1. Strategies for developing India as a contract research hub Swaminathan Subramaniam Chief Operating Officer Aurigene Discovery Technologies

2. The drug discovery value chain TARGET GENERATION & VALIDATION LEAD GENERAT LEAD OPTIM Candidate Drug Selection PRECLINICAL Assay Development Hit Identification Candidate Lead Ident. Lead Selection

3. Disaggregating the Drug discovery value chain TARGET GENERATION & VALIDATION LEAD GENERAT LEAD OPTIM Candidate Drug Selection PRECLINICAL

4. Risk & Value in Discovery TARGET GENERATION & VALIDATION LEAD GENERAT LEAD OPTIM Candidate Drug Selection PRECLINICAL 10 50 10 4 10 3 10 2 10 1 10 0 VALUE RISK

5. Modes of discovery The Classical Approach –Understanding of disease  Understanding of mechanism  Understanding of biochemical effectors  Molecular screens The Patent-busting and ICE approach –Look at existing knowledge of disease and drugs to find improvements that are novel –Analogs, enantiomerically pure versions Post-genomic drug discovery

6. Drug Discovery : the post-genomic version genomics/ proteomics domain architecture modelsstructure determination bioinformaticscloning/protein expression mine data for known ligands for similar/related domains select potential ligand class synthesize library of similar compounds assay hits leads automationautomation computationcomputation

7. Drivers for outsourcing Capacity mismatch Capability mismatch Need to focus resources and use capital efficiently Declining R&D productivity

8. There is a decline in R&D Productivity 30 40 70 60 50 9593918987998597 20 10 30 0 40 50 Annual R&D Expenditure ($ Bn) NCEs Launched per Year Source: PricewaterhouseCoopers Study

9. The Research Productivity Equation RESEARCH PRODUCTIVITY = IND’s GENERATED RESOURCES USED Discover More Discover for Less

10. Relationship between resource usage and IND generation Big Pharma Small biotech Resources Used IND’s generated

11. Resistors to outsourcing Loss of project control Loss of IP Loss of inhouse expertise Lack of motivation to be fast for CRO Source: Datamonitor, 2001

12. Pharmaceutical industry: Blockbusted Profitable heritage  internal inefficiency, investment decisions not tightly linked to creation of shareholder value Facing a leaner, more cost-sensitive environment  patents covering 80% of todays blockbusters will expire by 2007 (USD 67 billion value) Reuters business insight

13. R&D spend by stage in US US R&D spend/NDA in USD million TOTAL USD 800 Million

14. Cost savings by stage in India R&D spend/NDA in USD million TOTAL USD 800 Million SAVING USD 400 Million

15. Why India can meet the needs of the customer (platitudes!!) English speaking Scientific and Technical talent Institutions Time-zone??? Costs

16. Opportunity, Challenge and Danger!

17. Opportunity The Emerging Industrialization of Research Core TA focused Discovery Research Group (Target Validation; Lead Discovery; Lead Optimization) HTS Factory High Throughput Structure Determination Chemical Synthesis Tox; ADME; Counterscreens Preclinical CRO

18. Opportunity Role for niche providers There are 5 big players in the CRO business today The one stop shop has not emerged…there is still a role for niche providers

19. Challenge Global collaboration Transcending geographic distance Communication tools; internet; eTechnologies (Real-time research) On-shoring Hiring local talent

20. Early Maturity Growth Time / Effort Product Performance Danger! The Biotechnology S-curve New Invention Period Ill-defined Technology Explosive Growth Period Well-defined Technology Maturation Period Mature Technology Radioligand bindingToxicogenomicsSBDD

21. Danger! The easy business models in Drug Development outsourcing may prevent adequate focus on and investment in Drug Discovery outsourcing companies Becoming vendors for hire providing undifferentiated and commoditized services

22. Environment Infrastructure and regulatory environment Intelligent risk capital; corporate venturing Entrepreneurial and scientific talent

23. Building the ‘India’ brand for Research Services Association of Biotechnology Led Enterprises – Nasscom for the biotech/lifescience sector A well publicized voluntary code of conduct

24. Closing observations Niche opportunities make it possible for smaller players to find a place Integration of engineering, information and lifescience technologies is a unique opportunity for India