INDIA-CIS PHARMA & HEALTH CONFERENCE MUMBAI 3 rd MARCH , 2006

1. INDIA-CIS PHARMA & HEALTH CONFERENCE MUMBAI3rd MARCH, 2006 Department of Chemicals & Petrochemicals Ministry of Chemicals & Fertilizers Government of India

2. Agenda • India – Overview of the Country • Indian Pharmaceutical Industry • India’s Strengths in Pharma Sector • Status of Pharma Exports to CIS

3. India – Overview of the Country

4. India – Largest democracy in the world • Gained independence in 1947 • Current population over 1 billion • English is the language of business • 4th largest economy globally on PPP basis • 6th largest energy consumer • Predicted by Goldman Sachs to be the 3rd largest economy in the world by 2050

5. India finds harmony – Even with all its diversity • 29 states & 6 UTs with 22 official languages • 3.3 million square kilometers area • Religions: 81% Hindus, 12% Muslims, remaining are Christians, Sikhs, Jains, Buddhists, Parsis, Jews • Per capita income ~US$ 750 • GDP ~ US$ 650 billion

6. INDIA RISING GDP growth rate – 8.1% (twice that of USA & UK) Manufacturing sector growth rate – 9.4% Exports growth rate – 23 ( compounded growth rate over last 10 years) Inflation Rate - 4.1 % (5% a year ago) Credit growth- ~25% (22% last year) Foreign Exchange Reserve - US $ 142 billion (1991-US $ 5.8 billion) Some Indicators

7. Capital Market • Equity Index at the highest level ever close to 10500 (BSE) • India’s market capitalisation US$ 550 billion • Registered FIIs – 667 • This Year’s flow of portfolio investment- US $ 10 billion • Volume of public issues rose by 5 times in 2005 • Introduction of book-building process

8. RECENT FISCAL REFORMS • Income Tax simplified - 10%, 20% and 30% rates • Corporate Tax rate - Reduced to 30% from 35% • Peak Import Duty on non-agricultural items reduced from 15 to 12.5 % • Import duty on specified Capital Goods (including those for Pharma & biotech. Sector) - 5% • Import duty on IT items (217) – Nil • State Value Added Tax - introduced w.e.f. 1st April 2005 (4% rate for pharma)

9. Some of the world’s best academic and healthcare institutes are in India • 14,000 hospitals • 700,000 hospital beds (85% urban) • More than 500,000 doctors • 737,000 nurses • 171 medical colleges • 17,000 medical graduates/year (MBBS/MD) • 300 life sciences colleges produce over 700,000 graduates annually

10. Indian Pharmaceutical Industry

11. Indian Pharma Industry Profile • Number of companies • Large : 300 • SMEs : 6000 • According to Mckinsey & Co., Indian pharma market to be US$ 25 billion by 2010, out of which US$ 11 billion to be domestic sales • PHARMEXCIL formed to facilitate exports of pharmaceuticals and related matters-plan to set up warehouse facility in Russia

12. Indian Pharma Industry Profile contd. • Worth US$ 8 billion ; globally # 4 in volume, # 13 in value • Exports of US$ 3.7 billion in FY 2004, increasing @ 22.9% CAGR 1994-2003 years. • India among top-5 bulk manufacturers and top-20 exporters world-wide • India now files highest number of DMF’s • India has largest number of US FDA approved plants outside US.( 75 now) • US Pharmacoepia INDIA office opened at Hyderabad -first such office ouside USA • Domestic market growing at 8-10% p.a. • R&D spending to increase from 5% of sales to 8% by 2007

13. India: The Pharma Outsourcing Hub • India – emerging as the hub for • Collaborative & contract research • Contract manufacturing • Co-development • Co-marketing • Cost of developing an NCE – over US$ 1 billion whereas, in India it can be as less as US$ 50 million • Several MNCs like Pfizer, Merck, GSK, Roche, Bayer, Aventis, etc. making India a hub for APIs and bulk supplies • Pfizer, Eli Lilly, Novartis carrying out clinical trials in India

14. India: The Pharma Outsourcing Hub contd. • Several CROs (about 22) like Quintiles, Simbee, RCC, Omnicare, etc. set up liaison/marketing offices in India • Indian CROs commenced trials since 1996 • Cos. like GSK Biological lined up global trial of 4 vaccines in India during 2005. Also clinical R&D for AIDS, dengue, malaria, TB vaccines

15. Regulatory Framework • Drugs and Cosmetics Act, 1940 – a Central Act to regulate manufacture/ import/sale of drugs • New drugs, imports, clinical trials, drug standards approved by Central Govt. Enforcement by States • Drug (Price Control) Order, 1995 – for control of prices of specified drugs • Indian Patents Act, 1970 – As on 1st January, 2005 provides product patent for drugs, food and agro-chemicals

16. Some Recent Changes in Drugs & Cosmetics Act and Rules • Schedule “Y” amended for multi-centric concurrent clinical trials as per GCP • GMP – realigned as per international guidelines (particularly WHO & OECD) • GCP – India’s requirements on GCP published as guidelines • GLP – monitoring authority set up for pre-clinical (toxicological) studies • Registration system streamlined for import of drugs – both site and product registration

17. Process Patents for pharmaceuticals introduced in 1970 • Prior to 1970 • 85% market with foreign companies • 15% market with domestic companies • 1970 – Process Patent introduced for pharmaceuticals • At present • 85% market with domestic companies • 15% market with foreign companies

18. India’s Strengths in Pharma Sector

19. Indian Pharma Industry: Strengths - Policies • Product Patent regime in effect from January 1, 2005 • Pro-business, Pro-IP Government – federal, state & city • India bio/pharma clusters make it easy to set-up and conduct business • Effective Check on spurious drugs- new law being made

20. Indian Pharma Industry: Strengths - Infrastructure • Rich bio-diversity • Well-developed pharmaceutical, chemical & healthcare industries • Complex capabilities in research, synthesis & manufacturing • Quality conscious (cGMP, GLP, ISO) • CSIR= World renowned 42 national research laboratories • Huge patient population • Information technology = core competence

21. Indian Pharma Industry: Strengths - Cost • Cheaper labour (cost to hire a Ph.D. scientist = US$ 25K; as against US$ 65K/year in the US) • Employers receive loyalty, respect, dedication & admiration from employees • 40% cheaper to set up a plant in India than in the US/EU • 35-40% cost savings for conducting clinical trials in India • Funds available for expansion and start-ups

22. Indian Pharma Industry: Strengths - Talent • Huge pool of experienced scientific manpower – fluent in English • Employees work 6 days/week & are willing to work in all shifts • Reverse brain-drain : Non-resident Indian scientific personnel moving back • New breed of managers (no longer family-run businesses • Strong entrepreneural nature = Competition

23. India is a proven source of quality and cost-effective pharma materials • Fine chemicals • Intermediates • Advanced intermediates • APIs (Active Pharmaceutical Ingredients) • Formulations

24. Highest number of US FDA approved Plants outside the US are in India Source:FDA & Proximare

25. Indians filed the highest number of DMFs : 871% growth since 1987 Source:FDA & Proximare

26. Status of Pharma Exports to CIS COUNTRIES

27. Exports of Drugs, Pharmaceuticals, and Fine ChemicalsMajor Destinations in CIS

28. India – world’s supplier of ARV drugs (Anti- HIV/AIDS) • About 50% of the ARV drugs being exported to developing countries from India – substantial exports to Africa • Indian companies instrumental in drastic reduction in ARV drug prices from over US$ 10,000 per head/annum to US$ 150 per head/annum

29. CIS PHARMA MARKET (INCLUDING RUSSIA) • US$ 7 billion - Share of Indian exports only 3 to 4% (aroud $ 275 million) - Great scope to enhance exports from India • India can help CIS to meet their health care needs in a cost effective manner and cater to larger section of population • Joint Ventures possible provided certain issues like convertibility to dollar mode are sorted out in some countries • Fast track registeration for Indian medicines would be helpful

30. Areas for India-CIS collaboration • Sourcing of APIs & formulations from India • Collaborations for manufacturing & marketing of drugs-Indian companies are very strong in all therapeutic groups especially in diabetic , respiratory, neuro, antiinfective and cardiovascular groups and they can meet the requirements of CIS countries in a cost effective manner • Joint R&D work for pharmaceuticals • Training of drug regulators at NIPER • Cooperation for use of various testing facilities at NIPER with respect to quality control/quality assurance, bio-availability , impurity profiling ,toxicology etc. • Participation in INDIACHEM 2006 in Mumbai from 8-10 November, 2006

31. The Indian Government and Industry would welcome partnerships with CIS countries in providing access to affordable, quality medicines Conclusion

32. Thank You !