The Opportunities & Challenges from India
Dr. Brian W Tempest
Chief Mentor & Executive Vice Chairman of the Board
Ranbaxy Laboratories Limited, Delhi, India
Generics, Supergenerics & Patent Strategies
London – Monday, 14th May 2007
Except for the historical information contained herein, statements in this presentation and
the subsequent discussions, which include words or phrases such as “will”, “aim”, “will
likely result”, “would”, “believe”, “may”, “expect”, “will continue”, “anticipate”, “estimate”,
“intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “likely”, “project”,
“should”, “potential”, “will pursue” and similar expressions or variations of such
expressions may constitute "forward-looking statements". These forward-looking
statements involve a number of risks, uncertainties and other factors that could cause
actual results to differ materially from those suggested by the forward-looking statements.
These risks and uncertainties include, but are not limited to our ability to successfully
implement our strategy, our growth and expansion plans, obtain regulatory approvals, our
provisioning policies, technological changes, investment and business income, cash flow
projections, our exposure to market risks as well as other risks. Ranbaxy does not
undertake any obligation to update forward-looking statements to reflect events or
circumstances after the date thereof.
Disclaimer
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
Growth- Japan, sustain current growth- China, slightly slower growth to prevent hard landing
- India, increasing growth rate being talked up to 9%/10% Sentiment
- India, largest foreign affairs caucus in US Congress (180), nuclear deal - China, 74,000 demonstrations reported in 2005 in China. State secrecy, IP
The Economic Growth Advantage
A race to prosperity
The world has over 800 billionaires USA has almost half India - 36 billionaires China - 15 billionaires Net worth of 40 richest Indians - $170 b 40 richest Chinese - $38bSource: Forbes, Asia November 27, 2006
“2006 belongs to some of the emerging markets,
and no country more than India”
The Billionaires Advantage
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 Education Advantage
Science Education 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 Education 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 Education Advantage
Engineers/Science graduates p.a – India 0.7m, China 0.5m, EU 0.5m, USA 0.4m, Japan 0.3m
34 News TV channels. Oldest 13 years old (NDTV)
5000 newspapers, circulation 17m. 12 with 1m copies each.200m daily readers. 21m new daily readers 2003/2005, +14% with 50% rural and 50% urban readership
Diaspora network (25m across 120 countries)
Indians are hungry for information
The Information Advantage
Internet Usage – Asia
1. China 123 m2. Japan 86 m3. India 51 m4. S.Korea 34 m
Source: Business Today, Sept. 24, 2006
Mobile Phones
1. China 421 m2. USA
190 m3. Japan 157 m4. Russia 148 m5. India 116 m
Source: Times of India, Sept. 14, 2006
More Privatization – public sector not so buoyant
Scope for improvement of Government Policies
Manufacturing growth versus China
GDP dynamics: 1990 2005 - Agriculture 31% 20%
- Industry 28% 26% - Services 41% 54%
Further encouragement of R&D for Pharmaceuticals
The Potential for Improvement Advantage
The Pharma Plants Advantage
Active Pharmaceuticals Facility, Mohali Dosage Forms Facility, Paonta Sahib
The Pharma R&D Advantage
Ranbaxy’s Patent Filings
2449
32
86
146
170185
2001
2000
1999
2004
2005
Clinical data management•An Indian speciality•300 staff GSK -2.2m clinical data sheets -450 trials -Error rate <0.01/100k -No data security issues
Source: BCG report ‘Looking Eastward Sep’2006’
R&D hotbeds
“China & India have become R&Dhotbeds……….. MNCs already operate some 180 R&D centres in China andMore than 100 in India”
Source: BCG report ‘Looking Eastward Sep’2006’
PCT Filers from Developing Countires 20061. Huawei – China 6. ZTE – China2. LG – Korea 7. STR – Singapore3. Samsung – Korea 8. Ranbaxy – India4. LG Chem – Korea 9. CSIR – India5. Elec Telecom – Korea 10. NHN – Korea
Source: WIPRO
Cost Advantage China IndiaCost 40 16Patients/site 250 500
Based on USA at 100 Index
Source: BCG report ‘Looking Forward 2006’
Country USAIndia
Sites 22 8
Subject 626 896
Source: Andy Lee Pfizer Global, head clinical study and data management.Business India, August 13, 2006
“………..The Country’s World Class skills in Chemistry & IT and it’s large treatment naivepatient population provides added allure” Boston Consultancy Group
Harnessing the power of India 2006
The Pharma Clinical Advantage
Medical Tourism
Cardiac Surgery $000s USA 30 Singapore 20 Thailand 14 India 5-7Source: Business world, 18th Dec’2006
Patients
- Naïve untreated patients- HIV 50m- Diabetes 32m- HT 5m
India FDI
2003/4 $4.3b
2004/5 $5.6b
2005/6 $6.0b Source: Outlook business June 2006
The Investment Advantage
2005 FDIBrazil $15b UK $164 bRussia $14b USA $ 99 bIndia $6bChina $72b (+$35b)Source: UNCTAD 2006
- India on target for $12b in 2006/07- But still small
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
A Global Strategic Asset for developed
World Market businesses
India
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%
Q4’06 47% 9%
Source: US FDA / J P Morgan, 6th August 2006
Source: US FDA, Credit Suisse
- One in every four ANDAs filed by Indian Companies in top USA FDA filers Source: KPMG
- No Chinese generic company has yet filed a USA FDA ANDAbut expected in 2008
Generics - ANDAs
0
20
40
60
80
100
120
140
160
2002 2003 2004 2005
24
46
64
144
ANDA Filings in USA by Indian Companies
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
Discovery – Local vendors available in India to Support Clinical Research
Contract Research Organisations 30Bio-equivalence & Bio-analytical 15Data Management & enabled services 14Site Management Organisations 5Central Laboratories 8Storage & Distribution 5Centralised ECG Services 2Clinical Research Training 8
Source – Pharmaceutical Technology Asia Pacific, March 2007
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.
“The Indian System looks ramshackleand improvised. But at its best it is capable of brilliance”
“When we say the Silicon Valley isbuilt on ICs we don’t mean integratedcircuits – we mean Indians & Chinese”
“The UK needs to wake up to whatIndia is becoming”
Source: DEMOS report – January 2007
Perceptions of India
Key Challenges to the Indian Scenario
Potential Challenge – Asian Flu*
*50% of world chickens bred in Asia
Potential challenge – Oil prices
Source – Assocham
• A war against Iran could drive oil > $200 a barrel - ‘Times’ 22nd June 2006• India is expected to import 85% of crude oil by 2012 from 70% today
Source – BP
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
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”
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
Summary
Thank You