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Reflections on the Global Generic Pharmaceuticals Market place. Dr. Brian W Tempest www.briantempest.com Vidya Pratishthan’s School of Biotechnology , Baramati, India October 10 th 2007. DR. BRIAN W. TEMPEST CSci, CChem, MRSC, BSc, PhD

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reflections on the global generic pharmaceuticals market place

Reflections on the Global Generic Pharmaceuticals Market place

Dr. Brian W Tempest

www.briantempest.com

Vidya Pratishthan’s School of Biotechnology , Baramati, India

October 10th 2007

slide2

DR. BRIAN W. TEMPEST CSci, CChem, MRSC, BSc, PhD

Dr. Brian Tempest has worked in the pharma industry for the last 36 years. During this time he has worked for several pharma majors, including Glaxo & Searle, around the world and joined Ranbaxy 12 years ago. During this period Ranbaxy has transformed from a small company focused on the India domestic market, to a top 10 global generic company. Dr. Tempest has lived in New Delhi, India for the last 8 years, and has been President, Managing Director & Chief Executive Officer and, until recently, the Chief Mentor & Executive Vice Chairman of the Board. Dr. Tempest retired from Ranbaxy in December 2007, when he reached 60. Dr. Tempest is one of a few westerners to have held a leadership position in an Indian blue chip MNC, and has an unusual insight into India.

Dr Tempest is also a Honorary Professor of the Management School at Lancaster University, UK, and he sits on the Editorial Board of the Journal of Generic Medicines and on the Advisory Board of the India Fund held by JM Financial Investment Managers Ltd in Mumbai.

Dr. Tempest will be available from Hale & Tempest Co. Ltd from January 1st 2008

brian.tempest@gmail.com / brian.tempest@clara.co.uk

Mobile +91-98100-91192 / Tel:+44 1753 864 616

asia s share of the world gdp at ppp in
Asia’s Share of the World GDP (at PPP in %)

Year18701913 195019732001

China 17% 9% 5% 5% 12%

India 12% 8% 4% 3% 5%

Japan 2% 3% 3% 8% 7%

Rest of Asia7%5%7%9%13%

Total Asia38%25%19%25%37%

Source – WEF

- was 59% in 1820 with India 16%, China 33%

asia on the rise
Asia on the Rise

Source – FT

reflections
Reflections
  • Market drivers
  • Competition is rising
  • Why Branded generics
  • IP changes in USA & India
  • M&A and Private Equity
  • East-West Alliances
slide8

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

slide9

India’s Youthful Advantage

Percentage of Population aged 65 and older

29.2

22.7

21.5

21.4

18.7

14.8

14.7

2000 A

13.2

12.3

2025 E

2050 E

8.3

6.9

5

China

India

Europe

North America

median age in asia
Median Age in Asia

Years

2000

2025

2050

Sources: Rand Corporation

slide12

The Education Advantage

Engineers/Science graduates p.a – India 0.7m, China 0.5m, EU 0.5m, USA 0.4m, Japan 0.3m

slide13

Japan’s Wealth Advantage

Switzerland

1%

Spain

1%

Netherlands

2%

Taiwan

1%

Canada

2%

Rest of World

10%

Germany

4%

Italy

4%

France

5%

USA

37%

UK

6%

Japan

27%

Source: The World Distribution of Household Wealth

slide14

Top 5 Global Pharmaceutical Markets 2020

Sources: Goldman Sachs 2007

slide15

Patent Expiry Dates

Expiry

2010

Expiry

2011

Expiry

2012

Company

% at Risk

Sources: AXA Framlington

competition is rising cphi attendees milan 2 nd 4 th oct 07
Competition is Rising CPHI Attendees, Milan,2nd – 4th Oct’07

As registered on July 25, 2007

slide17

Generics – API’s

USA DMF filings by India

% Share of USA DMF filings

IndiaChina

2004 27% 9%

2005 37% 10%

2006 44% 14%

Q1’07 48% 17%

Source: US FDA / J P Morgan, 2 may 2007

IndiaChina

2004 187 48

2005 252 87

2006 357 128

Source: US FDA / J P Morgan, 6th August 2006

Source: US FDA, Credit Suisse

slide18

Generics - ANDAs

- 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

but expected in 2008

ANDA Filings in USA by Indian Companies

250

144

64

46

24

speed of clinical trials in india
Speed of Clinical Trials in India

EUIndia

Patients 85 650

Sites 22 5

Time 36m 18m

Neck Cancer CT

Plan Actual

Patients 100 130

Sites 10 9

Time 5m 2.5m

Overactive bladder CT

  • No. of USA investigators:

2001 - 2006

26,000 18,000

  • 300 patients, 30 sites

$5.6m EU/USA vs $ 1.8m plus

30% faster at $800K per day savings

Sources: CT Outsourcing Conference, 24th July 2007, Mumbai

electronic data capture in india
Electronic Data Capture in India

Accuracy

- 300 GSK Staff

- 2.2m Clinical Data sheets

- 450 Trials

- No data security issues

- Error rate <0.01 / 100k

Source: BCG report “Looking Eastward, Sept’2006”

% Trials in EDC

2005 2007

25% 45%

Savings

Paper EDC

$2.8m $ 0.5m

2004 data

Sources: CT Outsourcing Conference,

24th July 2007, Mumbai

branded generics
Branded Generics
  • Promotion to doctors rather than pharmacists
  • Consistent sales year on year
  • No huge highs & lows for sales and profits
  • Need field force to promote products
  • Tend to be profitable
  • Promoted in conventional manner
  • Global generic brands
  • Relevant to Central Europe, East Europe, Latam, Asia
  • Ranbaxy 50% branded generics & 50% commodity generics
branded generics the analyst s view
Branded Generics - the Analyst’s view
  • “Branded Generics are the most profitable place to be in generics and there are a few markets with better branded characteristics than those of the Middle East and North Africa region”

Frances Cloud Nomura September 14 2007

ip usa pendulum
IP – USA Pendulum
  • “A key USA Supreme Court ruling KSR VS Teleflex led to Pharmaceutical patents being more easily challenged on the grounds of obviousness, a ruling which immediately came into play when J&J & Merck had a US patent for Pepcid Complete (Famotodine) found to be obvious”.
  • Scrip, July 6th 2007, p3
  • The full beneficial impact of this ruling on the generic industry is yet to be seen eg Sanofi-Aventis Ramipril was invalidated as obvious by Lupin in September 2007.
bilateral ftas usa pendulum
Bilateral FTAs - USA Pendulum
  • Democrats now chair the Ways & Means Committee
  • USTR legally required to work within TRIPS
  • Up till now the USA has been incorporating TRIPS PLUS IP protection into bilateral free trade agreements
  • Corrections to bilateral trade agreements e.g. Peru, Columbia, Panama FTAs now being made

TRIPS

  • Basic product patent
  • Data protection

PLUS TRIPS

+ Data exclusivity

+ New forms, isomers etc

+ New Indications

+ New Combinations

should ip be the same across all countries
Should IP be the same across all Countries?

USD

Per Capita Expenditure on Healthcare 2002

USA

Brazil

Thai

China

India

Sources: World Health Report 2005

slide33

82% of the world population accounts for only 12% of the Global pharmaceutical sales

  • Sources:
  • IMS Midas, March 2005
  • Earth Trend Data Tables 2005
enforcement versus evergreening in developing countries
Enforcement versus Evergreeningin Developing Countries

India IP 02/03 06//07

Filed 11466 28882

Examined 9538 14119

Granted 1379 7359

- 140 patent examiners 2007

- 600 more planned

- Attrition an issue

- Weekly patent journal

- IP Appellate Court

Source: Business Standard, 16th Aug’2007

  • 1995 – 2005 FDA cleared 327 drugs
  • 95% pre 1995 – before WTO deal
  • 16 basic patent molecules possible
  • However 9000 Pharma applications
  • - for evergreen changes
  • - for new indications

Source: Gopa Kumar

“Centre for Trade & Development, Delhi”

pct filings
PCT Filings

PCT Files from Developing Countries 2006

Huawei - China

LG - Korea

Samsung - Korea

LG Cem - Korea

Elec Telecom – Korea

2TE – China

STR – Singapore

Ranbaxy – India

CSIR – India

NHN - Korea

Ranbaxy Patent Filings

24

32

49

86

146

170

185

pe deals in asia ex japan in h1 2007
PE Deals in Asia (ex-Japan) in H1 2007

Sources: Thomson Financial

pe vc share of all global m a deals
% PE/VC Share of all Global M&A Deals

21%

17%

16%

9%

6%

5%

Sources: Thomson One Banker, BCG Analysis

potential challenge asian flu
Potential Challenge – Asian Flu*

*50% of world chickens bred in Asia

slide43

Potential Challenge – Climate Change

CO2 emission - % of World total in 1990-2000

USA 23%

EU 25 17%

China 14%

Russia 7%

Japan 5%

India 4%

– source: WRI, EIA

potential challenge infrastructure
Potential Challenge – Infrastructure

“Our greatest potential will be realised only if we can ensure that our

Infrastructure does not become a severe and critical handicap”

Source – Manmohan Singh

slide45

Corruption - Perception Index

RankCountry

1 Finland, Iceland, NZ

5 Singapore

11 Austria, Luxemburg, UK

16 Germany

20 Belgium, Chile, USA

42 Mauritius, S.Korea

51 South Africa, Tunisia

70 Brazil, China, India, Mexico

121 Philippines, Russia

163 Haiti

Sources: Transparency International 2006, selected countries only

potential challenge oil prices
Potential challenge – Oil prices

Source – BP

  • A war against Iran could drive oil > $200 a barrel - ‘Times’ 22nd June 2006
  • India is expected to import 85% of crude oil by 2012 from 70% today

Source – Assocham

the tempest crystal ball
The Tempest Crystal Ball
  • India will continue to be a Key Driver in the Global Generic Industry
  • Competition is rising – Post TRIPs Indian companies will evolve
  • Discovery companies will continue to be attracted to India for CT, EDC,
  • MO. China will be perceived to be stronger in biology/ toxicology
  • IP changes in US & India will slowly favor Generics
  • Alliances between Western Biotech and Asians companies will expand.
  • M&A PE deals will grow
  • How to use Asia will become the key opportunity
slide50

The rise of the Indian Middle Class

- Assumes GDP growth of 7.3% for next 20 years with no profound shift in economic policy

Sources: McKinsey Quarterly, 3rd November 2007

perceptions of asia
Perceptions of Asia

“The Indian System looks ramshackle

and improvised. But at its best it is

capable of brilliance”

“When we say the Silicon Valley is

built on ICs we don’t mean integrated

circuits – we mean Indians & Chinese”

“The UK needs to wake up to what

India is becoming”

Source: DEMOS report – January 2007

slide52

Summary

Asia economic strength is returning to levels seen in the past

Many advantages for India with some challenges

India is a global strategic asset for developed markets

India is a rich location for R&D alliances and CT outsourcing

MNCs will dip in & out of India & China

South East Asian economies will be driven by India & China

Japan will continue to represent a huge share of global wealth

“China & India represent the future of Asia and quite possibly the future for the global economy” – Steve Roach, Morgan Stanley