Shortage of Natural ResourcesThe Scientific Innovative Power coming from India

Dr. Brian W Tempest

Chief Mentor & Executive Vice Chairman of the Board

Ranbaxy Laboratories Limited, Delhi, India

St. Gallen Symposium, St. Gallen, Switzerland

Friday, 1st June 2007

Asia’s Share of the World GDP (at PPP in %)

Year 1870 1913 1950 1973 2001 China 17% 9% 5% 5% 12% India 12% 8% 4% 3% 5% Japan 2% 3% 3% 8% 7%

Rest of Asia 7% 5% 7% 9% 13% Total Asia 38% 25% 19% 25% 37%

Source – WEF

- was 59% in 1820 with India 16%, China 33%

Davos

Source – FT

The Productivity Advantage

India a usa Pharma view USA India a usa Pharma view USA

1 chemist Better education x 1.3 1 chemist 1 chemist Better education x 1.3 1 chemist

70 hours/week Longer working time x 1.3 50 hours/week 70 hours/week Longer working time x 1.3 50 hours/week

$ 800 monthly Lower cost x 20 $ 12,000 monthly $ 800 monthly Lower cost x 20 $ 12,000 monthly

Sources: IPHMR Conferences, New Delhi August 2004

Japan - by 2050 36% > 65 years from 19% in 2005

China - one child families, get older before becoming wealthy - labour costs will rise owing to labour shortage India - India already has the youngest labour force in the world - source of the extra needed global workforce - India will pass China in total population in 2030 - By 2013 India will have more young workers 20-24 than China

The Ageing Advantage

Working Population, 15-64 yearsIn millions

The R&D Investment Advantage Most attractive R&D Investment locations:Ranked 3rd - China, USA, India, Japan & UK

Source – UNCTAD 2005

Reasons why India: Qualified Scientists & Engineers Global India players with Alliances English speaking TRIPs compliant – first patent March 2006 IIT, IIM & other scientific institutions

Source – UNCTAD 2005

4th largest reservoir of Scientific Manpower (2nd largest English speaking)

3m graduates pa, 115k MSc Chemistry (3.5k UK), 215k Eng (222k USA)

Physics the most popular subject

Lead by a Nuclear Scientist as President – remote sensing satellite technology, 1/6 countries

PCT application ranked 3rd – Kor, Chi, Ind, Sin, RSA

“US & Europe will not dominate Science, Maths, IT industries” – Mr. Bill Gates

The Science Natural Resources Advantage

Science Natural Resources in EU

“This means that when pupils are in a science laboratory their experience is unsafe, unsatisfactory or uninspiring for 65% of the time.” Source: Royal Society of Chemistry, Policy Bulletin – Spring 2006

UK “A” Level entries: Closed UK University 2000 2005 % change Chemistry Departments: Physics : 32,059 28,119 -12% Dundee Kings Chemistry: 40,856 38,851 -5% Surrey Exeter Maths: 67,036 52,897 -21% Lancaster Queen Mary Computing: 19,099 7,242 -62% Source: Daily Mail – 11 August 2006

Only pupils at private schools can take physics, chemistry & biology separately Source: Times, 9th November 2006

Number of Higher Education Institutions

05/06 18,123 +59%

00/01 11,412

90/01 5,932

80/01 4,861

Source: Indian University Grants Commission

Science Natural Resources in India

Number of Students enrolled in

Higher Education Institutions

05/06 10,500 +40%

00/01 7,500

90/01 4,000

80/01 3,000Source: Indian University Grants Commission

Number of Institutions courses

05/06 99/00

Pharmacy 1478 669 +120%

Medicine 229 174 +32%

Physiotherapy 205 52 +294%

Source: Pavan Agarwal (2006) based on data

from professional councils

PhD Degree awarded in Science

03/04 5408 +44%

00/01 3734

90/01 2950

(USA 03/04 25,000)

Source: Indian University Grants Committee

The Science Natural Resources Advantage

Engineers/Science graduates p.a – India 0.7m, China 0.5m, EU 0.5m, USA 0.4m, Japan 0.3m

Microsoft Global Development Centre (GDCI)

Microsoft Global Services (MGSI)

Microsoft Global Technical Support Centre (GTSC)

Microsoft Systems Research (MSRI)

Microsoft India Development Centre (MIDC)

Investment by Microsoft in India

The Pharma Plants Advantage

Active Pharmaceuticals Facility, Mohali Dosage Forms Facility, Paonta Sahib

Generics – API’sUSA DMF filings by India

1990 1 1995 4 2000 36 2004 187 2005 262 Source: Crisil / US FDA / J P Morgan

% Share of USA DMF filings India China 2004 27% 9% 2005 37% 10% 2006 44% 14%

Q1’07 48% 17%

Source: US FDA / J P Morgan, 2nd May 2007

Source: US FDA, Credit Suisse

Generics Rankings

Source: UBS, Businessworld, 30th October 2006

Discovery – Local vendors available in India to Support Discovery Research

Vendor Availability India ChinaAnalog preparation 41 25Combinatorial chemistry 37 7Analytical chemistry 37 7Structural chemistry 26 5Assay development 26 2Computer drug design 26 13High throughput Screening 11 2Bio informatics 13 7Genetically modified animals 0 3Basic molecular biology 13 25

Source – BCG, ‘Looking Eastwards, September 2006’

*Out of 90 vendors in October 2005

A race to prosperity

The Tempest Crystal Ball – India & China

•Post TRIPs new products will dry up in India by 2008. Under this pressure Indian companies will adopt different business models

•The global generic industry will be dominated by India

•Discovery companies will continue to be attracted to India

•China will be perceived to be stronger in biology/ toxicology

•Alliances between Western Biotech and Indian companies will expand

•It will be India & China - and not India or China.

Potential Challenge – Asian Flu*

*50% of world chickens bred in Asia

Potential Challenge – Infrastructure

Source – Manmohan Singh

“Our greatest potential will be realised only if we can ensure that ourInfrastructure does not become a severe and critical handicap”

CO2 emission - % of World total in 1990-2000

USA 23%EU 25 17%China 14%Russia 7%Japan 5%India 4%

– source: WRI, EIA

Potential Challenge – Climate Change

Asia economic strength is returning to levels seen in the past

Many advantages for India – Demographics, Education India is a global strategic asset for developed markets Some “Challenges” – infrastructure, climate change

The current feeling in Indian Boardrooms is that a turning point has been reached, a tipping point has been passed and India’s time has arrived

India is a rich location for future alliances

MNCs will dip in& out of India & China, using their individual strengths

“China & India represent the future of Asia and quite possibly the future for the global economy” – Steve Roach, Morgan Stanley

SummaryThe Scientific Innovative Power coming from India

Thank You