Drug Discovery

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  • 1. Drug Discovery & Developmentfor the World Market from India: How Real GV Prasad Vice Chairman & CEO,Dr. Reddys Laboratories 1 NOV 2007

2. Indian Pharma Industry: Poised for Transformation 3. Source: Capex of Top 15 companies; Annual reports, Analyst reports CAPEX BY INDIAN COMPANIES SHARE OF THE GLOBAL GENERICS PIE ANDA FILINGS FROM INDIA DMF FILINGS FROM INDIA Source: Annual reports, Analyst reports Source: USFDAwebsite Source: International revenues of 13 Indian companies; Annual reports, Analyst/Industry reports Indian Pharma Industry Backdrop I ndian Pharma to dominate Global generic industry 4. Indian Pharma Industry Backdrop Home Market also Poised forTransformation!!

  • Growth in disposable incomes & the number of middle-class households
  • Expansion of medical infrastructure
  • Greater penetration of health insurance
  • Rising prevalence of chronic diseases
  • Adoption of product patents
  • Aggressive market penetration
  • Debut of organized retail chains

RETAIL PHARMACEUTICAL MARKET IN INDIA US $ billion Source: India Pharma 2015, McKinsey & Co 5. Innovation: Opportunity for India 6. Innovation CapacityUnmet Needs 7. Innovation CapacityUnmet Needs Why Is It Important? 4% Though the R&D spend is increasing, successis decreasing 1980 1985 1990 1995 2000 02 03 8. 1980 1985 1990 1995 2000 02 03 Innovation CapacityUnmet Needs Why Is It Important? 4% Though the R&D spend is increasing, successis decreasing Source: PhRMA Pharmaceutical Industry Profiles 2007 Average Costto Develop One Drug (US$Mn) ... As Does Average Cost Per Drug ... 9. 1980 1985 1990 1995 2000 02 03 Innovation CapacityUnmet Needs Why Is It Important? 4% Though the R&D spend is increasing, successis decreasing Source: PhRMA Pharmaceutical Industry Profiles 2007 Average Costto Develop One Drug (US$Mn) ... As Does Average Cost Per Drug ... ... With Only 3 of 10 Drugs Recovering Investment... 10. Innovation CapacityUnmet Needs Indias Cost Structure Key Advantage

  • Western companies able to obtain a step down of 30-40% in cost by a mere site transfer to India
  • Companies in India able to reduce the upfront capital cost of setting up a project by 25-50%
  • Outsourced services to India significantly reduces the cost and time of clinical trials
  • Indias huge resource of skilled scientists, available at a fraction of the cost in developed countries
  • Scientists of Indian origin retuning provide a strong talent pool

CostLeadership(in HighRisk Game) Source: IBEF, E&Y Analysis Lower Filing Cost ProcessInnovation Manpower Cost Advantage Capital efficiency 11.

  • Improving R&D productivity,a high priority for innovator pharma companies
  • Exploring opportunities for expanding pipeline while addressing costs as well
    • Testing the waters: Outsourcing of non-core activities on an experimental basis
    • Expanding partnerships: Drug discovery experimental programs in various countries
  • Indian companies are setting up internal drug discovery programs as well as exploring partnerships with large & medium innovator companies

Global Pharmas ChallengeCreating Opportunities for Indian Pharmacos 12. Innovation in India: Current Status 13. Current status of Discovery & Development in India

  • Dr. Reddys
  • Glenmark
  • Ranbaxy
  • Cadila
  • Torrent
  • Sun Pharma
  • Biocon
  • Wockhardt
  • Nicholas Piramal

Internal Programs

  • Aurigene, Advinus, GVK Lifesciences
  • Dr. Reddys, Discman, Nicholas, Jubilant, Shasun, Divis, Suven
  • GVK Bio, Vimta, Lambda, Lotus, Accutest
  • Siro Clinpharm, iGate Clinical Research, Asian Clinical
  • Quintiles, ClinTec

Services Model

  • Drug Discovery
  • AstraZeneca
  • Altana
  • Clinical trials & data management
  • Pfizer
  • Eli Lilly
  • Novartis
  • GSK

MNC Outposts

  • GSK Ranbaxy
  • Eli Lilly Jubilant, Suven
  • Zydus BI, Onconova,
  • Dr. Reddys Rheoscience, Argenta, ClinTec
  • Aurigene Merck/ Serono, Forest Labs, Rheoscience
  • Merck & Co. Advinus Therapeutics
  • AstraZeneca Torrent
  • Wyeth GVK
  • Nicholas Morvus, Connexios, Biosynth
  • Syngene - Innate

Partnerships Source: Company news, industry reports 14. Headlines Today

  • More than three-quarters of the Top 50 pharma companies conduct clinical development in India (1)
  • Outsourced manufacturing activity in India at $100 million (2)
  • Outsourced clinical trial activity in India at $75 million in 2005 (3)
  • 40 50 NCEs under development by Indian pharma companies

(1,2) Motilal Oswal Report (3) Frost & Sullivan When will the first indigenously developed drug be launched from India? 15. NCE Pipeline of Indian Companies What would be the timeframe when innovative product from India will hit the market Source: Analyst reports, company presentations At least 3-4 years away from launch Company Pre-Clinical Phase I Phase II Phase III TOTAL Dr. Reddys 2 1 2 1 6 Glenmark 4 - 2 - 6 Ranbaxy 8 1 1 - 10 Cadila n/a 3 1 - 4 Torrent 5 1 - - 6 Wockhardt 4 1 1 - 6 Sun Pharma 3 1 - - 4 Nicholas Piramal 2 - 3 - 5 Biocon 3 - 2 - 5 Total 31 8 12 1 52 16. NCE Programs focused on Metabolic Disorders Source: Analyst reports Company Therapeutic Focus Dr. Reddys Metabolic Disorders, Cardiovascular Glenmark Metabolic Disorders, Respiratory, Pain Management Ranbaxy Metabolic Disorders, Inflammation/Respiratory, Anti-Infectives, Urology Cadila Metabolic Disorders, Inflammation Torrent Metabolic Disorders, Cardiovascular Wockhardt Sepsis & Anti-Infectives Sun Pharma Asthma/COPD, CNS, Allergy Nicholas Piramal Metabolic Disorders, Inflammation, Anti-Infectives, Oncology Biocon Metabolic Disorders, Inflammation, Cardiovascular, Oncology 17. Building a sustainable Innovation-led business : Key Challenges 18. Key Challenges

  • Target Selection :
      • Precedent targets vs Unprecedented targets
      • Translatability of in vivo disease models to humans
      • Length and Cost of meaningful human proof of concept studies
      • Increasingly crowded research makes selection of clinically differentiated products difficult

19. Key Challenges

  • Challenges operating out of India
    • Not yet part of the innovation eco system of venture capital, academic research &biotech
    • Lack of talent in critical functions
    • Access to thought leadership
    • Funding
      • P&L driven valuation
      • Lack of patient capital
    • Regulatory Frameworks for timely approvals
      • Regulatory frameworks/expertise not in place
      • Pace of approvals not satisfactory

20. Closing Thoughts We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered that, the larger they have been.-- George W. Merck

  • Indian Pharmaceutical Industry has the potential to
  • BringAffordability and Accessibilityof Drugs to the Masses
  • Increase Global Pharma IndustrysInnovation Capacityto MeetUnmet Needs
  • But needs to get the basics right