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1 1
Drug Discovery & Development
for the World Market from India: How Real
GV PrasadVice Chairman & CEO,
Dr. Reddy’s Laboratories1 NOV 2007
2
Indian Pharma Industry: Poised for Transformation
3
348472
669802
2002-03 2003-04 2004-05 2005-06
CA
PE
X (
US
$ M
n)
Source: Capex of Top 15 companies; Annual reports, Analyst reports
177144
9080
4165
2000 2001 2002 2003 2004 2005
80% 68% 57% 49%
20% 32%43% 51%
2001 2003 2005 2006*
CAPEX BY INDIAN COMPANIES SHARE OF THE GLOBAL GENERICS PIE
ANDA FILINGS FROM INDIA DMF FILINGS FROM INDIA
Source: Annual reports, Analyst reports Source: USFDA website
2.92.42.0
6.0%
5.5%
5.1%
2003-04 2004-05 2005-06
Source: International revenues of 13 Indian companies; Annual
reports, Analyst/Industry reports
Indian Pharma Industry BackdropIndian Pharma to dominate Global generic industry
4
Indian Pharma Industry BackdropHome Market also Poised for Transformation!!
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
3.4 3.96.1
20
4.6
2000 2002 2004 2006 2015
RETAIL PHARMACEUTICAL MARKET IN INDIA
US $ billion
Source: India Pharma 2015, McKinsey & Co
5
Innovation: Opportunity for India
6
Innovation Capacity Unmet Needs
7
Innovation Capacity Unmet NeedsWhy Is It Important?
4%
Though the R&D spend is increasing, success is decreasing
1980 1985 1990 1995 2000 ‘02 ‘03
8
1980 1985 1990 1995 2000 ‘02 ‘03
Innovation Capacity Unmet NeedsWhy Is It Important?
$138$318
$802
$1,200
1975 1987 2001 2006Source: PhRMA Pharmaceutical Industry Profiles 2007
Average Cost to Develop One Drug (US$Mn)
... As Does Average Cost Per Drug ...
4%
Though the R&D spend is increasing, success is decreasing
9
1980 1985 1990 1995 2000 ‘02 ‘03
Innovation Capacity Unmet NeedsWhy Is It Important?
$138$318
$802
$1,200
1975 1987 2001 2006Source: PhRMA Pharmaceutical Industry Profiles 2007
Average Cost to Develop One Drug (US$Mn)
... As Does Average Cost Per Drug ...
4%
Though the R&D spend is increasing, success is decreasing
... With Only 3 of 10 Drugs Recovering Investment...
10
Innovation Capacity Unmet NeedsIndia’s Cost Structure… Key Advantage
Lower Filing Cost
Process Innovation
Manpower Cost Advantage
Capital efficiency
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
India’s 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
Cost Leadership
(in High Risk Game)
Source: IBEF, E&Y Analysis
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 Pharma’s Challenge…Creating Opportunities for Indian Pharmacos
12
Innovation in India: Current Status
13
Current status of Discovery & Development in India
Dr. Reddy’s
Glenmark
Ranbaxy
Cadila
Torrent
Sun Pharma
Biocon
Wockhardt
Nicholas Piramal
Internal Programs
Aurigene, Advinus,
GVK Lifesciences
Dr. Reddy’s, 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. Reddy’s – 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 CompaniesWhat would be the timeframe when innovative product from India will hit the market
Company Pre-Clinical Phase I Phase II Phase III TOTAL
Dr. Reddy’s 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
Source: Analyst reports, company presentations
At least 3-4 years away from launch
16
NCE Programs focused on Metabolic Disorders
Company Therapeutic Focus
Dr. Reddy’s 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
Source: Analyst reports
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…
1. Bring Affordability and Accessibility of Drugs to the Masses
2. Increase Global Pharma Industry’s Innovation Capacity to Meet Unmet
Needs
3. But needs to get the basics right