Indian Pharmaceutical Industry

Evolution, Trends & Opportunities

CHLA September 21, 2006

Akshay Lal Vice President, Strategic Licensing & Sourcing Pharmascience Inc.

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 ‡Relative absence of organized Indian 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 1970 1980 1990 2000 2010 .

Moving up the Value Chain VALUE Innovative Products API Exports Generic exports to underdeveloped & developing countries Generic exports to developed countries Specialty Products 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 .

313 of the 946 DMF¶s filed were by Indian companies   Leader in capital investments . speed & scientists ± churning out generics faster than you can say µcopy¶ In 5 years.Generic Product Development & Manufacturing Destination  Leader in API DMF filings in the US   JanJan-Jun 2006 ± 175 of the 601 DMF¶s filed were by Indian companies 2005 .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 API¶s & formulations India¶s biggest assets ± cost. 30-35% of the global demand for generic products is 30expected to be met by India    .

more than 1000 employees Actavis . 3 manufacturing facilities.Generic Product Development & Manufacturing Destination ± cont. manufacturing facilities .development centre. acquired CRO (Lotus) Mylan ± acquired controlling stake in Matrix last month for US$ 736 mn Ratiopharm ± development centre.  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.

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.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. Reddy¶s   Matrix (now part of Mylan)  .

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

Reddy¶s     Glenmark    Opportunities for in-licensing & out-licensing inout- .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 Pre3 projects in Phase II 2 projects in Phase I 4 projects in Pre-Clinical Pre2 projects in Phase II ± deals with US$ 190 million signed 4 projects in Pre-Clinical Pre-  Dr.

Ranbaxy Service outsourcing . Jubilant. chemistry services & 3chemical custom synthesis)  Big pharma is entering into deals with Indian companies to lower their cost of R&D   Collaborative R&D ± GSK .Drug Discovery Services Outsourcing  Global outsourcing market:   US$ 15-20 billion ± Manufacturing 15US$ 3-4 billion ± Research (informatics. 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 3companies emerging out of India .Wyeth ± GVK.

Lambda Central laboratory services ± SRL Ranbaxy. GVK Bio. Suven. Infosys. Jubilant Drug Discovery/Medicinal Chemistry ± Aurigene. Vimta .Drug Discovery Services Outsourcing  Leading Indian Service Providers:       Contract Manufacturing ± Jubilant. Syngene. Shasun. GVK Bio PrePre-clinicals ± Vimta. Divi¶s Clinical Research ± Syngene (Biocon). Synchron BioBio-informatics & other IT services ± TCS. Divi¶s. Satyam. Aurigene (Reddy¶s).

penalties for not meeting deliverables Regular visits and video/teleconferences a must  Optimal Number of Partners    Relationship management   Contract negotiation    Project management  . regulatory & commercial Strategic ± markets/product lines Opportunistic ± product specific Relationship oriented culture Clear distribution of responsibilities and timelines Demand performance .Key Partnership Considerations  Supplier/Partner mapping/selection   Capability / Keenness / Reliability / Competitiveness Key team members ± development.

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

Thank you! Merci! .

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