

Unmatched cost competitiveness

Lower cost of infrastructure and skilled manpower Vertical integration

India Advantage cont.

Strong local industry

Growing expertise with international regulatory compliance High quality manufacturing with abundant capacities

Speed

Very strong entrepreneurial spirit Hungry for growth and recognition Quick learners and fast movers

Availability of capital

Stock market has seen unprecedented growth in the last decade Continues to be bullish on the pharma industry

Emerging Trends & Opportunities

Geographic Convergence

Established and growing destination for Generic product development and manufacturing Leading Indian companies seeking overseas markets and global scale

Generic Innovator Convergence

Leading Indian companies trying to climb the value chain into innovative research India developing into a Drug Discovery services outsourcing destination

Generic Product Development & Manufacturing Destination

Leader in API DMF filings in the US

Jan-Jun 2006 175 of the 601 DMFs filed were by Indian companies 2005 - 313 of the 946 DMFs filed were by Indian companies

Leader in capital investments - largest number of US FDA approved manufacturing facilities (outside the US) Almost 20% of ANDA filings in the US No place like India for generics R&D and manufacturing of APIs & formulations Indias biggest assets cost, speed & scientists churning out generics faster than you can say copy In 5 years, 30-35% of the global demand for generic products is expected to be met by India

Generic Product Development & Manufacturing Destination cont.

Leading global/regional generic players establishing a presence:

Teva acquired an Indian co in 2003, setting up new development centre & another manufacturing facility Sandoz development centre, 3 manufacturing facilities, more than 1000 employees Actavis - development centre, acquired CRO (Lotus) Mylan acquired controlling stake in Matrix last month for US$ 736 mn Ratiopharm development centre, manufacturing facilities

Indian companies seeking overseas markets and global scale

Aggressive Growth Strategies

For building a global scale Ranbaxy aims to be one of the Top 5 For market entry acquiring local co or setting up subsidiaries

Recent M&A activity size of deals growing

Ranbaxy going after acquisitions in US & Europe

Acquired 3 companies in Europe in March/April 2006 Terapia (Romania) for US$ 324 million Raising 1.5 billion to fund further acquisitions Acquired Betapharm (Germany) for US$ 570 million in March 2006 Acquired Docpharma (Belgium) for US$ 263 million in 2005.

Dr. Reddys

Matrix (now part of Mylan)

Indian companies seeking overseas markets cont.

Partnership opportunities

Large number of large and mid-sized Indian companies with world-class generic product development and manufacturing capabilities and facilities Lot of under-utilized manufacturing capacities These companies prefer focusing attention & resources on some key markets (US/EU) and look for partners in other markets
Opportunities for supplementing pipelines, filling pipeline gaps and reducing/optimizing cost of development and cost of goods: In-licensing products Dossier and API development Contract Manufacturing Contract Research pilot & pivotal bio-equivalence studies Opportunities for out-licensing and supplying products to leading Indian companies for other markets

Generic Innovator convergence

Increasing number of Indian companies moving up the value chain from generic to NDDS/NCE research Low cost development/manufacturing to Low cost innovation Some examples:

Ranbaxy

1 project in Phase II 1 project in Phase I 7 projects in Pre-Clinical 2 with GSK 3 projects in Phase II 2 projects in Phase I 4 projects in Pre-Clinical 2 projects in Phase II deals with US$ 190 million signed 4 projects in Pre-Clinical

Dr. Reddys

Glenmark

Opportunities for in-licensing & out-licensing

Drug Discovery Services Outsourcing

Global outsourcing market:

US$ 15-20 billion Manufacturing US$ 3-4 billion Research (informatics, chemistry services & chemical custom synthesis)

Big pharma is entering into deals with Indian companies to lower their cost of R&D

Collaborative R&D GSK - Ranbaxy Service outsourcing - Wyeth GVK, Jubilant, Lilly Suven

Global discovery services companies are looking at India to retain their cost advantages

Albany Molecular & Nektar have already established a presence

Indian industry hoping to see 3-4 global discovery services companies emerging out of India

Drug Discovery Services Outsourcing

Leading Indian Service Providers:

Contract Manufacturing Jubilant, Shasun, Divis Clinical Research Syngene (Biocon), Aurigene (Reddys), Synchron Bio-informatics & other IT services TCS, Satyam, Infosys, GVK Bio, Jubilant Drug Discovery/Medicinal Chemistry Aurigene, Divis, Syngene, Suven, GVK Bio Pre-clinicals Vimta, Lambda Central laboratory services SRL Ranbaxy, Vimta

Key Partnership Considerations

Supplier/Partner mapping/selection

Capability / Keenness / Reliability / Competitiveness Key team members development, regulatory & commercial
Strategic markets/product lines Opportunistic product specific Relationship oriented culture Clear distribution of responsibilities and timelines Demand performance - penalties for not meeting deliverables Regular visits and video/teleconferences a must

Optimal Number of Partners

Relationship management

Contract negotiation

Project management

Closing Comment

India is an acquired taste Give it some time & it will grow on you

Thank you!