Transcript Japan ppt - Dr. Brian W. Tempest

The Challenges from India in the
Global Generic Market Place
Dr. Brian W Tempest
Chief Mentor & Executive Vice Chairman of the Board
Ranbaxy Laboratories Limited, Delhi, India
Madrid – 8th 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.
Asia’s Share of the World GDP (at PPP in %)
Year
1870
1913
1950
1973
2001
China
India
Japan
Rest of Asia
17%
12%
2%
7%
9%
8%
3%
5%
5%
4%
3%
7%
5%
3%
8%
9%
12%
5%
7%
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
1 chemist
70 hours/week
$ 800 monthly
a usa Pharma view
Better education x 1.3
Longer working time x 1.3
Lower cost x 20
USA
1 chemist
50 hours/week
$ 12,000 monthly
Sources: IPHMR Conferences, New Delhi August 2004
The Ageing Advantage

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
Working Population, 15-64 years
In millions
The Economic Growth Advantage

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 Billionaires 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 - $38b
Source: Forbes, Asia November 27, 2006
“2006 belongs to some of the emerging markets,
and no country more than India”
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
The Education Advantage

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
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:
2000
2005
Physics :
32,059
Chemistry: 40,856
Maths:
67,036
Computing: 19,099
% change
28,119 -12%
38,851 -5%
52,897 -21%
7,242
-62%
Closed UK University
Chemistry Departments:
Dundee
Surrey
Lancaster
Kings
Exeter
Queen Mary
Source: Daily Mail – 11 August 2006
Only pupils at private schools can take physics, chemistry & biology separately
Source: Times, 9th November 2006
Science Education in India
Number of Higher Education Institutions
05/06
00/01
90/01
80/01
18,123
11,412
5,932
4,861
Number of Students enrolled in
Higher Education Institutions
+59%
05/06
00/01
90/01
80/01
Source: Indian University Grants Commission
Number of Institutions courses
05/06
99/00
Pharmacy
1478
669
Medicine
229
174
Physiotherapy 205
52
10,500
7,500
4,000
3,000
+40%
Source: Indian University Grants Commission
PhD Degree awarded in Science
+120%
+32%
+294%
Source: Pavan Agarwal (2006) based on data
from professional councils
03/04
5408
00/01
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 Information Advantage

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
Internet Usage – Asia
1.
2.
3.
4.
China
Japan
India
S.Korea
Source: Business Today, Sept. 24, 2006
Mobile Phones
123 m
86 m
51 m
34 m
1.
2.
3.
4.
5.
China
USA
Japan
Russia
India
Source: Times of India, Sept. 14, 2006
421 m
190 m
157 m
148 m
116 m
The Potential for Improvement Advantage

Manufacturing growth versus China

Scope for improvement of Government Policies

GDP dynamics:
- Agriculture
- Industry
- Services
1990
2005
31%
28%
41%
20%
26%
54%

More privatization – public sector not so buoyant

Further encouragement of R&D for Pharmaceuticals
The Clinical Advantage
Cost Advantage
China
Enrolment
Cost
Patients/site
50
40
250
Country
USA
India
Sites
22
8
Subject
626
896
India
33
16
500
Based on USA at 100 Index
Source: BCG report ‘Looking Forward 2006’
Source: Andy Lee Pfizer Global, head clinical study and
data management.Business India, August 13, 2006
Patients
-
Naïve untreated patients
HIV
50m
Diabetes
32m
HT
5m
Medical Tourism
Cardiac Surgery
$000s
USA
Singapore
Thailand
India
30
20
14
5-7
Source: Business world, 18th Dec’2006
“………..The Country’s World Class skills in Chemistry & IT and it’s large treatment naive
patient population provides added allure”
Boston Consultancy Group
Harnessing the power of India 2006
The M&A Future Advantage
The Investment Advantage
India FDI
2003/4
2004/5
2005/6
$4.3b
$5.6b
$6.0b
Source: Outlook business June 2006
2005 FDI
Brazil
Russia
India
China
$15b
UK
$14b
USA
$6b
$72b (+$35b)
$164 b
$ 99 b
Source: UNCTAD 2006
- India on target for $10b in 2006/07
- But still small
Investment by Microsoft in India

Microsoft Global Development Centre (GDCI)

Microsoft Global Services (MGSI)

Microsoft Global Technical Support Centre
(GTSC)

Microsoft Systems Research (MSRI)

Microsoft India Development Centre (MIDC)
India
A Global Strategic Asset for developed
World Market businesses
The Competitive Advantage - Pharma
Active Pharmaceuticals Facility, Mohali
Dosage Forms Facility, Paonta Sahib
The Competitive Advantage - Pharma
Clinical data management
R&D hotbeds
•An Indian speciality
•300 staff GSK
-2.2m clinical data sheets
-450 trials
-Error rate <0.01/100k
-No data security issues
“China & India have become R&D
hotbeds……….. MNCs already operate
some 180 R&D centres in China and
More than 100 in India”
Source: BCG report ‘Looking Eastward Sep’2006’
Source: BCG report ‘Looking Eastward Sep’2006’
2005
2004
2001
2000
170
1999
185
146
86
24
R&D III
32
49
Ranbaxy’s Patent Filings
The Pharma Advantage – API’s
USA DMF filings by India
1990
1995
2000
2004
2005
Source: Crisil / US FDA / J P Morgan
Source: US FDA, Credit Suisse
1
4
36
187
262
% Share of USA DMF filings
2004
2005
Q1’06
Q2’06
Q3’06
India
27%
37%
44%
41%
45%
China
9%
10%
15%
16%
17% (latest)
Source: US FDA / J P Morgan, 6th August 2006
The Pharma Advantage - ANDAs
ANDA Filings in USA by Indian Companies
160
144
140
120
100
64
80
46
60
40
24
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
Global Market Trends for Generic Companies
Source: UBS, Businessworld, 30th October 2006
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
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
•It will be India & China - and not India or China
Key Challenges
Potential Challenge – Asian Flu*
*50% of world chickens bred in Asia
Potential challenge – Oil prices
Source – EIIG
Source – BP
• A war against Iran could drive oil > $200 a barrel - ‘Times’ 22nd June 2006
• BRIC countries consume 20% global oil
Source – Outlook business June 2006
Potential Challenge - Pollution
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 – 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
Summary
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 is the most serious
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 possibly
the future for the global economy” – Steve Roach, Morgan Stanley
Thank You