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1 Pharmexil December 1 st , 2005 Indian Pharma Opportunities and Challenges Arun Sawhney [email protected]

Indian Pharma Opportunities and Challenges ArunSawhneypharmexcil.org/v1/docs/IndiaAfrica/ArunSawhney_DrReddys.pdf · Indian Pharma Opportunities and Challenges ArunSawhney ... only

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Pharmexil December 1st, 2005

Indian Pharma

Opportunities and Challenges

Arun [email protected]

2

Outline of presentation

Evolution of Indian Pharma

Opportunity landscape

API & Generics

Contract services

Innovation

India Advantage &Partnering opportunities

3

Evolution of Indian pharma industry has been driven by changes in the patent laws

Growth of API and Formulations

API to US & EuropeReverse engineering of molecules

Leveraged excellent Chemistry skills

Research only in Government institutionsImport substitution

Export Led growth

Global generics opportunity US and EU as key markets

Globalization of key players

Outsourcing wave contract research and manufacturing

Emerging Discovery research in Indian Pharma companies

Transition to patent regime

70 s thru 90 s

90 s onwards

Dominated by MNC players (>70%)

Prices comparable to International prices

Government started IDPL and HAB with Soviet support

1970 patent law passed in 1972 which allowed only process patents

Prior to 1970

Indian Pharma has to find new and novel ways to grow in the global arena

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3.23.5

4.1

4.44.7

0

1

2

3

4

5

2000 2001 2002 2003 2004

10.4% 9.7%8.3% 5.1% 6.4%

Indian Pharmaceutical Market

$ bn

Source:ORG-IMS

CAGR of 8.7%

Growth Drivers New introductions in chronic lifestyle driven therapies CVS, Metabolic Disorders and CNS

5

Outline of presentation

Evolution of Indian Pharma

Opportunity landscape

API & Generics

Contract services

Innovation

India Advantage &Partnering opportunities

6

Development services including clinical trials and data management

Supply of API and Generics to RegulatedLess Regulated markets

Launch of NME/NCEs through analog research, NDDS and emerging therapies

Global opportunities

Innovation led global research

development opportunity

Global Generics & API

opportunity

Research services such as bioinformatics, structure based drug design

Global Opportunities

Short Term

Long Term

Contract ServicesCRAMS Space

Contract manufacturing for innovator and generics companies

7

Indian Companies are poised to capture the Global API Opportunity

1,350

130

520

~1,000

1993 1998 2003 2005

API Exports by Indian companies are growing at a CAGR of over 30%

API exports $ Million

17% 22% 29% 36%

83% 78% 71% 64%

2001 2002 2003 2004

India

Rest of the World

Number of Drug Master Files (DMFs) filed annually

100% = 331 352 541461

Over 40% of the DMF s filed in Q1 2005 were from India

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Indian Pharma is making its presence felt in the Global generics market

164

1538

47

72

2000 2001 2002 2003 2004

Indian companies currently have <3% share of generics market, but have filed 15% of incremental applications

One in every 4 ANDA s filed today are by Indian companies

Number of Abbreviated New Drug Applications (ANDAs) filed annually

Sales of top 20 US prescription drugs

Indian companies have filed ANDA s for 10 of the top 20 US drugs worth $35 bn

Para 4 Filed57%

No Para 4 Filed43% 80%

20%

Para 4 Filed

Source Source -- CLSACLSA

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Outline of presentation

Evolution of Indian Pharma

Opportunity landscape

API & Generics

Contract services

Innovation

India Advantage &Partnering opportunities

10

Pharmaceutical outsourcing India s future landscape

Global Pharmaceutical outsourcing market

Development outsourcing

Manufacturingoutsourcing

CustomizedChemistry services

$ 3bn by 2007

$ 18bn by 2007$ 27bn by 2007

Source: Industry Reports, Kotak Institutional Equities

Technical skills

Regulatory & quality compliance

Cost advantage

Global relationships

Clinical Trial India advtg. factors

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Indian Pharma Positioning in the outsourcing space

Pharmaceutical product life cycle

Pre-launch Growing Mature Early-to-market Late-to-market

On-patent On-patent Off-patent

Customized chemistry services

Albany Molecular, Divi s Labs, Biocon, Shasun Chemicals, Dr. Reddy s

Manufacturing outsourcing: Off patent

Ranbaxy, Dr. Reddy s, Cipla, Biocon, Lupin, Aurobindo Pharma, Ipca, Divi s Laboratories, Shasun Chemicals

Manufacturing outsourcing: On patent

Nicholas Piramal, Shasun Chemicals, Cadila Healthcare

Development Outsourcing

Biocon, Nicholas Piramal, GVK

Source: Industry Reports, Kotak Institutional Equities

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Outline of presentation

Evolution of Indian Pharma

Opportunity landscape

API & Generics

Contract services

Innovation

India Advantage &Partnering opportunities

13

Ascending the value chain is key to growth .

Margins

Low

High

Intermediates

API

CommodityGenerics & Hospital

Commodity

API to NA/Europe

NA/Europe Generic

OTC

NDDS

Patented New ProductsResearch servicesDevelopment services

Inn

ova

tio

n

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Generics20%

Innovation80%

The real value lies in innovation .

Source: Goldman Sachs estimates

Global Pharmaceutical Market 450 bn

Innovation is not an easy game

Big Pharma spends around a billion dollars to bring a new NME / NCE to market

A vibrant risk capital market, a mindset that encourages innovation and involvement of academic institutions are pre-requisites for success

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Indian Pharma Need to develop skill-sets for tapping NME/NCE opportunity

Follow on drugs and NDDS

Develop follow on molecules in existing drug classesNovel Drug Delivery Systems (NDDS)

Develop new leads for existing targets

First in class drugs for existing targets

Identify new targets using emerging technologies

Skill build-up Synthetic chemistry

Medicinal chemistry

Molecular biology

Pharmacology

Protein chemistry

Cell biology

New drugs for new targets

Current Indian skill set

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Dr. Reddy sRanbaxyGlenmarkWockhardt

Just scratching the surface of innovation-led drug discovery

2

42**2*

Other companies with stated Discovery programs

Companies with wider portfolio

Sun PharmaceuticalsNicholas PiramalZydus

TorrentDaburLupin

Phase I Phase II Phase IIIPreclinical

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* RBx 2258 l* RBx 2258 licensed to Schwarz Pharmaicensed to Schwarz Pharma** DRF 2593 being co** DRF 2593 being co--developed with developed with RheosciencesRheosciences

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Some Licensing Deals

Ranbaxy Schwarz PharmaDr. Reddy s Novartis, Novo NordiskTorrent Novartis (AGE breaker)Glenmark Forest Laboratories (PDE4)

NME research in areas like Malaria (Ranbaxy),

Anti-infectives (Dr. Reddy s) and Cancer (Dabur, Dr. Reddy s) focused on tackling

problems of developing countries

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Summary

Increased commoditization & Increased commoditization & competitive intensity for competitive intensity for

generics & APIgenerics & API ss

Needs to gear up to address innovationNeeds to gear up to address innovation--led led business opportunity in both the developing business opportunity in both the developing and developed worldsand developed worlds

Indian Indian PharmaPharma

Opportunity for alternative Opportunity for alternative source of NCE research and source of NCE research and

development in the long term development in the long term

Utilize the global generics Utilize the global generics opportunity to fuel growthopportunity to fuel growth

Opportunity to capture Opportunity to capture the CRAMS spacethe CRAMS space

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India Advantage &Partnering opportunities

Outline of presentation

Evolution of Indian Pharma

Opportunity landscape

API & Generics

Contract services

Innovation

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Indian Pharma Self sufficient and gearing up to serve the world

When we joined the WTO ten years ago, Indian pharma exports were less than $ 1 bn. A decade

later our pharma exports are in excess of $ 3.5 bn and account for more than a third of the

industry s turnover

Indian Pharma exports ($ bn)

1.0

3.5

1995 2005

CAGR > 20%

Captive Import

Indian Pharmaceutical Industry

Indian Pharmaceutical industry meets around 70% of the country s demand for bulk drugs, drug

intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles.

20,000 registered units

250 large and 8000 small units

Meet around 70% of India s demand

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Advantage India

Competent workforce

Cost-effective

Information & Technology

Globalisation

Good analytical set up

Quality, cGMP compliance

Communication

Good documentation

Long-term commitment

Pharmaceutical Development

Cost of conducting clinical trials

in India 40 60 % of developed

markets (cost of patient recruitment

and medical personnel

India has strong IT skills for

clinical data management

Heterogeneous gene pool

Speed Recruitment of patients

& conducting clinical trials

Return rate of patients

Clinical Development

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Indian companies have strong roots in ASEAN, GCC and the African markets

Source Source -- PharmexilPharmexil

266 284

73 81

334 362

FY 2004 FY 2005

AFRICA ASEAN GCC

Increasing exports from India

$ mn

Offering affordable drugs

Indian brands dominate the CVS, GI and Anti infective therapies in most of the above markets

Brands like Ciprolet (Dr. Reddy s), Cifran and Simvor (Ranbaxy) are the top brands in many countries across GCC, ASEAN and Africa

Fighting AIDS

Indian companies are leading the fight against AIDS across the RoW markets companies like

Ranbaxy, Cipla (formulations) & Matrix (API) are the major ARV suppliers offering affordable drugs at a fraction of the innovator prices

Creating employment

Indian companies have set up manufacturing locations in a no. of countries including Nigeria,

Vietnam, and Malaysia

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Thank You