Advantages of India

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Advantages of India
Dr. Brian W Tempest Chief Mentor Executive Vice
Chairman of the Board Ranbaxy Laboratories
Limited, Delhi, India India Clinical Trials
Outsourcing Mumbai, India Monday 23rd July
2007
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Disclaimer
Except for the historical information contained
herein, statements in this presentation and the
subsequent discussions, which include words or
phrases such as will, aim, will likely
result, would, believe, may, expect,
will continue, anticipate, estimate,
intend, plan, contemplate, seek to,
future, objective, goal, likely,
project, should, potential, will pursue
and similar expressions or variations of such
expressions may constitute "forward-looking
statements". These forward-looking statements
involve a number of risks, uncertainties and
other factors that could cause actual results to
differ materially from those suggested by the
forward-looking statements. These risks and
uncertainties include, but are not limited to our
ability to successfully implement our strategy,
our growth and expansion plans, obtain regulatory
approvals, our provisioning policies,
technological changes, investment and business
income, cash flow projections, our exposure to
market risks as well as other risks. Ranbaxy does
not undertake any obligation to update
forward-looking statements to reflect events or
circumstances after the date thereof.
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Asias Share of the World GDP (at PPP in )

• Year 1870 1913
  1950 1973 2001
• China 17 9
  5 5 12
• India 12 8
  4 3 5
• Japan 2 3
  3 8 7
• Rest of Asia 7 5 7
  9 13
• Total Asia 38 25
  19 25 37
• Source WEF
• - was 59 in 1820 with India 16,
  China 33

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Davos
Source FT
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The Productivity Advantage
India a usa Pharma view USA
1 chemist Better education x
1.3 1 chemist
70 hours/week Longer working time x 1.3
50 hours/week
800 monthly Lower cost x 20
12,000 monthly
Sources IPHMR Conferences, New Delhi August 2004
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The Ageing Advantage

• Japan - by 2050 36 gt 65 years from
  19 in 2005
• China - one child families, get older
  before becoming wealthy
• - labour costs
  will rise owing to labour shortage
• India - India already has the
  youngest labour force in the world
• - source of the
  extra needed global workforce
• - India will pass
  China in total population in 2030
• - By 2013 India
  will have more young workers 20-24 than China

Working Population, 15-64 years In millions
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The Economic Growth Advantage

• Growth
• - Japan, sustain current growth
• - China, slightly slower growth to prevent hard
  landing
• - India, increasing growth rate being talked
  up to 9/10
• Sentiment
• - India, largest foreign affairs caucus in US
  Congress (180), nuclear deal
• - China, 74,000 demonstrations reported in
  2005 in China. State secrecy, IP

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A race to prosperity
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The Billionaires Advantage

• The world has over 800 billionaires
• USA has almost half
• India - 36 billionaires
• China - 15 billionaires
• Net worth of 40 richest Indians - 170 b
• 40 richest Chinese - 38b
• Source Forbes, Asia November 27, 2006
• 2006 belongs to some of the emerging markets,
• and no country more than India

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The RD Investment Advantage

• 
  
• Most attractive RD Investment locations
• Ranked 3rd - China, USA, India, Japan UK
• Source UNCTAD 2005

• Reasons why India
• Qualified Scientists Engineers
• Global India players with Alliances
• English speaking
• TRIPs compliant first patent March 2006
• IIT, IIM other scientific institutions
• Source UNCTAD 2005

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The Education Advantage

• 4th largest reservoir of Scientific Manpower (2nd
  largest English speaking)
• 3m graduates pa, 115k MSc Chemistry (3.5k UK),
  215k Eng (222k USA)
• Physics the most popular subject
• Lead by a Nuclear Scientist as President
  remote sensing satellite technology, 1/6
  countries
• PCT application ranked 3rd Kor, Chi, Ind, Sin,
  RSA
• US Europe will not dominate Science, Maths, IT
  industries
• Mr. Bill Gates

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Science Education in EU
This means that when pupils are in a science
laboratory their experience is unsafe,
unsatisfactory or uninspiring for 65 of the
time. Source Royal Society of Chemistry, Policy
Bulletin Spring 2006 UK A Level
entries Closed UK University
2000 2005 change
Chemistry Departments Physics
32,059 28,119 -12 Dundee
Kings Chemistry 40,856 38,851
-5 Surrey Exeter Maths
67,036 52,897 -21 Lancaster
Queen Mary Computing 19,099 7,242
-62 Source Daily Mail 11 August
2006 Only pupils at private schools can take
physics, chemistry biology separately Source
Times, 9th November 2006
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Science Education in India

• Number of Higher Education Institutions
• 05/06 18,123 59
• 00/01 11,412
• 90/01 5,932
• 80/01 4,861
• Source Indian University Grants Commission

Number of Students enrolled in Higher Education
Institutions 05/06 10,500
40 00/01 7,500 90/01
4,000 80/01 3,000 Source Indian
University Grants Commission
Number of Institutions courses
05/06 99/00 Pharmacy
1478 669 120 Medicine
229 174 32 Physiotherapy
205 52 294 Source Pavan
Agarwal (2006) based on data from
professional councils
PhD Degree awarded in Science 03/04 5408 44 00/
01 3734 90/01 2950 (USA 03/04 25,000)
Source Indian University Grants Committee
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The Education Advantage
Engineers/Science graduates p.a India 0.7m,
China 0.5m, EU 0.5m, USA 0.4m, Japan 0.3m
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The Information Advantage

• 34 News TV channels. Oldest 13 years old (NDTV)
• 5000 newspapers, circulation 17m. 12 with 1m
  copies each.200m daily readers. 21m new daily
  readers 2003/2005, 14 with 50 rural and 50
  urban readership
• Diaspora network (25m across 120 countries)
• Indians are hungry for information

• Internet Usage Asia
• China 123 m
• Japan 86 m
• India 51 m
• S.Korea 34 m
• Source Business Today, Sept. 24, 2006

• Mobile Phones
• China 421 m
• 2. USA 190 m
• Japan 157 m
• Russia 148 m
• 5. India 116 m
• Source Times of India, Sept. 14, 2006

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The Pharma Plants Advantage
Active Pharmaceuticals Facility, Mohali
Dosage Forms Facility, Paonta Sahib
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The Pharma RD Advantage

• Clinical data management
• An Indian speciality
• 300 staff GSK
• -2.2m clinical data sheets
• -450 trials
• -Error rate lt0.01/100k
• -No data security issues
• Source BCG report Looking Eastward Sep2006

RD hotbeds China India have become
RD hotbeds.. MNCs already operate some 180
RD centres in China and More than 100 in
India Source BCG report Looking Eastward
Sep2006
2005

• PCT Filers from Developing Countires 2006
• Huawei China 6. ZTE China
• LG Korea 7. STR Singapore
• Samsung Korea 8. Ranbaxy India
• LG Chem Korea 9. CSIR India
• Elec Telecom Korea 10. NHN Korea
• Source WIPRO

2004
2001
2000
185
170
1999
146
86
49
24
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Ranbaxys Patent Filings
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The Pharma Clinical Advantage

• Cost Advantage
• China India
• Cost 40 16
• Patients/site 250 500
• Based on USA at 100 Index
• Source BCG report Looking Forward 2006

Country USA India Sites 22 8 Subject 626 896
Source Andy Lee Pfizer Global, head clinical
study and data management.Business India, August
13, 2006
Medical Tourism Cardiac Surgery 000s

USA 30 Singapore 20 Thailand 14
India 5-7 Source Business world, 18th Dec2006

• Patients
• Naïve untreated patients
• HIV 50m
• Diabetes 32m
• HT 5m

..The Countrys World Class skills in
Chemistry IT and its large treatment
naive patient population provides added allure
Boston Consultancy
Group Harnessing the power of India 2006
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The Investment Advantage

• India FDI
• 2003/4 4.3b
• 2004/5 5.6b
• 2005/6 6.0b
• Source Outlook business June 2006

2005 FDI Brazil 15b UK 164
b Russia 14b USA 99 b India 6b China 72b
(35b) Source UNCTAD 2006

• India on target for 12b in 2006/07
• - But still small

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Investment in India is rising
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The Potential for Improvement Advantage

• More Privatization public sector not so buoyant
  
• Scope for improvement of Government Policies
• Manufacturing growth versus China
• GDP dynamics 1990 2005
• - Agriculture 31 20
• - Industry 28 26
• - Services 41 54
• Further encouragement of RD for Pharmaceuticals

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Corporates continue to need Support
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The Potential for Improvement Advantage

• More Privatization public sector not so buoyant
  
• Scope for improvement of Government Policies
• Manufacturing growth versus China
• GDP dynamics 1990 2005
• - Agriculture 31 20
• - Industry 28 26
• - Services 41 54
• Further encouragement of RD for Pharmaceuticals

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Investment by Microsoft in India

• Microsoft Global Development Centre (GDCI)
• Microsoft Global Services (MGSI)
• Microsoft Global Technical Support Centre (GTSC)
• Microsoft Systems Research (MSRI)
• Microsoft India Development Centre (MIDC)

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India

• A Global Strategic Asset for developed
• World Market businesses

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Generics APIs
USA DMF filings by India
Share of USA DMF filings

• 
  
  
• India China
  
• 2004 27 9
• 2005 37 10
• 2006 44 14
• Q406 47 9
• Source US FDA / J P Morgan, 6th
  August 2006

• 
  
• 1990
  1
• 1995 4
• 2000 36
  
• 2004 187
• 2005 262
• Source Crisil / US FDA / J P Morgan

Source US FDA, Credit Suisse
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Generics - ANDAs
ANDA Filings in USA by Indian Companies
144
64
46
24

• - One in every four ANDAs filed
  by Indian Companies in top
• USA FDA filers
• Source KPMG
• - No Chinese generic company has
  yet filed a USA FDA ANDA
• but expected in 2008

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Discovery Local vendors available in India to
Support Discovery Research
Vendor Availability
India China Analog
preparation 41 25 Combinatorial
chemistry 37 7 Analytical chemistry 37 7 Str
uctural chemistry 26 5 Assay
development 26 2 Computer drug
design 26 13 High throughput
Screening 11 2 Bio informatics 13 7 Genetica
lly modified animals 0 3 Basic molecular
biology 13 25 Source BCG, Looking
Eastwards, September 2006 Out of 90 vendors in
October 2005
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Discovery Local vendors available in India to
Support Clinical Research
Contract Research Organisations 30 Bio-equivale
nce Bio-analytical 15 Data Management
enabled services 14 Site Management
Organisations 5 Central Laboratories 8 Storag
e Distribution 5 Centralised ECG
Services 2 Clinical Research
Training 8 Source Pharmaceutical
Technology Asia Pacific, March 2007
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Patient Recruitment
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The Global challenge between India China
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The Tempest Crystal Ball India China

• Post TRIPs new products will dry up in India by
  2008. Under this pressure
• Indian companies will adopt different
  business models
• The global generic industry will be dominated by
  India
• Discovery companies will continue to be attracted
  to India
• China will be perceived to be stronger in
  biology/ toxicology
• Alliances between Western Biotech and Indian
  companies will expand
• It will be India China - and not India or
  China.

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Perceptions of India
The Indian System looks ramshackle and
improvised. But at its best it is capable of
brilliance When we say the Silicon Valley
is built on ICs we dont mean integrated circuits
we mean Indians Chinese The UK needs to
wake up to what India is becoming Source
DEMOS report January 2007
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Key Challenges to the Indian Scenario
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Potential Challenge Asian Flu
50 of world chickens bred in Asia
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Potential challenge Oil prices
Source BP

• A war against Iran could drive oil gt 200 a
  barrel - Times 22nd June 2006
• India is expected to import 85 of crude oil by
  2012 from 70 today

Source Assocham
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Potential Challenge Climate Change
CO2 emission - of World total in
1990-2000 USA 23 EU 25 17 China 14 Russia
7 Japan 5 India 4 source WRI, EIA
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Potential Challenge Infrastructure
Our greatest potential will be realised only if
we can ensure that our Infrastructure does not
become a severe and critical handicap
Source Manmohan Singh
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Potential Challenge over the border
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Summary

• 
  
• Asia economic strength is returning to
  levels seen in the past
• Many advantages for India Demographics,
  Education
• India is a global strategic asset for
  developed markets
• Some Challenges infrastructure, climate
  change
• The current feeling in Indian Boardrooms is
  that a turning point has been reached, a
• tipping point has been passed and Indias
  time has arrived
• India is a rich location for future
  alliances and CT outsourcing
• MNCs will dip in out of India China, using
  their individual strengths
• China India represent the future of Asia
  and quite possibly the future for the global
  economy Steve Roach, Morgan Stanley

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Thank You