Partnering Opportunities in India Dr. Brian W Tempest Chief Mentor & Executive Vice Chairman of the Board Ranbaxy Laboratories Limited, Delhi, India Bio-Partnering World Congress 2007 London Tuesday, 17 th April 2007 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 Asias Share of the World GDP (at PPP in %) Year China 17% 9% 5% 5% 12% India 12% 8% 4% 3% 5% Japan 2% 3% 3% 8% 7% Rest of Asia 7% 5% 7% 9% 13% Total Asia 38% 25% 19% 25% 37% Source WEF - was 59% in 1820 with India 16%, China 33% Davos Source FT The Productivity Advantage Indiaa usa Pharma view USA 1 chemist Better education x chemist 70 hours/week Longer working time x hours/week $ 800 monthly Lower cost x 20 $ 12,000 monthly Sources: IPHMR Conferences, New Delhi August 2004 Japan - by % > 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 By 2013 India will have more young workers than China The Ageing Advantage Working Population, years In millions 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 Economic Growth Advantage A race to prosperity 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 Billionaires Advantage 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 4 th largest reservoir of Scientific Manpower (2 nd 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 3 rd K, Ch, Ind, Si, RSA US & Europe will not dominate Science, Maths, IT industries Mr. Bill Gates The Education Advantage 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 % change Chemistry Departments: Physics : 32,059 28, % Dundee Kings Chemistry: 40,856 38,851 -5% Surrey Exeter Maths: 67,036 52, % Lancaster Queen Mary Computing: 19,099 7, % Source: Daily Mail 11 August 2006 Only pupils at private schools can take physics, chemistry & biology separately Source: Times, 9 th November 2006 Number of Higher Education Institutions 05/06 18, % 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, % 00/01 7,500 90/01 4,000 80/01 3,000 Source: Indian University Grants Commission Number of Institutions courses 05/06 99/00 Pharmacy % Medicine % Physiotherapy % Source: Pavan Agarwal (2006) based on data from professional councils PhD Degree awarded in Science 03/ % 00/ / (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 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 Diaspora network (25m across 120 countries) Indians are hungry for information The Information Advantage Internet Usage Asia 1.China123 m 2.Japan 86 m 3.India 51 m 4.S.Korea 34 m Source: Business Today, Sept. 24, 2006 Mobile Phones 1.China421 m 2.USA190 m 3.Japan157 m 4.Russia148 m 5.India116 m Source: Times of India, Sept. 14, 2006 More Privatization public sector not so buoyant Scope for improvement of Government Policies Manufacturing growth versus China GDP dynamics: Agriculture 31%20% - Industry28%26% - Services41%54% Further encouragement of R&D for Pharmaceuticals The Potential for Improvement Advantage The Pharma Plants Advantage Active Pharmaceuticals Facility, MohaliDosage Forms Facility, Paonta Sahib The Pharma R&D Advantage Ranbaxys Patent Filings Clinical data management An Indian speciality 300 staff GSK -2.2m clinical data sheets -450 trials -Error rate $200 a barrel - Times 22 nd June 2006 India is expected to import 85% of crude oil by 2012 from 70% today Source BP CO 2 emission - % of World total in USA23% EU 2517% China14% Russia7% Japan5% India4% source: WRI, EIA Potential Challenge - Pollution Potential Challenge Infrastructure Source Manmohan Singh Our greatest potential will be realised only if we can ensure that our Infrastructure does not become a severe and critical handicap 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, pollution The current feeling in Indian Boardrooms is that a turning point has been reached, a tipping point has been passed and Indias time has arrived India is a rich location for future alliances China & India represent the future of Asia and quite possibly the future for the global economy Steve Roach, Morgan Stanley Summary Thank You