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Dr. Brian W Tempest briantempest GLG New York Webcast 5 October 2010

Exploring the Structural Changes in the Global Pharmaceutical Marketplace: an India-China Emerging World Webcast. Dr. Brian W Tempest www.briantempest.com GLG New York Webcast 5 October 2010.

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Dr. Brian W Tempest briantempest GLG New York Webcast 5 October 2010

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  1. Exploring the Structural Changes in the Global Pharmaceutical Marketplace: an India-China Emerging World Webcast Dr. Brian W Tempest www.briantempest.com GLG New York Webcast 5 October 2010

  2. Dr Brian Tempest advises Companies, Banks, High Net Worth Individuals and Investment Funds on their Strategy in the Emerging World based on his wide experience in China, Japan, South East Asia and India where he has lived for the last decade. Brian has worked for Ranbaxy Laboratories since 1995 holding the position of Managing Director and Chief Executive Officer until 2005. He was then Chief Mentor and Non Executive Director until 2008. He is one of the few westerners to have led a Sensex Nifty 50 Indian blue Chip MNC and as a result has a valuable insight into India. Brian has also been Regional Director, Far East for Glaxo where he was responsible for businesses in Japan, China, Korea, and Taiwan. Brian has worked in the Pharmaceutical Industry for the last 39 years and led Healthcare businesses in North America, South America, Europe, Africa, Middle East, Asia and India. He has also led sessions at Investor Meetings across Asia, Europe and USA. He is now an International Advisor to MAPE – India, Religare -India and UNCTAD - Switzerland. In addition he is a member of the SCRIP Global awards panel. Brian speaks at global conferences on the Challenge from India and China and more information on these presentations can be found on his website www.briantempest.com. Brian has a PhD in Polymer Chemistry from Lancaster University and is a member of the Royal Society of Medicine, the Royal Society of Chemistry and is a Chartered Chemist. He is now Chairman of Hale & Tempest Co Ltd.

  3. Healthcare Pressures to 2050

  4. Whilst GDP Growth has Declined, Healthcare Costs continue to Grow

  5. Emerging World’s Perceived Economic Health in 2009

  6. Asian View of World Trade - Europe not really a player

  7. The Future? - Pharma Vending Machines Currently being test marketed in UK Hospitals 2010

  8. Structural Change: Big Pharma

  9. Big Pharma- Despite increasing R&D NCE Productivity continues to fall

  10. Generic Exposure

  11. Many Drugs withdrawn this Decade Source: Deutsche bank, FDA

  12. EC Surprise Anti Trust Raids 2008/9 • 1st - GSK, Astra Zeneca, Sanofi Aventis, Pfizer, Wyeth, Teva in January 2008 • 2nd – Teva , Servier, Kirka in November 2008 • 3rd – Sanofi Aventis France, Novartis France, Teva France in October 2009 • 4th – Lundbeck Italy, Teva UK in December 2009

  13. Approvals becoming Difficult Source: Pharmatimes UK July-August 2010

  14. Sales Force Job Cuts in Press since 2009

  15. USA – Many OTC Switches this Decade Source: Deutsche Bank

  16. 82% of the world population accounts for only 12% of the global pharma sales • Sources: • IMS Midas, March 2005 • Earth Trend Data Tables 2005

  17. Emerging World Share of Pharma Growth source IMS

  18. Emerging World Share of Pharma Source EIU, OECD, WHO, IMS, Roland Berger

  19. Profitability in Branded Generic Markets

  20. Big Pharma & the Emerging World source IMS - BRIC, Mexico, Turkey, South Korea

  21. Emerging Markets & Big Pharma

  22. India Rankings Abbott now has 7000 reps & 7% Market Share

  23. A New World Order is Coming with New Alliances - Pfizer & Aurobindo

  24. Structural Change: Generic Companies

  25. Patent Expiries 2003-2013 (in 8 Markets)

  26. USA Generics Filings Source: Deutsche bank July 2010

  27. USA - Legal Scorecard for Generics Source Impax Feb 2009

  28. Top 22 Generic Companies over $1b Source: Company Reports Generics Bulletin 28 May 2010 (excludes Apotex & Actavis Private Companies)

  29. Next18 Generic Companies < $1b Source: Company Reports Generics Bulletin 28 May 2010 (excludes Recalcine Private Company)

  30. Generic consolidation will continue

  31. Generic Profit Margin Profile in descending order source: Deutsche Bank July 2010

  32. Different Global Generic Market Sizes $b- the hidden branded generic markets

  33. USA - First to File Lawsuits Source RBC Capital Markets January 15 2010

  34. USA - Litigation Success Rates Source RBC Capital Markets January 15 2010 • Patent Challenges on rise - 65 FTFs in 2009 • Success rate at 48% - or 76% including deals • 3 courts hold 69% with 36% success e.g. NJ • 4 courts never ruled against generics e.g. NY • At risk launches on the rise – 6 in 2009 • Teva has 12 of the 28 at risk launches – 2002/9 • Settlements on the rise – 54 in 2009 • Teva accounts for a third of all settlements • Authorized generics on the rise – 25 in 2009 • Watson represents a fifth of all AGs

  35. USA Challenge – Size of Product Basket Source: Deutsche Bank

  36. Japan - Generics supported by Politicians

  37. Distributors moving into GenericsUK Coop – the world’s largest consumer cooperative • GBP£10b UK company • running food stores, banks, insurance, funeral homes, travel agents, farms and pharmacies • 3rd rank pharmacy chain in UK with 800 stores • Owns UK pharmaceutical wholesaler Sants • Opus Marketing JV with Day Lewis Pharmacy Chain offers 113 products under “Prospect” brand • Tianjin Tasly Sants Manufacturing JV opens 2010/11 • With Investment GBP£20m, 200 staff

  38. Structural Changes: Indian Pharma Companies

  39. Indian Generics have consistently outperformed USA Generics

  40. To understand India , understand the promoter families McKinsey Quarterly 16 Jan 2010 • Family ownership -often overlooked • 1/3 of S&P500 index, 40% of top 250 Cos Fr/Ge • <30% survive into the 3rd generation • Survivors do better than their corporate peers • Family Councils, Wealth Management Offices • Every generation has a liquidity event • Families renew their portfolios over time

  41. India - The Education Advantage

  42. Indian Deals Roaring Ahead July 2010 Grant Thornton Deal Tracker

  43. Indian DMFs 62% April 2010

  44. Chinese DMFs 22% April 2010

  45. India represents 50% of USA ANDAs

  46. FDA Approved Manufacturing Sites source FDA

  47. The Indian Drug Development Model Early discovery leads from US, Europe, Taiwan, Singapore Molecular optimisation from India Toxicology from China, Central Europe, Singapore Electronic Data Capture from India API Manufacture from India with Raw Materials from China Drug Formulation Manufacture from India, USA Phase 1 Clinical Trials from Europe Phase 2,3 heavy use of India Corporate back office from India

  48. India – Share of CRAMS Market

  49. Chinese ANDAs are Coming

  50. The Tempest Crystal Ball • Asia has become the Centre of Gravity for global business • Big Pharma will develop Emerging World Strategies, Generics Strategies, OTC Strategies, Vaccine Strategies, VC Strategies • Big Pharma will continue to be attracted to India for CT, EDC, MO. and to China for RM/Biology/Toxicology • Big Pharma will develop dual IP as well as dual pricing • Many Indian families are reviewing their family portfolios and will optimize their holdings. M&A will consequently expand further • Generics – Risks and Competition are rising • Branded Generics will continue to be very attractive

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