Transcript Japan ppt - Dr. Brian W. Tempest
Succeeding in Japan
Dr. Brian W Tempest Chief Mentor & Executive Vice Chairman of the Board Ranbaxy Laboratories Limited, Delhi, India India Japan Initiative Mumbai – 2 nd February 2007
Disclaimer
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.
USA 37%
Where is the World’s Wealth?
Rest of World 10% Taiwan 1% Switzerland 1% Spain 1% Netherlands 2% Cannada 2% Germany 4% Italy 4% France 5% UK 6% Source: The World Distribution of Household Wealth Japan 27%
Where are the Worlds’ Pharmaceuticals sold?
Mexico China Canada Spain UK Italy France Germany Japan USA 1.5% 1.5% 2.0% 2.4% 3.3% 3.4% 4.9% 5.4% 12.0% Top 15 countries = 85.9% of worldwide pharmaceutical market estimate 2003 44.6%
Japan’s GDP
A race to prosperity
Indo - Japan Political & Economic Background
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Japan Recovering from a decade old recession
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Japan is fully exposed to China, but now there is a political inpasse
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JETRO, Abe, Koizumi – all giving positive guidance on India
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Ageing is a major issue in Japan - by 2050 36% > 65 years from 19% in 2005
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Huge interest with many Japanese delegations visiting India
Japanese Government Policy changes on Pharmaceuticals
Past 2002 2003 2004 2006 Poor quality, poor support National hospitals start using generics Co-payments begin at 30% Public hospitals become companies GPs can opt for generic substitution Postal worker challenge helped minimize the influence of the doctor lobby
Japanese Government Intervention on Pharmaceuticals
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Global Size Companies 4 companies of global size Fugisawa + Yamanouchi = Astellas (April’06) Sankyo + Daiichi Takeda Eisai
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Mid Size Companies Move to niches and/or generics Shionogi Tanabe Mitsubishi
Both Japan & India are hungry for Information
Internet Usage – Asia 1.
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3.
4.
China Japan India S.Korea
123 m 86 m 51 m 34 m
Source: Business Today, Sept. 24, 2006
Mobile Phones 1.
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5.
China USA Japan Russia India 421 m 190 m 157 m 148 m 116 m
Source: Times of India, Sept. 14, 2006
Japanese – India differences
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Before time Open neck shirt Sashime Golf vs vs vs vs After time White shirts/ties Vegetarianism Cricket Takes time for each side to understand what is a very complex picture, eg. visiting cards, hellos
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Japanese are heavily influenced by USA, Technology Innovation, Productivity & Education
The Pharma Advantage - ANDAs
ANDA Filings in USA by Indian Companies 160 140 120 100 80 60 46 64 144 24 40 20 0 2002 2003 2004 2005 - 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 – API’s
USA DMF filings by India % Share of USA DMF filings 1990 1 1995 4 2000 36 2004 187 2005 262 Source: Crisil / US FDA / J P Morgan 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, 6 th August 2006 Source: US FDA, Credit Suisse
Science Education in India
Number of Higher Education Institutions 05/06 18,123 +59% 00/01 11,412 90/01 5,932 80/01 4,861 Source: Indian University Grants Commission Number of Institutions courses 05/06 99/00 Pharmacy 1478 669 +120% Medicine 229 174 +32% Physiotherapy 205 52 +294% Source: Pavan Agarwal (2006) based on data from professional councils Number of Students enrolled in Higher Education Institutions 05/06 10,500 +40% 00/01 7,500 90/01 4,000 80/01 3,000 Source: Indian University Grants Commission PhD Degree awarded in Science 03/04 00/01 5408 3734 90/01 2950 (USA 03/04 25,000) +44% 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
The R&D Investment Advantage
Most attractive R&D Investment locations: Ranked 3 rd - 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
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
Global Market Trends – Discovery R&D
Vendor Availability Analog preparation Combinatorial chemistry Analytical chemistry Structural chemistry Assay development Computer drug design High throughput Screening Bio informatics Genetically modified animals Basic molecular biology Source – BCG, ‘Looking Eastwards, September 2006’ * Out of 90 vendors in October 2005 India 41 37 37 26 26 26 11 13 0 13 China 25 7 7 5 2 13 2 7 3 25
Global Market Trends for Generic Companies
Source: UBS, Businessworld, 30 th October 2006
The Japanese generic market
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$2.0b in 2006 with a 5% level of generic substitution
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Forecast to increase by 11% p.a to 2010
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Novartis has a 5% share – leading foreign generic player
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Regular price reductions (related to trade discounts)
Nippon Chemipher Generics Business
14 12 10 8 6 4 2 0 Yen billion 4.3
Q3A 5.4
Q4A 6.2
Q5E 7.3
8.5
Q6E Q7E 10.00
Q8E 11.50
Q9E Source: JP Morgan Asia Pacific, Equity Research 16 November 2005
Our story in Japan
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Experience
Worked on our relationship for several years since 2003 50% in joint venture Filed products to meet expectations of MHLW Manufactured products to Japanese Consumer expectations Now launched several products with our partner Leading market share of products launched Constant Interaction with Japanese investors & media
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Reputation
Licence in opportunities for India/China from Japan Manufacturing contracts for Japan NCEs intermediates
M&A deals in Europe by Indian Companies 2003 - 2007
Company Number Ranbaxy Wockhardt Stada Matrix DRL Aurobindo Torrent 6 3 2 2 1 1 1 Sun Pharma Jubiliant Zydu Cadilla 1 1 1 _______________________________________________ Total 19 _______________________________________________ Source: Nomura, December 2006
Conclusion
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Huge business potential opportunity Good fit & Synergy between India & Japan Long term planning needed Personal attention of the CEO required on the relationship Accept the complexity and may not understand everything Focus on technology innovation, USA, education, productivity