March 2005 Indian Pharmaceutical Industry Riding a Growth Wave

March 2005 Pharmaceuticals  India - An Overview  Market and Growth Potential  Players  Opportunities  Why India?  Contact in India

India - An Introduction  Population  States/UTs  Geographical Area  Languages recognised  Business language  Per Capita Income**  GDP** Over 1 bn mn sq kms 22 English US$ 534 US$ 650 bn Source:CSO Statistics **(at factor cost & at current prices) 1USD=43.54 INR (as on July 4, 2005)

March 2005 India - Fast pace Growth  Largest democracy  4th largest economy by PPP index  6th largest energy consumer  ForEx reserves skyrocket from US$ 42 bn (2001) to US$ 133 bn (February, 2005)  GDP growth to continue between 6-8%  3rd largest economy by 2050: Goldman Sachs  Leading in IT & BPO  Oil & Gas and Biotechnology sunrise industries

March 2005 India - Leading the world  Hero Honda - largest manufacturer of motorcycles  Moser Baer - 3rd largest optical media manufacturer in world  Pharmaceutical Industry - 4th largest in world  Walmart, GAP, Hilfiger sources more than USD 1bn worth apparel from India  100 Fortune 500 have set R&D facilities in India including GE, Delphi, Eli Lilly, HP, Heinz and Daimler Chrysler

March 2005 Pharmaceuticals  India - An Overview  Market and Growth Potential  Players  Opportunities  Why India?  Contact in India

March 2005 Pharma Market Volume – wise8% of global market 4 th largest in the world CAGR( )16.6% Exports 23% CAGR( ) Size ( )US$ 7 bn Share of formulations80% Size 2010 (estimated)US$ 25 bn

March 2005 Exports CAGR (over last decade )26% Rate of growth (2003)21% Export destinationsUS, Germany, Russia, UK and China India - Net exporter of pharmaceutical products Exports ( )US$ 2.8 bn

March 2005 Increased R&D Focus Shift from business-driven research to research-driven business

March 2005 Increasing R&D Spend Annual recurring R&D expense growth rate32.3% yoy

March 2005 Resurgence of FDI 100% automatic FDI approvals to aid increased investment in R&D infrastructure by MNCs Resurgence of FDI in the Pharma Sector Source: CMIE

March 2005 Quality Assurance in Manufacturing India has the highest number of USFDA approved plants outside the US  GMP compliant  Approved by international bodies - US FDA, UK MCA, South African MCC Manufacturing facilities

March 2005 Pharmaceuticals  India - An Overview  Market and Growth Potential  Players  Opportunities  Why India?  Contact in India

March 2005 Domestic Players Ranbaxy Largest pharma company in India; LaboratoriesAnnual revenues of US$1bn Dr Reddy’sIndian company with presence in Laboratorymore than 50 countries CiplaOne of the lowest cost manufacturer of anti-HIV drugs in the world WockhardtLargest Indian pharmaceutical company in UK Nicholas Piramal Aggressively investing in R & D

March 2005 MNC Presence in India GlaxoSmithKline Leads in 6 of the 10 therapeutic categories Pfizer Owns the two largest selling brands in India Astra ZenecaInvolved in cardiovascular, respiratory, maternal healthcare & pain control and anasthesia AventisIndian manufacturing sites identified as potential global sourcing units by global parent company

March 2005 MNC Presence in India NovartisCollaborations with Dr Reddy’s and Torrent WyethContract-manufacturing tie-up with Indian major Bharat Biotech Sanofi-SynthelaboPresent in cardiology, thrombosis & neuropsychiatry RocheAlready invested US$ 20 mn in India and plans additional US$ 7.35 mn in MerckLeader in laboratory reagents market in India

March 2005 MNC Activity in India  Novartis AG seeking tie-ups with Indian companies  Bristol-Myers to enter India again  Aventis’s Goa unit to be sourcing hub  Pfizer India doubles research investment in India  AstraZeneca, Glaxo to make India R&D hub  Chiron to make India its Asian hub  Bayer AG to make India sourcing hub  Eli Lilly to make India sourcing hub  German major Boehringer Ingelheim to enter India  India to be Roche's global hub for bulk drugs

March 2005 Pharmaceuticals  India - An Overview  Market and Growth Potential  Players  Opportunities  Why India?  Contact in India

March 2005  USD 70 mn market ( )  Growing at 20% per annum  Outsourcing - fastest growing area for new investment  US$ 1 bn opportunity by 2010 Clinical research Invest in India Contract Research

March 2005 Invest in India Custom synthesis  Largest pool of trained analytical and development chemists  Excellent track record of innovation  US FDA approved manufacturing facilities  30-50% cost savings

March 2005 Invest in India  Global Outsourcing opportunity worth US$ 15 bn by 2010  Global majors to outsource manufacturing from India API sourcing and contract manufacturing

March 2005 Invest in India  Pre clinical testing Superior and low cost chemical synthesis skills advantages  Clinical trials India to be an outsourcing centre for conducting low cost clinical trials Collaborative R&D GlaxoSmithKline has R&D alliance with Ranbaxy Laboratories

March 2005 Export from India Source: SSKI Exports drive growth for Indian pharmaceutical majors

March 2005 Export from India Generics - The key driver for export growth Source: SSKI

March 2005 Partner with India Marketing alliances - A win-win strategy Increased market penetration  Zydus Cadila has strategic agreement with Schering AG  Nicholas Piramal has 5 year strategic alliance with Biogen Idec

March 2005 Partner with India  Process reengineering expertise  Low-cost scientific manpower available  Low capital requirement for NDDS research  Fast clearances from regulatory authorities New Drug Delivery System (NDDS)

March 2005 Pharmaceuticals  India - An Overview  Market and Growth Potential  Players  Opportunities  Why India?  Contact in India

March 2005 Advantage India  Excellent chemical synthesis skills  Successful scaling up of laboratory processes to plant-size  Cost-effective and commercially viable non-infringing processes  Pool of low-cost and highly skilled medical professionals  Manufacturing facilities of international standards  Quick absorption of new technology

March 2005 Indian Pharmaceutical Act  Reduction in number of drugs under price control to 28 as against 74  100% foreign investment automatically permitted  Abolishment of industrial licensing for bulk drugs, intermediates and formulations  Automatic approval for Foreign Technology Agreements

March 2005 Regulatory Scenario  IPR/Patent regulations Product patent regime to be implemented by Jan in compliance with TRIPS  Price regulations Price controls decline substantively  Product and quality regulations

March 2005 Policy Incentives  Tax exemptions at par with IT  Reduction in peak custom duties from 30% to 25%  Increase on rate of depreciation on life saving equipment from 25% to 40%  Income from royalty on drugs licensed to foreign companies exempted from tax  Tax holiday for R&D companies

March 2005 Key Features 22% increase in allocation under the National Rural Health Mission Formation of a SME Growth Fund to provide equity support to small & medium units in the pharmaceutical & biotechnology sectors. Import duty on select equipments used in pharmaceutical & biotech research reduced from 20% to 5%. 150% weighted deduction on R&D expenditure Union Budget Fillip to R&D initiatives

March 2005 Pharmaceuticals  India - An Overview  Market and Growth Potential  Players  Opportunities  Why India?  Contact in India

March 2005 Contact in India Confederation of Indian Industry (CII) 23, Institutional Area Lodi Road New Delhi – Tel Fax /