Life Sciences /Biotechnology Attracting Risk capital and Stimulating Alliances and Joint Ventures

1. Life Sciences /Biotechnology Attracting Risk capital and Stimulating Alliances and Joint Ventures Vishal Gandhi Asst. Vice President Life Sciences &Technology, YES BANK LTD

2. The Journey India – The Vision India – The Opportunity Life Sciences Clusters/Biotech Parks About YES BANK Life Sciences credentials The Agenda

3. The Journey

4. Statistics 5,500 companies worldwide 500 are publicly owned $60bn USD plus revenue base Hundreds of products on the market

5. Therapeutics – novel and generic Diagnostics Devices R & D Tools and Reagents Instruments Health Care Delivery – hospitals, clinics Services: CRO; Chemistry; Labs; Pharmacy What does LS Encompass?

6. Key Issues Need to reduce “time to market” Need to sustain profitability Disease and healthcare management Leading to Changing industry structure Outsourcing and Partnerships Research Alliances Mergers & Acquisitions Emerging service areas The Changing Global Life Science Industry

7. USA’s USP

8. The Fuel: Capital MARKET CONCEPT TO Venture Capital / Private Equity Government Spending ($27 bn pa) Scientific Expertise CAPITAL

9. Entrepreneurial Environment • Faith in Science • Motivating Small companies &individuals

10. Recent licensing transactions between Biotechnology and pharmaceutical companies • Neurocrine/Pfizer( Indipion, an insomnia agent): Pfizer gains exclusive worldwide development and marketing rights in exchange for upfront, milestone and royalty payments • Millennium/Ortho Biotech (Velcade, a first-in-class chemotherapeutic agent): Millennium retains all US commercialization rights whereas Ortho will keep rights out side the US. Millennium will receive royalties from Ortho on sales outside the US and received an upfront payment of USD 15 million. Milestone payments for clinical development, regulatory development out side the US and sales milestones are included • Avanir Pharmaceuticals/Peregrine Pharmaceuticals (An anticancer antibody): In exchange of license fee, milestone and royalty payements for Avanir’s antibody • Contd.

11. Increased focus on R&D Increased focus on CRAM services (including biologics) Marketing alliances Brand acquisition Adoption of product patent regime Life Science focused VC funds Development of Life Science Clusters with shared wet lab infrastructure Indian Response

12. India - The Vision

13. Domestic market $1.46 billion in 2005-2006 Estimated at $5 billion by 2010 India expected to contribute 8% of the world's biotechnology market by 2010. Significant promise of Growth Statistics • Over 200 biotech companies • Total bioscience investment of nearly $150 million USD

19. India –The Opportunity

20. India is positioned to grow into a major R&D center for biotechnology companies on the basis of Skilled Workforce Low Cost Research & Development

21. Growing demand for biotechnology products Rich biodiversity Strong R&D base Wealth of well educated human capital. Advantage India

22. Powerful and inexpensive information base Base • India advantage from a clinical trials standpoint • Access to large number of patients • Sophisticated network • Short patient recruitment times

23. Patent Protection being strengthened Achievements Effective 1st Jan, 2005 TRIPS agreement expected to increase foreign investment and improve the environment for R&D and forging new global alliances • Regulations established to approve • Genetically modified crops • Recombinant therapeutics • Guidelines for Stem Research

24. SBIRI (DBT) APIDC-TDB PRDF (DST) NMITLI (CSIR) Venture Capital & Government

25. Life Sciences cluster /Biotech Parks

26. A Cluster can be defined as a geographically proximate group of companies and associated institutions in a particular field linked by commonalities and complementarities Where, value of the system as a whole is greater than the sum of its parts Are usually seeded and evolve organically It is observed worldwide that innovation driven companies thrive better in clusters Characteristics of Life Sciences Cluster

27. Elements of Life Science Cluster Innovative SMEs, Startups Anchor companies R&D Institutions with strong industry linkages Support Services Companies – vendors, suppliers, law firms, VCs Life Science Cluster Availability of finance Life Science Parks/ Incubators to nurture SMEs Good common infrastructure

28. According to Minnesota Biomedical and Bioscience Network report on leading life science clusters as of 2004-05 there are 12 Life Science Clusters in EU (Germany, France, Switzerland, Belgium, Sweden, Finland) 11 in USA 14 in Asia-Pacific (including Hyderabad,Bangalore and Uttranchal from India) 4 in UK and Ireland 3 in Australia 3 in Canada 2 in South America 1 in Africa 1 in Middle East Leading Life Science Clusters

29. 600 sq. km in three blocks around Hyderabad designated as Genome Valley for life sciences growth Life Sciences R&D institutions CCMB, IICT, CDFD, NIN, ICRISAT, Univ of Hyderabad etc. Biopharma Companies Shantha Biotechnics, Indian Immunologicals, Bharat Biotech, Biological Evans, Krebs Biochedmicals, Ocimum Biosolutions, Dr. Reddy’s Laboratories etc. Contract Research Organisations Vimta labs, Suven Life Sciences, GVK Biosciences, Magene Life Sciences etc. Hospitals, clinicians involved in R&D and clinical research Dedicated biotech fund - APIDC Venture Capital Life Science Parks/ Incubators ICICI Knowledge Park, SP Biotech Park, ICRISAT Agri-park and Incubator, Incubator at Univ. of Hyd. Genome Valley Cluster, Hyderabad

30. Generally infrastructure driven shared facility offering innovation driven SMEs and startups the right location and fulfilling some of the other listed needs Shared infrastructure & admin support lowering overheads Low capital investment – ready to use infrastructure Network creation and international knowledge flow Competitive environment Facilitating Technology Transfer, fundraising, marketing Mentoring for incubatees Knowledge building - introducing/ strengthening codes and conventions through shared learning Can be government driven, private initiative, public-private partnership or university led Government’s role in removing entry barriers crucial Offerings of Life Science Clusters

31. Technology backed by defendable IP Business model Valuation/Exits: 5-10x return Cost of development and time lines Competition What VC’s Look For

32. Financing: long-term equity Business Partner: share risk and reward Networks: Access to expertise and alliances Mentoring Exit VC Value Proposition

33. Drug Discovery: Deep knowledge base of traditional medicine to aid in drug discovery. Large Bio diversity of plant / marine / animal to aid in drug discovery / production & nutraceuticals. Clinical trials: Large drug naïve populations for rapid and low cost clinical trials. Services focusing on the huge domestic market: Huge domestic markets with specific needs that can provide scale advantages to companies addressing these needs: availability of drugs, diagnostic services, healthcare delivery, health insurance, etc. Contract research/ manufacture: chemistry skills, that can lead to strength in process design, contract manufacturing, laboratory drug discovery related services. Orphan drug discovery & development: Low cost skilled labor with easy availability provides the ability to build contract manufacturing and services businesses; build drug discovery businesses focused on orphan drugs, etc. Bioinfomatics services: strong IT skills to aid in developing IP in a number of the services areas that Indian companies are involved in. Stem cell / GM crops: Enabling policies that help development in Stem cell/ banking research, GM crops, etc. India biotech investment opportunities driven by its competitive advantages

34. Tech Transfer

35. Potential Licensees/Licensors Small company that lacks the facilities to do basic research of its own and wishes to buy the products of others’ research Larger research based-based company which wishes to expand its product line or investigate new areas of research Technology Transfer Licenses

36. ® Commercial & FinancialConsiderations of aBiotech/PharmaLicense Agreement ____________________________

37. ® Commercial Clauses • Commercial Due Diligence Clauses • - Clauses Relating to Development • - Clauses Relating to Working/Marketing • Product-By-Product • Market-By-Market ____________________________

38. ® Financial Clauses • Upfront Payments • Milestones • Annual Payments/Maintenance Fees ____________________________

39. Life Sciences & Technology

40. Ranbaxy Laboratories Ltd. Exclusive advisor to Ranbaxy for divestment of 100% holding in Ranbaxy Fine Chemicals Limited 2005 Corporates : Private Equity and M&A Medreich Limited United Phosphorus Ltd. Advisory for private equity fund raising of US$ 25 million Advisory for Acquisition of agrichem business in India 2005 2005

41. Large Global Pharmaceutical Company Large Global Generic Company Advising a large MNC Company for setting up its R&D facility in India Advisory for product portfolio analysis and suggested growth strategies for the domestic market 2005 2005 Corporates: Business Advisory

42. Corporates: Key Relationships

43. Membership of various national & international level bodies OPPI IDMA ABLE BCIL TiE Providing advisory and fund based services to agriculture, life sciences & biotechnology companies and government bodies Provide advisory services for Infrastructure related projects such as life science and IT parks etc. jointly with YES’ Infrastructure team Assist customers in their M&A transactions by coupling our sectoral / industry knowledge with the experience of YES’ M&A team Sectoral Focus & Strength • FICCI • CII • PHDCCI

44. M&A League Tables

45. Background MIDC wanted to set-up the first ever Biotech park at Pune An offshoot from new expressway between Mumbai and Pune. Supporting bio-pharmaceuticals, diagnostics, vaccines companies MIDC invited private developers for joint development, promotion and marketing of the proposed park Consultants’ Role Carried out the overall conceptualization of the park Created Information Memorandum to invite private participation and created the selection criteria for private partner Provide hand-holding till the finalization and structuring of the deal with the selected private partner Case Study - Pune BT Park

46. The Proposed Concept Specialised biotech facilities (BioResource Centre) Common Utilities Specialised office space for customised labs Business Facilitation Centre Common Amenities Block Developed land area for GMP facilities RESIDENTIAL COMPLEX Pune BT Park Biotech Park Infrastructure

47. Current Status TCG (88% Equity) is developing the park in conjunction with MIDC Three of YES BANK’s clients have already taken space at the park YES BANK recently got a client from US for leasing facilities at Pune BT park TCG has approached YES BANK for advisory services towards building the requisite infrastructure and inviting new tenants Revenue models Sale of Plots and Office Space (Long Term Lease) Rentals from BioResource Centre, Build-to-suite premises A charge on the IPR generated from the park Pune BT Park

48. Government Assignments -examples • Advising GOM for developing Mumbai into a Biotech Hub • Member of the Screening Committee in SBIRI. SBIRI is a scheme launched by DBT that supports the high-risk pre-proof-of-concept research and late stage development in small and medium companies

49. Thank you