PHARMA INDUSTRY – EMERGING CHALLENGES AND OPPORTUNITIES

1. PHARMA INDUSTRY – EMERGING CHALLENGES AND OPPORTUNITIES Jawaharlal Nehru Pharma City (Developed by Ramky Group and APIIC) Parawada, Vishakhapatnam District A Sector Specific Industrial Park for Bulk Drug, Pharmaceuticals & Fine Chemicals. Government of AP initiative under Public Private Partnership on Build Own Operate (BOO) basis Dr P.P. Lal Krishna Chief Executive Officer Ramky Pharma City (India) Ltd

2. Agenda • Pharma industry overview • Opportunities for Indian pharma • Regulatory Approvals • Jawaharlal Nehru Pharma-city – An overview • Need for Incubators • Cluster Development Approach • Role of Cost Accountants in Pharma Industry • Conclusion

3. History of Pharma sector in India:- • Started its journey in 1903 when professor D.C Roy forward Bengal chemical and pharma clinical works in Kolkata. • During half of the 20th century, Indian government largely dependent on the UK, France and Germany for medicine. • The new and independent government in 1947 Emphasized on Industrialization to achieve self reliance and therefore invested heavily in pharmaceuticals among other industries and reduced import of medicines • The government takes its first concrete steps towards self reliance in pharmaceutical sector in 1954 with the establishment of Hindustan antibiotics ltd (HAL) and in 1961 establishing Indian Drug and Pharmaceutical Limited

4. Indian Pharma Today • It’s a $ 20 bn industry divided almost equally between domestic and exports • Growing at a healthy 2 digit rate • Poised to touch $ 40 bn by 2015 • Already emerged as a “preferred” sourcing hub for the global fraternity • One of the mature markets • Almost 98% drugs are made locally

5. Indian Pharma Today • Good balance between MNCs and Indian companies • Becoming leader in Generic formulations • Reasonably strong in APIs too • A truly global presence

6. Opportunities for Indian Pharma • Generic Opportunity: 450 molecules worth USD350bn are going off-patent in the coming years (Source: McKinsey) • The contract manufacturing opportunity of prescription drugs is estimated to increase from a value of USD26.2 billion to USD43.9 bn. in the next 5 years. • There are many important categories such as monoclonal antibodies, peptides, biotech, etc., which are not filed by India forgoing a global opportunity of appx.USD90bn. • Several technologies such as sustained release/controlled/modified release Lyophilized Pharmaceuticals, bio-pharmaceuticals, Specialty generics, Drug Intermediates, NIP based APIs/Formulations, regulatory compliant infrastructure are not attempted in India. There are more than 285 drugs in this category with an opportunity of USD50bn.

7. Opportunities for Indian Pharma • In the drug research value chain, there are certain key strengths such as: • Significant valid population to participate in clinical trials • Significant capabilities in medical skills, hospital beds and IT. • There exists an opportunity to capture the market share in global clinical R&D market such as clinical trials, data management, testing etc. • By 2012, nearly half of all newly approved prescription drug products will be biologics.

9. Regulatory Approvals

10. Need of the hour • Pharma infrastructure which allows the manufacturers to focus only on producing and marketing the products in a seamless way without having to worry about many corollary issues like pollution, effluents, testing labs, BioE labs , logistics etc.

11. World Class Facility Fiscal Benefits of locating in an SEZ Bridging the Gap • Jawaharlal Nehru Pharma City - Sector Specific Industrial Park for Pharma companies Developed by Ramky Group & APIIC has been promoted in order to bridge this gap. • Offering a world-class facilities, in a convenient city with all essential services for the pharmaceutical companies which will help them save on investments also Jawaharlal Nehru Pharma City

12. JNPC- excellent pedigree • JNPC is the brainchild of Ramky group- a leading name in Infrastructure space • Ramky is a 17 yr old, $ 2 bn, 6000+ employee group today with Presence in India, UAE, Africa and Singapore • With presence in infrastructure, Environmental engineering, Real estate, other allied industries

13. Jawaharlal Nehru Pharma City – Layout Plan

14. Salient Features of JN Pharma City • JNPC offers world-class common infrastructure, common utilities & basic amenities. • Power with dedicated sub-station – 132/33/11 KV with backup feeder • Dedicated Water supply scheme of 20MLD and summer storage tank in an extent of 250 Acres • Two Lane well paved Road network of 32 Km • Street lighting with underground cabling • Common Effluent Treatment Plant of 12 MLD Capacity • Hazardous Waste Management Facility-6 Lakh Ton Capacity • Marine Outfall Pipeline for disposal of treated effluents of length 16 Km onshore & 1.8 Km off shore with a diffuser depth of 18m • Planning for Exclusive Township close to JN Pharma City

15. Plug-n-Play Facility • Effluent & Storm water Conveyance • A dedicated 1000 Line telephone exchange with Broadband internet connectivity • Central Fire Protection services • Common security & surveillance • Planning for Logistics hub, Chemical Feedstock, Container terminals & Common Warehouse facility • Amenities include Banks, ATM’s, Primary health centre, food courts & Club house etc… • Exclusive pharma R&D center

16. Environmental Infrastructure • Effluent Conveyance Pipelines – 64 Km. • Common Effluent Treatment Plant • Marine Outfall Pipeline • Hazardous Waste Management Facility • Common solvent recovery area

17. Common Effluent Treatment Plant at JNPC Salient Features: • Capacity : 12 MLD • Separate Low TDS & High TDS effluent conveyance Pipe Line Network. • Air Strippers for removal of Volatile Organic Compounds • Incinerator / regenerative thermal Oxidiser for destruction of Volatile Organic Compounds • Fully automated Cyclic Biological Activated Sludge Treatment Plant • Separate Treatment for Cyanides, Heavy Metals & other wastes. • Multiple Effect Evaporators for High TDS effluent treatment • Powdered activated carbon treatment • Guard ponds for toxicity check • Marine Outfall Pipelines - disposal of treated effluents

18. Project Background Effluent Collection Incinerator Marine Out fall CETP (12 MLD) Diffuser - 15 Mt. Off shore Pharma Units

19. Amenities & Social Infrastructure • Administrative Offices • Banks • Food Courts • Club House • Commercial Area • Common Security & surveillance • Business Centre • Training Centre • Convention & Exposition Halls • Exclusive township

20. Support Infrastructure • Central Instrumentation center • Wet laboratories • Central fire protection services • Emergency medical center • Logistics hub & truck terminals • Parking Bay • Central warehouses • Customs bonded warehouses & ICD • Bulk solvents storage • Central workshops • Petrol & diesel outlets

21. Land Sales Non-SEZ Area & SEZ area Land allotted in percentage 86

22. Success Story of JNPC Concession Agreement made during the year 2004 Operations started during the year 2008-09 As on today land allotted to about 86% of the park capacity Employment provided to the tune of 11000 people and indirect employment is several times Investment brought to pharmacity is about Rs 7000 Cr Occupants are from Innovators, Generic companies, Indian giants, multinational companies & first generation entrepreneurs Continual improvement in upgrading technologies and facilities to meet the customer requirements This project is undertaken under PPP model with private participation and this is one of the successful pharma park in India

23. Proposal for cluster at RPCIL

24. ROLE OF Cost Accountant in Pharma Industry Pharma Industry is competing with China and other developing /developed nations In fact 60% of Raw Materials are imported from China, even the technologically India is superior Costing of the Process and Product will play a major role in competing with China and other countries The Critical Parameters for Cost Accountants in Pharma industry is distribution of Utility Cost for the product and man power allocation cost Cost Accountant plays a crucial role in marketing the product

25. ROLE OF COST AND MANAGEMENT ACCOUNTANT IN THE GROUWTH OF PHARMA SECTOR • There are numerous factors responsible for its growth like R&D, Govt; policy, patent act etc; besides these factors there is one important input which enables Indian pharma sector to compete with other players. i.e cost effectiveness. • CMA works hard in supplying the required cost date for enabling the decision makers in taking strategic decisions like launching of new generic drugs, making alliances with other firms, capital investment in technology, infrastructure building

26. Conclusion Residual Andhra Pradesh will attract more investment because of business opportunities and availability of technical manpower in this reasons If MAT & DDT is removed more MNCs will invest in our Region in SEZ More investments are possible after the tax benefits to Residual Andhra Pradesh Political Support and support by bureaucrats will boost the investment in this region

27. Thank You