Global Pharmaceutical Market

y Estimated at $900 bn in 2010 y Growth Rate

6% CAGR y Expected to Reach - $1037 bn in 2012 y Generic Drugs - $92 bn y Generic Drug Market y Growth Rate 11% CAGR y $155 bn by 2012

Indian Pharmaceutical Industry

y y y y y y y

Indian companies and subsidiaries of MNCs Indian companies manufacture Generic Drugs Intermediaries Bulk drugs or APIs Meets 95% of domestic medical needs Other areas of recent focus include:
y Drug Discovery and Development y Contract Research y Contract Manufacturing

y Ranked 4th by Production Volume y Ranked 13th by Domestic Consumption Value y Growth expectation from $13 bn in 2007 to $34 bn in

2012

Factors for Immense Growth Potential

y Increasing health consciousness of people y Affordability due to rising incomes of expanding

middle class y Health insurance facilities y Large number of untreated and under-treated medical conditions y Newer and better medicines

Ran k 1 2 3 4 5 6 7 8 9

Company Johnson & Johnson Pfizer Roche GlaxoSmithKline Novartis Sanofi AstraZeneca Abbott Laboratories Merck & Co.

Country United States United States Switzerland United Kingdom Switzerland France United Kingdom United States United States Germany United States

Total Change Revenues(USD billions) 09/10 (%) 61,90 50,01 47,35 45,83 44,27 41,99 32,81 30,76 27,43 22,30 21,84 -5.3 6.6 -21.5 20.3 3.6 17.9 23.1 21.4 64.2 38.8 N/A

10 Bayer HealthCare 11 Eli Lilly

Top 10 Pharmaceutical Companies in India: Ranbaxy Dr. Reddys Laboratories Cipla Sun Pharma Industries Lupin Labs Aurobindo Pharma GlaxoSmithKline Pharma Cadila Healthcare Aventis Pharma IPCA Laboratories

Unique Advantages of Indian Market

y Solid legal framework & strong financial markets y Committed to free market economy & globalization y 70 million middle-class market with huge growth

potential

Key Characteristics of Indian Pharma Sector

Self-reliance displayed by the production of 70% of

bulk drugs and almost the entire requirement of formulations within the country. Low cost of production. Low R&D costs. Innovative Scientific Manpower. Excellent and world-class national laboratories specialising in process development and development of cost effective technologies.

Conti
y Increasing balance of trade in pharma sector. y An efficient and cost effective source for procuring

generic drugs especially the drugs going off patent in the next few years. y An excellent centre for clinical trials in view of the diversity in population.

Key Statistics of Indian Pharma Market

Annual Turnover Rs. 226 b Growth

rate 5.2%Exports Rs. 141 b Future projections Rs. 1200 b (by McKinsey) by2010 Share of World Pharma market 1.0% in value 8%in volume terms Global ranking 13th in value terms 4th in volume terms Number of Generic Brands over 60,000 in 60therapeutic categories

Conti
y Number of units - 10,000 out of which

approximately 300 in organized sector y OTC market Rs. 35 b growth 18-20% y Alternative medicine - Herbal / Ayurvedic marketRs. 38 b y Per capita drug expenditure Rs. 220 per annum

Strengths
y Cost Competitiveness y Well-developed industry with strong manufacturing

base y Well-established network of laboratories and R&D infrastructure y Access to pool of highly trained scientists, both in India and abroad y Strong marketing and distribution network

Conti
y Competencies in Chemistry and process development y India has the largest number of US FDA approved

plants outside US y Rich biodiversity

Weaknesses
Low investments in innovative R&D Lack of resources to compete with MNCs for new drug

discovery research & to commercialize molecules on a world wide basis Inadequate regulatory standards Production of spurious and low quality drugs spoils the image of the industry in international arena

Opportunities
y Significant export potential y Licensing deals with MNCs for NDDS y Marketing alliances to sell MNC products in Indian

market y Contract manufacturing agreements with the MNCs y Potential for developing India as a centre for international clinical trials

Threats
y Product patent regime poses serious challenge to

domestic industry unless it invests in R&D y DPCO puts unrealistic ceilings on product prices & profitability & prevents pharma companies in generating investible surpluses y Export effort hampered by procedural hurdles & non tariff barriers imposed abroad y Lowering of tariff protection

Future Trends
Innovation, not original research alone, is the order of

the day. MNCs will make an aggressive bid for the Indian market, as India moves towards TRIPS, and international companies register their new drugs for patenting after 10 years. Smaller companies, which had so far benefited from the protective regime, may be forced to become contracting units, or close shop. Generics will have a huge demand.

Conti
Increasing R&D costs will lead to more consolidation

among international companies. Within 5 years, the top ten pharma companies will control over 60% of the world market. International companies could set up their own R&D labs in India and develop drugs for tropical diseases. Innovations in R&D process such as genomics and combinatorial chemistry.

Research & Development in Indian Pharma Industry

R&D spending on R & D

World 10 - 16 % of sales turnover India 1.5 - 2 % of sales turnover Scope for collaborative R&D by development of
Combinatorial Chemistry New Synthetic Molecules Plant Derived Candidate Drugs

Conti
y Indian pharma industry provides cost-effective clinical

trial research. y It has an excellent record of development of improved, cost-beneficial chemical syntheses for various drug molecules.