Indian Pharmaceutical Industry Evolution, Trends

1
Indian Pharmaceutical Industry Evolution, Trends
Opportunities

• CHLA
• September 21, 2006
• Akshay Lal
• Vice President, Strategic Licensing Sourcing
• Pharmascience Inc.

2
Presentation Structure

• Indian Pharmaceutical Evolution
• India Advantage
• Emerging Trends Opportunities
• Key Partnership Considerations

3
Indian Pharmaceutical Evolution

• Phase V
• Innovation and Research
• New IP law
• Discovery Research
• Convergence

• Phase IV
• Growth Phase
• Rapid expansion of domestic market
• International market development
• Research orientation

• Phase III Development Phase
• Process development
• Production infrastructure creation
• Export initiatives

• Phase II
• Government Control
• Indian Patent Act 1970
• Drug prices capped
• Local companies begin to make an impact

• Phase I
• Early Years
• Market share domination by foreign companies
• Relative absence of organized Indian companies

1970
1980
1990
2000
2010
4
Moving up the Value Chain
VALUE
Innovative Products
Specialty Products
Generic exports to developed countries
Generic exports to under-developed developing
countries
API Exports
TIME
5
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

6
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

7
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

8
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 RD 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

9
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

10
Indian companies seeking overseas marketsand
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 MA 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
• Dr. Reddys
• Acquired Betapharm (Germany) for US 570 million
  in March 2006
• Matrix (now part of Mylan)
• Acquired Docpharma (Belgium) for US 263 million
  in 2005.

11
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

12
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
• Dr. Reddys
• 3 projects in Phase II
• 2 projects in Phase I
• 4 projects in Pre-Clinical
• Glenmark
• 2 projects in Phase II deals with US 190
  million signed
• 4 projects in Pre-Clinical
• Opportunities for in-licensing out-licensing

13
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 RD
• Collaborative RD 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

14
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

15
Key Partnership Considerations

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

16
Closing Comment

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

17

• Thank you!
• Merci!