Cross Cultural Workforce Engagement

Dr. Brian W Tempest

Chief Mentor & Executive Vice Chairman of the Board

Ranbaxy Laboratories Limited, Delhi, India

Human Resources Council – India

Conference Board

16th February 2007, Taj Mahal Hotel, Delhi

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.

Disclaimer

Economic Background

Global Major Issues

- USA on the verge of a military defeat- Iran and N.Korea are global nuclear issues- Shifting power in the Economic world- Religious turmoil in the Islamic world- Inspite of these, the world economy steadily growing, driven by:

- Technology innovation- Collapse in cost of collecting, analysing & transmitting information - China/India growth- Integration of global market for goods & services- Monetary stability

Source: FT, 10th Jan’2007

Where is the World’s Wealth?

Canada2%

Rest of World10%

Japan27%

Germany4% Italy

4%

France5%

UK6%

USA37%

Netherlands2%

Spain1%

Switzerland1%Taiwan

1%

Source: The World Distribution of Household Wealth

Where are the Worlds’ Pharmaceuticals sold?

USAJapan

GermanyFrance

ItalyUK

SpainCanada

ChinaMexico

Top 15 countries = 85.9% of worldwide pharmaceutical market estimate 2003

2.4%

3.3%

3.4%

4.9%

5.4%

12.0%

44.6%

1.5%

1.5%

2.0%

A race to prosperity

Global speed of change

The world is changing faster than ever

Globalisation is the key driver of this change

Best hope for the improvement of the lives of the world’s population

Creates wealth

Faster Trade and interdependence

Over the last 2 decade, more people have been lifted out of poverty in Asia than in any other region at any other time in history

Rise of China & India has energised Asia

Education is highly valued in India & Asia

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: Closed UK University 2000 2005 % change Chemistry Departments: Physics : 32,059 28,119 -12% Dundee Kings Chemistry: 40,856 38,851 -5% Surrey Exeter Maths: 67,036 52,897 -21% Lancaster Queen Mary Computing: 19,099 7,242 -62% Source: Daily Mail – 11 August 2006

Only pupils at private schools can take physics, chemistry & biology separately Source: Times, 9th November 2006

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

Science Education in India

Number of Students enrolled in

Higher Education Institutions

05/06 10,500 +40%

00/01 7,500

90/01 4,000

80/01 3,000Source: 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

PhD Degree awarded in Science

03/04 5408 +44%

00/01 3734

90/01 2950

(USA 03/04 25,000)

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 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 Pharma Advantage – API’sUSA DMF filings by India

1990 1 1995 4 2000 36 2004 187 2005 262 Source: Crisil / US FDA / J P Morgan

% Share of USA DMF filings 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, 6th August 2006

Source: US FDA, Credit Suisse

- 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 - ANDAs

0

20

40

60

80

100

120

140

160

2002 2003 2004 2005

24

46

64

144

ANDA Filings in USA by Indian Companies

Global Market Trends for Generic Companies

Source: UBS, Businessworld, 30th October 2006

The Tempest Crystal Ball - Pharma

•Post TRIPs new pharma products will dry up in India by 2008

•Under this pressure Indian Pharma 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

Our Cultural diversity

Country Headcount No. of Countries<10 2410-25 425-50 450-100 7>100 10*

• Ground operations in 49 countries

• 1/3 of headcount overall is non Indian

*Brazil, Romania, Malaysia, China, Russia, South Africa, Nigeria, Japan US, India

Cultural Diversity is driven by M&A

2003 – 2007 M&A deals in Europe

Ranbaxy - 6Stada - 2Matrix - 2DRL - 1Aurobindo - 1Wockhardt - 3Sun Pharma - 1Torrent - 1Jubilant - 1Zydus Cadilla - 1

Source: Nomura, 21st December 2006

Potential for human disconnections

Americans- very aggressive - must be clear, start early, finish early

Chinese - bargain very aggressively

Italians - possessive about their personal time, don’t expect to meet outside office hours

& Australians or weekends

Brazilians - love football, fast cars & coffee

Canadians - a mixture of Americans and Europeans

Scandinavians- don’t appreciate jokes so much

Spanish - unusual long lunch hours is the norm

French - want to shake hands every morning and may even kiss you

Koreans - hardly stop working, but when they do, drink lots of whisky

Arabs - a long pre-dinner reception, but the last piece of food ends the meeting

Japanese - slow in decision making, very hierarchial, large teams patience needed

Both Japan & India are hungry for Information

1. China 123 m2. Japan 86 m3. India 51 m4. S.Korea 34 m

Source: Business Today, Sept. 24, 2006

1. China 421 m2. USA 190 m3. Japan 157 m4. Russia 148 m5. India 116 m

Source: Times of India, Sept. 14, 2006

Internet Usage – Asia Mobile Phones

Japanese – India vs engagement

• Before time vs After time

• White shirts/ties vs Open neck shirt

• Sashime vs Vegetarianism

• Golf vs Cricket

• Takes time for each side to understand what is a very complex picture, eg. visiting cards, hellos

• Japanese are heavily influenced by USA, Technology Innovation,

Education & Productivity

The Productivity Advantage

India a usa Pharma view USA India a usa Pharma view USA

1 chemist Better education x 1.3 1 chemist 1 chemist Better education x 1.3 1 chemist

70 hours/week Longer working time x 1.3 50 hours/week 70 hours/week Longer working time x 1.3 50 hours/week

$ 800 monthly Lower cost x 20 $ 12,000 monthly $ 800 monthly Lower cost x 20 $ 12,000 monthly

Sources: IPHMR Conferences, New Delhi August 2004

Assessment Centre results on 200 managers

Some brilliant minds with perfect scores

Mathematics are very strong

Great achievers & deliverers of results

Weaker in the softer skills, eg. persuasion & motivation

Team building skills need enhancing

Invest in training

Conclusions

Senior managers need to be chameleons

Management teams should represent a mixture of culture

HR team needs a mixture of cultures

Communications is the most important step

Operate seamlessly in different countries

Sensitive to local culture & traditions

Avoid the expat India clique

Invest in training, transfers, team, travel

Source: R.Gopalakrishnan – Asian Management Review, April 2006

Thank You