1. SOMEDAY YOU WILL REAP WHAT YOU SOW India: The New Global Business Opportunity Arun Maira The Boston Consulting Group San Francisco

2. - 1 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco PRESSURES ON COMPANIES IN DEVELOPED COUNTRIES Intense competition between firms in developed countries in their own developed country markets Competition between firms for customers in developing countries Emerging of new competitors from developing countries Pressure on prices and margins Need for innovations in products and business models

3. - 2 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco THREE OUT OF FOUR EXECUTIVES PLAN TO INCREASE INNOVATION SPENDING IN 2005 How will your company’s investments in innovation change this year? Percentage of respondents Source: BCG 2005 ITC Survey

4. - 3 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco MOST EXECUTIVES ARE NOT SATISFIED WITH THE RETURN ON INNOVATION SPENDING Are you satisfied with the financial return on your investments in innovation? Percentage of respondents Source: BCG 2005 ITC Survey No Yes

5. - 4 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco INCREASED COMPETITION IN DEVELOPED MARKETS REQUIRES INCREASING INVESTMENTS IN NEW CAR MODELS Average life of new models (Europe) Life (years) Year of introduction Increasing models and decreasing sales per model (US Market) Number of vehicle models (1) Avg. total sales per model (2) (1)Total number of models of cars and light trucks (2)Average total annual sales per model Source: Automotive News Case Study: Automobiles

6. - 5 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco INDIAN AUTOMOBILE INDUSTRY HAS DEVELOPED CAPABILITIES UP THE VALUE CHAIN R&D/Product development Component manufacture Assembly Low capital intensity, BEP <100k units/ annum (Global BEP is 150-200k units/ annum) Total Manufacturing Cost 20- 30 % less than USA Very high quality: 1 Japan Quality Medal and 5 Deming Prize Winners- largest number outside Japan Exports growing 30% per annum; 80% to 'developed' countries Global average development cost of new car > $600m Tata Indica- $350 m M & M Scorpio- $150 m Case Study: Automobiles

7. - 6 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco COSTS OF MEDICINES AND HEALTHCARE SOARING IN DEVELOPED COUNTRIES US$ Trillion CAGR: 10.9% Total USA Healthcare Spending Source:EIU, Literature Review US$(‘000s) CAGR UK: 9.2% CAGR Ger: 6.2% Annual Household Expenditure on Healthcare (EST) Case Study: Healthcare and Pharma

8. - 7 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco R&D COSTS & PRODUCTIVITY OF US PHARMA PROBLEMATIC Case Study: Healthcare and Pharma

9. - 8 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco LOW COST, HIGH QUALITY MEDICAL CAPABILITIES AVAILABLE IN INDIA Not just cost advantage: The success rate in the 43,000 cardiac surgeries till 2002 was 98.5% India's success in 110 bone marrow transplants is 80% Quality a Key Factor Source:IBEF, Literature Review Healthcare Cost Differential US$ Cost Saving 80% 91.2% 92.5% 98.8% 97.7% Case Study: Healthcare and Pharma

10. - 9 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco COST EFFECTIVE AND GOOD QUALITY DRUG DEVELOPMENT AND MANUFACTURE DRUGS IN USA Cost of development- hundreds of million dollars Amgen antibody- $10.00/ dose Cost of treatment- $20,000 INDIAN DRUG Time for development- 3 years Cost of development- $4 m! Cost of treatment- $50 !! DEVELOPMENT (Example: Disease- Psoriasis) USFDA Approved Plants Outside USA Case Study: Healthcare and Pharma

11. - 10 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco INDIA HAS A LARGE RESERVOIR OF HUMAN RESOURCES Reaping What You Sow Note:Potential surplus is calculated keeping the ratio of working population (age group 15 – 59) to total population constant Source:U.S. Bureau of the Census International Data Base; BCG Analysis 47 M India 0M 19 M 7M7M 3M 5M 3M Bangladesh Pakistan Iran Brazil Mexico Philippines 5M 4M Vietnam 2M Turkey 5M Indonesia 1M Malaysia 0M Ireland Israel Iraq 2M 4M Egypt -10 M China -6 M Russia -1M Czech Republic -17M U.S. -2M U.K. -2M Italy -3M France -9M Japan Potential surplus population in working age group (2020)

12. - 11 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco SOMEDAY REAPING WHAT YOU SOW Vertical integration Small volumes, but growing Logistics & infrastructure problems INDIA'S LEGACY Domain knowledge Software capabilities Remote delivery possible INDIA'S STRENGTHS MASS MANU- FACTURING REMOTELY PROVIDED SERVICES Small volume, high variety, low cost mfg INDIA'S OPPORTUNITIES

13. - 12 - CII- Symposium on “India!-The New Global Business Opportunity - 11 Apr '05, San Francisco INDIA EMERGING AS A "KNOWLEDGE SERVICES" HUB IN THE WORLD Skilled people; Low costs; IT capabilities; English Remotely delivered services Import of customers to service in India Transaction processing Design and analysis Research and developmen t Value added tourism Leisure tourism Information Tech Pharma/Healthcare Education Services Auto/ engineering Chemicals Financial Services                 Industry Source:BCG Analysis