AFFORDABLE EFFICACIOUS MEDICINES ALL ROADS LEAD TO INDIA

AFFORDABLE EFFICACIOUS MEDICINES ALL ROADS LEAD TO INDIA DAARA B PATEL SECRETARY - GENERAL INDIAN DRUG MANUFACTURERS’ ASSOCIATION (IDMA) 4 TH SINO-INDIA FORUM: FINISHED DRUGS EXPORT China, 14 th November 2013

• MUMBAI ü IDMA’s HQ ü 80 % Pharma Corporate Office are located 2

INDIAN DRUG MANUFACTURERS’ ASSOCIATION Founded in 1961 – now in 52 nd year of service as premier Association of the Indian Pharma Industry Regarded in Government, Media & Industry Circles as the ‘Voice of the National Sector’ 6 Region-wise State Boards 19 Sub-Committees, headed by Experts Membership Strength – over 700 Members Publications: IDMA Bulletin (Weekly), Indian Drugs (Monthly) & Annual Publication Awards presented on Annual Day for Quality Excellence, Best Patents, Quality Research, At IDMA- PAC Awards for Eminent Analyst, Outstanding Analyst, Young Analyst Seminars/ Workshops on Regulatory, Technical, Medical affairs, Harmonization projects with US FDA, IP, USP, EDQM, ANVISA 3

IDMA GOING GLOBAL • IDMA is in talks with leading Associations and Organisations globally for closer Co-operation and Networking on International issues concerning the Pharmaceutical Industry and has signed MOUs with : ü IDMA-CPIA (China Pharmaceutical Industry Association) ü IDMA-KPMA (Korean Pharmaceutical Manufacturers Assn) ü IDMA-Dubiotech (Dubai Biotechnology Park) ü IDMA-ABLE (Assn. of Biotechnology Led Enterprises) ü IDMA- Pro Genericos - Brazil (in discussion) 4

IDMA GOING GLOBAL (contd…) • Active participation in International Fora: ØIGPA Conference, Canada ØUSP Convention, Washington ØAPI China Spring, Harbin ØPropak Asia, Bangkok Ø 2 nd Annual Pharma Manufacturing China Summit, Shanghai ØGenerics R&D & Partnering Asia, Shanghai ØIndia-Japan Pharma Industry Seminar, Osaka ØInternational Pharmaceutical Ingredients Expo & Conference, Japan ØSino-India Forums 5

DEMAND DRIVERS Accessibility Ø Over USD 200 Billion to be spent on medical infrastructure in the next decade Ø New business models expected to penetrate tier-2 and tier-3 cities Ø Over 160, 000 hospital beds expected to be added each year in the next decade Ø Increasing access to lower-income segments due to Government initiatives that increase access and affordability (e. g. RSBY) Acceptability v Rising levels of education to increase the acceptability of pharmaceuticals v Patients to show greater propensity to selfmedicate, boosting the OTC market v Acceptable of biologics and preventive medicines to rise v Vaccine market could grow 20 per cent per year in the next decade v Surge in medical tourism due to increased patient inflow from other countries Affordability Epidemiological Factors ü Rising income could drive 73 millions households to the middle class over the next 10 years ü Over 650 million people expected to be covered by Health Insurance by 2020 ü Government-sponsored programmes set to provide health benefits to over 380 million BPL people by 2017 ü By 2017, the Government plans to provide free generic medicines to half the population at an estimated cost of USD 5. 4 billion q Patient pool expected to increase over 20% in the next 10 years, mainly due to rise in population q New diseases and lifestyle changes to boost demand q Increasing prevalence of lifestyle diseases 6

EVOLUTION OF INDIAN PHARMA INDUSTRY 7

GROWTH IN PURCHASING POWER 8

INDIAN PHARMA INC ü Knowledge based Industry and one of the world's largest and most developed. ü Current turnover estimated at US$ 25 bln. growing @ 12% ü About 300 Large & over 10, 000 SMEs ü About 77% units make Formulations and about 23% units make APIs ü Over 64, 000 formulations in market covering almost every therapeutic segment with about 10 to 200 brands per molecule ü For example, Ciprofloxacin has over 180 brands and Atorvastatin has about 96 brands competing in the market. 9

INDIAN PHARMA INC (contd…) ü Medicines constitute only about 15% of total healthcare spend in India ü About 90% of India’s pharmaceutical market is made up of branded generics and has the potential to grow at an accelerated 15 to 20% CAGR in the next five years. ü Patented drugs account for 1% of $12 bln. market, set to grow to 5% of est. $ 50 -60 bln. market by 2020 ü Globally ranks 4 th largest in volume and 12 th in value ü 10% of World’s Production but 1. 5% of Value (Extremely Competitive Prices) 10

SHARE OF GENERIC AND PATENTED DRUGS IN INDIAN MARKET By 2016, share of generics may be about 90% of Indian pharma market, as patented drugs increase to about 10% 11

FORMULATION EXPORTS ($ bio) 12

INDIAN PHARMA INC (contd…) ü Exports at $12 bln. with formulations at $ 7. 5 bln. and APIs at $ 4. 5 bln. ü Exports estimated to cross $16 bln. by 2013 -14 ü Exports to almost all countries, with major share in regulated markets ü Rated world’s single largest producer and top exporter of generic drugs ü Every Third Tablet consumed in the World is ‘Made in India’ 13

INDIAN PHARMA INC (contd…) ü India’s five of the largest export markets are USA, UK, Germany, Russia and South Africa ü Three out of Global Top 10 fastest growing generic companies are Indian - Glenmark, Dr Reddy’s and Sun Pharma ü The Indian pharma market is expected to grow at 12– 15 % over next two years ü The Indian drugs and pharma sector attracted FDI worth US$ 9. 6 bln. between April 2000 to May 2012 14

INDIAN PHARMA INC (contd…) • India is now among the top five pharma emerging markets globally • Front runner in a wide range of specialties involving complex drugs' manufacture, development and technology • Expected to touch $36 bln. by 2016 • India has about 40% of all ANDA approvals from US FDA during January-July 2013. • USFDA approvals speak about the stringent norms followed by the Indian companies 15

INDIA’S API INDUSTRY Ø The Indian API Industry services the Domestic and International Market Ø The Indian API manufacturing industry is the third largest in the world, to grow at CAGR 17% over 2011 -17 ØProducing over 400 APIs Ø Growth in Generic Industry spurred API demand worldwide Ø Increased emphasis of contract manufacturing increases scope of captive API demand Ø High percentage of API exports are high value, servicing Highly regulated markets with complex APIs Ø Globally Indian companies hold more than 90% of APIs approvals for ARVs, Anti-TBs and Anti-malarials 16

RECENT COLLABORATIONS WITH INDIAN COs MNC INDIAN THE DEAL FROM RATIONALE Mylan Labs, USA Matrix labs 71. 5% August 2006 Expand mfgr platform, Access to key markets Daiichi Sankyo, Japan Ranbaxy Acquired June 2008 Access to low cost manufacturing Pfizer, USA Aurobindo Contract Manufacturing March 2009 60 products for regulated markets Fresenius Kabi, Germany Dabur Acquired April 2009 Access to oncology manufacturing Pfizer, USA Claris Lifesciences Contract Manufacturing May 2009 Access to sterile injectable drugs GSK, UK Dr Reddy’s Partnership June 2009 Develop & market select products for emerging markets 17

RECENT COLLABORATIONS WITH INDIAN COs MNC INDIAN THE DEAL FROM RATIONALE Mylan Labs, US Biocon Contract mfgr & dev. June 2009 Develop monoclonal antibody Mylan Labs, USA Famy Care 15% stake August 2009 Access to oral contraceptive mfg. Sanofi Pasteur, France Shantha Biotech. Controlling stake August 2009 Access to vaccine manufacturing Hospira Orchid Chem. Buyout of injectable antibiotics Dec 2009 Access to low cost manufacturing Pfizer, USA Strides Collaboration Jan 2010 & Access to 78 oncology May 2010 products & sterile injectables Reckitt Benckister, UK Paras Pharma Takeover March 2010 Access to OTC market Abbott Labs, USA Nicholas Piramal Takeover of healthcare business May 2010 Access to generic products 18

RECENT COLLABORATIONS WITH INDIAN COs MNC INDIAN THE DEAL FROM RATIONALE Pfizer , USA Vetnex Animal Health Controlling stake June 2009 Access to animal health business Vetoquinol, France Wockhardt (vet division) Buyout June 2009 Access to Indian market Abbott Lab. , USA Wockhardt (nutrition Div) buyout July 2009 Access to Indian nutrition market Reckitt Benckister, UK Paras Pharma Takeover March 2010 Access to OTC market Litha ealthcare, South Africa Natco Pharma Marketing of Sept 2011 products Access to multitude of dossiers B. Braun Singapore Ahlcon Parenterals(I) Controlling stake March 2012 Iv Fluid and medical disposals Buyout Sept 2013 Injectables catering to oncology Mylan Inc, USA Strides Arcolab (Agila Specilaities) 19

TOP INDIAN M&A SECTORS • Automotiv e • 13% • FMCG, Food & Beverages • Other s • 18% • Manufacturing • 4% • IT & ITES • 14% • Oil & Gas • 21% • Pharma, Healthcare & Biotech • 11% • 4% • Banking & Financial • Power & Energy Services • 5% • 4% • Cemen t • 6% 20

INTERNATIONAL REGULATORY APPROVALS No. of manufacturing sites (APIs + formulations) registered / approved by US FDA (as on 31 -3 -2013) 550 / 323 Total no. of DMFs filed from India as on 31 -3 -2013 > 3000 No. of ANDAs final / tentative approvals received from USFDA in 178 / 42 Year 2012 No. of ANDAs final / tentative approved by US FDA between Jan -June 2013 87 / 25 No. of CEPs (certificates of suitability) from EDQM received by 130 companies 902 No. of sites approved by PDMA (Japan) – 20% of all PDMA aprrovals >190 WHO GMP certified plants > 800 Australian TGA approvals 845 21

R&D Investment in India • R&D investments overall is approx 18% of revenue • Spending on R&D by 30 leading Indian pharma companies up significantly by 19. 7% during the year ended March 2013 over the previous year. • Focus of R&D by these companies is on new cost effective generic products in key therapeutic areas • With higher spending on R&D, Indian Pharma Inc. is set to tap upcoming opportunities from loss of patent exclusivity in the coming years. (Improve / Add Value to generics / patented products) 22

R&D Investment in India • Net outcome of this trend is higher approvals for ANDAs and DMFs from highly regulated authorities like US, Europe and Japan. • Major companies like Shasun Pharma, Unichem Lab. , Biocon, Natco Pharma etc have pushed their R&D expenses over 50% during 2012 -13 • For example, R&D expenditure of Shasun Pharma went up by 179% 23

FOCUSSED APPROACH • Designing products specifically for low income group • Identifying and servicing completely new needs • Focusing on New Drug Delivery Systems • Greater focus on prevention rather than treatment, including increasing use of information and communication technologies 24

INDIAN BIOTECHNOLOGY MARKET Global Biotech Revenue $262 billion Indian Biotech Market at $ 4. 3 bln. expected to touch $ 11. 6 bln. by 2017 25

INDIAN BIOTECH SET-UP • World's largest producer of vaccines: 60% of the world’s vaccines are manufactured in India – exported to over 150 countries - accounts for 60– 80% of annual UN vaccine purchases • Over 300 companies in operation • Among the five rising biotech industries in Asia-Pacific • Annual revenue generated is over $4 bln at a growth rate of 21. 5% • Revenue from biotech exports at $ 2. 2 bln in 2013 accounting for 51% of total industry revenues • Genome Valley project at Hyderabad is the largest single cluster for biotech research, training and manufacturing, earns foreign exchange of over $ 1 bln per year 26

THE INDIAN SCENARIO India's growing respect and legal / regulatory framework for IPR, favourable economic policies and availability of huge talent pool for sustaining and growing operations is making India an attractive choice for global pharma companies for investment, tieups, mergers, acquisitions. 27

THE INDIAN SCENARIO Because of patent expirations of blockbuster drugs, Indian firms are expected to actively participate in the production of generic version of these products. Indian companies are also ready with generic version of biotech drugs. Therefore, India will be able to maintain a large basket of qualitty affordable generics with assured safety and efficacy. 28

GLOBAL HEALTHCARE COSTS Ø Rapid hike in prices Ø Overall economic slowdown Ø Rising Govt. deficit Ø Reduction in Healthcare budgets Ø High priced prescription drugs Ø Aging population Ø Administrative costs Ø Spending on chronic diseases etc Ø Companies forced to reduce prices 29

INDUSTRY’S CHALLENGES Declining Productivity Competitive Pressure Reducing drug approvals Stringent regulations Implementation of cost control measures by Governments Ø Increasing development costs Ø Increase in Clinical trial period due to tightened drug safety regulations - thereby Leading to higher Ø Ø Ø development costs and increased time-to-market 30

GLOBAL PHARMA MARKET 31

GLOBAL PHARMA TRENDS • Spending on medicines will reach $1. 2 trn. by 2016 • Rising influence of healthcare access and funding World over is driving demand towards low cost generic options from India • Anti-Diabetic Drugs and those for cardiovascular diseases are expected to see the fastest growth. • Cardiovascular patients estimated globally at over 250 million, mainly due to changes in demographics and lifestyle • Pharmaceutical industry's R&D programs will need to adjust to broad availability of low-cost generics from India • Demand for generics will also increase in oncology, diabetes, multiple sclerosis and HIV therapy areas 32

WHAT IS THE SOLUTION? Ø Globally, Governments and pharma companies are looking at opportunities to procure medicines at affordable prices, reduce costs, improve pipeline and reduce the time-to-market Ø To reduce healthcare costs, they are adopting strategies like: ü SOURCING FROM INDIA ü Outsourcing (manufacturing, research, Clinical Trials etc) to India ü Restructuring their R&D models to consider generics ü Adopting efficient sales & marketing functions to promote ‘value-added’ generics as alternatives ü In-Licencing Arrangements 33

ADVANTAGE INDIA 34

ADVANTAGE INDIA • While clinical trials cost approximately $300 to 350 million in US, they cost only about $25 million in India • India has the 2 nd highest number of qualified doctors in the world. Of every six medical doctors in the US, one is Indian • Investigational New Drug stage costs about $100 to 150 million in US, but costs only around $10 to 15 million in India • 700, 000 science and engineering graduates & 1500 Ph. Ds qualify annually. Over 15, 000 scientists • India’s huge population and the prevalence of a wide spectrum of disease conditions offer a wide patient-resource for clinical trials 35

ADVANTAGE INDIA On demand • India manufactures and exports medicines from all therapeutics groups. • Many original innovator companies source their discovered drugs from Indian companies. • India is a world leader in anti. AIDS and anti-TB segments and for some of the latest medicines like Glitazones, Celecoxib, Statins, Montelukast and many anticancer drugs 36

US PATENT EXPIRIES Year No. of Patents 2010 70 2020 171 2011 130 2021 133 2012 165 2022 88 2013 207 2023 95 2014 253 2024 64 2015 235 2025 45 2016 162 2026 37 2017 203 2027 42 2018 209 2028 21 2019 2013 2029 22 (Source: USFDA Orange Book, Oct 2011) 37

GLOBAL RECOGNITION • Bill Clinton's foundation, Clinton Health Access Initiative (CHAI) got further discounts from Indian generic manufacturers that reduced the cost of combination drug treatments for AIDS, which can reach thousands of dollars per year in the West, to as low as $120 a year per patient. • Many Indian companies are part of this agreement where Lamivudine, Stavudine, Zidovudine, Nevirapine will be supplied to a few African countries. • India has highest number of approvals from the US President's Emergency Plan for AIDS Relief (PEPFAR). 38

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INDIA AS PHARMACY OF DEVELOPING WORLD – Examples • Main procurement agencies for developing countries depend overwhelmingly on India • 70 -90% of essential medicines of developing countries comes from India • 50% of medicines procured by UNICEF for developing countries are from India • 75 -80% of medicines distributed by Dutch-based International Dispensary Association (IDA) Foundation, the chief medical supplier to developing countries is sourced from India 40

INDIA AS PHARMACY OF DEVELOPING WORLD – Examples (contd…. ) • 80% of medicines for AIDS issued by MSF (Doctors Without Borders) come from India and are distributed in treatment projects in over 30 countries • Globally, 70% of treatment for 87 countries provided by UNICEF, The Global Fund to Fight AIDS, Tuberculosis and Malaria, the Clinton Foundation, etc. come from India • 91% of the generic ARVs approved by the US FDA for PEPFAR, the US President’s AIDS initiative for distribution in developing countries are from India, resulting in cost-savings up to 90%. 41

INDIA AS PHARMACY OF DEVELOPING WORLD – Examples (contd…. ) • In Zimbabwe, 75% of all tenders for medical expenditure come from India • In Lesotho, it is 95% • 90% of the ARVs used in Zimbabwe’s national treatment programme come from India • In addition, raw materials are exported from India to other countries for local production of affordable medicines • This has been crucial to enable national AIDS programmes, such as those in Brazil or Thailand, to provide universal free access to ARVs. • Thailand gets 90% of its raw materials for ARV production from India 42

INDIA’S SUPPORT TO USA • Over 40% of generics prescribed are from India • To ensure continued supply of the low cost quality generics from India, the US FDA has opened India office • 1 out of 5 US FDA inspections for approvals are in India • Indian firms have over 40% of total ANDA approvals in USA • 80% of all retail prescriptions filled in USA are for generic drugs • Based on their marketing and distribution networks and manufacturing capacities, Indian firms could see as much as 15 -28% annual growth from the US, predict experts. • To overcome the recent shortage of cancer drugs J & J’s Doxil in USA, the US FDA sought Sun Pharma’s help in providing their chemotherapeutic drug Lipodox drugs from India 43

LARGEST SUPPLIER TO UNICEF • • • India has consistently been the largest supplier to UNICEF since 2007. India was the largest supplier country in 2012, with $558 million worth of supplies such as vaccines, pharmaceuticals, nutrition, medical supplies Of the 2. 14 bln. purchases by UNICEF in 2012, more than 25% were from India Serum Institute of India Ltd. , an IDMA Member supplied vaccines / biologicals worth $254 mio dollars, making it the largest supplier in India Other significant suppliers include Hetero Labs, Ranbaxy Labs, Aurobindo Pharma, Haffkine Bio-Pharma Corp. , Micro Labs etc, all Members of IDMA. 44

LARGEST SUPPLIER TO UNICEF • UNICEF has recognised India's contribution to glocal aid, and international groups have lauded India's role in increasing access to medicines in the developing world. • Anti Retro. Viral (ARV) treatment in Europe was $10, 000 per patient a year, until Indian manufactured drugs brought it down to $95 patient a year. • India is not only the largest supplier to UN groups, but also to the MSF and International Dispensary Association. 45

Affordable Efficacious Medicines – All Roads Lead • India happens to be the largest supplier of generic ARVs to low and middle income countries. • Paul Cawthome (MSF Access Campaign Coordinator -Asia) highlighted the worldwide dependency on India as a drug supplier best, when he said : 'It comes as a great relief to millions around the world who depend on a continuous supply of Indian generic medicines that the Indian Supreme Court has ruled against Novartis. ‘ • To meet increasing global requirements, the Government of India has set a target of $25 bln. for pharmaceutical exports by 2016. 46

Affordable Efficacious Medicines – All Roads Lead to India • Over 100 countries, mostly in the developing world, depend on India for affordable and quality essential medicines, vaccines and medical supplies • Every fifth generic drug and every third HIV drug consumed anywhere in the world, mostly in the developing world, home to over 80 % of the world's population, is manufactured in India 47

CHINDIA BILATERAL TRADE • China’s Premier Li Keqiang chose India for his first foreign trip • Premier Li was confident that “we are not a threat to each other, nor do we seek to contain each other” • Prime Minister Manmohan Singh had earlier assured China that “the world is big enough for both countries and each is too big to be contained by the other“ • China has emerged as India’s largest trading partner as it replaced the US (in March 2008) • Premier Li has assured that China’s markets will be opened to Indian products to address the trade imbalance and boost commerce to $100 billion a year 48

CHINDIA BILATERAL TRADE • Despite a clear value proposition, Indian companies find it difficult to win government procurement contracts due to regulations that favour Chinese companies. • Again, China accounts for nearly 73% of Indian imports of APIs and other organic compounds. 49

CHINDIA - PARTNERSHIP IN GLOBAL TENDERING • As a reciprocal measure, China should import drug formulations from India to offset the trade deficit against API imports and set a timeline for review and approval of drug dossiers • India’s closer engagement with China in the global production network could be a possible way to improve its technologyintensive exports. • Our trade must focus on ‘trade creation’ and ‘trade diversion’ 50

IN CONCLUSION A Win-Win situation!! Ø IDMA has always promoted access to quality affordable medicines, as our Annual themes confirm: ü ü Affordable Medicines for All (2003) Indian Pharmaceutical Industry – Going Global (2004) People First… Patents Next (2005) Global Pharma, India has Arrived (2006) ü Contract Research and Manufacturing Services -Destination India (2007) ü ü Indian Pharmaceutical Industry – Exciting Times Ahead (2008) India’s Quality Affordable Generics: For Global Healthcare (2009) India- The Generics Pharma Capital of the World (2010) Healthcare Of People – Always In All Ways (2011) ü INDIAN PHARMA INC. CREATING A GLOBAL IMPACT (2012) ü AFFORDABLE EFFICACIOUS MEDICINES – ALL ROADS LEAD TO INDIA (2013) 51

Thank You Xiexie 52