The New Economic Landscape
Brian W Tempest
CEO & Managing Director
Ranbaxy Laboratories Limited, India
The Pharmaceutical Industry in the 21st Century :
Is India Challenging the R&D Business Model?
Chatham House, London, January 2005
The New Asia
50
Gross Saving as % GDP
45
40
35
30
25
20
15
10
5
1952
1957
1962
1967
1972
India
1977
1982
1987
1992
1997
2002
China
Source: CSO, China National Bureau of Statistics, Morgan Stanley Research
RANBAXY
Largest Economies in 2050
50,000
GDP US$ Bn
40,000
30,000
20,000
10,000
China
US
India
Europe
Brazil
Japan
Source: Global Economics Paper No:118 by Goldman Sachs 14-Oct-04
Russia
RANBAXY
A Dramatic Rise in China and
India’s Middle Classes
Number,
millions
1600
1400
1200
1000
800
600
400
200
0
2005
2015
2025
China
2035
2045
India
Source: Global Economics Paper No:118 by Goldman Sachs 14-Oct-04
RANBAXY
Indian GDP Growth
% YoY
12
10
8
6
4
2
0
1997
1998
1999
2000
2001
2002
2003
Source: Central Statistical Organization of India (CSO), Morgan Stanley Research
2004
RANBAXY
Advantage India
• # of Co’s listed on the BSE second only to NYSE
• 4 out of 10 silicon valley startups run by Indians
• 2nd largest pool of scientists & engineers in the world
• 220 out of the Fortune 500 Co’s outsource IT work here
• ~ 15% of scientists in Big Pharma are of Indian origin
Source : CLSA India Paradox Report, 2003
RANBAXY
The Chrysler Example
By Kirsten Downey
Washington Post Staff Writer
Saturday, March 6, 2004 Pg E01
For each mid size car Daimler Chrysler AG builds at one of
its plants, the Company pays $1,300 to cover employee
healthcare costs, more than twice the cost of the sheet
metal in the vehicle *
(Covers both present and retired employee’s with family)
Source : IMS presentation at the IGPA Conference in Prague , June 2004.
RANBAXY
Cost of Health
• Cost of non pharma healthcare
• High cost innovative medicines
• Across USA, EU & Japan
14%
USA
12%
Germany
France
10%
Spain
8%
UK
6%
4%
2%
60
64
68
72
76
80
84
88
92
Source: Deutsche Bank and SSB Research, 2002 , OECD Health Data 2003 3rd Ed.
96
'00
RANBAXY
RANBAXY
Cost of Health and Age
Source: Deutsche Bank Research, July 2002,OECD Health Data 2003 3rd Ed.
RANBAXY
Issues facing Big Pharma
• Increasing R&D costs
• Product withdrawals e.g. Vioxx
• Re-importation of prescription drugs
• Drug shortages in hospitals in USA
• Pressure on earnings
RANBAXY
India Competitive Advantages
1.
Aggressive Home Market
RANBAXY
India Competitive Advantages
2. Cost of Manufacture
Active Pharmaceuticals Facility, Mohali
Dosage Forms Facility, Paonta Sahib
• Highest # of FDA approved plants outside the US
• 1/3rd of all DMF* filings with the FDA
* Drug Master File
RANBAXY
India Competitive Advantages
3. Cost of Innovation
Ranbaxy R & D Center – I
Ranbaxy R & D Center – II
• India’s inherent strength in
Chemistry
Mathematics
RANBAXY
The Productivity Advantage
India
1 chemist FTE
USA
Better education x 1,3
1 chemist FTE
70 h/week
Longer working time x 1,3
50 h/week
$ 800 monthly
Lower cost x 20
$ 12,000 monthly
Source: IPHMR Conference, New Delhi August 2004
RANBAXY
MNC owned R&D centers in India
Akzo Nobel
GE
Bell Labs
General Motors
Colgate Palmolive
HP
Cummins
Honeywell
Danisco Cultor
Intel
Delphi
McDonald’s
D-Link
Monsanto
DuPont
Qualcomm
Daimler Chrysler
Texas Instruments
Eli Lilly
Tyco Electronics
Emerson Electric
Unilever
Source: CLSA Emerging Markets
RANBAXY
Ranbaxy R&D Organization
22 from US / EU
in 2003
> 1000 Scientists
in R&D
115,000 MSc Scientists & 12,000 PhD's in Chemistry every year
RANBAXY
India Geographic Footprint
2000 - US$ 475 Mn
RoW
34%
2003 - US$
972 Mn
RoW
19%
USA
14%
Europe
6%
USA
43%
Europe
9%
BRIC
46%
2004 - US$ 1178 Mn
2007 - US$ 2 Bn*
RoW
10%
RoW
22%
BRIC
26%
BRIC
29%
BRIC
20%
USA
36%
Europe
~20%
USA
~50%
Europe
16%
* Estimated
RANBAXY
Global Human Bridge
Leading to shareholder wealth
RANBAXY
Innovation - Our own example
Cipro XR
BD / TD
Discovery
Licensing
Full
product
& patenting
out
product
with no
by Indian
to patent
OD
Pharma
holder
solution
company
FDA
development APPROVAL
in the
USA
USA
product
prescriptions
begin
Product
Royalty
gains
to
~ 15%
Indian
market
Pharma
share
company
4-5 Years
RANBAXY
Thank You
Brian W Tempest
CEO & Managing Director
Ranbaxy Laboratories Limited, India
The Pharmaceutical Industry in the 21st Century : Is
India Challenging the R&D Business Model
Chatham House, London, January 2005