Post on 22-Feb-2016
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The Indian Challenge in Asia
Dr. Brian W Tempest
Chief Mentor & Executive Vice Chairman of the Board
Ranbaxy Laboratories Limited, Delhi, India
Singapore – 28th March 2007
Except for the historical information contained herein, statements in this presentation and
the subsequent discussions, which include words or phrases such as “will”, “aim”, “will
likely result”, “would”, “believe”, “may”, “expect”, “will continue”, “anticipate”, “estimate”,
“intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “likely”, “project”,
“should”, “potential”, “will pursue” and similar expressions or variations of such
expressions may constitute "forward-looking statements". These forward-looking
statements involve a number of risks, uncertainties and other factors that could cause
actual results to differ materially from those suggested by the forward-looking statements.
These risks and uncertainties include, but are not limited to our ability to successfully
implement our strategy, our growth and expansion plans, obtain regulatory approvals, our
provisioning policies, technological changes, investment and business income, cash flow
projections, our exposure to market risks as well as other risks. Ranbaxy does not
undertake any obligation to update forward-looking statements to reflect events or
circumstances after the date thereof.
Disclaimer
Asia’s Share of the World GDP (at PPP in %)
Year 1870 1913 1950 1973 2001 China 17% 9% 5% 5% 12% India 12% 8% 4% 3% 5% Japan 2% 3% 3% 8% 7%
Rest of Asia 7% 5% 7% 9% 13% Total Asia 38% 25% 19% 25% 37%
Source – WEF
- was 59% in 1820 with India 16%, China 33%
Davos 2006
Source – FT
The Productivity Advantage
India a usa Pharma view USA
1 chemist Better education x 1.3 1 chemist
70 hours/week Longer working time x 1.3 50 hours/week
$ 800 monthly Lower cost x 20 $ 12,000 monthly
Sources: IPHMR Conferences, New Delhi August 2004
Japan - by 2050 36% > 65 years from 19% in 2005
China - one child families, get older before becoming wealthy - labour costs will rise owing to labour shortage India - India already has the youngest labour force in the world - source of the extra needed global workforce - India will pass China in total population in 2030 - By 2013 India will have more young workers 20-24 than China
The Ageing Advantage
Working Population, 15-64 yearsIn millions
Growth- Japan, sustain current growth- China, slightly slower growth to prevent hard landing
- India, increasing growth rate being talked up to 9%/10% Sentiment
- India, largest foreign affairs caucus in US Congress (180), nuclear deal - China, 74,000 demonstrations reported in 2005 in China. State secrecy, IP
The Economic Growth Advantage
The world has over 800 billionaires USA has almost half India - 36 billionaires China - 15 billionaires Net worth of 40 richest Indians - $170 b 40 richest Chinese - $38bSource: Forbes, Asia November 27, 2006
“2006 belongs to some of the emerging markets, and no country more than India”
The Billionaires Advantage
The R&D Investment Advantage Most attractive R&D Investment locations:Ranked 3rd - China, USA, India, Japan & UK
Source – UNCTAD 2005 Reasons why India: Qualified Scientists & Engineers Global India players with Alliances English speaking TRIPs compliant – first patent March 2006 IIT, IIM & other scientific institutions
Source – UNCTAD 2005
4th largest reservoir of Scientific Manpower (2nd largest English speaking)
3m graduates pa, 115k MSc Chemistry (3.5k UK), 215k Eng (222k USA)
Physics the most popular subject
Lead by a Nuclear Scientist as President – remote sensing satellite technology, 1/6 countries
PCT application ranked 3rd – K, Ch, Ind, Si, RSA
“US & Europe will not dominate Science, Maths, IT industries” – Mr. Bill Gates
The Education Advantage
Science Education in EU
“This means that when pupils are in a science laboratory their experience is unsafe, unsatisfactory or uninspiring for 65% of the time.” Source: Royal Society of Chemistry, Policy Bulletin – Spring 2006
UK “A” Level entries: Closed UK University 2000 2005 % change Chemistry Departments: Physics : 32,059 28,119 -12% Dundee Kings Chemistry: 40,856 38,851 -5% Surrey Exeter Maths: 67,036 52,897 -21% Lancaster Queen Mary Computing: 19,099 7,242 -62% Source: Daily Mail – 11 August 2006
Only pupils at private schools can take physics, chemistry & biology separately Source: Times, 9th November 2006
Number of Higher Education Institutions
05/06 18,123 +59%00/01 11,41290/01 5,93280/01 4,861
Source: Indian University Grants Commission
Science Education in India
Number of Students enrolled inHigher Education Institutions
05/06 10,500 +40%00/01 7,50090/01 4,00080/01 3,000Source: Indian University Grants Commission
Number of Institutions courses 05/06 99/00Pharmacy 1478 669 +120%Medicine 229 174 +32%Physiotherapy 205 52 +294%
Source: Pavan Agarwal (2006) based on data from professional councils
PhD Degree awarded in Science
03/04 5408 +44%00/01 373490/01 2950(USA 03/04 25,000)
Source: Indian University Grants Committee
The Education Advantage
Engineers/Science graduates p.a – India 0.7m, China 0.5m, EU 0.5m, USA 0.4m, Japan 0.3m
34 News TV channels. Oldest 13 years old (NDTV)
5000 newspapers, circulation 17m. 12 with 1m copies each.200m daily readers. 21m new daily readers 2003/2005, +14% with 50% rural and 50% urban readership
Principal internet languages to become English, Chinese and Hindi
Diaspora network (25m across 120 countries)
Indians are hungry for information
The Information Advantage
Internet Usage – Asia
1. China 123 m2. Japan 86 m3. India
51 m4. S.Korea 34 m
Source: Business Today, Sept. 24, 2006
Mobile Phones
1. China 421 m2. USA
190 m3. Japan 157 m4. Russia 148 m5. India
116 m
Source: Times of India, Sept. 14, 2006
Manufacturing growth versus China Scope for improvement of Government Policies
GDP dynamics: 1990 2005 - Agriculture 31% 20%
- Industry 28% 26% - Services 41% 54%
More privatization – public sector not so buoyant
Further encouragement of R&D for Pharmaceuticals
The Potential for Improvement Advantage
Cost Advantage China IndiaCost 40 16Patients/site 250 500
Based on USA at 100 Index
Source: BCG report ‘Looking Forward 2006’
Country USA India
Sites 22 8
Subject 626 896
Source: Andy Lee Pfizer Global, head clinical study and data management.Business India, August 13, 2006
“………..The Country’s World Class skills in Chemistry & IT and it’s large treatment naivepatient population provides added allure” Boston Consultancy Group
Harnessing the power of India 2006
The Clinical Advantage
Medical Tourism
Cardiac Surgery $000s USA 30 Singapore 20 Thailand 14 India 5-7Source: Business world, 18th Dec’2006
Patients
- Naïve untreated patients- HIV 50m- Diabetes 32m- HT 5m
The M&A Future Advantage
India FDI 2003/4 $4.3b 2004/5 $5.6b 2005/6 $6.0b Source: Outlook business June 2006
The Investment Advantage
2005 FDIBrazil $15b UK $164 bRussia $14b USA $ 99 bIndia $6bChina $72b (+$35b)Source: UNCTAD 2006
- India on target for $10b in 2006/07- But still small
Microsoft Global Development Centre (GDCI)
Microsoft Global Services (MGSI)
Microsoft Global Technical Support Centre (GTSC)
Microsoft Systems Research (MSRI)
Microsoft India Development Centre (MIDC)
Investment by Microsoft in India
A Global Strategic Asset for developed
World Market businesses
India
The Competitive Advantage - Pharma
Active Pharmaceuticals Facility, Mohali Dosage Forms Facility, Paonta Sahib
The Competitive Advantage - Pharma
R&D III Ranbaxy’s Patent Filings
2449
32
86146
170185
2001
2000
1999
20042005
Clinical data management•An Indian speciality•300 staff GSK -2.2m clinical data sheets -450 trials -Error rate <0.01/100k -No data security issues
Source: BCG report ‘Looking Eastward Sep’2006’
R&D hotbeds
“China & India have become R&Dhotbeds……….. MNCs already operate some 180 R&D centres in China andMore than 100 in India”
Source: BCG report ‘Looking Eastward Sep’2006’
The Pharma Advantage – API’sUSA DMF filings by India
1990 1 1995 4 2000 36 2004 187 2005 262 Source: Crisil / US FDA / J P Morgan
% Share of USA DMF filings India China 2004 27% 9% 2005 37% 10% Q1’06 44% 15% Q2’06 41% 16%
Q3’06 45% 17% (latest) Source: US FDA / J P Morgan, 6th August 2006
Source: US FDA, Credit Suisse
- One in every four ANDAs filed by Indian Companies in top USA FDA filers Source: KPMG
- No Chinese generic company has yet filed a USA FDA ANDA
The Pharma Advantage - ANDAs
0
20
40
60
80
100
120
140
160
2002 2003 2004 2005
24
46
64
144
ANDA Filings in USA by Indian Companies
Global Market Trends for Generic Companies
Source: UBS, Businessworld, 30th October 2006
Global Market Trends – Discovery R&D
Vendor Availability India ChinaAnalog preparation 41 25Combinatorial chemistry 37 7Analytical chemistry 37 7Structural chemistry 26 5Assay development 26 2Computer drug design 26 13High throughput Screening 11 2Bio informatics 13 7Genetically modified animals 0 3Basic molecular biology 13 25
Source – BCG, ‘Looking Eastwards, September 2006’
*Out of 90 vendors in October 2005
The Tempest Crystal Ball
•Post TRIPs new products will dry up in India by 2008
•Under this pressure Indian companies will adopt different business models: - Generics, Discovery, Services, M&A
•MNCs will continue to be attracted to India owing to the science education
•China will be perceived to be stronger in biology/ toxicology
•75% of new R&D sites and 30% of R&D staff globally will be in India/China
•Alliances between Western Biotech and Indian companies will expand
•The global generic industry will be dominated by India in the next five years
•China will dominate the chemical intermediates segment
•India & China - and not India or China. This will also drive ASEAN market growth.
Japan’s share of World Wealth
Canada2%
Rest of World10%
Japan27%
Germany4% Italy
4%
France5%
UK6%
USA37%
Netherlands2%
Spain1%
Switzerland1%Taiwan
1%
Source: The World Distribution of Household Wealth
Japan’s share of World Pharmaceuticals
USAJapan
GermanyFrance
ItalyUK
SpainCanada
ChinaMexico
Top 15 countries = 85.9% of worldwide pharmaceutical market estimate 2003
2.4%
3.3%
3.4%
4.9%
5.4%
12.0%
44.6%
1.5%
1.5%
2.0%
Japan’s GDP
A race to prosperity
Key Challenges
Potential Challenge – Asian Flu*
*50% of world chickens bred in Asia
Potential challenge – Oil prices
Source – Outlook business June 2006
• A war against Iran could drive oil > $200 a barrel - ‘Times’ 22nd June 2006• BRIC countries consume 20% global oil
Source – BP
India, China, USA – Refuse any mandatory CO2 emission caps
India is 6th greatest energy consumer
Ganges River is the World’s most polluted river – source: World Commission on water
Potential Challenge - Pollution
Potential Challenge – Infrastructure
Source – Manmohan Singh
“Our greatest potential will be realised only if we can ensure that ourInfrastructure does not become a severe and critical handicap”
Asia economic strength is returning to levels seen in the past
Many advantages for India – R&D, Demographics, Education India as a global strategic asset for developed markets Some “Challenges” – infrastructure, pollution
The current feeling in Indian Boardrooms is that a turning point has been reached, a tipping point has been passed and India’s time has arrived
“China & India represent the future of Asia and quite possiblythe future for the global economy” – Steve Roach, Morgan Stanley
Summary
Thank You