1. March 2005 Indian Pharmaceutical Industry Riding a Growth Wave

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

3. India - An Introduction  Population  States/UTs  Geographical Area  Languages recognised  Business language  Per Capita Income**  GDP** Over 1 bn 35 3.3 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)

4. 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

5. 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

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

7. March 2005 Pharma Market Volume – wise8% of global market 4 th largest in the world CAGR(1995-2002)16.6% Exports 23% CAGR(1995-2002) Size (2002-03)US$ 7 bn Share of formulations80% Size 2010 (estimated)US$ 25 bn

8. 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 (2002-2003)US$ 2.8 bn

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

10. March 2005 Increasing R&D Spend 1996 -2002 Annual recurring R&D expense growth rate32.3% yoy

11. 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

12. 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

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

14. 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

15. 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

16. 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 2004-05 MerckLeader in laboratory reagents market in India

17. 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

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

19. March 2005  USD 70 mn market (2001-02)  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

20. 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

21. 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

22. 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

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

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

25. 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

26. 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)

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

28. 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

29. 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

30. March 2005 Regulatory Scenario  IPR/Patent regulations Product patent regime to be implemented by Jan 1 2005 in compliance with TRIPS  Price regulations Price controls decline substantively  Product and quality regulations

31. 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

32. 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 2005-06 Fillip to R&D initiatives

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

34. March 2005 Contact in India Confederation of Indian Industry (CII) 23, Institutional Area Lodi Road New Delhi – 110003 Tel 0091 11 24629994-97 Fax 0091 11 24626149/24615693 Email sandhya.tewari@ciionline.org