March 2005

Indian Pharmaceutical Industry

Riding a Growth Wave

March 2005

Pharmaceuticals

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

India - An Introduction

Population

States/UTs

Geographical Area

Languages recognised

Business language

Per Capita Income**

GDP**

Over 1 bn

35

3.3 mn sq kms

22

English

US$ 534

US$ 650 bnSource:CSO Statistics**(at factor cost & at current prices)

1USD=43.54 INR (as on July 4, 2005)

March 2005

India - Fast pace Growth

Largest democracy

4th largest economy by PPP index

6th largest energy consumer

ForEx reserves skyrocket from US$ 42 bn (2001) to

US$ 133 bn (February, 2005)

GDP growth to continue between 6-8%

3rd largest economy by 2050: Goldman Sachs

Leading in IT & BPO

Oil & Gas and Biotechnology sunrise industries

March 2005

India - Leading the world

Hero Honda - largest manufacturer of motorcycles

Moser Baer - among the top three media manufacturers

in the world

Pharmaceutical Industry - 4th largest in world

Walmart, GAP, Hilfiger sources more than

USD 1bn worth apparel from India

100 Fortune 500 have set R&D facilities in India

including GE, Delphi, Eli Lilly, HP, Heinz and Daimler

Chrysler

March 2005

Pharmaceuticals

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

Pharma Market

Volume – wise 8% of global market

4th largest in the world

CAGR(1995-2002) 16.6%

Exports 23%

CAGR(1995-2002)

Size (2002-03) US$ 7 bn

Share of formulations 80%

Size 2010 (estimated) US$ 25 bn

March 2005

Exports

CAGR (over last decade ) 26%

Rate of growth (2003) 21%

Export destinations US, Germany, Russia, UK and China

India - Net exporter of pharmaceutical products

Exports (2002-2003) US$ 2.8 bn

March 2005

Increased R&D Focus

Shift from business-driven research to research-driven business

March 2005

Increasing R&D Spend

1996 -2002

Annual recurring R&D expense growth rate 32.3% yoy

March 2005

Resurgence of FDI

100% automatic FDI approvals

to aid increased investment in

R&D infrastructure by MNCs

Resurgence of FDI in the Pharma Sector

Source: CMIE

March 2005

Quality Assurance in Manufacturing

India has the highest number of USFDA approved plants outside the US

GMP compliant

Approved by international bodies - US FDA, UK MCA,

South African MCC

Manufacturing facilities

March 2005

Pharmaceuticals

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

Domestic Players

Ranbaxy Largest pharma company in India;Laboratories Annual revenues of US$1bn

Dr Reddy’s Indian company with presence in Laboratory more than 50 countries

Cipla One of the lowest cost manufacturer of anti-HIV drugs in the world

Wockhardt Largest Indian pharmaceutical company in UK

March 2005

MNC Presence in India

GlaxoSmithKline Leads in 6 of the 10 therapeutic categories

Pfizer Owns the two largest selling brands in India

Astra Zeneca Involved in cardiovascular,respiratory, maternal healthcare & pain control and anasthesia

Aventis Indian manufacturing sites identified as potential global sourcing unitsby global parent company

March 2005

MNC Presence in India

Novartis Collaborations with Dr Reddy’s and Torrent

Wyeth Contract-manufacturing tie-upwith Indian major Bharat Biotech

Sanofi-Synthelabo Present in cardiology, thrombosis & neuropsychiatry

Roche Already invested US$ 20 mn in India and plans additionalUS$ 7.35 mn in 2004-05

Merck Leader in laboratory reagents market in India

March 2005

MNC Activity in India

Novartis AG seeking tie-ups with Indian companies

Bristol-Myers to enter India again

Aventis’s Goa unit to be sourcing hub

Pfizer India doubles research investment in India

AstraZeneca, Glaxo to make India R&D hub

Chiron to make India its Asian hub

Bayer AG to make India sourcing hub

Eli Lilly to make India sourcing hub

German major Boehringer Ingelheim to enter India

India to be Roche's global hub for bulk drugs

March 2005

Pharmaceuticals

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

USD 70 mn market (2001-02)

Growing at 20% per annum

Outsourcing - fastest growing

area for new investment

US$ 1 bn opportunity by 2010

Clinical research

Invest in India

Contract Research

March 2005

Invest in India

Custom synthesis Largest pool of trained analytical

and development chemists

Excellent track record of innovation

US FDA approved manufacturing

facilities

30-50% cost savings

March 2005

Invest in India

Global Outsourcing opportunity

worth US$ 15 bn by 2010

Global majors to outsource

manufacturing from India

API sourcing and

contract

manufacturing

March 2005

Invest in India

Pre clinical testing Superior and low cost chemical synthesis skills advantages

Clinical trials India to be an outsourcing centre for conducting low cost clinical trials

Collaborative R&D

GlaxoSmithKline has R&D alliance with Ranbaxy Laboratories

March 2005

Export from India

Source: SSKI

Exports drive growth for Indian pharmaceutical majors

March 2005

Export from India

Generics - The key driver for export growth

Source: SSKI

March 2005

Partner with India

Marketing alliances - A win-win strategy

Increased market penetration

Zydus Cadila has strategic agreement with Schering AG

Nicholas Piramal has 5 year strategic alliance with

Biogen Idec

March 2005

Partner with India

Process reengineering expertise

Low-cost scientific manpower available

Low capital requirement for NDDS research

Fast clearances from regulatory authorities

New Drug Delivery System (NDDS)

March 2005

Pharmaceuticals

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

Advantage India

Excellent chemical synthesis skills

Successful scaling up of laboratory processes to plant-size

Cost-effective and commercially viable non-infringing

processes

Pool of low-cost and highly skilled medical professionals

Manufacturing facilities of international standards

Quick absorption of new technology

March 2005

Indian Pharmaceutical Act

Reduction in number of drugs under price control to 28 as

against 74

100% foreign investment automatically permitted

Abolishment of industrial licensing for bulk drugs,

intermediates and formulations

Automatic approval for Foreign Technology Agreements

March 2005

Regulatory Scenario

IPR/Patent regulations

Product patent regime implemented w.e.f January 2005

in compliance with TRIPS

Price regulations

Price controls decline substantively

Product and quality regulations

2 8

3 7 0

1 4 3

7 4

1 9 7 9 1 9 8 7 1 9 9 5 2 0 0 5

(E)

2 8

3 7 0

1 4 3

7 4

1 9 7 9 1 9 8 7 1 9 9 5 2 0 0 5

(E)

March 2005

Policy Incentives

Tax exemptions at par with IT

Reduction in peak custom duties from 30% to 25%

Increase on rate of depreciation on life saving

equipment from 25% to 40%

Tax holiday for R&D companies

March 2005

Key Features

• 22% increase in allocation under the National Rural Health Mission

• Formation of a SME Growth Fund to provide equity support to small & medium units in the pharmaceutical & biotechnology sectors.

• Import duty on select equipments used in pharmaceutical & biotech research reduced from 20% to 5%.

• 150% weighted deduction on R&D expenditure

Union Budget 2005-06

Fillip to R&D initiatives

March 2005

Pharmaceuticals

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

Contact in India

Confederation of Indian Industry (CII)

The Mantosh Sodhi Centre23, Institutional AreaLodi RoadNew Delhi – 110003

Tel 0091 11 24629994-97Fax 0091 11 24626149/24615693Email c.banerjee@ciionline.org