Exploring the Structural Changes in the Global Pharmaceutical Marketplace

1. Exploring the Structural Changes in the Global Pharmaceutical Marketplace Dr. Brian W Tempest www.briantempest.com MAPE Fund Managers Conference Mumbai, India 29 September 2010

2. Dr Brian Tempest advises Companies, Banks, High Net Worth Individuals and Investment Funds on their Strategy in the Emerging World based on his wide experience in China, Japan, South East Asia and India where he has lived for the last decade. Brian has worked for Ranbaxy Laboratories since 1995 holding the position of Managing Director and Chief Executive Officer until 2005. He was then Chief Mentor and Non Executive Director until 2008. He is one of the few westerners to have led a Sensex Nifty 50 Indian blue Chip MNC and as a result has a valuable insight into India. Brian has also been Regional Director, Far East for Glaxo where he was responsible for businesses in Japan, China, Korea, and Taiwan. Brian has worked in the Pharmaceutical Industry for the last 39 years and led Healthcare businesses in North America, South America, Europe, Africa, Middle East, Asia and India. He has also led sessions at Investor Meetings across Asia, Europe and USA. He is now an International Advisor to MAPE – India, Religare -India and UNCTAD - Switzerland. In addition he is a member of the SCRIP Global awards panel. Brian speaks at global conferences on the Challenge from India and China and more information on these presentations can be found on his website www.briantempest.com. Brian has a PhD in Polymer Chemistry from Lancaster University and is a member of the Royal Society of Medicine, the Royal Society of Chemistry and is a Chartered Chemist. He is now Chairman of Hale & Tempest Co Ltd.

3. Healthcare Pressures Forever (2050)

4. Futuristic Pharma Vending Machines -currently being test marketed in UK Hospitals & Supermarkets 2010

5. The R&D Model is failing

6. Approvals & Reimbursements Source: Pharmatimes UK July-August 2010

7. EU Surprise Anti Trust Raids 2008/9 • 1st - GSK, Astra Zeneca, Sanofi Aventis, Pfizer, Wyeth, Teva in January 2008 • 2nd – Teva , Servier, Kirka in November 2008 • 3rd – Sanofi Aventis France, Novartis France, Teva France in October 2009 • 4th – Lundbeck Italy, Teva UK in December 2009

8. Many Drugs withdrawn this Decade Source: Deutsche bank, FDA

9. Generic Exposure

10. Sales Force Job Cuts in Press since 2009 in H1 2010

11. 82% of the world population accounts for only 12% of the global pharma sales • Sources: • IMS Midas, March 2005 • Earth Trend Data Tables 2005

12. Emerging World Share of Pharma Growth source IMS

13. Emerging World Share of Pharma Sales Source EIU, OECD, WHO, IMS, Roland Berger

14. Profitability in Branded Generic Markets

15. Regional Operating Margins - GSK

16. Big Pharma & the Emerging World source IMS - BRIC, Mexico, Turkey, South Korea

17. Emerging Markets & Big Pharma

18. Big Pharma - New World Order is Coming

19. Patent Expiries 2003-2013 (in 8 Markets)

20. USA Generics Filings Source: Deutsche bank July 2010

21. USA - First to File Lawsuits Source RBC Capital Markets January 15 2010

22. USA - Litigation Success Rates Source RBC Capital Markets January 15 2010 • Patent FTF Challenges on rise • Success litigation rate at 48% - or 76% including deals with patent owner • 3 courts hold 69% of cases with a 36% success rate e.g. NJ • 4 courts never ruled against generics e.g. NY • At risk launches on the rise – 6 in 2009 • Teva has 12 of the 28 at risk launches – 2002/9 • Settlements on the rise – 54 in 2009

23. USA Challenge – Size of Product Basket Source: Deutsche Bank

24. EU Chain forms a China Generic Factory • UK Coop a GBP£10b UK company • Worlds largest consumer cooperative • running food stores, banks, insurance, funeral homes, travel agents, farms and pharmacies • 3rd rank pharmacy chain in UK with 800 stores • Owns UK pharmaceutical wholesaler Sants • Offers 113 products under “Prospect” brand • Tianjin Tasly Sants Chinese JV opens 2010/11 • With Investment GBP£20m, 200 staff • SAP went live Feb 2010

25. Generic Profit Margin Profile in descending order source: Deutsche Bank July 2010

26. Indian Generics have consistently outperformed USA Generics

27. Indian Deals Roaring Ahead July 2010 Grant Thornton Deal Tracker

28. Top 22 Generic Companies over $1b Source: Company Reports Generics Bulletin 28 May 2010 (excludes Apotex & Actavis Private Companies)

29. Next18 Generic Companies < $1b Source: Company Reports Generics Bulletin 28 May 2010 (excludes Recalcine Private Company)

30. The Tempest Crystal Ball • Asia is becoming the Centre of Gravity for global business • Big Pharma will develop Emerging World Strategies, Generics Strategies, OTC Strategies, Vaccine Strategies, VC Strategies • Big Pharma will continue to be attracted to India for CT, EDC, MO. and to China for RM/Biology/Toxicology • Big Pharma will develop dual IP as well as dual pricing • In Commodity Generics risks and competition will rise further. Branded Generics will continue to be very attractive • Many Indian families are reviewing their family portfolios. M&A will roar ahead • Oncology Monoclonals could be the next wave after HIV

31. Thank You brian.tempest@clara.co.uk www.briantempest.com