INDIAN PHARMA OUTLOOK

INDIAN PHARMA MARKET: BRANDED GENERICS

CHARACTERISTICS

Indian Pharma Market (IPM): Predominantly a Branded Generic marketHigh degree of fragmentation; Low Price; Competition impacting prices

Significant pricing disparity exists across molecule segments

-Please note MRP is approximate calculated on PTS *Source: Taking wings, Ernst & Young, 2009.; ‘ Source: IMS Dataset Jul’11; #KPMG, The Indian

Pharmaceutical Industry Collaboration for Growth1. Industry and company sources

High Degree of

Fragmentation

Competition Impacting Prices

Predominantly a Branded Generic

Market1

No. of players in India# : ~20,000 ; No.

of Brands in India* : over 60, 000

IPM: Driven by Growing Indian EconomyIncreasing GDP and rising healthcare expenditure

Healthcare spend by Government is on an upward trajectory#

The Indian population’s expenditure on healthcare is steadily moving up

The Indian economy is growing fast.

*PwC report: Indian Pharma Inc: Capitalising on India’s growth potential page, 8 & 9 #Ministry of Health & Family Welfare website; India Pharma 2020 : Propelling access and acceptance and realising true potential; Mc Kinsey & Company Report-2010

Indian Population’s expenditure breakup

as a % of overall disposable income

IPM: Changing Competition MixMarket dominated by Indian Players- Recent shift in favour of MNCs driven by M&As

A good no. of M&As and JVs in the recent past

*ORG IMS, please note all figures are MAT Dec except 2011 which is on MAT August basis

3/4th of the market by Local companies. Recent shift in favor of MNCs driven by M&As

Rapid changes in the top 10 players

IPM: Sources of GrowthBoth Volume and New Products; Chronic therapies growing faster

Chronic TAs viz CVD, Neuro psychiatry registering higher growth #

New Products and Volumes are the key drivers of growth’

Institutions also contributing

*PwC report: Indian Pharma Inc: Capitalising on India’s growth potential page, 26, # Source : IMS Data-set & Team Analysis, `Note: All figures are MAT Dec, except 2011, where fig mentioned are on MAT July basis, IMS dataset

IPM: Sources of GrowthMetros, TC-1 and Rural markets driving growth; Doctor base expanding, so also, Field Force

Contribution of Metro and Class-1 towns has moved from 59.1% to 62.3%

Doctor segment expanding and so is theField force of pharma companies

*India Pharma 2020 : Propelling access and acceptance and realising true potential; Mc Kinsey & Company Report-2010, #Source : IMS Data-set & Team Analysis

Value Share Value ShareCAGR

10/05

All India 5,169 100.0% 10,397 100.0% 15%

Metros 1,703 32.9% 3,334 32.1% 14%

Class1 1,355 26.2% 3,141 30.2% 18%

Class2 1,106 21.4% 1,850 17.8% 11%

Rural 1,003 19.4% 2,072 19.9% 16%

2005 2010

INDIAN PHARMA MARKET: BRANDED GENERICS

GOING FORWARD

Affordability expected to IncreaseDriven by higher income levels & health insurance penetration

•Rising Income levels will drive more households in Upper & Middle Income level 1

•Health insurance penetration will increase to ~45% of population 2

1. The ‘Bird of Gold’: The Rise of India’s Consumer Market, May 2007, McKinsey Global Institute 2. India Pharma 2020 : Propelling access and acceptance and realising true potential; Mc Kinsey & Company Report-2010

The Income levels are set to rise Health Insurance Penetration is estimated to grow

Govt. focus will be on Primary & Secondary care in Tier-2/ Rural towns; while Private sector will focus on Tertiary care in Metros & Secondary care in Teir-1 cities

Accessibility & Acceptability expected to ImproveThrough primary & Secondary care focus

Companies will invest in shaping Patient Tunnel

Healthcare in Metro and TC- 1 will continue to drive IPM*

Ministry of Health & Family Welfare website; India Pharma 2020 : Propelling access and acceptance and realising true potential; Mc Kinsey & Company Report-2010,*IMS Data-set & Team Analysis

1. India Pharma 2020 : Propelling access and acceptance and realising true potential; Mc Kinsey & Company Report-20102. Report of the Committee on India Vision 2020, Planning Commission Government of India, 2002

Epidemiological factors expected to expand Patient PoolRising population and disease prevalence will expand patient pool

Several disease areas likely to see 25-45% rise in patient pool 1

Patients suffering from key diseasesMn

Increase in the Productive Population Pool, would drive higher treatment rates 2

Nos % Nos % Nos %

Total 1,175 100 1,256 100 1,331 100 1.3%

< 15 years 370 31 372 30 373 28 0.1%

15-64 years 747 64 819 65 882 66 1.7%

>65 years 58 5 65 5 76 6 2.7%

CAGR

(2020/10)

2010 2015 2020Year

Population spread by AgeMn

INDIAN PHARMA MARKET: VACCINES , INNOVATIVE PRODUCTS & OTC

•62% of the revenues in 2009-2010 from the biotech industry came from bio-pharmaceuticals.#

•25% of all Bio-pharmaceutical sales - contributed by Vaccines*

Vaccine Market : CurrentBiotech Industry is steadily growing

#Source: ABLE-Biospectrum industry survey, June 2010, Ernst & Young analysis, *Source: PwC report: Indian Pharma Inc: Capitalising on India’s growth potential page, 35

Source: PwC report: Indian Pharma Inc: Capitalising on India’s growth potential page, 36 & 37

Vaccine Market : Going ForwardIncreasing disposable income will drive growth

•Increasing disposable incomes will drive growth of the vaccine segment further.Trend will be towards combination vaccines

•Govt. interventions through national immunization drives will increase awareness.

Innovative products : CurrentPatent protected products being launched; Contribute less than expected, only about 1-2% of the IPM *

#Indicative List

•A no. of patented products launched during 2008-10 due to the advent of the product patent regime in

2005•In-Licensing, Joint Ventures, Marketing agreements driving the focus towards niche products#Source : Ernst and Young analysis, Taking Wings, 2009 * Mckinsey & Company India Pharma 2020 Propelling access & acceptance realising true potential Source: PwC report: Indian Pharma Inc: Capitalising on India’s growth potential

Launch of Patented Products In-Licensing, JVs & Marketing agreements

Innovative Products : Going ForwardPatent protected products launch expected to increase: Projected to be less than 5% of IPM by 2020

•Patented product segment is projected to grow to USD 1.7 billion by 2020 (base case) . *

•Simultaneous CTs across the globe are diminishing time to launch the product.

•In the future, with growing affordability, deepening of health insurance and steadyimprovement in Intellectual Property Rights (IPR),patented product launches shouldincrease.*

•Mckinsey report ‘India Pharma 2020, projected the market for patent protected productsto be less than 5% of the IPM by 2020.

#Source : Ernst and Young analysis, Taking Wings, 2009 * Mckinsey & Company India Pharma 2020 Propelling access & acceptance realising true potential *PwC report: Indian Pharma Inc: Capitalising on India’s growth potential page, 26

Source : India Pharma 2020 : Propelling access and acceptance and realizing true potential; Mc Kinsey & Company Report-2010

Projected Growth Rates%

• McKinsey’s projections are broader & directional in nature

IPM: Going ForwardIncreasing affordability, accessibility, acceptability and epidemiological factors expected to drive IPM growth of 14.5% CAGR

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