11

INDIA-CIS PHARMA & HEALTH CONFERENCE

MUMBAI3rd MARCH, 2006

Department of Chemicals & PetrochemicalsDepartment of Chemicals & Petrochemicals

Ministry of Chemicals & FertilizersMinistry of Chemicals & Fertilizers

Government of IndiaGovernment of India

22

AgendaAgendaIndia – Overview of India – Overview of

the Countrythe Country

Indian Pharmaceutical Indian Pharmaceutical

IndustryIndustry

India’s Strengths in India’s Strengths in

Pharma SectorPharma Sector

Status of Pharma Status of Pharma

Exports to CISExports to CIS

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India – Overview of the CountryIndia – Overview of the Country

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India – Largest democracy in the worldIndia – Largest democracy in the world

Gained independence in 1947Gained independence in 1947

Current population over 1 billionCurrent population over 1 billion

English is the language of businessEnglish is the language of business

44thth largest economy globally on PPP basis largest economy globally on PPP basis

66thth largest energy consumer largest energy consumer

Predicted by Goldman Sachs to be the 3Predicted by Goldman Sachs to be the 3rdrd

largest economy in the world by 2050largest economy in the world by 2050

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India finds harmony – Even with all its India finds harmony – Even with all its diversitydiversity

29 states & 6 UTs with 22 official languages29 states & 6 UTs with 22 official languages

3.3 million square kilometers area3.3 million square kilometers area

Religions: 81% Hindus, 12% Muslims, remaining Religions: 81% Hindus, 12% Muslims, remaining

are Christians, Sikhs, Jains, Buddhists, Parsis, are Christians, Sikhs, Jains, Buddhists, Parsis,

JewsJews

Per capita income ~US$ 750Per capita income ~US$ 750

GDP ~ US$ 650 billionGDP ~ US$ 650 billion

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INDIA RISINGINDIA RISING

GDP growth rate – 8.1% (twice that of USA & UK)GDP growth rate – 8.1% (twice that of USA & UK)

Manufacturing sector growth rate – 9.4%Manufacturing sector growth rate – 9.4%

Exports growth rate – 23 ( compounded growth rate Exports growth rate – 23 ( compounded growth rate

over last 10 years)over last 10 years)

Inflation Rate - 4.1 % (5% a year ago)Inflation Rate - 4.1 % (5% a year ago)

Credit growth- ~25% (22% last year)Credit growth- ~25% (22% last year)

Foreign Exchange Reserve - US $ 142 billion (1991-US $ Foreign Exchange Reserve - US $ 142 billion (1991-US $

5.8 billion)5.8 billion)

Some IndicatorsSome Indicators

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Capital MarketCapital MarketEquity Index at the highest level ever close to Equity Index at the highest level ever close to

10500 (BSE)10500 (BSE)

India’s market capitalisation US$ 550 billion India’s market capitalisation US$ 550 billion

Registered FIIs – 667Registered FIIs – 667

This Year’s flow of portfolio investment- US $ 10 This Year’s flow of portfolio investment- US $ 10 billionbillion

Volume of public issues rose by 5 times in 2005Volume of public issues rose by 5 times in 2005

Introduction of book-building processIntroduction of book-building process

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RECENT FISCAL REFORMSRECENT FISCAL REFORMS

Income Tax simplified - 10%, 20% and 30% ratesIncome Tax simplified - 10%, 20% and 30% ratesCorporate Tax rate - Reduced to 30% from 35%Corporate Tax rate - Reduced to 30% from 35%Peak Import Duty on non-agricultural items Peak Import Duty on non-agricultural items

reduced from 15 to 12.5 % reduced from 15 to 12.5 % Import duty on specified Capital Goods Import duty on specified Capital Goods

(including those for Pharma & biotech. Sector) - (including those for Pharma & biotech. Sector) - 5%5%

Import duty on IT items (217) – NilImport duty on IT items (217) – NilState Value Added Tax - introduced w.e.f. 1st State Value Added Tax - introduced w.e.f. 1st

April 2005 (4% rate for pharma)April 2005 (4% rate for pharma)

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Some of the world’s best academic and Some of the world’s best academic and healthcare institutes are in Indiahealthcare institutes are in India

14,000 hospitals14,000 hospitals

700,000 hospital beds (85% urban)700,000 hospital beds (85% urban)

More than 500,000 doctorsMore than 500,000 doctors

737,000 nurses737,000 nurses

171 medical colleges171 medical colleges

17,000 medical graduates/year (MBBS/MD)17,000 medical graduates/year (MBBS/MD)

300 life sciences colleges produce over 300 life sciences colleges produce over

700,000 graduates annually700,000 graduates annually

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Indian Pharmaceutical IndustryIndian Pharmaceutical Industry

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Indian Pharma Industry ProfileIndian Pharma Industry Profile

Number of companiesNumber of companiesLarge : 300Large : 300SMEs : 6000SMEs : 6000

According to Mckinsey & Co., Indian According to Mckinsey & Co., Indian pharma market to be US$ 25 billion by pharma market to be US$ 25 billion by 2010, out of which US$ 11 billion to be 2010, out of which US$ 11 billion to be domestic salesdomestic sales

PHARMEXCIL formed to facilitate exports PHARMEXCIL formed to facilitate exports of pharmaceuticals and related matters-of pharmaceuticals and related matters-plan to set up warehouse facility in Russia plan to set up warehouse facility in Russia

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Worth US$ 8 billion ; globally # 4 in volume, # 13 in value Worth US$ 8 billion ; globally # 4 in volume, # 13 in value

Exports of US$ 3.7 billion in FY 2004, increasing @ Exports of US$ 3.7 billion in FY 2004, increasing @ 22.9% CAGR 1994-2003 years.22.9% CAGR 1994-2003 years.

India among top-5 bulk manufacturers and top-20 India among top-5 bulk manufacturers and top-20 exporters world-wideexporters world-wide

India now files highest number of DMF’s India now files highest number of DMF’s

India has largest number of US FDA approved plants India has largest number of US FDA approved plants outside US.( 75 now)outside US.( 75 now)

US Pharmacoepia INDIA office opened at Hyderabad -US Pharmacoepia INDIA office opened at Hyderabad -first such office ouside USAfirst such office ouside USA

Domestic market growing at 8-10% p.a.Domestic market growing at 8-10% p.a.

R&D spending to increase from 5% of sales to 8% by R&D spending to increase from 5% of sales to 8% by 20072007

Indian Pharma Industry Profile Indian Pharma Industry Profile contd.contd.

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India: The Pharma Outsourcing HubIndia: The Pharma Outsourcing Hub

India – emerging as the hub for India – emerging as the hub for Collaborative & contract research Collaborative & contract research Contract manufacturing Contract manufacturing Co-developmentCo-developmentCo-marketingCo-marketing

Cost of developing an NCE – over US$ 1 billion Cost of developing an NCE – over US$ 1 billion whereas, in India it can be as less as US$ 50 millionwhereas, in India it can be as less as US$ 50 million

Several MNCs like Pfizer, Merck, GSK, Roche, Bayer, Several MNCs like Pfizer, Merck, GSK, Roche, Bayer, Aventis, etc. making India a hub for APIs and bulk Aventis, etc. making India a hub for APIs and bulk suppliessupplies

Pfizer, Eli Lilly, Novartis carrying out clinical trials in Pfizer, Eli Lilly, Novartis carrying out clinical trials in IndiaIndia

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Several CROs (about 22) like Quintiles, Simbee, Several CROs (about 22) like Quintiles, Simbee, RCC, Omnicare, etc. set up liaison/marketing RCC, Omnicare, etc. set up liaison/marketing offices in India offices in India

Indian CROs commenced trials since 1996Indian CROs commenced trials since 1996

Cos. like GSK Biological lined up global trial of Cos. like GSK Biological lined up global trial of 4 vaccines in India during 2005. Also clinical 4 vaccines in India during 2005. Also clinical R&D for AIDS, dengue, malaria, TB vaccinesR&D for AIDS, dengue, malaria, TB vaccines

India: The Pharma Outsourcing Hub India: The Pharma Outsourcing Hub contd.contd.

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Regulatory FrameworkRegulatory Framework

Drugs and Cosmetics Act, 1940 – a Central Act Drugs and Cosmetics Act, 1940 – a Central Act to regulate manufacture/ import/sale of drugsto regulate manufacture/ import/sale of drugs

New drugs, imports, clinical trials, drug New drugs, imports, clinical trials, drug standards approved by Central Govt. standards approved by Central Govt. Enforcement by StatesEnforcement by States

Drug (Price Control) Order, 1995 – for control of Drug (Price Control) Order, 1995 – for control of prices of specified drugsprices of specified drugs

Indian Patents Act, 1970 – As on 1Indian Patents Act, 1970 – As on 1stst January, January, 2005 provides product patent for drugs, food 2005 provides product patent for drugs, food and agro-chemicals and agro-chemicals

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Some Recent Changes in Drugs & Some Recent Changes in Drugs & Cosmetics Act and RulesCosmetics Act and Rules

Schedule “Y” amended for multi-centric Schedule “Y” amended for multi-centric concurrent clinical trials as per GCPconcurrent clinical trials as per GCP

GMP – realigned as per international guidelines GMP – realigned as per international guidelines (particularly WHO & OECD) (particularly WHO & OECD)

GCP – India’s requirements on GCP published GCP – India’s requirements on GCP published as guidelinesas guidelines

GLP – monitoring authority set up for pre-GLP – monitoring authority set up for pre-clinical (toxicological) studiesclinical (toxicological) studies

Registration system streamlined for import of Registration system streamlined for import of drugs – both site and product registrationdrugs – both site and product registration

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Process Patents for pharmaceuticals Process Patents for pharmaceuticals introduced in 1970introduced in 1970

Prior to 1970Prior to 197085% market with foreign companies85% market with foreign companies15% market with domestic companies15% market with domestic companies

1970 – Process Patent introduced for 1970 – Process Patent introduced for pharmaceuticalspharmaceuticals

At presentAt present85% market with domestic companies85% market with domestic companies15% market with foreign companies15% market with foreign companies

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India’s Strengths in Pharma SectorIndia’s Strengths in Pharma Sector

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Indian Pharma Industry: Strengths - Policies Indian Pharma Industry: Strengths - Policies

Product Patent regime in effect from January 1, Product Patent regime in effect from January 1, 20052005

Pro-business, Pro-IP Government – federal, state Pro-business, Pro-IP Government – federal, state & city& city

India bio/pharma clusters make it easy to set-up India bio/pharma clusters make it easy to set-up and conduct businessand conduct business

Effective Check on spurious drugs- new law Effective Check on spurious drugs- new law being made being made

2020

Rich bio-diversityRich bio-diversity

Well-developed pharmaceutical, chemical & Well-developed pharmaceutical, chemical & healthcare industrieshealthcare industries

Complex capabilities in research, synthesis & Complex capabilities in research, synthesis & manufacturingmanufacturing

Quality conscious (cGMP, GLP, ISO)Quality conscious (cGMP, GLP, ISO)

CSIR= World renowned 42 national research CSIR= World renowned 42 national research laboratorieslaboratories

Huge patient populationHuge patient population

Information technology = core competenceInformation technology = core competence

Indian Pharma Industry: Strengths - Indian Pharma Industry: Strengths - Infrastructure Infrastructure

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Cheaper labour (cost to hire a Ph.D. scientist = Cheaper labour (cost to hire a Ph.D. scientist = US$ 25K; as against US$ 65K/year in the US)US$ 25K; as against US$ 65K/year in the US)

Employers receive loyalty, respect, dedication Employers receive loyalty, respect, dedication & admiration from employees& admiration from employees

40% cheaper to set up a plant in India than in 40% cheaper to set up a plant in India than in the US/EUthe US/EU

35-40% cost savings for conducting clinical 35-40% cost savings for conducting clinical trials in Indiatrials in India

Funds available for expansion and start-upsFunds available for expansion and start-ups

Indian Pharma Industry: Strengths - Cost Indian Pharma Industry: Strengths - Cost

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Huge pool of experienced scientific manpower Huge pool of experienced scientific manpower – fluent in English– fluent in English

Employees work 6 days/week & are willing to Employees work 6 days/week & are willing to work in all shiftswork in all shifts

Reverse brain-drain : Non-resident Indian Reverse brain-drain : Non-resident Indian scientific personnel moving backscientific personnel moving back

New breed of managers (no longer family-run New breed of managers (no longer family-run businessesbusinesses

Strong entrepreneural nature = CompetitionStrong entrepreneural nature = Competition

Indian Pharma Industry: Strengths - Talent Indian Pharma Industry: Strengths - Talent

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India is a proven source of quality and India is a proven source of quality and cost-effective pharma materialscost-effective pharma materials

Fine chemicalsFine chemicals

IntermediatesIntermediates

Advanced intermediatesAdvanced intermediates

APIs (Active Pharmaceutical Ingredients)APIs (Active Pharmaceutical Ingredients)

FormulationsFormulations

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Highest number of US FDA approved Plants Highest number of US FDA approved Plants outside the US are in Indiaoutside the US are in India

0

10

20

30

40

50

60

70

India Italy Spain China Israel

US FDA Approved Plants Outside the US

Source:FDA & Proximare

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Indians filed the highest number of DMFs : Indians filed the highest number of DMFs : 871% growth since 1987871% growth since 1987

0

20

40

60

80

100

120

140

1969-85

1990 1995 2000 2001 2002 2003Source:FDA & Proximare

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Status of Pharma Exports to CIS Status of Pharma Exports to CIS COUNTRIESCOUNTRIES

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Exports of Drugs, Pharmaceuticals, and Exports of Drugs, Pharmaceuticals, and Fine ChemicalsFine Chemicals

Major Destinations in CISMajor Destinations in CISCountry Country 2003-042003-04

($ million)($ million)

2004-052004-05

($ million)($ million)

Share of Dosage Share of Dosage Forms (%)Forms (%)

2004-052004-05

RussiaRussia 146146 164164 9494

UkraineUkraine 4747 7373 9090

KazakistanKazakistan 1111 1515 9292

AzerbijanAzerbijan 22 99 9898

UzbekistanUzbekistan 44 66 8989

BelarusBelarus 44 66 8989

TurkmenistanTurkmenistan 22 33 8989

KyrgystanKyrgystan 11 33 100100

GeorgiaGeorgia 11 22 9494

TazikistanTazikistan 11 11 9191

All figures rounded All figures rounded of 1$ = Rupees 44of 1$ = Rupees 44

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India – world’s supplier of ARV drugs (Anti- India – world’s supplier of ARV drugs (Anti- HIV/AIDS) HIV/AIDS)

About 50% of the ARV drugs being exported to About 50% of the ARV drugs being exported to

developing countries from India – substantial developing countries from India – substantial

exports to Africaexports to Africa

Indian companies instrumental in drastic Indian companies instrumental in drastic

reduction in ARV drug prices from over US$ reduction in ARV drug prices from over US$

10,000 per head/annum to US$ 150 per 10,000 per head/annum to US$ 150 per

head/annum head/annum

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CIS PHARMA MARKET (CIS PHARMA MARKET (INCLUDING RUSSIA)INCLUDING RUSSIA)

US$ 7 billion - Share of Indian exports only 3 to 4% (aroud US$ 7 billion - Share of Indian exports only 3 to 4% (aroud $ 275 million) - Great scope to enhance exports from India $ 275 million) - Great scope to enhance exports from India

India can help CIS to meet their health care needs in a India can help CIS to meet their health care needs in a cost effective manner and cater to larger section of cost effective manner and cater to larger section of populationpopulation

Joint Ventures possible provided certain issues like Joint Ventures possible provided certain issues like convertibility to dollar mode are sorted out in some convertibility to dollar mode are sorted out in some countriescountries

Fast track registeration for Indian medicines would be Fast track registeration for Indian medicines would be helpfulhelpful

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Areas for India-CIS collaborationAreas for India-CIS collaborationSourcing of APIs & formulations from IndiaSourcing of APIs & formulations from IndiaCollaborations for manufacturing & marketing of drugs-Indian Collaborations for manufacturing & marketing of drugs-Indian

companies are very strong in all therapeutic groups especially companies are very strong in all therapeutic groups especially in diabetic , respiratory, neuro, antiinfective and in diabetic , respiratory, neuro, antiinfective and cardiovascular groups and they can meet the requirements of cardiovascular groups and they can meet the requirements of CIS countries in a cost effective mannerCIS countries in a cost effective manner

Joint R&D work for pharmaceuticals Joint R&D work for pharmaceuticals Training of drug regulators at NIPERTraining of drug regulators at NIPERCooperation for use of various testing facilities at NIPER with Cooperation for use of various testing facilities at NIPER with

respect to quality control/quality assurance, bio-availability , respect to quality control/quality assurance, bio-availability , impurity profiling ,toxicology etc.impurity profiling ,toxicology etc.

Participation in INDIACHEM 2006 in Mumbai from 8-10 Participation in INDIACHEM 2006 in Mumbai from 8-10 November, 2006November, 2006

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The Indian Government and Industry would The Indian Government and Industry would welcome partnerships with CIS countries in welcome partnerships with CIS countries in

providing access to affordable, quality providing access to affordable, quality medicines medicines

ConclusionConclusion

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Thank You !Thank You !