VISION: 10/03

VISION: 10/03

Growth Perspectiveof

Indian Pharmaceutical Industry

New DelhiOctober 30, 2003

byD G Shah

Secretary GeneralIndian Pharmaceutical Alliance

1

Outline of Presentation

Introduction

Global Generics Markets

Opportunities

Challenges-Post 2005

Patents & Implications for the Indian Pharmaceutical Sector

VISION: 10/03 2


Boundaries of Change

Demand will Grow Fastest in Emerging Markets

Generic Options Available for Most Large Disease

Segments

‘Westernization’ of Disease Patterns in the Developing

World

Elderly Population will Fuel Demand In Developed Markets


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Increase in Over 65 Population

4%9%

6% 7% 9% 10% 8% 8% 8%11%

9%

16%18%

20%21%

23%24% 24% 24%

28%

0%

5%

10%

15%

20%

25%

30%

35%

Ind

ia

Ch

ina

Ne

w

Ze

ala

nd

Un

ite

d

Sta

tes

Au

str

alia

Ca

na

da

Un

ite

d

Kin

gd

om

Fra

nce

Ge

rma

ny

Ja

pa

n

Year 2000 Base

Increase to 2030

Per

cen

t of

Pop

ulat

ion

65+

Yea

rs O

ld

Source: US Census Bureau: National Institutes on AgingNote: Represents 2002 dataVISION: 10/03

4

1998% absoluteChange in

Volume & Mix

Volume Growth from Generics in Strategic Markets

2002% absoluteChange in

Volume & Mix1.2% 1.4%

4.1% 4.3%

2.5%2.7%

1998 2002

Price Volume & Mix New Elements

83%Brands

17%Generics

91%Brands

9%Generics

Source: IMS Health: MIDAS, MAT Dec 2002



VISION: 10/03 5

Dramatically Outpaced Brand Growth% Growth @ Constant Dollars

Retail Only Brands Generics

Canada +15 +19US +8 +26Germany +7 +16UK +8 +34Japan +2 -6Italy +2 +77Spain +10 +17France +1 +43

Source: IMS Health: MIDAS, MAT Dec 2002



2002 Generic Growth

VISION: 10/03 6



5%11%

20% 20%

40%

47% 49%52%

0%

10%

20%

30%

40%

50%

60%F

ran

ce

Jap

an

Ne

wZ

ea

lan

d

Au

stra

lia

Ca

na

da

Un

ited

Sta

tes

Ge

rma

ny

Un

ited

Kin

gd

om

Gen

eric

s P

resc

riptio

ns

as

% o

f T

otal

Pre

scrip

tions

Generic Utilization by Country

Source: PharmaHandbookNote: Represents 2002 dataVISION: 10/03 7

Source: Chemexcil

L A C7%

East Asia21%

West Europe19%

North America

18%

Africa13%

East Europe8%

South Asia8%

West Asia4%

O A C2%

Market 2001-02Rs Mn

Share%

Growth %

East Asia 20,423 20.8 2.4

West Europe 19,049 19.4 10.1

North America 17,675 18.0 53.3

Africa 12,762 13.0 15.0

East Europe 7,761 7.9 -0.9

South Asia 7,435 7.6 9.1

L A C 7,102 7.2 -7.8

West Asia 4,349 4.4 16.4

O A C 1,579 1.6 -3.2

Total 98,135 100.0 12.1

Region-Wise Exports: 2001-02



VISION: 10/038

Source: Chemexcil

Hong Kong4%

U K3%

Singapore2%Netherland

2%Spain2%

Switzerlad2%

Sri Lanka2%

Thailand2%

Nepal2%

Canada2%

Mexico2%

Vietnam2%

Brazil4%

China 4%

Nigeria4%

Japan2%

USA17%

Germany5%

Russia5%Others

36%

Market 2001-02Rs Mn

Share%

Growth %

USA 16,201 16.5 64.4

Germany 4,987 5.1 16.1

Russia 4,771 4.9 -4.0

Nigeria 3,767 3.8 8.9

China 3,747 3.8 40.3

Brazil 3,493 3.6 -4.9

Hong Kong 3,413 3.5 -22.9

U K 2,798 2.9 14.8Vietnam 2,117 2.2 13.2

Singapore 1,948 2.0 -9.3

Netherland 1,911 1.9 -0.1

Spain 1,690 1.7 2.7

Switzerland 1,566 1.6 27.9

Sri Lanka 1,521 1.6 -12.3

Japan 1,501 1.5 7.5

Thailand 1,486 1.5 -0.8

Nepal 1,509 1.5 13.3

Canada 1,474 1.5 -12.1

Mexico 1,489 1.5 -8.6

UAE 1,413 1.4 10.1

Others 35,333 36.0 8.9

Total 98,135 100 12.1

India’s Top 20 Markets



VISION: 10/03

9

$13

$28$8

$19

$6

$10

2001 2007

$27

$57

111%111%

2001-07CAGR%

Overall 13.3%

ROW 8.9%

Europe 15.5%

U S 13.6%

Size and Growth ($Billions)

Source: Datamonitor

Global Generics Market


VISION: 10/0310

Leveraging Knowledge Base

Partnering Global Players

Opportunities


VISION: 10/03 11

Leveraging Knowledge Base

Lead Optimization

Synthesizing Designed Structure

Manufacture of Clinical Trial Samples

Global Clinical Research Projects

Moving – Up the Value Chain of R & D

Opportunities


VISION: 10/03 12

Moving up the Value Chain of R & D

NCE

Chiral

NDDS Analogue

Process Development

30%

65%

5%

2000E

Opportunities

30%

35%

2005

35%


VISION: 10/03 13

Partnering Global Players

Product Development

In/Out Licensing of New Products

Addressing Public Health Problems

Market Access

Opportunities


VISION: 10/03 14

Challenges – Post 2005

National Patent Law

Data Exclusivity

Patent Law Treaty (PLT)

Substantive Patent Law Treaty (SPLT)

Non Tariff Barriers


VISION: 10/03 15

National Patent Law

Manufacture For Exports Under Para 6

Safeguards & Conditions

Patentability



VISION: 10/03 16


Patentability

The number of new chemical entities approved for use by US Food and Drug Administration (FDA) declined to 27 in 2000, compared to about 60 in 1985…

…but the number of patents granted in the main patent class for new drug compositions was 6,730 in 2000.

Patenting In Pharmaceuticals

Year: 2000 NCEs: 27 Patents: 6,730


VISION: 10/03 17


Patentability

Formulations/Dosage Forms

Salts

Processes

Combinations

Polymorphs

Optional Isomers

New Indications (therapeutic methods)

Patenting Minor or Trivial Developments


VISION: 10/03 18


Blanketing: a jungle or a minefield of patents

Flooding: multiple patents, major as well as minor

Fencing: blocking certain lines or directions of R &

D

Surrounding: an important central patent is fenced in or surrounded by other less important patents that block the use of the central patent, even after its expiration

Networking: building of a patent portfolio to strengthen overall protection and bargaining power

Patentability

Patenting Strategies


VISION: 10/03 19

Data ExclusivityData Exclusivity

TRIPS Article 39.3

Period of Exclusivity ?

Retrospective Effect ?

Impact of Data Exclusivity



VISION: 10/03 20

Impact Of 10-year Data Exclusivity

PATENTFILING

CLINICAL DEVELOPMENT

&REGULATORY

APPROVAL

REGULATORYAPPROVAL

SOUGHTIN INDIA

REGULATORYAPPROVALGRANTEDIN INDIA

PATENTEXPIRY

GENERICSUBMISSION

GENERICAPPROVAL

MARKETINGEXCLUSIVITY

IN INDIA

YEARS0 10 13 15 20 25 27

0 10 13 15 20 25 27



VISION: 10/03 21

Patent Law Treaty (PLT)



Diplomatic Conference Comprising 140 States

Adopted PLT by Consensus in June 2000

104 Countries Signed the Final Act For Adoption

and 43 Countries Signed PLT

Main Features of PLT Harmonizes Formality Requirements Streamlines Procedures for Patenting Excludes Substantive Patent Law Issues

VISION: 10/03 22

Substantive Patent Law Treaty (SPLT)



1st Draft in November 2001 Revised in May 2002-Lays Down World Patent Law Makes TRIPS Obsolete Secures What Could Not Be Achieved in TRIPS Implications

End of Patent Policy as a Tool For National Development Strategies

Deviation Can be Subject to Sanctions “No Exclusions to What is Patentable”

A Pipe Dream Takes On Real Proportions!

VISION: 10/03 23

Non-tariff Barriers



Spreading Doubts About Product Quality

Working to Deny/Delay Product Registrations

Raising Standards of Regulatory Approvals

VISION: 10/03 24

UN Nod for Generic Drugs



“Under no circumstances do companies based in some countries

that have poor regulatory quality standards match the standards of

quality, service, and innovation on a sustainable basis

that international companies provide.”

IFPMA

VISION: 10/03 25

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