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Mak Jawadekar, Ph.D. Director, AMP, WWPM Pfizer Global R D, Groton

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Mak Jawadekar, Ph.D. Director, AMP, WWPM Pfizer Global R D, Groton

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    2. 1 Asia is a diverse region for Pfizer with operations in 18 Countries

    3. 2 Today’s Focus: Charting India Frontiers India : Growth Rate Statistics Drivers for Growth in Outsourcing & New Markets in India for the Western Bio/Pharma Industry Anticipated Growth Drivers for M & A activity Wall Street’s focus on corporate ‘bottom line’ and its R & D Productivity Ever Changing Global Pharma Industry Landscape Factors for further economic equilibration Recent Changes in India’s IPR Regulations

    4. 3 My personal networking Passion for India As an Immigrant, Naturalized US Citizen,my family background Key-Note address: Indian Pharmaceutical Congress, New Delhi December 2001 Roundtable with the President of India, Dr. Abdul Kalam: 2003 Outsourcing Experience within the US 2000-2004/SRI Initiative Getting involved with USIBA and USINPAC/ Meetings In DC 2004

    5. 4 My Personal Networking Passion for Asia continues… Meeting with President George Bush: June 2005 Invitation to the White House: ‘Diwali Celebration’: Nov 2005 President Bush’s Trade Mission to India – March 2006 Looking at Pfizer’s ‘Capturing Global Advantage Initiative’ Contributions to Pfizer, the US and to the motherland Ability to participate and help in the future growth

    6. 5 President George W. Bush’s Ongoing Agenda Grow Bilateral Trade More outsourcing Enhance US Business efficiencies Further Growth in Science & Technology Exchange Economic Partnerships

    7. 6

    8. 7 LABOR COSTS AROUND THE WORLD Hourly Compensation Costs __________________________________________________________ $US

    9. 8 Business Activity in India Majority of outsourcing work is labor-intensive manufacturing Growth in manufacturing leading to surge in commodity imports Most outsourcing is comprised of business processing services (e.g., IT services, call centers, back office etc.) Higher value-added business is still minor component

    10. 9 Growing India:

    11. 10 Today’s Modern India! Growth spurred by the IT sector, translating into Life-Sciences Many new Pharma-Bio-tech Parks are on the horizon Growth in Mumbai, Pune, Bangalore, Hyderabad areas for the Life Sciences sector Huge rise on the third party CRO type businesses.

    12. 11 Themes – India

    13. 12 India: Potential Working Population Trend

    14. 13 India: Low-Cost Service Provider

    15. 14 India Pharma Expertise Chemical Process Expertise – Indian companies have built development skills over the last three decades to research and manufacture complex drugs Cost advantages Fixed asset costs – The cost of building and staffing an FDA approved facility in India is 20-25% of the cost of setting up a comparable facility in the US or Europe Variable costs – Cheap labor and lower development costs Clinical study costs – Due to the large population of India, patients for various tests are easily available at up to 10% of the cost of US patients

    16. 15 Evolving Indian Business Model

    17. 16 India -Statistics

    18. 17 India –More Fast facts

    19. 18 The number of FDA inspected Indian fine chemicals companies has greatly expanded over the past few years.(Source: Arthur D Little)

    20. 19 Global Drivers for India revolve around various factors

    21. 20 Advantages of IPR/TRIPS Strong intellectual property rights support innovation – new medicines, improved treatments; Implementing TRIPS protects consumers against counterfeits, thus saving lives and health; TRIPS gives the basis of company access programs – the proven solution for improving access; TRIPS is a delicate balance of flexibilties and responsibilities; Ministers agreed in Doha Declaration that public health needs can be met in the TRIPS framework. I would like to begin by clearing up a misconception which some observers of the TRIPS and Public Health issue may have. Far from being contradictory to public health, TRIPS is fundamental to promoting public health, including in developing countries. Strong intellectual property rights support innovation – new medicines, improved treatments; Implementing TRIPS protects consumers against counterfeits, thus saving lives and health. Indeed, it is a little-known fact that TRIPS began as a treaty against counterfeiting. Furthermore, TRIPS has strong provisions mandating serious criminal penalties for counterfeiters. TRIPS gives the basis of company access programs – the proven solution for improving access; TRIPS is a delicate balance of flexibilties and responsibilities which took many years to negotiate. This harmony of the different elements within TRIPS should not be disturbed before much thought is given to the consequences of such actions. In recognition of the importance of the balance in TRIPS, the Trade Ministers agreed in Doha Declaration that public health needs can be met within the TRIPS framework. I would like to begin by clearing up a misconception which some observers of the TRIPS and Public Health issue may have. Far from being contradictory to public health, TRIPS is fundamental to promoting public health, including in developing countries. Strong intellectual property rights support innovation – new medicines, improved treatments; Implementing TRIPS protects consumers against counterfeits, thus saving lives and health. Indeed, it is a little-known fact that TRIPS began as a treaty against counterfeiting. Furthermore, TRIPS has strong provisions mandating serious criminal penalties for counterfeiters. TRIPS gives the basis of company access programs – the proven solution for improving access; TRIPS is a delicate balance of flexibilties and responsibilities which took many years to negotiate. This harmony of the different elements within TRIPS should not be disturbed before much thought is given to the consequences of such actions. In recognition of the importance of the balance in TRIPS, the Trade Ministers agreed in Doha Declaration that public health needs can be met within the TRIPS framework.

    22. 21 Total Pharmaceutical R&D Spending: Canada Even industrialized countries benefit from strengthening IPRs. After Canada’s repeal of its compulsory licensing policy in 1992, foreign direct investment expanded dramatically, as you can see here. Canada also now has a vibrant and growing biotech industry thanks to stronger patent protection and indeed has more biotech firms per capita than the USA.Even industrialized countries benefit from strengthening IPRs. After Canada’s repeal of its compulsory licensing policy in 1992, foreign direct investment expanded dramatically, as you can see here. Canada also now has a vibrant and growing biotech industry thanks to stronger patent protection and indeed has more biotech firms per capita than the USA.

    23. 22 Innovation & IPR Recognition IPRs clearly stimulate innovation and growth in pharmaceuticals. The real benefit of strengthened IPRs will go to domestic innovators, helping developing countries in their development policies. Key developing countries can take their rightful place as global leaders in pharmaceutical innovation, which will benefit patients in developing countries and around the world. IPRs clearly stimulate innovation and growth in pharmaceuticals. The real benefit of strengthened IPRs will go to domestic innovators, helping China in its development policies. China can take its rightful place as a global leader in pharmaceutical innovation, which will benefit patients in China and around the world. Thank you very much.IPRs clearly stimulate innovation and growth in pharmaceuticals. The real benefit of strengthened IPRs will go to domestic innovators, helping China in its development policies. China can take its rightful place as a global leader in pharmaceutical innovation, which will benefit patients in China and around the world. Thank you very much.

    24. 23 Indian Pharma & Where it is Going! Indian Pharma is expected to be one of the key global growth players into the US and Europe. Indian firms have accounted for 35% of the DMF filings during 2004 with the USFDA. API integration factor Expansion in Semi Regulated Markets: With better margins in Russia, Brazil , and eastern European countries. Polarization of Generic Industry: Post Ivax acquisition, Teva is the market leader ($7B), followed by Sandoz ($3B) Pharmaceutical(fragmented) Distribution: A next wave of Reform? Growth in Biotech/Vaccines: High institutional sales, Distinct target markets, large Phrama’s reluctance to develop for diseases in developing countries Value Driven Growth Vs. Volume driven Growth

    25. 24 The value of total sector (M& A) in India has more than quadrupled to a record of $ 18.3 Billions in 2005. A total of 872 Indian companies merged or were acquired in 2005 compared to 565 worth $4.5 B in the same period in 2004. According to AT Kearney’s 2005 survey, India is the 2nd most favorite global destination Indian with International Companies: Zydus Cadila-Alpharma (Fr), Sun-Caraco(US), Ranbaxy-RPGAventis (Fr),Glenmark-Lab Klinger(Brazil), Dr. Reddy’s-Trigenesis(US), Jubliant Organosys-PSI (Belgium) Global Generics: Teva-Ivax, Teva-Sicor(US), Sandoz-Sabex(Canada),Meda-Viatris(Germany), Matrix-DocPharma (Belgium), Actavis-Amide (US) In the News: Wockhardt trying to do a deal in the US Jubliant Organsys trying to acquire in the US

    26. 25 Expect much more M & A activity in the next 5 years !! 2006-2007 will continue to see more M & A activity because of the changing Pharma Industry and pressures on Margins & Pricing Indian Parliamentary ordinance amending the patents Act, to encourage International MNCs for greater presence and increase market share. Expect more M & A with Biotech as well with growth in virtual, small companies looking to do JVs, Partnerships, collaborations, alliances and other types of tie-ups with bigger companies.

    27. 26 India: Pro-factors for the Western Big Pharma to consider India: Emerging economic power for Market growth Favorable WTO/IPR environment Fair Legal System Access to talented Scientific work force Pharmaceutical Mfg facilities with GXP Most favorable cost advantages with economies of scale Rapidly establishing reforms/ changing infrastructure

    28. 27 Asia Strategy (Under Development): Factors under consideration: Outsource for more capacity, lower costs of R & D Access to the emerging Growth Market economies Corporate overarching strategies TA Dynamics Market needs Regulatory environment S & T /Innovation Business Cycle dynamics IPR/Data Protection with all the cautionary measures

    29. 28 Key Drivers for growth for the global Pharma/Biotech/Generic Pharmaceutical Industry: Crystal ball Growth of Global Pharma Market Volumes due to India/China Enhancing Productivity in Pharma R & D Focus on Performance and adapting to changing environment Global Outreach & capturing advantage due to the global outreach Geographic Expansion through M & A / Economies of scale Expansion of capabilities in DDS/Formulations Vertical Integration into API/ USFDA approved sites Exploration of Specialty Pharma options Global Metamorphosis of Speed/Quality/Cost paradigm

    30. 29 Acknowledgements Pfizer PGRD ‘CGA’ Team Arthur D. Little :Data Output Morgan Stanley (V. Pandit) Financial Data Dr. E. Noehrenberg, IFPMA US Congressional India Caucus Staff White House Support Staff Many Pfizer colleagues

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