1. Overview of Development, Manufacturing & Global Marketing from India Dr Brian W Tempest President – Pharmaceuticals New Delhi February 12, 2002

2. Once R&D discovers, Can the Indian Pharma Industry develop, manufacture & market around the world? R&D discovers

3. Global Pharmaceutical Industry  Global pharma market ~ $ 362 bn - 2000 estimates  Top 10 companies have ~ 40 % market share  10 countries presently cover ~ 80% of global pharma market  Generics opportunities  ~ $45 bn in advanced markets by 2005  Government focus on affordable health care costs Blockbuster Patent Expirations (adjusted for patent extensions) in $ Bn

4. Source: IMS World Review 2000 Rank in 2005 1.USA(1) 2.Japan (2) 3.Germany (3) 4.France (4) 5.UK (5) 6.Italy (6) 7.Mexico (11)  8.China (7)  9.Brazil (8)  10.Canada (9)  11.Spain (10)  12.India (14)  (Rank in 2000) Total market CAGR ( 1995 - 2000) = 5.3% US market CAGR ( 1995 - 2000) = 12.4% Total market growth in 2000 = 6.9% US contribution ~ 55% ( $18.2 bn) $ 282 bn$ 362 bn World Pharma Markets

5. Source: IMS World Review 2000 US 31% Europe 19% Japan 11% Others 39% Generics Market in 2000 ~ USD 36 bn Emerging Markets in 2000 ~ USD 30 bn (Latin America, China, India, Russia) World Generics and Emerging Markets

6. Indian Pharma Market Size ~ $ 4 Bn in 1999 8% of Global Volume, 1% of global value Rank 5th in volume, 14th in value terms Number of drugs under price control –197934790% of market –19957450% –2000?? Exports of $ 1.7 b, Imports of $ 0.7b Prescription driven, Branded Generic market Modern Medicine reach 30% of population

7. Manufacturing capabilities Employs approx. 1.86 mn people Has 10000 manufacturing units. 2900 large scale and 7100 in small scale sector Total production stands at $ 4.2 bn. 95 % Formulations manufactured indigenously 90% of bulk drug requirement met indigenously RANBAXY

8. Production capacity of Indian Pharma Industry Rs Crores * *1Crore = 10 Million RANBAXY

9. Investment in Indian Pharma Industry RANBAXY

10. The Indian Pharma Market API manufacturing 90 - 100 250 Organized domestic sector 80 ExportingInternational operations 68 Accredited R&D facilities Average spend ~ 3.5% New drugs research 3 70% of pharma Market ($ 3.5b) 75% of API Production ($ 700m) 90% of pharma Exports ($1.4b) 65% of total R&D Spend ($ 75m) 80% of JVs and foreign investment Ranbaxy present in all categories

11. Improvement in health indicators in India over the years RANBAXY

12. Exports of Pharmaceutical Products from India RANBAXY

13. Significant Presence India ranks 5 th among the drug producing countries in volume terms and 14 th in Value terms. 8% share of global pharmaceuticals production. Market size of $ 3.5 bn growing at 16% 23,000 companies registered. 350 companies operating nationally. RANBAXY

14. Comparative Drug Prices 31.0712.76 Naproxen 250mg (antiarthritic) 41.1613.58 Haloperidol 5mg (cardioprotective) 61.1511.29 Atenolol 100mg (cardiovascular) 40.8915.26 Diltiazem 60mg (antihpertensive) 29.903.82 Nifedipine 10mg (cardiovascular) 58.5615.45 Captopril 25mg (antihypertensive) 121.6716.15 Ranitidine 150mg (anti-ulcer) 36.406.77 Cimetidine 200mg (anti-ulcer) UKINDIADRUG Rupees RANBAXY

15. Key elements in the success of Indian Pharma Industry Entrepreneurship and Scientific & Technological skills Reversing brain drain Strong capacity to learn, absorb, and adopt process technologies World class capabilities in Quality Management ensured approvals by US-FDA, UK-MCA, Australian-TGA and SA-MCC Moving up the value chain in R&D – Process development to Analog research, NDDS, Chiral research and NCEs RANBAXY

16. Competitive edge of Indian Pharmaceutical Companies Immense flexibility of industry to move from one drug to another Strong presence in foreign markets, net exporter of bulk drugs & formulations Advantage of low costs and availability of high skills in process development Cost of R&D much lower compared to other nations India has third largest scientific pool in the world In volume terms India produces 8-10% of worlds volume RANBAXY

17. Ranbaxy Competitive Edges Brand Marketing –Origins in India – cut throat competition –USA Commodity generics Backward Integration –Control API costs –Not locked into suppliers –Productivity breakthroughs R&D –Low cost –Excellent chemical research skills

18. Unique Price advantage Lower production cost due to reverse engineering capabilities Lower input cost due to indigenously manufactured raw material Low labor costs Inexpensive machinery Government’s policies RANBAXY

19. PCT applications from developing countries CompanyCountryApplications 1.Samsung ElectronicsKorea112 2.Shanghai GereChina105 3.Shanghai GereChina97 4.Fudon UniversityChina71 5.LG ElectronicsKorea38 6.Korea Institute of TechnologyKorea32 7.LG ChemicalsKorea30 8.RanbaxyIndia22 9.Samsung ChemicalsKorea22 10.Korea ???Bwker InstituteKorea20

20. Strategic Architecture for Ranbaxy … products Gross margins Technology barriers Business risk R&D investment Regulatory requirements Scale management Information intensity Teachnological & Marketing complexity NCE NDDR 60-80% Intermediates & Bulk Substances 2 - 12% Commodity generics 12 - 20% Conven- tional dosage forms 20 - 30% Value Added/ Branded Generics 30-40% NDDS OTC 45- 60%

21. Market Mix - Changing Profile DevelopingEmerging Developed Regulatory / Technology / Cost Structure Russia China UK USA Australia Nigeria Brazil INDIA Egypt Vietnam Thailand S. Africa Poland Malaysia 5 79 16 4 67 29 ‘99 ‘04 Sales Revenue % FW Africa Sri Lanka Japan

22. Business dynamics of markets Russia Germany UK USA W. Europe Nigeria Brazil INDIA Egypt Vietnam Thailand Kenya S. Africa Poland C. Europe AdvancedEmergingDeveloping China Regulatory /marketing complexity Cost / Returns Hi Lo Malaysia Myanmar Ukraine C. America Mexico Cote-d-Ivory Ireland Canada Cameroon Peru ANZ M.East

23. 90’s80’s 00’s  Internationalization … our changing contours Strategy India          Exports        International        Markets Developing       Emerging       +  +      Advanced     +  + Products API, Dosage Form Generics, Branded Generics Proprietary technology platforms (NDDS), VAGs, R x products Competencies Backward integration Developmental research, Regulatory, Manufacturing, Marketing Innovative research, Patents, Legal Brand marketing for R x products

24. Thank You