FINAL PROJECT REPORT ON STUDY OF TOP 10 PHARMACEUTICAL COMPANIES IN INDIA A report submitted to Ishan Institute of Management & Technology,

Greater Noida as a partial fulfillment of full time Post Graduate Diploma in Business Management. UNDER GUIDENCE OF DR. RAKESH SHARMA SUBMITTED TO: Dr. D.K. GARG CHAIRMAN IIMT, Greater Noida. SUBMITTED BY: Ashish Kr. Chhaperia ENR- MMR 4085 Anima Kumari ENR- MMR 4083 Batch: 15th PGDM (MARKETING)

ISHAN INSTITUTE OF MANAGEMENT &TECHNOLOGY 1A, KNOWLEDGE PARK - I, Greater Noida, Distt. GB Nagar (U.P) Website: www.ishanfamily.com, E-Mail: student@ishanfamily.com

ACKNOWLEDGEMENT It is the great pleasure to have this opportunity for the preparation of this project. We have highly obliged by Ishan Institute of management & Technology for giving the opportunity of this dissertation. I take the opportunity to express our gratitude to all of them, who in some or the other way helped us to accomplish this project. A large number of individuals have contributed directly or indirectly in this project. I am thankful to all of them for their help and encouragement. I take an opportunity to acknowledge my indebted to Dr. D. K. Garg (Chairman, IIMT), Dean Sir Prof. M.K. Verma, and all the staff of the PGDM department for making available all facilities in fulfilling the requirement for the reasonable work. I wish to acknowledge my thanks to my guide Dr. Rakesh Sharma for their valuable cooperation and efforts for the preparation of this project. Last but not least, We also very much thankful to our parents, brother and sisters for their continuous encouragement and moral support during this project and other people who helped us in preparing this project knowingly and unknowingly.

Date: Place:-

Ashish Kumar Chhaperia Enr- MMR 4085 Anima Kumari Enr- MMR 4083 Batch: 15th PGDM (Marketing)

DECLARATION The final project report on Study on top 10 pharmaceutical companies in India under guidance of Dr. Rakesh Sharma is the original work done by me. This is the property of the Institute and use of this report without prior permission of the institute will be considered illegal and actionable.

Date:

Signature Name: Ashish Kumar Chhaperia ENR MMR 4085 Anima Kumari ENR MMR 4083 Batch: 15th PGDM (MARKETING)

TABLE OF CONTENTS CHAPTER-1- INTRODUCTION  Industry Profile  Objective of the study  Present scenario CHAPTER-2- GROWTH OF PHARMACEUTICAL INDUSTRY IN INDIA

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CHAPTER-3- REGULATORY ENVIRONMENT OF INDIAN PHARMACEUTICAL INDUSTRY  The Patent Act  Drug price control  Patent (Amendment Act) CHAPTER-4- RANBAXY PHARMA 145  History (Mission, Vision)  Products  Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-5- DR. REDDYS LABS  History (Mission, Vision)  Products  Organization structure  Marketing mix  R and D activities 146-165 10469-103

 Promotional strategies CHAPTER-6- CIPLA PHARMA 210  History (Mission, Vision)  Products  Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-7- SUN PHARMA INDUSTRIES 211-241  History (Mission, Vision)  Products  Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-8- LUPIN LABS  History (Mission, Vision)  Products  Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-9- AUROBINDO PHARMA  History (Mission, Vision)  Products 298-303 166-

 Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-10- GLAXO SMITHKLINE PHARMA  History (Mission, Vision)  Products  Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-11- CADILA HEALTHCARE  History (Mission, Vision)  Products  Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-12- AVENTIS PHARMA  History (Mission, Vision)  Products  Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-13- IPCA PHARMA  History (Mission, Vision)

 Products  Organization structure  Marketing mix  R and D activities  Promotional strategies CHAPTER-14- SCOPE OF PHARMACEUTICAL INDUSTRY  Contract research and manufacturing  Outsourcing and other services  Research and development CHAPTER-15- SWOT ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY CHAPTER-16- FUTURE PROSPECT  Conclusion  Finding  Suggestion BIBLIOGRAPHY ANNEXURE 304-305 306-309

CHAPTER-1

INTRODUCTION

 Industry Profile
Recent globalization and the development of the information superhighway have brought the countries of the world closer. From a business perspective, the world is one marketplace. The American pharmaceutical industry has played a pioneering role in the development of the drug industry through in-depth, timely, and useful research and bulk manufacturing of drug products. Although the US pharmaceutical industry is enjoying the leadership position, it can no longer be content to focus only on the US, Japanese, and European markets. India, being the second largest country in the world in terms of population, is also attracting attention for future business potential. The purchasing capacity of approximately 300 million middle-class individuals cannot be easily overlooked by global pharmaceutical companies. This market potential will be increased by Indian officials decision to honor international patent laws by 1 January 2005. After having made a similar move, the Korean pharmaceutical industry grew tremendously, and the doors to foreign investments swung open. This article analyzes the current information available about the Indian pharmaceutical industry (IPI). It discusses the IPIs preparation for 2005 so that it will not lose market share after multinational companies enter the Indian pharmaceutical market. It also discusses some strategies that the American pharmaceutical industry may choose to ensure smooth entry into the IPI. The pharmaceutical industry in India is going through a major shift in its business model in the last few years in order to get ready for a product patent regime from 2005 onwards. This shift in the model has become necessary due to the earlier process patent regime put in place since 1972 by the Government of India. This was done deliberately to promote and encourage the domestic health care industry in producing cheap and affordable drugs. As prior to this the Indian pharmaceutical sector was completely dominated by multinational companies (MNCs). These firms imported most of the bulk drugs (the active pharmaceutical ingredients) from their parent companies abroad and sold the formulations (the end products in the form of tablets and capsules, syrups etc.) at prices unaffordable for a majority of the Indian population.

This led to a revision of Government of Indias (GOI) policy towards this industry in 1972 allowing Indian firms to reverse engineer the patented drugs and produce them using a different process that was not under patent. The entry of MNCs was also discouraged by restricting foreign equity to 40%. The licensing policy was also biased towards indigenous firms and firms with lesser foreign equity1. All these measures by GOI laid foundations to a strong manufacturing base for bulk drugs and formulations and accelerated the growth in the Indian Pharmaceutical Industry (IPI), which today consists of more than 20,000 players1. As a result the Indian pharmaceutical industry today not only meets the domestic requirement but has started exporting bulk drugs as well as formulations to the international market. Currently the main activities of Indian pharmaceutical industry are broadly restricted to producing (i) bulk drugs and (ii) formulations with very few companies risking investing in primary research aimed at developing and patenting new drugs. The bulk drug business is essentially a commodity business, where as the formulation business is primarily a market driven and brand oriented business. Multinational companies which have entered the Indian market have mostly restricted themselves to formulation segment till date. The domestic pharmaceutical industry (MNCs and Domestic) meets about 90% of the countrys bulk drug requirement and almost the entire demand for formulations. The economics of bulk drug business and that of formulation business are quite different. Since a majority of the Indian companies are producing both bulk as well as formulations, these are considered together for the purpose of the present study. The Changing Environment During the early 1990s, markets were opened by removing restrictions on imports and in 1994 licensing was abolished for producing bulk drugs and formulations. Other than this FDI restrictions into this sector have been modified to allow 74% foreign equity through the automatic route. More favorable conditions are to follow in future particularly for MNCs as soon as Product Patents and Exclusive Marketing Rights (EMRs) are permitted. In a situation like this, there is a lot of speculation that the indigenous companies that have been the mainstay of the Indian pharmaceutical industry2 over the past couple of decades finally becoming a formidable part of Indian economy and a major source of foreign income might be facing uncertain market conditions in the future. It may also come down to a state where most of the small scale companies have to close down, with the multinational companies dominating and monopolizing the industry once again. There is a justified reason for this, and that is, so far Indian companies have made use of the cheap labor and the reverse engineering skills under the favorable conditions of process patent regime and developed generic replicas to drugs that were under patent in developed countries, which then were sold in the domestic markets and exported to other unregulated markets elsewhere in the world. This generic business enabled them to compete with multinational companies in India and abroad and resulted in good revenues. However, once the product patent regime gets implemented from the year 2005, one is not allowed to reverse engineer drugs that are patented after 1995, and the revenues from this business will suffer. Whereas, the multinational companies in India, which have an impressive new product portfolio will get exclusive marketing rights to sell their products at higher prices and will be in a position to dictate the terms.

Given the above, survival of Indian companies depends on producing generics of drugs whose patent has lapsed and export the same to regulated markets4. This is possible only if these firms are able to formulate these products at much lower prices allowing then to face competition from established players in the international markets. Other than this, avenues like contract research and manufacturing for multinational companies have become popular business models for many small scale and medium scale firms. Given this situation it is highly likely that individual firms adopt different strategies for growth. These strategies are dependent more on the managements perception of the individual firms strength in terms of finance, manpower and material in relation with the other firms within the industry for a given environmental context. Some of these strategies may end in failure due to unexpected changes in the environment or bad judgment on the part of the management. The main question for which we try to provide an answer is Do internal efficiencies have any role to play in the growth of a firm irrespective of the individual growth strategies adopted in a dynamic environmental context. The above question becomes very important for firms which operate in a transition economy. This is particularly true if the transition is aimed towards being a part of the global economy. This would create an environment where firms are faced with a completely new opportunity set in terms of investment and growth. These opportunities encourage firms to adopt high growth strategies at the cost of immediate returns. The success or failure of any such strategies is dependent on the nature of competition faced by these firms over time. Therefore it would be very reasonable to assume that a firms internal efficiencies may become the crucial deciding factor in dictating the survival and growth of these firms in various segments of pharmaceutical industry. We concentrate on the role of internal efficiencies in the growth of these firms independent of the individual marketing strategies and long term visions adopted at the firm level. The following paragraphs try to analyze the role of internal efficiencies in fostering growth using DEA. Three models of DEA have been used namely the CCR, BCC and AR models not only to ascertain the relevance of the parameters used for fostering growth but also to throw light on the efficiency of these models in isolating the better firms irrespective of the individual growth strategies used. Cost Structure/Performance indicators of Indian pharmaceutical industry The pharmaceutical industry is characterized by low fixed asset intensity and high working capital intensity (ICRA 2002). The Material cost, Marketing and selling cost and Manpower Cost constitute the three major cost elements for the Indian pharmaceutical industry, accounting for close to 70% of the operating income. In the past 6-7 years, material costs, which account for almost 50% of the operating cost have declined owing to the decrease in prices of bulk drugs and intermediates, increase in exports which enabled procurement of raw materials in large quantities and hence at low prices and finally due to increase in production efficiencies. On the other hand, the marketing and selling expenses, comprising of promotional expenses, trade discounts, advertising and distributing costs; and freight and forwarding costs have increased in the past few years owing to the increase in emphasis on sales of formulations. This increased focus on marketing partly lead to the increase in the manpower costs of pharmaceutical companies during the last decade. The other factor for the increase in the manpower costs, at least in case of a few

companies might be due to an increase in R&D efforts, which requires quality research personnel. Data Envelopment Analysis as a measure of efficiency Efficiency of a firm can be defined as the maximization of a set of outputs (Output-oriented) given a set of inputs or minimization of a set of inputs (Input-oriented) for a given output. Most DEA applications in the literature are Input-oriented and this is attributed to a general lack of suitable multiple-output datasets. Traditional industry reports (e.g., ICRA2) on the trends in costs, margins and returns generated by IPI analyze the industry with the help of various performance indicators like operating profit margins, net profit margins, fixed asset turnover, working capital intensity and inventory holding period etc. However, parameters like margins, returns and debt ratios can only describe various performance characteristics in isolation as only one input and one output can be taken at a time. Comparison of these parameters in isolation across firms for a given industry might provide a biased picture of a firms efficiency vis--vis other firms in the same industry. This problem with this kind of analysis can be overcome by defining or developing a performance indicator using the various parameters with suitable weights to come up with a composite index comparable across firms. This strategy would also limit the interpretation of the results due to the static nature of the weights so assigned. Data Envelopment Analysis (DEA), one of the more recent and a highly popular tool among researchers overcomes this problem by simultaneously analyzing multiple inputs and outputs to come up with a single scalar value as a measure of efficiency. DEA has been used to successfully measure relative efficiencies of DMUs in various public and private sector industries like banks, computer industry, health care sector, pharmacies, car manufacturing industry, fisheries and search engines on the internet etc since its development in 1978 (Charnes et al. 1978). In the Indian context Saha et al3 used DEA to measure the relative efficiencies of Indian banks, in a changing environment of financial sector reform initiatives by the Indian government since the early 1990s. One of the instances where DEA was used in the financial analysis of pharmaceutical companies was by Smith4, who used financial statements of 47 firms producing pharmaceutical products to show the advantages of DEA to the traditional ratio analysis in describing the multivariate nature of firms5. The objective of DEA application in the current study is to see if there are any best practices developed in IPI that are not influenced by the external environment. The Methodology of Data Envelopment Analysis Data envelopment analysis offers several characteristics that are quite unique and useful in comparison to traditional financial analysis methods like ratio analysis or regression analysis. Although all these techniques have their own advantages and disadvantages, one of the most important feature of DEA is the ability to compare many parameters simultaneously and come up with a scalar measure of overall performance. DEA provides the relative efficiency of each of the firms (which usually are called Decision Making Units (DMUs)) in a given set of firms. These DMUs are assumed to be in the business of producing various outputs by consuming a set of

inputs. In general several inputs are required to produce one or more outputs for a DMU. However, in DEA only a few inputs and outputs are chosen depending on how critical their contribution is to the effective performance of the DMU, in order not to dilute the efficiency analysis with too many parameters. The selection of inputs and outputs is of paramount importance in any DEA calculations as the results of the study can vary with different sets of inputs and outputs. These vary from industry to industry, and even within an industry depending on the objective of the efficiency analysis being carried out. It always helps to begin with 2-3 inputs (outputs) and slowly build up the number noting down the effect of each additional input (output) on the efficiency scores. Another unique feature of DEA is that the type of units used for all the inputs and outputs does not have to be the same, as long as same set of inputs and outputs are used for all DMUs, and the measure of efficiency becomes units invariant. This gives a tremendous flexibility in choosing the inputs and outputs, and a convenient way to compare relative efficiencies of DMUs. Data Envelopment analysis, first proposed by Charnes, Cooper and Rhodes in 1978, is a nonparametric method which assumes the production function is unknown. DEA involves solving a linear programming (LP) problem where the solution provides a numerical description of a piecewise linear production frontier. Since the formal introduction of DEA, the basic concepts and principles have developed into four types of DEA models6. Those are the CCR ratio model, BCC returns to scale model, additive model and multiplicative model. In a comparative study Ahn et al proved theoretically that the results in the form of efficiency or inefficiency are robust, even though different models are applied. Here we give a brief description of one of the most basic DEA models, the CCR model, proposed by Charnes, Cooper and Rhodes in 1978. We use the following notation: xi, j ith input of DMU j where i = 1,,m and j = 1,,n. yi, j ith output of DMU j where i = 1,,s and j = 1,,n. ui ith weight corresponding to output yi,o where i = 1,,s and o = 1n is the DMU that is being evaluated. vi ith weight corresponding to input xi,o where i = 1,,m and o = 1n is the DMU that is being evaluated. In the above notation, we are assuming n DMUs, with m inputs and s outputs. The CCR model of DEA can be expressed in terms of the following linear programming model5. Max o s so = u1 y1 +L+ u y (1) Subject to 1 1 1 + + = o m mo v x L v x (2) u1y1 j +L+ us ysj v1x1 j +L+ vmxmj j = 1,..., n (3) v1,v2 ,Lvm 0 (4) u1,u2 ,Lus 0 (5) gives the efficiency of the DMU O. Since there are n companies, we will have n optimisations to measure the efficiency of each DMU. DMU O is CCR-efficient if * = 1 and there exists at least one optimal solution (v*,u*) with v* > 0 and u* > 0 , where ( * , v* ,u* ) is the optimal solution to the LP (1) (5). Otherwise, DMU O is CCR-inefficient. In case of inefficient DMU, DEA also gives the degree of inefficiency and benchmarks a corresponding reference set of efficient DMUs, also called peer group. The peer DMUs are the efficient units closest to it and

are observed to produce the same or higher level of outputs with the same or less inputs in relation to the inefficient DMU being compared. This enables the inefficient DMUs to know if there is excessive wastage of inputs and/or if there is any scope for improvement in outputs. The above-mentioned Constant Returns to Scale (CRS) DEA model implies that the size of a DMU should not matter for the efficiency. To facilitate ease of calculations, the dual of the LP model (1)-(5) was developed, where a virtual DMU, which is the linear combination of all the DMUs of the sample, is compared with each DMU under evaluation, to calculate the efficiencies as follows: Where j are the multipliers corresponding to each of the DMUs in the linear combination of the virtual DMU, and therefore the weights of inputs and outputs of the virtual DMU. subject to the constraints, DMU is compared with the virtual DMU to see if it can produce equal or more output than the virtual DMU with the same or lesser input. If it can, then that particular DMU is efficient and forms a part of efficient frontier with = 1, = 1 and = 0, j 0 o j . If not, it is inefficient and the degree of inefficiency depends on the efficient companies on the frontier. Banker, Charnes and Cooper8 (BCC) developed a DEA-model that calculates pure technical efficiency, which is consistent with a maintained hypothesis of Varying Returns to Scale (VRS). The BCC model is given by the dual of CCR model (6)-(9), with an extra constraint on j , given below by equation (10), which restricts the feasible region to a convex hull and at the same time ensuring the varying returns to scale. 1 (10) 1 2 + + + = n L In fact, an efficiency score obtained using the CCR-model is called Technical Efficiency, which comprises of both Scale Efficiency and pure Technical Efficiency. In a case where a DMU is found to be inefficient, one can decompose this total inefficiency to see in what degree this is due to scale inefficiency or technical inefficiency. At this point, one should note that the resulting weights assigned by the DEA, in CCR and BCC models are not necessarily the correct weights as management or the analyst might assign since the weights are designed to place the organization under evaluation in the best light possible. DEA provides a conservative performance evaluation and gives the DMU the best weighting possible whether or not the weightings represent the balance of outputs and inputs desired by management or an analyst. For example, a DMU producing a high level of operating income and little operating cash flow may not be considered by an analyst to be as healthy as a DMU with a more balanced production of financial outputs. However, it is possible for this less-healthy DMU to receive a higher DEA score. To avoid a situation, where unfair amounts of weights are being as signed to any input and/or output, Assurance Region model was developed. In this model, weights of any two inputs/outputs may be controlled with the help of upper/lower limits. Application of DEA to Indian Pharmaceutical Industry In the present study we have considered a sample of 44 pharmaceutical companies, whose data is available throughout the period 1992 - 2002. The main reason for choosing this sample is the fact that we have continuous availability of data for a common sample, which enables measurement of various performance characteristics of those pharmaceutical companies that have survived at

least 11 years or more. A point to note here is that the selection of such a sample in itself gives a set of companies that have successfully survived at least the last 11 years, and includes most of the market leaders on the top and the companies that are struggling to make ends meet in the bottom. Thus we hope that the sample is representative enough to include all kinds of firms with a history of 11 years or more, except the ones, which have started after 1992, and the ones that have closed down or got merged before 2002. Indigenous Companies 29 65.91% Multi National Companies 15 34.09% Bulk & Formulations 21 47.73% Only Formulations 22 50% Big (Turnover 300 Crores) 15 34.09% Small(Turnover < 300 Crores) 29 65.91% The composition of the sample is given which is differentiated under different criterion, first in terms of origin: indigenous versus multi nationals, secondly in terms of business: Bulk & Formulations versus only Formulations and finally, size wise: big versus small. Our aim is to see how the companies in different categories will fare in terms of efficiency ratings. The DEA analysis on this sample would give relative efficiencies of these 44 firms with respect to each other and not with respect to all the 20,000 companies of Indian pharmaceutical industry. This means, there might be other efficient/inefficient companies, with better/worse practices in the larger population, that are not included in this sample, and whose inclusion might reduce/increase the respective efficiencies of the firms in the present sample. However, for now, we restrict ourselves to the present sample and focus on their best practices and try to analyse the emerging trends in Indian pharmaceutical industry. Inputs and outputs for the Data Envelopment Analysis The choice of the inputs and outputs is very crucial for the relative efficiencies to be useful in arriving at meaningful conclusions. For any given firm in an industry, performance or efficiency is purely relative. There can be no predefined efficiency indicators given the general constraint that the sum total of output should always be greater than the sum total of input. Given this relative efficiency depends on the firms capability or to be precise the managements capability in utilizing the given resources better than the competition. This will provide these firms with surplus output or slack, which can be used to face market uncertainty and take advantage of any new opportunities thus enhancing the growth of the firm. This is also true in case of Indian pharmaceutical industry, which is faced with a major period of uncertainty and an unprecedented opportunity for growth. Most of the parameters fostering growth are external in nature like demand in external markets etc. The one factor which is internal and under the direct control of the management are the costs expended for a given output. The major cost elements, which contribute towards 70% of the operating income2 of a pharmaceutical firm in India are chosen as inputs for the application of DEA in the current paper, as follows: (i) Cost of Production and selling (ii) Cost of Material and

Cost of Manpower. The outputs are (i) Profit margin (ii) Net Sales and (iii) Exports. As the objective of our study is to look at the internal efficiencies of pharmaceutical companies, the natural choices for outputs are net sales and profit margin, which explicitly state the performance of the firm. Even though exports are part of net sales, it is taken separately as the third output, as a representative of a firms export business, which is going to play a very crucial role in a firms ability to survive and grow in a post product patent regime. Results of the DEA Analysis We used both CCR and BCC models in order to find scale efficiency and pure technical efficiencies of the 44 companies in our sample. We also used Assurance Region model with restrictions on weights of the inputs according to the ratio 7:5:1 respectively, which are derived from the past trend in the cost structure of these inputs in the Indian pharmaceutical industry, as discussed in the previous section. We have divided the results of the sample into three groups, the group-I consisting of top efficiency ranking firms, group-II consisting of medium efficiency rankings and finally group-III consisting of the least efficient companies. Table 2 gives the top 8 companies in terms of CCR efficiency ratings from the sample. Columns 2 and 3 and 4 give the number of times each company in column 1 has come as efficient, using CCR, BCC and Assurance Region (AR) models during the Financial Years (FY) 1992-2002. Finally column 5 gives the Compounded Annual Growth Rate of these companies during the period 1992-2002 and the last two columns give the net sales of these companies in the years 1992 and 2002 respectively. Group-I companies, as is evident from Table 2 is an interesting mix of 5 small and 3 big companies. However, out of 8 companies, there are 7 Indian companies and 1 MNC; and 6 companies are in the business of Bulk & Formulations. Another interesting observation is that the Compounded Annual Growth Rate (CAGR) of these companies is quite high with Morepen Laboratories Ltd (MLL) which is BCC-efficient throughout the 11-year period and CCR efficient in 10 out of 11 years, topping the CAGR score. The average CAGR of Group-I companies is 26.1%, which is much higher than the industry average. Looking at the scores of the above 8 companies a pattern can be observed. Out of these 8 companied 4 companies MRR, Aarti, Organon and Gujarat Themis are both CCR and BCC efficient but fail to score in the AR-model. In the remaining four, 3 companies Bharti, Neuland and Dr. Reddys are found to be efficient in all the three models. Ranbaxy was found to be highly BCC efficient but failed to score in both CCR and AR models. It is interesting to note that this discrepancy in terms of model efficiencies seems to be dependent on the growth strategy adopted by these firms. These growth strategies also define the nature and relevance of the various internal factors used in the analysis. It is evident that these firms have very high growth rates. The four firms which have not been found to be AR efficient have one thing in common in spite of vast differences in the size of the firms. All the four firms are bulk drug manufacturers. Bulk drug business is characterized by relatively low risk and is more cost driven but requires very low marketing and selling expenses. The low marketing and selling

(iii) (iv)

expenses of these firms have precluded them from scoring in the AR-model. Since the AR-model predefines the limits of the parameters used in the model. In case of three companies which have been found efficient in all the three models their products require more marketing and selling costs. Whereas in case of Ranbaxy which was found to be only BCC efficient it is interesting to note that inspite of the high growth figures the growth is driven by low margins. This is possible as Ranbaxy is focusing on increasing its market presence globally using pricing as its main strategy which is reflected in its reducing margins. Best Practices of Efficient Companies in Group I As discussed earlier, the DEA methodology tries to show every DMU in its best possible light, by giving more weighting to those inputs that are lowest and those outputs that are at the highest for the DMU under evaluation. Thus, an in-depth analysis of the weights can reveal those resources that were more efficiently utilized by an efficient DMU, and hence resulted in a full efficiency score. A close look at the weights of CCR-scores, for Group-I companies shows that all the 7 indigenous companies have got maximum weighting to Cost of Manpower, consistently for all the years (total of 74 instances), except in 3 instances. Ranbaxy got more weighting to Cost of Material in the year 1999, whereas, DRL got more weighting to Cost of Material in the year 2000, and to Cost of Production and Selling in the year 2002. However, the only MNC, Organon got more weighting to Cost of Material throughout the sample period (9 out of 11 instances), except for 1995 & 2002, where Cost of Manpower got more weighting. Thus, it is clear that the best practice for the indigenous companies is the efficient management of their low cost Manpower, whereas those MNCs, which are managing the Raw Material well can fare well in the efficiency ratings. Perhaps, Organon being in the business of both Bulk & Formulations, in a position to utilize its Raw Material better, and since most of the MNCs are only in the business of Formulations, could not make it to the group of most Efficient companies. Medium Efficient Companies Group II Out of the 12 companies in that are on the CCR-efficient frontier at least in one year, 2 are MNCs and the rest are indigenous companies. Exactly 50% of companies in Group II are in the business of only formulations, and the other 50%, in the business of Bulk drug and formulations, with both MNCs dealing with only formulations. There are 5 companies that have been BCC-efficient for 5 or more years, and 9 companies that have come up as efficient with the Assurance Region (AR) model, at least in one year. A point to note here is that the average CAGR of Group-II companies is 13.04% which is much lower than that of Group-I companies. However, the negative CAGR rate of Duphar-Interfran has contributed to this lower rate to some extent, which otherwise is 14.82% (excluding Duphar-Interfran). As one can see from Graph I, the top three companies of Group II have achieved a CCR efficiency score of 1 throughout the period 1998 2000. In fact Cipla started off its efficiency journey, a year early, from 1997 till 2000, and although dipped a bit in 2001-2002, only marginally to .95 and .96 respectively. One can see from the graph that the initial period from 1992-1994 was not very good for Cipla, and the CCR-efficiency ratings increased steadily from

1995 onwards. This consistency is reflected in the BCC-efficiency ratings of 0.96 in year 1995 and a 1 throughout the 7-year period 1996-2002. On the other hand, both Torrent and Pfizer started doing well from 1997 on wards, with Pfizer, an MNC achieving full efficiency during 1998-2001 and dipping to lower rate of 0. 94 in 2002. Pfizer has a volatile performance during 1992-1995, after which it has a steady growth in its efficiency scores. Pfizer has been an outsourcing hub to its global major Pfizer Inc. of the US and also conducts clinical development of new molecules with an R&D base, and has not launched many new drugs due to its parents policy on patented drug introduction in the Indian market. Torrent Pharmaceutical Limited (TPL), an indigenous company, has been BCC- efficient during 1992-1995 and 1998-2000, dipping only slightly in between; and scale efficient in 1992 and during 1998 2000, which shows its consistency in being efficient in general, which stayed between 0.86 and 1. TPLs CAGR at 17.26 during 1992-2002 can be attributed to its presence in high growth therapeutic segments and introduction of new products in high growth segments like central nervous system, gastro intestinal and new molecules in antibiotics. Novo-Nordisk (India) Limited, to which TPL supplies insulin formulations, ensures a steady market for its products. TPL has been focusing on R&D of NCEs and NDDS in recent times, with 6 NCEs in its pipeline and is geared for a post product patent regime, and is also planning to offer contract research facilities to international as well as domestic players. Duphar-Interfran on the other hand is an interesting example for a small company, which has stayed efficient even with a negative growth that has resulted due to down sizing. Nicholas Piramal India Ltd. and Wockhardt, which rank 5th and 7th in turnover according to FY2002s figures in the IPI, two of the top league indigenous companies, have a volatile CCR efficiency and a steady BCC-efficiency during the period 1992-2002, as is evident from graph II. However, their performance has been pretty impressive with a CAGR of 25.87 and 23.78 respectively, which questions the relationship between growth and efficiency scores. Nicholas Piramal India Limited (NPIL), which is in the business of formulations, has been busy expanding and forming alliances with international players like F. Hoffmann La Roche and Boots plc., which provide NPIL access to their products in niche areas and over the counter (OTC) segment. Thus, even though NPIL has managed to increase its turnover with acquisition of brands and the businesses of other pharmaceutical companies, the very investments required for expansion have reduced its internal efficiency scores. Similar arguments hold good for Wockhardt, which has not only opened subsidiaries in UK, Europe and China, but also invested heavily in the R&D of Least Efficient Companies There are 12 each of indigenous and MNC firms in the least efficient companies, i.e., Group III, as listed in Table 4. These are the companies which never got a full CCR-efficiency score of 1, throughout the period 1992-2002. The minimum and maximum values of their CCR-efficiency scores are shown in the second and third columns of Table 4 respectively. The average CAGR of Group-III companies is 9.84%, which re-instates the lower efficiency scores. There were in total 15 companies in the Formulations business and 9 companies in Bulk & Formulations business, highlighting the scale inefficiencies involved in the Formulations business as against Bulk & Formulation business. One can attribute this result to the possibility that companies involved in both Bulk & Formulation business in general produce at least some of the raw materials required for formulations, and therefore can be more efficient. This may also be one of the reason for the

high percentage of MNCs in the least efficient group, as shown in Table 4, as they are mostly involved in only the Formulation business. As one can see from Table 4, there are Indian branches of some of the global majors like Glaxo Smithkline Pharmaceuticals Ltd, Aventis Pharma Ltd, Novartis India Ltd and Abbot India Ltd present in the least efficient group. Most of these companies have reduced introduction of new products in Indian market, as within a short period after introduction of new products, indigenous companies come up with reverse-engineered products at much lower prices. After spending millions of dollars on R&D of these products, the MNCs can not realize the costs by competing with the indigenous companies at such low prices. Thus MNCs usually introduce new products in Indian market, if there are no substitutes, and/or there is sufficient market and there is no immediate competition and so on.

 Objective of the study

India's pharmaceutical industry has been growing at record levels in recent years but now has unprecedented opportunities to expand in a number of fields. The domestic industry's longestablished position as a world leader in the production of high-quality generic medicines is set to reap significant new benefits as the patents on a number of blockbuster drugs are scheduled to expire over the next few years. In addition, more and more governments worldwide are seeking to curb their soaring prescription drug costs through greater use of generics. These opportunities are presenting themselves not only in India's traditional wealthy client markets such as the U.S. and European Union nations but also in emerging economies with vast populations such as Africa, South America, Asia, and Eastern and Central Europe. In addition, India's long-established position as a preferred manufacturing location for multinational drug manufacturers is quickly spreading into other areas of outsourcing activities. Soaring costs of R&D and administration are persuading drug manufacturers to move more and more of their discovery research and clinical trials activities to the subcontinent or to establish administrative centers there, capitalizing on India's high levels of scientific expertise as well as low wages. Both multinational and local drug manufacturers could eventually benefit from the market potential of India's population of over one billion. A large market will likely open up as the result of a projected boom in health insurance, an area in which the country is currently woefully underdeveloped. New government initiatives seek to enable the majority of the population to

access the life-saving drugs they need, while even greater opportunities may be presented by the rise of the new Indian consumer. This group-urban, middle class and wealthy-live fast-paced, Western-style lives and, as a result, they are beginning to suffer from Western, lifestyle-related illnesses, for which they want, and can afford, innovative drug treatments. This untapped domestic market is also highly attractive to the pharmaceutical MNCs, which recently have returned to India in large numbers (many had left when the regime allowing process patents only was introduced in the early 1970s). Now, MNCs and domestic companies are starting to work together, utilizing each other's strengths for their mutual benefit. For the foreign firms, this includes not only the Indian companies' research and manufacturing capabilities and their much lower operational cost levels, but also comprehensive marketing and distribution networks operating throughout India's vast territories. There are, however, a number of uncertainties, particularly the effects of India's new product patent system, which was introduced on January 1, 2005. Previously, only process patents were granted, a situation that led to India's current role as a world leader in the production of high quality, affordable generics. The new regime may spell the end for the domestic sector's smaller players, while for others it could represent unprecedented opportunities. Nevertheless, the domestic industry is still spending far too little on R&D, which must change quickly if it is even to begin to address these new opportunities and challenges. On the international front, the industry still has some catching up to do in terms of quality assurance while, on the local market, pricing remains a problem. There is a need for regulatory reform in India to encourage leading global players to continue and accelerate the outsourcing of their R&D activities-beginning with discovery research-to the subcontinent. This is particularly urgent in the face of the strong competition from India, where the government has been particularly proactive in encouraging foreign investments in pharmaceuticals and biotechnology. In India, the industry is now awaiting developments following the January draft publication of the government's National Pharmaceuticals Policy for 2006. The document contains proposals for far-reaching initiatives aimed at boosting the domestic industry's global competitiveness, as well as improving the population's access to medicines. Indian government ministers have also

promised MNCs concrete action soon on speeding the patent approval process and other crucial issues, such as the definition of patentability and compulsory licensing. Action is required soon, if India wants to be a significant player in the global pharmaceutical arena.

Characteristics of the pharmaceutical market

The single most important characteristic of the pharmaceutical sector is that it is perhaps the only class of products in which the consumer i.e. the patient has virtually no choice that he/she can meaningfully exercise. The decision on what medicine must be taken is made by the doctor or, in some circumstances, the druggist/pharmacist. Thus, the normal dimensions of consumer choice product, price and quality simply do not exist. The only available choice is whether to take the prescribed medicine or not. The choice maker in this case, whether the doctor or the pharmacist, has no incentive to be price-sensitive, and indeed may have perverse incentive structures. The doctors decision at the most ethical level would be based on the best treatment of his/her patient, and he/she should neither be expected to know or even care about the cost of treatment, except in cases where the patients economic condition patently rules out a specific course of treatment. Even in such situations, the choice is not likely to be between alternative brands of the same active pharmaceutical ingredient (API), but between alternative APIs within the therapeutic category. It is not reasonable to expect that the doctor will, or even should, be aware of the various brands of the same API available in the market, let alone keep him/her updated on the market prices of the huge range of formulations across the various therapeutic categories. In this situation of limited information, it is rational to expect prescriptions to be driven by the promotional efforts of the drug companies, whether ethical or not. Since the intensity of such promotions is resourcedriven, they are likely to be positively correlated to the price of the drug or to the resource base of the company. However, there is evidence that in India there is distinct market segmentation between different brands of the same API, usually on a vocational basis, with prescription behavior in terms of brand selection being driven by the economic status of the patients in the catchment area. Although there is no rigorous research which conclusively proves a positive correlation between

average incomes and the price of the most commonly prescribed brand, there is sufficient anecdotal evidence. This makes perfect economic sense since new companies coming into a particular API are likely to position themselves to address a target population which has been excluded by the incumbents. Indeed, there is also evidence that the same company may market more than one brand of the same API at very different price points. This kind of behavior, whether by incumbents or by new players, in essence transfers the bulk of the consumers surplus to the producers or marketers. This, in itself, is not necessarily a bad thing, since first of all it provides space for new entrants. Second, it ensures that a drug is available to a much wider range of patients than would have been the case if only a single price point were to be used in all markets across the country. The available data suggests that the range of prices within which different brands of the same API are currently marketed can be anywhere between 2:1 and 10:1. However, the downside is that such segmentation can never be perfect, and consequently it may well be the case that a large number of poor patients may be prescribed a drug which is either beyond their economic capacity or therapeutically inferior. It is, therefore, of the highest importance that doctors are provided with information support systems which will enable them to prescribe in the most case-sensitive manner possible. Whether they do or not would of course depend upon their ethical standards, but lack of information should not be the cause. As far as the pharmacist is concerned, who is expected to know the prices of different brands, the incentive structure is actually perverse since it is rational to push brands which have higher margins. Even in the case where retail margins are fixed as percentage of the price, a higher price will be associated with a higher absolute margin. Thus, controls on retail margins are unlikely to serve the purpose of moderating prices, and may in fact push lower priced products out of the market. This is not a phenomenon peculiar to drugs, and a retail margin-driven marketing strategy has been effectively used in a range of products where quality differentiation is an important factor in consumer choice. However, in most cases where consumer sovereignty exists, such strategies tend to be short-lived since there is other equally, if not more, effective ways of affecting consumer behavior. In the case of drugs, such alternatives are not available and, therefore, there is a tendency for such strategies to be perpetuated for extended periods of time.

Secondly, the prevailing system for drug certification is completely opaque as far as the therapeutic quality and effectiveness of different brands are concerned, certainly for the patient and also possibly for doctors. The Indian Pharmacopoeia (IP) certification, or its equivalent in other countries, only attests to the quality of the API in most cases, and not to the quality of the formulation, which is what the patient actually purchases. In fact, the significance of the IP mark is lost to all but the most discerning due to the lack of any active consumer awareness programe. However, since different formulations of the same API are perceived to have different levels of effectiveness, perhaps quite rightly since there are usually differences in the excipients or the drug delivery technology, the lack of adequate information and awareness may lead to adverse selection behavior, whereby a higher price is associated with better quality. Active brand promotion by the drug companies contributes to this process in no small measure, and the government has done practically nothing in this regard. The introduction of good manufacturing practices (GMP) through Schedule M is eminently desirable in itself as it addresses the issue of consistency and assurance of quality. However, the level of regulatory enforcement of GMP through intensive GMP audits as well as the level of competence of GMP inspectors varies considerably in the country. Its main focus is also consistency rather than assurance of therapeutic effectiveness. The reduction in prices of drugs observed over time appears to arise partly from price competition between alternative brands of the same API, but also from two other sources. First, competition between alternative APIs within the same therapeutic category, whereby the emergence of newer, more effective alternatives force drug companies to reposition their older products to cater to a lower income category. Second, growth in incomes can possibly change the price elasticity of demand sufficiently to justify addressing a larger market segment by lowering of prices. It should be noted, however, that the latter effect depends critically upon the distribution of income growth between different income segments. In fact, if growth leads to an increase in income disparities, drug prices may go up rather than down. In the Indian context, for instance, historically there has been a reduction in income inequalities, which may have been a major cause of the observed low drug prices in the country. In recent years, however, there is evidence that the trend has changed, and income distributions are worsening. The rapid growth in

the size and incomes of the Indian middle-class in recent years permits significant increase in drug prices without running into affordability and market size issues, which existed in the past. The role of the introduction and diffusion of newer and better drugs as perhaps one of the prime mover in lowering drug prices has implications which need to be considered carefully in the Indian context. Until now, in the absence of product patents, new drugs could be introduced at considerably lower prices, which then had strong knock-on effects on the prices of existing APIs in the same therapeutic class. In the future, this process is likely to be much weaker since the newer patented drugs should be expected to follow market skimming strategies, which has been the trend in the rest of the world. Consequently, the prices of existing drugs may not experience the kind of pressure as earlier unless the entry point price is pitched at an appropriate level. Although drug companies are expected to be sensitive to price-income considerations prevailing in the specific market, the likelihood of an affordable entry price will depend largely upon whether the company concerned already has a significant presence in that particular therapeutic category. In all probability, new APIs will be introduced by relatively large, multi-product firms, which will not be inclined to poach on their existing client base and will, therefore, tend to follow a high price-low volume approach, at least initially. This would be particularly true of MNCs, which would have to be sensitive to their international reference price and third country repercussions. On the other hand, the impetus given to domestic research and development (R&D) by the product patent regime may accelerate the pace of discovery and introduction of new molecules by companies which do not need to worry about the international dimensions of their pricing strategy, but this is likely to take time and cannot entirely be relied upon, since the innovator may perceive the external market as being more important to his interest than the domestic. Nevertheless, in this context, the processes for grant of patents and for drug approvals in the country are of the highest importance, and it is necessary that these be streamlined to minimize time delays. In fact, the immediate danger is that most Indian companies may come under severe pressure and their resource availability for R&D may get eroded until such time as they reconfigure their product portfolios. It is; therefore, important to ensure that the pricing and marketing regime consciously takes into account both R&D needs as well as the transitional arrangements that may be necessary.

The diffusion of new drugs, or even new formulations, is as important as their introduction, and requires considerable expenditure in educating the medical fraternity about the product characteristics and points of differentiation from existing alternatives. It is quite natural, therefore, that the promotional expenditures of drug companies are significantly higher than that of most other products, and which serve a very important function. However, there is a very thin line between legitimate promotion, on the one hand, and market manipulation or anti-competitive behavior, on the other. It should be clear, therefore, that in the market for drugs and pharmaceuticals, consumer sovereignty, which is at the heart of all competition-based policy, simply does not exist and the role of price competition is, therefore, very limited indeed. In this respect, if no other, the pharmaceuticals sector is completely different from practically all other commodities, and thus the strategies and policies normally used to promote industrial activity in other sectors simply do not apply in this context. It is little wonder then that almost all countries, at one time or another, have found overt price controls to be the most attractive, and indeed the most effective, method for ensuring the availability of drugs at affordable prices. There is no doubt that a well designed price control mechanism can not only moderate the prices of critical drugs, but actually increase their supply as well. Nevertheless, price controls appear to have fallen out of favor in recent years due to the increasing complexity of the pharmaceuticals sector and the need to provide drug companies the flexibility to meet emerging market challenges. However, it needs to be recognized that intense competition in the Indian Pharma sector, which is basically multi-source in nature, has in the past responded to the general paying capacity of Indian population, with the consequence that the prices of drugs manufactured and marketed in India have remained among the lowest in the world. Although this may change in the coming years, for reasons that have already been discussed in the preceding chapter, the strategy to moderate drug prices in the country would have to take cognizance of this fact.

Comparison with the U.S. Market

The Indian biotech sector parallels that of the U.S. in many ways. Both are filled with small startups while the majority of the market is controlled by a few powerful companies. Both are

dependent upon government grants and venture capitalists for funding because neither will be commercially viable for years. Pharmaceutical companies in both countries have recognized the potential effect that biotechnology could have on their pipelines and have responded by either investing in existing start-ups or venturing into the field themselves. In both India and the U.S., as well as in much of the globe, biotech is seen as a hot field with a lot of growth potential.

Developing the Domestic Indian Pharmaceutical Market

Satish Reddy of Dr Reddy's Laboratories applauds the government's draft National Pharmaceutical Policy for 2006's provisions on increasing access to treatments for life threatening. Diseases, but points out those Western lifestyle diseases are currently providing the major growth in the domestic market. India currently spends 4.5 to 5.0 percent of its GDP on health care, but public spending accounts for just 0.9 percent, putting the nation among the 20 lowestspending countries worldwide. Total health expenditures were $29.3 billion in 2004, with around 83 percent accounted for by private providers. The balance of spending is also iniquitous; while the poorest 20 percent of the population has double the mortality rates, malnutrition and fertility of the richest quintile, the latter group receives about three rupees for every one rupee spent on the former. Two-thirds of what the government spends on health care goes to secondary and tertiary care rather than basic services. Ninety-four percent of all private health spending is out of pocket, mostly at the time of the incident, and more than 40 percent of hospitalized people borrow money or sell assets in order to cover their expenses. The remaining 6 percent of spending is provided by insurance -3.7 percent social, 1.6 percent employer-sponsored and 0.7 percent private insurance. Just 15 percent of the population has some form of insurance; an estimated 800,000,000 people in India have none. The health insurance market was opened up to the private sector in 2000 and, since then, growth has been fast, with nearly 10.3 million policies sold in 2003-04 compared to 7.5 million in 2001-02. A 40 percent compound annual growth rate (CAGR) is forecast for the health insurance sector over the coming years, making it a significant driver of the domestic health care market, which analysts at McKinsey believe could be worth $40 billion by 2012.

National health policy goals By

y y y y y Achieve zero growth of HIV/AIDS 2007 Eliminate kalar-azar 2010 Reduce by 50 percent mortality due to TB, malaria and other Vector- and water-borne diseases 2010 Reduce prevalence of blindness to 0.5 percent 2010

Source: Sustaining Health with Innovative R&D and Health Infrastructure; presentation for the Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH) in New Delhi, India, November 4, 2004 Rising levels of population and incomes, plus the arrival of new products, will continue to grow the domestic market around 10 percent a year, but there will be no dramatic change unless there is help to improve people's access drugs. In 2003, medicines accounted for just 15 percent of India's total health care spend and patented drugs currently represent fewer than 5 percent of the national market. The prices of essential drugs in India are among the worlds lowest, with market growth coming mainly from volume in urban markets. Turning to the domestic market, forthcoming privatization of health insurance and India's fast-growing middle class will certainly boost consumption. India's fastest-growing product segments last year were for lifestyle-related diseases and the MNCs can produce innovative, patented treatments for these conditions, as well as develop treatments for developing-world diseases such as malaria, TB and HIV/AIDS. Novartis's own Institute of Tropical Diseases in Singapore, where such research is being done, should have been cited in India, but the timing was wrong-before the Patent Act was passed. He feels that Novartis is unlikely to bring such research to India soon, although in February 2006 the firm opened a global R&D centre for OTC medicines at Thane, on the outskirts of Mumbai. Ranjit Shahani applauds the National Pharmaceuticals Policy's proposal of public/private partnerships (PPPs) to tackle life-threatening diseases such as cancer and HIV/AIDS, but stresses that, in order for them to work, they should be voluntary, and the government should exempt all

life-saving drugs from import duties and other taxes such as excise duty and VAT. He is, however, critical about a proposal for mandatory price negotiation of newly patented drugs. He feels this will erode India's credibility in implementing the Patent Act in a fair and transparent manner. To deal with diabetes, medicines are not the only answer; awareness about the need for lifestyle changes needs to be increased, he adds. While industry leaders have long called for the development of PPPs for the provision of health care in India, particularly in rural areas, such initiatives are currently totally unexplored. However, the government's 2006 draft National Pharmaceuticals Policy proposes the introduction of PPPs with drug manufacturers and hospitals as a way of vastly increasing the availability of medicines to treat life-threatening diseases. It notes, for example, that while an average estimate of the value of drugs to treat the country's cancer patients is $1.11 billion, the market is in fact worth only $33.5 million. The big gap indicates the near non-accessibility of the medicines to a vast majority of the affected population, mainly because of the high cost of these medicines, says the Policy, which also calls for tax and excise exemptions for anti-cancer drugs. Another area for which PPPs are proposed is for drugs to treat HIV/AIDS, India's biggest health problem. Official estimates put the number of Indians living with the disease at 5.1 million in 2003, with up to 40 percent being women and children, but others say the total is closer to 8 million. 50 Moreover, of the world's 150 million diabetic population, 33 million are in India. Among the Policy's other proposals are a 2 percent tax that would generate an estimated $1.45 billion a year to provide free medicines under health insurance schemes for the poorest Indians and also establish at least 25 pharma parks over the next five years: a renegotiation pricing mechanism for patented drugs; reduced prices for bulk public drugs purchases; promoting generics by removing them from the price control regime; ceiling prices for 314 drugs to be fixed based on the weighted average price of the top three brands of each product by value at April 1, 2005; rebranding of prescription drugs with clear evidence of market dominance, defined as a market share over 70 percent; halving excise duty on all medicines from 16 percent to 8 percent; a 15 to 35 percent cap to be introduced on the wholesale and retail trade margins of unbranded drugs that are not price controlled: the annual revision of the list of essential drugs; and moves to strengthen the drug regulatory system and computerize the National Pharmaceutical Pricing

Authority. The Ministry of Chemicals and Fertilizers is also reported to be estimating production costs for 374 essential drugs, so that their prices can be fixed, and drawing up a list of life-saving drugs that could be brought under price control. Many of the measures intended by the government contradict the industry's wishes for further deregulation of the Indian pharmaceutical market. The challenge remains to provide access to life-threatening diseases and, at the same time, create price incentives for the R&D investments.

 Present scenario
Pharmaceutical products consist of two main components the active pharmaceutical ingredient (API) or bulk drug and the formulation (i.e., a suitable final dosage form). Generally, APIs are either produced by chemical synthesis or are of plant, animal, or biological origin. Patents are critical aspects in the development and marketing of pharmaceutical products. A patent can be obtained for a new drug molecule, a new indication for an existing molecule, or for a new drug delivery system of an existing product. The World Trade Organization (WTO) has decided to enforce a product patent life of 20 years in all countries. In other words, if drug development and FDA approval takes approximately 10 years from the first disclosure of the molecule, a pharmaceutical company gets only 10 years of exclusivity to market the formulation. The excessive cost of drug development forces drug prices to remain high while the drugs are protected by patents. In addition, not every project leads to a marketed product, so successfully marketed products must cover the costs incurred for the failed projects. The current pharmaceutical market is worth more than $317 billion (4). The major contributing regions are the United States, Japan, and Europe. GlaxoSmithKline, Pfizer, and Merck are the top three companies in the pharmaceutical market, with annual sales of $23.5, 22.6, and 20.2 billion, respectively. Pfizer has the largest R&D budget, which is hovering at $4.4 billion .Most of the major US pharmaceutical companies showed double-digit growth in 1999 (4).Drug prices vary from country to country. Citizens of developing countries cannot afford expensive medicines that are under patent. Multinational companies (MNCs) must either choose to sell a product at a low price in these countries or face the challenge of piracy or parallel trade. Types of diseases in Third World countries may vary from those in developed nations. However, because of the lack of sizable profits from distributing pharmaceutical products in Third World countries,

MNCs are reluctant to conduct research to develop new drug molecules to treat these diseases.

Growth Scenario in 2010

India's pharmaceutical industry is now the third largest in the world in terms of volume. Its rank is 14th in terms of value. Between September 2008 and September 2009, the total turnover of India's pharmaceuticals industry was US$ 21.04 billion. The domestic market was worth US$ 12.26 billion. This was reported by the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers. As per a report by IMS Health India, the Indian pharmaceutical market reached US$ 10.04 billion in size in July 2010. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. Leading Pharmaceutical Companies In the domestic market, Cipla retained its leadership position with 52.7 per cent share. Ranbaxy followed next. The highest growth was for Mankind Pharma (37.2%). Other leading companies in the Indian pharma market in 2010 are
 Sun Pharma (25.7%)  Abbott (25%)  Zydus Cadila (24.1%)  Alkem Laboratories (23.3%)  Pfizer (23.6 %)  GSK India (19%)  Piramal Healthcare (18.6 %)  Lupin (18.8 %)

Future Prospects
The Indian pharmaceuticals market is expected to reach US$ 55 billion in 2020 from US$ 12.6 billion in 2009. This was stated in a report title "India Pharma 2020: Propelling access and acceptance, realizing true potential" by McKinsey & Company. In the same report, it was also mentioned that in an aggressive growth scenario, the pharma market has the further potential to

reach US$ 70 billion by 2020

Due to increase in the population of high income group, there is every likelihood that they will open a potential US$ 8 billion market for multinational companies selling costly drugs by 2015. This was estimated in a report by Ernst & Young. The domestic pharma market is estimated to touch US$ 20 billion by 2015. The healthcare market in India is to reach US$ 31.59 billion by 2020. The sale of all types of pharmaceutical drugs and medicines in the country stands at US$ 9.61 billion, which is expected to reach around US$ 19.22 billion by 2012. Thus India would really become a lucrative destination for clinical trials for global giants.

There was another report by RNCOS titled "Booming Pharma Sector in India" in which it was projected that the pharmaceutical formulations industry is expected to prosper in the same manner as the pharmaceutical industry. The domestic formulations market will grow at an annual rate of around 17% in 2010-11, owing to increasing middle class population and rapid urbanization. The Indian Pharmaceutical Industry today is in the front rank of Indias science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously. Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies

control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control. The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations. Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally selfreliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market. India currently represents just U.S. $6 billion of the $550 billion global pharmaceutical industry but its share is increasing at 10 percent a year, compared to 7 percent annual growth for the world market overall. Also, while the Indian sector represents just 8 percent of the global industry total by volume, putting it in fourth place worldwide, it accounts for 13 percent by value, and its drug exports have been growing 30 percent annually. The organized sector of India's pharmaceutical industry consists of 250 to 300 companies, which account for 70 percent of products on the market, with the top 10 firms representing 30 percent. However, the total sector is estimated at nearly 20,000 businesses, some of which are extremely small. Approximately 75 percent of India's demand for medicines is met by local manufacturing. According to the German Chemicals Association, in 2005, India's top 10 pharmaceutical companies were Ranbaxy, Cipla, Dr. Reddy's Laboratories, Lupin, Nicolas Piramal, Aurobindo Pharma, Cadila Pharmaceuticals, Sun Pharma, Wockhardt Ltd. and Aventis Pharma. Indian-

owned firms currently account for 70 percent of the domestic market, up from less than 20 percent in 1970. In 2005, nine of the top 10 companies in India were domestically owned, compared with just four in 1994. India's potential to further boost its already-leading role in global generics production, as well as an offshore location of choice for multinational drug manufacturers seeking to curb the increasing costs of their manufacturing, R&D and other support services, presents an opportunity worth an estimated $48 billion in 2007.

CHAPTER-2

GROWTH OF PHARMACEUTICAL INDUSTRY IN INDIA

Historical background:
India received independence from Britain in 1947. In the early years following that event, MNCs were allowed to export drugsmainly low-priced generics and a few high-priced specialty items. When the Indian government increased pressure against the import of finished products, MNCs developed formulation units in India and exported only bulk drugs to that country. In the early 1960s, the Indian government encouraged the indigenous manufacture of bulk drugs. In the following decade the Indian patent act prevented the granting of product patents for substances used in foods and pharmaceuticals. Only process patents were allowed for five years from the date of granting a patent or seven years from the date of filing the patent. Drug price control order (DPCO) was introduced during the same period to prevent undue profiteering from essential medicines. MNCs were compelled to reduce their holdings to 40% in their Indian

ventures. In the 1980s1990s, domestic pharmaceutical companies flourished. As a result, the market share of MNCs fell to the current 35%, down from 75% in 1971. Types of drug systems in India: Ancient civilization allowed India to develop various kinds of medical and pharmaceutical systems. In addition to the allopathic system, which is prevalent in the United States, Japan, and Europe, the following types of medical and pharmaceutical systems are used by the Indian people: Ayurveda : Ayurveda translates as the science of life. It encompasses fundamentals and philosophies about the world and life, diseases, and medicines. The knowledge of ayurveda is compiled in Charak Samhita and Sushruta Samhita. The curative treatment lies in drugs, diet, and general mode of life. Siddha : The Siddha system is one of the oldest Indian systems of medicine. Siddha means achievement. Siddhas were saintly figures who achieved healing through the practice of yoga. The siddha system does not look merely at a disease but takes into account a patients age, sex, race, habits, environment, diet, physiological constitution, and so forth. Siddha medicines have been effective in curing some diseases, and further work is needed to truly understand why this system works. Unani: The unani system originated in Greece and progressed to India during the medieval period. It involves promotion of positive health and prevention of disease. The system is based on the humoral theory, i.e., the presence of blood, phlegm, yellow bile, and black bile. A persons temperament is accordingly expressed as sanguine, phlegmatic, choleric, or melancholic. Drugs derived from plant, metal, mineral, and animal origin is used in this system.

Homeopathy: Homeopathy flourished in Germany in the seventeenth and eighteenth centuries. In India, it is one of the commonly used methods to treat diseases. Physicians in the time of Hippocrates (400 BC) first observed that some substances produce symptoms of conditions that they were then used to treat. On the basis of this finding, a homeopathic medicinal agent, which can produce artificial symptoms in healthy human beings, can cure a similar set of symptoms of natural diseases. It normally uses a single medicine, and the dosage is minimal just enough to cure the disease. Yoga and naturopathy: Yoga and naturopathy are ways of life. In naturopathy, one applies simple laws of nature. It advocates proper attention to eating and living habits. It also involves hydrotherapy, mud packs, baths, massage, and so forth. Yoga consists of eight components: restraint, observance of austerity, physical postures, breathing exercises, restraining of the sense organs, contemplation, meditation, and Samadhi Increasing interest exists in revisiting these ancient drug systems. The Department of Indian Systems of Medicines and Homeopathy was established in 1995 as a separate department in the Ministry of Health and Family Welfare. One of the organizations goals is to prepare standards for ayurvedic, unani, sidhha, and homeopathy drugs. Goods manufacturing practices for ayurvedic drugs are at the final stage. The department is actively pursuing a proposal to establish a medicinal-plant board to enhance the availability of quality raw materials, prepare a database of medicinal plants, and collect information from ancient texts. India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries. Over 20,000 registered pharmaceutical manufacturers exist in the country. The domestic pharmaceuticals industry output is expected to exceed Rs260 billion in the financial year 2002, which accounts for merely 1.3% of the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54 bn (21%) and formulations, the remaining Rs 210 bn (79%). In financial year 2001, imports were Rs 20 bn while exports were Rs87 bn.

Statistics In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago. Most pharma companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Mirroring the social structure, firms are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise. Although many of these companies are publicly owned, leadership passes from father to son and the founding family holds a majority share. In terms of the global market, India currently holds a modest 1-2% share, but it has been growing at approximately 10% per year. India gained its foothold on the global scene with its innovatively-engineered generic drugs and active pharmaceutical ingredients (API), and it is now seeking to become a major player in outsourced clinical research as well as contract manufacturing and research. There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies. Growth in other fields notwithstanding generics is still a large part of the picture. London research company Global Insight estimates that Indias share of the global generics market will have risen from 4% to 33% by 2007. Advantage India Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available.

Cost-effective chemical synthesis: Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs. Legal & Financial Framework: India has a 65 year old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community. Information & Technology: It has a good network of world-class educational institutions and established strengths in Information Technology. Globalization: The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is continuously growing. Consolidation: For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India. Patents: As it expands its core business, the industry is being forced to adapt its business model to recent changes in the operating environment. The first and most significant change was the January 1, 2005 enactment of an amendment to Indias patent law that reinstated product patents for the first time since 1972. The legislation took effect on the deadline set by the WTOs TradeRelated Aspects of Intellectual Property Rights (TRIPS) agreement, which mandated patent protection on both products and processes for a period of 20 years. Under this new law, India will be forced to recognize not only new patents but also any patents filed after January 1, 1995. Indian companies achieved their status in the domestic market by breaking these product patents, and it is estimated that within the next few years, they will lose $650 million of the local generics market to rightful patent-holders. In the domestic market, this new patent legislation has resulted in fairly clear segmentation. The multinationals narrowed their focus onto high-end patients who make up only 12% of the market, taking advantage of their newly-bestowed patent protection. Meanwhile, Indian firms have chosen to take their existing product portfolios and target semi-urban and rural populations.

Product development: Companies are also starting to adapt their product development processes to the new environment. For years, firms have made their ways into the global market by researching generic competitors to patented drugs and following up with litigation to challenge the patent. This approach remains untouched by the new patent regime and looks to increase in the future. However, those that can afford it have set their sights on an even higher goal: new molecule discovery. Although the initial investment is huge, companies are lured by the promise of hefty profit margins and the recognition as a legitimate competitor in the global industry. Local firms have slowly been investing more money into their R&D programs or have formed alliances to tap into these opportunities. Small and medium enterprises: As promising as the future is for a whole, the outlook for small and medium enterprises (SME) is not as bright. The excise structure changed so that companies now have to pay a 16% tax on the maximum retail price (MRP) of their products, as opposed to on the ex-factory price. Consequently, larger companies are cutting back on outsourcing and what business is left is shifting to companies with facilities in the four tax-free states - Himachal Pradesh, Jammu & Kashmir, Uttaranchal and Jharkhand. As SMEs wrestled with the tax structure, they were also scrambling to meet the July 1 deadline for compliance with the revised Schedule M Good Manufacturing Practices (GMP). While this should be beneficial to consumers and the industry at large, SMEs have been finding it difficult to find the funds to upgrade their manufacturing plants, resulting in the closure of many facilities. Others invested the money to bring their facilities to compliance, but these operations were located in non-tax-free states, making it difficult to compete in the wake of the new excise tax. Over-the-Counter Medicines The Indian market for over-the-counter medicines (OTCs) is worth about $940 million and is growing 20 percent a year, or double the rate for prescription medicines. The government is keen

to widen the availability of OTCs to outlets other than pharmacies, and the Organization of Pharmaceutical Producers of India (OPPI) has called for them to be sold in post offices. Developing an innovative new drug, from discovery to worldwide marketing, now involves investments of around $1 billion, and the global industry's profitability is under constant attack as costs continue to rise and prices come under pressure. Pharmaceutical production costs are almost 50 percent lower in India than in Western nations, while overall R&D costs are about one-eighth and clinical trial expenses around one-tenth of Western levels. India's longestablished manufacturing base also offers a large, well-educated, and English-speaking workforce, with 700,000 scientists and engineers graduating every year, including 122,000 chemists and chemical engineers, with 1,500 PhDs. The industry provides the highest intellectual capital per dollar worldwide, says OPPI. Indias top 10 branded drugs 2004: Corex (chlorpheniramine maleate, codeine phosphate) Human Mixtard (insulin) Voveran (diclofenac sodium) Becosules (vitamin B complex, vitamin C) Taxim (cefotaxime) Asthalin (salbutamol) Sporidex (cephalexin) Digene (aluminium hydroxide, magnesium hydroxide) Betnesol (betamethasone) Althrocin (erythromycin)

India's largest-selling drug products are antibiotics, but the fastest growing are diabetes, cardiovascular and central nervous system treatments. The industry's exports were worth more than $3.75 billion in 2004-05 and they have been growing at a compound annual rate of 22.7 percent over the last few years, according to the government's draft National Pharmaceuticals Policy for 2006, published in January 2006. The Policy estimates that, by the year 2010, the industry has the potential to achieve $22.40 billion in formulations, with bulk drug production going up from $1.79 billion to $5.60 billion: India's rich human capital is believed to be the strongest asset for this knowledge-led industry. Various studies show that the scientific talent pool of 4 million Indians is the second-largest English-speaking group worldwide, after the USA. The Indian Pharmaceutical Industry in 2004 Turnover: $6.02 billion, up 6.4 percent year over year Exports: $3.72 billion Imports: $985.3 million Bulk drug production: $2.10 billion, with over 400 bulk drugs produced. Over 60,000 formulations produced, in 60 therapeutic categories Capital investment: up 14.8 percent to $1.16 billion Employment: 5 million direct, 24 million indirect VAT In April 2005, the government introduced value-added tax for the first time and abolished all other taxes derived from sales of goods. So far, 22 states have implemented VAT, which is set at 4 percent for medicines. This led to pharmaceutical wholesalers and retailers cutting their stocks dramatically, which severely affected drug manufacturers' sales for several months. Corex (chlorpheniramine maleate, codeine phosphate)

Human Mixtard (insulin) Voveran (diclofenac sodium) Becosules (vitamin B complex, vitamin C) Taxim (cefotaxime) Asthalin (salbutamol) Sporidex (cephalexin) Digene (aluminum hydroxide, magnesium hydroxide) Betnesol (betamethasone) Althrocin (erythromycin) Opportunities: The main opportunities for the Indian pharmaceutical industry are in the areas of: Generics (including biotechnology generics) Biotechnology Outsourcing (including contract manufacturing and R&D outsourcing). Generics Prescription drugs worth $40 billion in the U.S. and $25 billion in Europe are due to lose patent protection by 2007-08. Indian firms will likely take around 30 percent of the increasing global generics market, the Associated Chambers of Commerce and Industry of India (Assocham) forecast. Currently, the Indian industry is estimated to account for 22 percent of the generics world market. Low production costs give India an edge over other generics-producing nations, especially India and Israel, says Assocham's president Mahendra Sanghi. He suggests that it will

be easier for Indian firms to win larger generics market shares overseas than at home, particularly in the U.S. and Europe. Indian drug manufacturers currently export their products to more than 65 countries worldwide. Their largest customer is the U.S., the world's biggest pharmaceutical market. The use of generic drugs is growing quickly in the U.S. due to cost pressure by payers and the introduction on January 1 this year of the Medicare Part D prescription benefit, giving seniors and people with disabilities prescription drug coverage for the first time. With 74 facilities, India has the largest number of U.S. Food and Drug Administration (FDA)- approved drug manufacturing facilities outside the U.S. Indian firms now account for 35 percent of Drug Master File applications and one in four of all U.S. Abbreviated New Drug Application (ANDA) filings submitted to the FDA. Analysts at Credit Lyonnais Securities Asia say they expect the number of generic drug launches by Indian companies in the U.S. to increase from 93 in 2003 to over 250 by 2008. In January 2006, the Indian exporters' representative body, the Pharma Export Promotion Council (Pharmexcil) said it planned to raise a number of concerns with the U.S. government over what it sees as barriers to trade with them. One is a U.S. regulation that disqualifies Indian firms from bidding for government contracts, and another is the requirement Indian drug manufacturers submit separate applications for each U.S. state (there is no U.S.-wide regulatory requirement), even when the firms have FDA-approved products and facilities. Table-1 ANDA Filings for Indian Mid-sized Companies Company FY04 -Glenmark 12 Zydus Cadila -Orchid 5 Wockhardt 7 12-13 18 18-30 13 6-18 FY05 7 FY06Glenmark 14

2 Aurobindo

22

Source: Cygnus Consulting & Research. Industry Insights-Pharmaceuticals, November 2004 2006 However, India's traditional lucrative export markets may be becoming a little less secure, for a number of reasons. For example, generic prices have not been rising in the U.S.; the seniors' advocacy group AARP (formerly the American Association of Retired Persons) says that, of the 75 generic drugs widely used by older people that it monitors on a quarterly basis, none had had a change in manufacturer list price during third quarter 2005 and only three had had increases in list price at any time during January to September 2005.18 Also, new competitive threats have arrived, such as authorized generics produced by major drug producers, new mid-sized players, Indian and Eastern Europe manufacturers, and fully integrated generics firms, which are less reliant on Indian back-end businesses. The U.S. continues to be an attractive market for Indian firms, despite the challenges of price erosion and the launch of authorized generics by innovator companies, says Ranjit Shahani, vice chairman and managing director, Novartis India Ltd, and President of the Organization of Pharmaceutical Producers of India. He does not see any increase in nontariff barriers there, and in fact feels that trade between India and the U.S. is set to rev up following President George W. Bush's visit to India on March 1, 2006, with both countries going all out to liberalize market access. The major concern of the U.S. FDA appears to be the entry of counterfeit drugs, he says, but he does not believe this to be an obstacle for reputable Indian manufacturers. Moreover, while the World Trade Organization (WTO) Doha Trade-Related Aspects of Intellectual Property rights (TRIPs) national emergency/compulsory license agreement presents an exporting opportunity for Indian firms, Shahani stresses that the firms must have anti-diversion measures in place in order to protect their reputation. The European generics market, he says, pointing to Dr Reddy's recent acquisition of Betapharm of Germany for $570 million, holds more promise. Indian companies have acquired

over $1 billion worth of pharmaceutical companies overseas in the past year and a half and should increasingly look more aggressively at countries like Brazil, Russia and the Commonwealth of Independent States, and Japan, where the markets are mature and remunerative, despite some regulatory hurdles, he notes. Also, he says, Indian firms should move up the value chain to produce innovative super generics as the once-a-day Ciprofloxacin product developed by Ranbaxy and licensed to Bayer, move up from producing generic generics to branded generics. Relationship between pharmaceuticals and biotechnology Unlike in other countries, the difference between biotechnology and pharmaceuticals remains fairly defined in India. Bio-tech there still plays the role of pharmas little sister, but many outsiders have high expectations for the future. India accounted for 2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-Pacific region and 11th in the world in number of bioteches. In 2004-5, the Indian biotech industry saw its revenues grow 37% to $1.1 billion. The Indian biotech market is dominated by biopharmaceuticals; 75% of 2004-5 revenues came from biopharmaceuticals, which saw 30% growth last year. Of the revenues from biopharmaceuticals, vaccines led the way, comprising 47% of sales. Biologics and largemolecule drugs tend to be more expensive than small-molecule drugs, and India hopes to sweep the market in biogenetics and contract manufacturing as drugs go off patent and Indian companies upgrade their manufacturing capabilities. The Indian pharmaceutical industry is the world's second-largest by volume and is likely to lead the manufacturing sector of India. India's bio-tech industry clocked a 17 percent growth with revenues of Rs.137 billion ($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-pharma was the biggest contributor generating 60 percent of the industry's growth at Rs.8,829 crore, followed by bio-services at Rs.2,639 crore and bio-agri at Rs.1,936 crore. The first pharmaceutical company are Bengal Chemicals and Pharmaceutical Works, which still exists today as one of 5 government-owned drug manufacturers, appeared in Calcutta in 1930. For the next 60 years, most of the drugs in India were imported by multinationals either in fully formulated or bulk form. The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970, enabled the industry to become what it is today. This patent act removed composition patents from food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out, Indian companies started to take their places. They carved a niche in both the Indian and world markets with their expertise in reverse-

engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present.

The Indian pharmaceutical industry (IPo) today

Top 10 Pharmaceuticals in India, as of 2010
Revenue2010 Rank Company
(Rs crore) (Rs billion)

Revenue 2010

1 2 3 4 5 6 7 8 9 10

Ranbaxy Laboratories

4,198.96

41.989 41.622 37.637 24.635 22.155 20.801 17.734 16.13 9.838 9.8044

Dr. Reddy's Laboratories 4,162.25 Cipla Sun Pharmaceutical Lupin Ltd Aurobindo Pharma GlaxoSmithKline Cadila Healthcare Aventis Pharma Ipca Laboratories 3,763.72 2,463.59 2,215.52 2,081.19 1,773.41 1,613 983.80 980.44

In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago. Most pharma companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Mirroring the social structure, firms are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are

often a mix of public and private enterprise. Although many of these companies are publicly owned, leadership passes from father to son and the founding family holds a majority share. In terms of the global market, India currently holds a modest 1-2% share, but it has been growing at approximately 10% per year. India gained its foothold on the global scene with its innovatively engineered generic drugs and active pharmaceutical ingredients (API), and it is now seeking to become a major player in outsourced clinical research as well as contract manufacturing and research. There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies. Growth in other fields notwithstanding, generics are still a large part of the picture. London research company Global Insight estimates that Indias share of the global generics market will have risen from 4% to 33% by 2007.

Patents
As it expands its core business, the industry is being forced to adapt its business model to recent changes in the operating environment. The first and most significant change was the January 1, 2005 enactment of an amendment to Indias patent law that reinstated product patents for the first time since 1972. The legislation took effect on the deadline set by the WTOs Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which mandated patent protection on both products and processes for a period of 20 years. Under this new law, India will be forced to recognize not only new patents but also any patents filed after January 1, 1995.[3] Indian companies achieved their status in the domestic market by breaking these product patents, and it is estimated that within the next few years, they will lose $650 million of the local generics market to patent-holders. In the domestic market, this new patent legislation has resulted in fairly clear segmentation. The multinationals narrowed their focus onto high-end patients who make up only 12% of the market, taking advantage of their newly bestowed patent protection. Meanwhile, Indian firms have chosen to take their existing product portfolios and target semi-urban and rural populations.

Product development
Indian companies are also starting to adapt their product development processes to the new environment. For years, firms have made their ways into the global market by researching generic competitors to patented drugs and following up with litigation to challenge the patent. This approach remains untouched by the new patent regime and looks to increase in the future. However, those that can afford it have set their sights on an even higher goal: new molecule discovery. Although the initial investment is huge, companies are lured by the promise of hefty profit margins and the recognition as a legitimate competitor in the global industry. Local firms have slowly been investing more money into their R&D programs or have formed alliances to tap into these opportunities.

Small and medium enterprises

As promising as the future is for a whole, the outlook for small and medium enterprises (SME) is not as bright. The excise structure changed so that companies now have to pay a 16% tax on the maximum retail price (MRP) of their products, as opposed to on the ex-factory price. Consequently, larger companies are cutting back on outsourcing and what business is left is shifting to companies with facilities in the four tax-free states - Himachal Pradesh, Jammu & Kashmir, Uttaranchal and Jharkhand.[12]Consequently a large number of pharmaceutical manufacturers shifted their plant to these states, as it became almost impossible to continue operating in non tax free zones. But in a matter of a couple of years the excise duty was revised on two occasions, first it was reduced to 8% and then to 4%. As a result the benefits of shifting to a tax free zone was negated. This resulted in, factories in the tax free zones, to start up third party manufacturing. Under this these factories produced goods under the brand names of other parties on job work basis. As SMEs wrestled with the tax structure, they were also scrambling to meet the July 1 deadline for compliance with the revised Schedule M Good Manufacturing Practices (GMP). While this should be beneficial to consumers and the industry at large, SMEs have been finding it difficult to find the funds to upgrade their manufacturing plants, resulting in the closure of many facilities. Others invested the money to bring their facilities to compliance, but these operations were located in non-tax-free states, making it difficult to compete in the wake of the new excise tax.

Challenges
All of these changes are ultimately good for the Indian pharmaceutical industry, which suffered in the past from inadequate regulation and large quantities of spurious drugs. They force the industry to reach a level necessary for global competitiveness. However, they have also exposed some of the inadequacies in the industry today. Its main weakness is an underdeveloped new molecule discovery program. Even after the increased investment, market leaders such as Ranbaxy and Dr. Reddys Laboratories spent only 5-10% of their revenues on R&D, lagging behind Western pharmaceuticals like Pfizer, whose research budget last year was greater than the combined revenues of the entire Indian pharmaceutical industry. This disparity is too great to be explained by cost differentials, and it comes when advances in genomics have made research equipment more expensive than ever. The drug discovery process is further hindered by a dearth of qualified molecular biologists. Due to the disconnect between curriculum and industry, pharmas in India also lack the academic collaboration that is crucial to drug development in the West.

R&D
Both the Indian central and state governments have recognized R&D as an important driver in the growth of their pharma businesses and conferred tax deductions for expenses related to research and development. They have granted other concessions as well, such as reduced interest rates for export financing and a cut in the number of drugs under price control. Government

support is not the only thing in Indian pharmas favor, though; companies also have access to a highly developed IT industry that can partner with them in new molecule discovery.

Labor force
Indias greatest strengths lie in its people. India also boasts of well-educated, English-speaking labor force that is the base of its competitive advantage. Although molecular biologists are in short supply, there are a number of talented chemists who are equally as important in the discovery process. In addition, there has been a reverse brain drain effect in which scientists are returning from abroad to accept positions at lower salaries at Indian companies. Once there, these foreign-trained scientists can transfer the benefits of their knowledge and experience to all of those who work with them. Indias wealth of people extends benefits to another part of the drug commercialization process as well. With one of the largest and most genetically diverse populations in any single country, India can recruit for clinical trials more quickly and perform them more cheaply than countries in the West. Indian firms have just recently started to leverage.

Biotechnology
Unlike in other countries, the difference between biotechnology and pharmaceuticals remains fairly defined in India. Bio-tech there still plays the role of pharmas little sister, but many outsiders have high expectations for the future. India accounted for 2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-Pacific region and 11th in the world in number of biotechs. In 2004-5, the Indian biotech industry saw its revenues grow 37% to $1.1 billion. The Indian biotech market is dominated by biopharmaceuticals; 75% of 2004-5 revenues came from biopharmaceuticals, which saw 30% growth last year. Of the revenues from biopharmaceuticals, vaccines led the way, comprising 47% of sales. Biologics and largemolecule drugs tend to be more expensive than small-molecule drugs, and India hopes to sweep the market in biogenerics and contract manufacturing as drugs go off patent and Indian companies upgrade their manufacturing capabilities.

Biotechnology statistics
Top 20 Biotechnology Companies in India, 2010
Rank Company 1 2 3 Biocon Serum Institute of India Panacea Biotec Revenue
(Rs crore)

2004 Revenue

2010

(USD millions)

646 565 217

148.6 129.9 50.0

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Venky's (India) Limited Mahyco Monsanto Novo Nordisk Rasi Seeds Aventis Pharma Bharat Serums Chiron Behring Vaccines GlaxoSmithKline Indian Immunologicals Shantha Biotechnics Novozymes Eli Lilly and Company Wockhardt

188 166 135 87 84 81 78 78 72 70 69 68 67

43.2 38.3 31.0 20.0 19.4 18.6 17.9 17.9 16.6 16.1 15.9 15.7 15.4 12.3 9.4 9.1 8.3

Bharat Immunological & Biological Corp. 53 Bharat Biological International Advanced Biochemicals Biological E 41 40 36

Most companies in the biotech sector are extremely small, with only two firms breaking 100 million dollars in revenues. At last count there were 265 firms registered in India, over 75% of which were incorporated in the last five years. The newness of the companies explains the industrys high consolidation in both physical and financial terms. Almost 50% of all biotechs are in or around Bangalore, and the top ten companies capture 47% of the market. The top five companies were homegrown; Indian firms account for 62% of the biopharma sector and 52% of the industry as a whole. The Association of Biotechnology-Led Enterprises (ABLE) is aiming to grow the industry to $5 billion in revenues generated by 1 million employees by 2009, and data from the Confederation of Indian Industry (CII) seem to suggest that it is possible.

Comparison with the U.S.

The Indian biotech sector parallels that of the U.S. in many ways. Both are filled with small startups while the majority of the market is controlled by a few powerful companies. Both are dependent upon government grants and venture capitalists for funding because neither will be commercially viable for years. Pharmaceutical companies in both countries have recognized the potential effect that biotechnology could have on their pipelines and have responded by either investing in existing start-ups or venturing into the field themselves. In both India and the U.S., as well as in much of the globe, biotech is seen as a hot field with a lot of growth potential.

Relationship with IT
Many analysts have observed that the hype around the biotech sector mirrors that of the IT sector. Biotech colleges have been popping up around the country eager to service the pools of students that want to take advantage of a growing industry. The International Finance Commission, the private investment arm of the World Bank, called India the centerpiece of IFCs global biotech strategy. Of the $110 million invested in 14 biotech projects investment globally, the IFC has given $43 million to 4 projects in India. According to Dr. Manju Sharma, former director of the Department of Biotechnology, the biotech industry could become the single largest sector for employment of skilled human resource in the years to come.[5] British Prime Minister Tony Blair was similarly impressed, citing the success of Indias biotech industry as the reason for his own countrys own biotech opportunities. Malaysia is also looking to India as an example for growing its own biotech industry.

Government support
The Indian government has been very supportive. It established the Department of Biotechnology in 1986 under the Ministry of Science and Technology. Since then, there have been a number of dispensations offered by both the central government and various states to encourage the growth of the industry. Indias science minister launched a program that provides tax incentives and grants for biotech start-ups and firms seeking to expand and establishes the Biotechnology Parks Society of India to support ten biotech parks by 2010. Previously limited to rodents, animal testing was expanded to include large animals as part of the ministers initiative. States have started to vie with one another for biotech business, and they are offering such goodies as exemption from VAT and other fees, financial assistance with patents and subsidies on everything ranging from investment to land to utilities.

Foreign investment
The government has also taken steps to encourage foreign investment in its biotech sector. An initiative passed earlier this year allowed 100% foreign direct investment without compulsory licensing from the government1. In April, a delegation headed by the Kapil Sibal, the minister of science and technology and ocean development, visited five cities in the U.S. to encourage investment in India, with special emphasis on biotech. Just two months later, Sibal returned to the U.S. to unveil Indias biotech growth strategy at the BIO2005 conference in Philadelphia.

Challenges The biotech sector faces some major challenges in its quest for growth. Chief among them is a lack of funding, particularly for firms that are just starting out. The most likely sources of funds are government grants and venture capital, which is a relatively young industry in India. Government grants are difficult to secure, and due to the expensive and uncertain nature of biotech research, venture capitalists are reluctant to invest in firms that have not yet developed a commercially viable product. As previously mentioned, India hopes to solve its funding problem by attracting overseas investors and partners. Before these potential saviors will invest significant sums in the industry, however, there needs to be better scientific and financial accountability. India is slowly working towards these goals, but it will be a while before they are up to the standards of Western investors. Indias biotech firms share another problem with their pharmaceutical cousins: a lack of qualified employees. Biotech has the additional disadvantage of competing against IT for ambitious, science-minded students but not being able to guarantee the same compensation. An aspiring researcher in India needs 710 years of education covering a range of specialties in order to qualify to work in biotech. Even if a student does choose to go on the biotech path, the ineffectual curriculum at many universities makes it doubtful as to whether he will be qualified to work in the field once finished. One estimate shows that 10% of upper-echelon biotech recruits have come from foreign countries. While this is not a problem, per se, it drives up cost in a country whose competitive advantage is based on cheap, high-quality labor. Far from ending with scientists, there is also a shortage of people with a knowledge of biotechnology in related fields: doctors, lawyers, programmers, marketing personnel and others. While little has been done about the latter half of the employee crunch, the government has addressed the problem of educated but unqualified candidates in its Draft National Biotech Development Strategy. This plan included a proposal to create a National Task Force that would work with the biotech industry to revise the curriculum for undergraduate and graduate study in life sciences and biotechnology. The governments strategy also stated intentions to increase the number of PhD Fellowships awarded by the Department of Biotechnology to 200 per year. These human resources will be further leveraged with a Bio-Edu-Grid that will knit together the resources of the academic and scientific industrial communities, much as they are in the U.S.

Major players
Glenmark

Glenmark is a emerging leader of Indian Pharmaceutical market in sales as well in Research. Soon new chemical entities will hit the market.
Ranbaxy Laboratories

Ranbaxy is the leader in the Indian pharmaceutical market, taking in $1.174 billion in revenues for a net profit of $160 million in 2004. It was the first Indian pharmaceutical to have a proprietary drug (extended-release ciprofloxacin, marketed by Bayer) approved by the U.S.

FDA, and the U.S. market accounts for 36% of its sales. 78% of Ranbaxys sales are from overseas markets; its offices in 44 countries manage manufacturing in 7 countries and distribution in over 100. IMS Health estimated that Ranbaxy is among the top 100 pharmaceuticals in the world and that it is the 15th fastest growing company. By 2012, Ranbaxy hopes to be one of the top 5 generics producers in the world, and it consolidated its position with the purchase of French firm RGP Aventis in 2003. Ranbaxy also has higher aspirations, however, to build a proprietary prescription business in the advanced markets. To this end, it keeps a dedicated research facility in Gurgaon staffed with over 1100 scientists. They currently have two molecules in Phase II trials and 3-5 in pre-clinical testing. It spent $75 million in R&D in 2004, a 43% increase over its 2003 expenditure. Arun Puri is the chairman and CEO Brian Tempest is the only non-Indian on the senior management team.
Dr. Reddy's Laboratories

Founded in 1984 with $160,000, Dr. Reddys was the first Asia-Pacific pharmaceutical outside of Japan and the sixth Indian company to be listed on the New York Stock Exchange. It earned $446 million in fiscal year 2005, deriving 66% of this income from the foreign market. In order to strengthen its global position, Dr. Reddy acquired UK-based BMS Laboratories and subsidiary Meridian Healthcare. Anji Reddy is the chairman of Dr.Reddy's. Although 58% of Dr. Reddys revenues come from generic drugs, the company was committed to WTO-compliance long before the 2005 bill took effect, and most of these products were already off patent. Dr. Reddy has long been a research-oriented firm, preceding many of its peers in setting up a New Drug Development Research (NDDR) in 1993 and out-licensing its first compound just four years later. Dr. Reddys has since outlicensed two more molecules and currently has three others in clinical trials. Although Dr. Reddys is publicly traded, the Reddy family (including founder/chairman K. Anji Reddy, son-in-law/CEO GV Prasad and son/COO Satish Reddy) holds a hefty 26% share in the company.
Nicholas Piramal

The company led by Asish Mishra grossing $350 million per year, Nicholas Piramal started its existence with the 1988 acquisition of Nicholas Laboratories and grew through a series of mergers, acquisitions and alliances. The company has formed a name for itself in the field of custom manufacturing. It cites its 1700-person global sales force as another core strength; with its acquisition of Rhodias inhalation anaesthetics business, Nicholas Piramal gained a sales and marketing network spanning 90 countries34. Nicholas Piramal is well-poised for the challenge of surviving in the aftermath of product patent protection. The company has respected intellectual property rights since its inception and refused

to "support generic companies seeking first-to-file or early-to-market strategies." Instead, it decided to make its own intellectual property and opened a research facility last November in Mumbai with hopes of launching its first drug in 2010 at a cost of $100,000.24,33
Cipla

Cipla is one of the oldest drug manufacturers in India. It is led by Dr. Yusuf K. Hamied, Chairman and Managing Director. Cipla burst into the international consciousness in 2000 with Triomune, an AIDS treatment costing between $300 and $800 per year that infringed upon patents held by several companies who were selling the cocktail for $12,000 per year. Long before this news, Cipla had been building a strong global presence, and it now distributes its 800odd products in over 140 countries. Privately held Cipla holds a prominent spot in its home country as well; it is the leader in domestic sales, having just unseated GlaxoSmithKline for the first time in 28 years. Revenue in 2004 totaled $552 million (using Rs 43.472 = $1) about 75% of which was derived in India. Cipla did not report having a research program. |Dr. Kiran Mazumdar-Shaw]] is the Chairman and Managing Director of Bioco Irish chemicals company seeking to break into the Indian market, Biocon is now the leading biotech in India, bringing in Rs 646.36 crore (almost $150 million) in revenue for fiscal year 2004. It initially made its money by producing enzymes, but Biocon recently decided to become a researchoriented company with the goal of bringing a proprietary new drug to market. The company went public in March 2004, and "its shares were oversubscribed by 33 times on opening day." Eight months later it launched Insugen, a bio-insulin that is its first branded product. Biocon also has two wholly owned subsidiaries, Syngene and Clinigene, that perform custom research and clinical trials.
Serum Institute of India

Serum Institute of India can make the enviable claim that 2 out of every 3 children in the world are immunized with one of their vaccines. It is the worlds largest producer of measles and DTP vaccines, and its portfolio includes other vaccines, antisera, plasma products and anticancer compounds. The Serum Institute earned Rs 565 crore ($130 million) in revenue in fiscal year 2005, selling mainly to UN agencies and to the Indian government. The Serum Institute is part of the Poonawalla Group, whose holdings include a horse stud farm and manufacturers of industrial equipment and components. Dr. Cyrus Poonawalla is the Chairman of the company.
Others

Other important domestic companies Glenmark Generics Ltd. - Mr. Glenn Saldana, MD Lupin Ltd : Sun Pharmaceuticals : - Dr. Desh Bandhu Gupta, Chairman - Dilip S. Sanghvi, Chairman and Managing Director

Torrent Pharmaceuticals :- Sudir Mehta, Chairman Wockhardt : Cadila Healthcare : Hetero Drugs : Nectar Lifesciences : Macleods Pharma : Intas Biopharmaceuticals : Bharat Serums : Orchid Pharmaceuticals : Zenbiz Life science Panacea Biotec : AMN Pharmaceuticals : Ajanta Pharma : - Mr. Soshil Kumar Jain, Chairman - Amandip, Chairman and Managing Director - Yogesh Agrawal, Managing Director - Habil F. Khorakiwala, Chairman - Pankaj R. Patel, Chairman and Managing Director - Dr. B. Partha Saradhi Reddy, Chairman and Managing Director - Mr. Sanjiv Goyal, Chairman - Dr. Rajendra Agarwal, Managing Director - Dr. Urmish Chudgar, Managing Director - Mr. Bharat V. Daftary, Chairman and Managing Director - Mr. K. Raghavendra Rao, Chairman & Managing Director

Green Apple Lifesciences Limited : - Mitesh Mehta, Chairman Reliance Life Sciences Pvt Ltd : - Mr. K.V. V. Subramaniam, President and CEO

CHAPTER-3
REGULATORY ENVIRONMENT OF INDIAN PHARMACEUTICAL INDUSTRY The Indian pharmaceutical industry is a successful, high-technology-based industry that has witnessed consistent growth over the past three decades. The current industry players comprise several privately owned Indian companies that have captured a substantial share in the domestic pharmaceutical market due to factors such as favorable government policies and limited competition from overseas. However, the liberalization of the Indian economy is revolutionizing Indian industries as they begin to emerge from domestic markets and gear up for international competition. The Indian pharmaceutical industry is a prime example of an industry that is being forced to revisit its long-term strategies and business models as India opens its markets to global trade. Factors such as protection of intellectual property are increasing in significance due to the growing recognition of the need to ensure protection of valuable investments in research and development (R&D). Efforts are being made in India to curb problems of weak enforceability of existing intellectual property legislations, and the Indian government is moving towards establishing a patent regime that is conducive to technological advances and is in keeping with its global commitments.

 The Patent Act

Across the widest cross-section of views on Patents and Indian Pharma Industry, there is complete consensus on one area. Everyone, without exception, agrees that the Patents Act, 1970 which came into effect in 1972, was instrumental in providing the impetus for laying foundations of a strong manufacturing base of both formulations and bulk actives (as well as intermediates) in India. The Indian pharma entrepreneurs also deserve kudos for rising to the occasion and living up to the expectations and confidence reposed in them by the Government. Provisions of the 1970 Act, which helped the National pharma industry to grow at a double digit pace have already been discussed and debated widely. Special amended provisions for pharmaceuticals, deleting product patenting (retaining process patenting), introducing Licenses of Right, liberal Compulsory Licensing provisions, reduction of patent protection period from 14 years to 7 years (from date of application) and 5 years (from date of sealing) in the Patent Act, 1970, virtually kept pharma patents out of protection and open for commercialization for anyone at will. Consequently, there was no interest for international applicants to file pharma patent applications in India. While being active in "reverse engineering", with a weak patent system, the Indian Pharma Industry, was not at all keen on innovative research and patenting.

With the advent of WTO and TRIPs, the entire scenario has changed. Effective 1.1.1195 India was obliged to comply with its obligations under WTO and TRIPs. Being a developing country with no product patent protection, India was eligible for 10 years (5 + 5) in transition for full TRIPs compliance. India availed of this and made the 1st Amendment to Patent Act 1970 (earlier on 1.1.95 through notification and later through the 1999 Amendment effective from 1.1.95). This enabled applicants to file for EMR as per amended Sec. 5(2) and section 24 A to F. While a few EMRs were applied for, it appears that none qualified for a grant. However, effective 1.1.95, product patent applications [as per Sec. 5(2) of the amended Act] continues to be accepted. It is reliably known that in excess of 4700 product patent applications have been received and accepted by the Indian Patent Office, these applications will be taken up for examination on or after 1.1.2005 or on the effective date on which the 3rd Amendment (introducing product patent provisions) comes into effect whichever is earlier (?). Product patent applications referred here are not necessarily NCEs or new drugs. Pharma formulations, compositions, synergestic combinations, new drug delivery systems, novel dosage forms, herbal extracts etc. (any claims other than for processes) are also covered in this list of 4700+ applications. The 2nd Amendment to the Patent Act (1970), introduced in 1999, was referred to a Joint Parliamentary Committee (JPC). On receipt of the JPC report (post-Doha), the Patents (Amendment) Act, 2002 was enacted. While the earlier Patents (Amendment) Rules, 1999 came into effect on 2.6.1999, the latest amendment i.e. Patents (Amendment) Rules 2003 has been notified on 2nd May 2003. However, the effective date on which the Rules and (consequently the 2002 Act) will come into effect has not yet been notified, which is expected soon (may be between 20th May 2003 to 1st June 2003). The salient features of the 2002 Act & 2003 Rules are: (i) 20 years uniform duration of patent term (including for all currently valid patents (ii) widened scope for inventions (and TRIPs compliant definitions) (iii) PCT compliance in full (iv) Budapest Treaty provisions (v) Other than "per se", provision for business methods, computer programs, software, method of testing etc. (vi) Deletion of License of Right (vii) Reversal of burden of proof for process patents

(viii) Bolar exemption (to Waxman-Hatch) type provisions (ix) Parallel import from authorized sources etc. The third amendment, which is due, (to come into effect on or before 1.1.2005) will make Indian Patent Act, fully TRIPs compliant. The flexibilities available for sovereign states have been rationally used by Indian Lawmakers to tailor the provisions to National interest especially in the area of public health and affordable access to medicines. The Patent Act (1970) was good, timely and helped the Indian Pharma Industry. The Amendments to Patent Act 1970 (1st, 2nd and the impending 3rd amendment) consequent to WTO and TRIPs have done a world of good for the Indian Pharma Industry. First of all, though slowly and belatedly, after considerable prodding (except a couple like Dr Reddy's & Ranbaxy), the Pharma Industry has woken up into a hectic action-phase. This is the best that could have happened to Pharma R&D and the pharmacy (and chemistry as well as biotechnology) profession as a whole.

Under the WTO and the new regime, India's exports have continued to grow double digit while rest of the world (except China) has slowed *down. Post-TRIPs, Indian Pharma Industry has turned to innovative research and patenting. Patents being filed by Indian Pharma companies are almost doubling every year, not only in India, but in US and under PCT. Having woken up, there is no stopping the 'Davids' taking on the 'Goliaths'. Supported by the Nation, the National Government and the people, Indian Pharma Industry is going to see a flurry of hectic activity in CEO vision-setting, R&D directions, Intellectual Property protection and international alliances and tie-ups - not to speak of patenting - not only in India - but worldwide.

Under the WTO and the new regime, India's exports have continued to grow double digit while rest of the world (except China) has slowed *down. Post-TRIPs, Indian Pharma Industry has turned to innovative research and patenting. Patents being filed by Indian Pharma companies are almost doubling every year, not only in India, but in US and under PCT. Having woken up, there is no stopping the 'Davids' taking on the 'Goliaths'. Supported by the Nation, the National Government and the people, Indian Pharma Industry is going to see a flurry of hectic activity in

CEO vision-setting, R&D directions, Intellectual Property protection and international alliances and tie-ups - not to speak of patenting - not only in India - but worldwide Patent rights were introduced in India for the first time in 1856 and, in 1970, the Patent Act 1970 (the Patents Act) was passed, repealing all previous legislations. India is also a signatory to the Paris Convention for the protection of industrial property, 1883, and the Patent Cooperation Treaty, 1970. The Patents Act provides that any invention that satisfies the criteria of newness, onobviousness and usefulness can be the subject matter of a patent. Some of the non patentable inventions under the Patents Act include methods of agriculture or horticulture, processes for the medicinal, surgical, curative, prophylactic or other treatment of human beings, animals or plants or substances obtained by a mere admixture, resulting only in the aggregation of the properties of the components, etc. With regard to pharmaceuticals, in the case of substances intended for use or capable of being used as food, drugs or medicines or substances produced by chemical processes, patents are granted only for the processes of manufacture of such substances and not for the substances themselves. Hence, pharmaceutical products are currently not granted patent protection under Indian law. India had a product patent regime for all inventions under the Patents and Designs Act 1911. However, in 1970, the government introduced the new Patents Act, which excluded pharmaceuticals and agrochemical products from eligibility for patents. This exclusion was introduced to break away Indias dependence on imports for bulk drugs and Formulations and provide for development of a self-reliant indigenous pharmaceutical industry. Thus, under our existing patent laws, molecules, which are products of chemical reactions, are as such non-patentable in India. This restriction, coupled with the restriction on mere admixtures resulting in aggregation of properties in which the components do not exhibit any synergistic behavior, severely limit the items, which can be patented in India. Actives prepared by chemical synthesis are as such non-patentable in India even if they exhibit functional properties. Likewise, standard drug formulations in which the ingredients behave as mere admixtures also do not qualify for patents in India. In such cases only the process, i.e. the method of making the product is patentable. The lack of protection for product patents in pharmaceuticals and agrochemicals had a significant impact on the Indian pharmaceutical industry and resulted in the development of considerable expertise in reverse engineering of drugs that are patentable as products throughout the industrialized world but unprotect able in India.

As a result of this, the Indian pharmaceutical industry grew rapidly by developing cheaper versions of a number of drugs patented for the domestic market and eventually moved aggressively into the international market with generic drugs once the international patents expired. In addition, the Patents Act provides a number of safeguards to prevent abuse of patent rights and provide better access to drugs. The term of patents in the case of processes or methods of manufacture of a substance intended to be used or capable of being used as food or as a medicine or drug is for a period of seven years from the date of filing or five years from the date of sealing the patent, whichever is less. Patents relating to all other inventions are granted for a period of 14 years from the date of filing the patent, unless shown to be invalid. The Patents Act also has provisions relating to compulsory licensing. On the completion of three years from the date of sealing the patent, any person interested in working the patented invention may apply for a compulsory license with respect to the invention. The controller of patents may direct the patent holder to grant such a license upon the terms as may be deemed fit, only if he or she is satisfied that the reasonable requirements of the public with respect to the patented invention have not been met or that the patented invention is not available to the public at a reasonable price. In addition to compulsory licensing, the Patents Act includes a provision for licenses of right where, in certain cases, the central government can, after the expiration of three years from the date of the sealing of the patent, apply for an order that the patent may be endorsed with the words licenses of right, on the grounds that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not available to the public at a reasonable price. Patents for certain substances that are not food items or drugs as such but that are capable of being used as food items or drugs are deemed to be endorsed with the words licence of right immediately on completion of three years from the date of the sealing of the patent. The effect of endorsing a patent with the words licenses of right is that any person who is interested in working the patented invention in India may request the patentee to grant a license. The granting of a license would be on terms that have been mutually agreed upon, even if he/she is already the holder of a license under the patent. In case the parties are unable to agree on the terms of the license, they can apply to the controller of patents to arrive at a settlement of terms.

Patent and the Future of Indian Pharmaceutical Industry The absence of product patent protection for pharmaceuticals and agrochemicals led many multinationals to limit their portfolios to patent expired products or a few selected patented products. This resulted in an erosion of their market share because local manufacturers introduced the most advanced medicines through reverse engineering. Foreign firms were required to pay royalties for international drugs, while Indian companies could access the newest molecules from all over the world and reformulate them for sale in the domestic market. Thus, this resulted in the systematic weakening of patent rights for pharmaceutical products in India and led to the exodus of several international research-based pharmaceutical firms. The obligations imposed on India under the TRIPS Agreement are going to have a significant impact on Indias successful bulk and formulation-oriented pharmaceutical industry. Indian companies will have to compete with the multinationals by focusing on drug development and thereby producing their own patented products. Alternatively, Indian companies could focus on producing patented drugs under license from foreign companies or concentrate on generating revenues from producing generic drugs. Currently, conflicting views exist within the Indian drug companies with regard to Indias transition into the product patent regime.8. Some of the existing pharmaceutical companies believe that product patents will pave the way for innovation in India, while others hold the view that the high cost of R&D will stifle the growth of the Indian pharmaceutical industry. The key to survival for Indian pharmaceutical companies would be the exponential growth of R&D expenditure. Indian companies need product patent protection to encourage research in developing inexpensive drugs that suit the Indian disease profile. Already the larger firms are increasing their total R&D expenditure as a percentage of sales and they are beginning to move in the direction of new molecule discovery rather than concentrating solely on development research. While some firms may not make the transition, signs thus far suggest that a number of Indian firms will successfully weather the transition and come out as more innovative companies. In addition, the advent of product patents is bound to be a boost for multinational companies that have previously been reluctant to invest in India in the absence of product patent protection, and it will increase competition in the domestic market.

 Drug price control

Until the late 1960s multinational corporations dominated the pharmaceutical industry in India. Virtually no regulations governed the industry, especially on prices. In the early 1970s, there was a flurry of activity. The Indian Patents Act was passed which disallowed product patents, granted patents for processes for 5 to 7 years, and introduced compulsory licensing in the public interest. The Drug (Price Control) Order was also promulgated, and a committee constituted to study the working of the industry. This Committee called for major changes and provided the inspiration for the Drug Policy of 1978. But its more radical recommendations were not implemented. Since then, the drugs price control system has been revised twice, each time reducing the number of drugs under price control, governments controls on imports, liberalizing the retention and common sale prices of bulk drugs, as well as the retail and ceiling prices of scheduled formulations. The number of medicines under price control has come down from 347 in 1977, to 163 in 1987, and 76 in 1995.

This relaxation in drugs price control was in line with the general trend towards price deregulation because of the pressure from Indian owned pharmaceutical companies that had developed considerably and whose concerns were becoming similar to those of foreign companies, and the concerted pressure from multinational companies and their governments. The present drugs price control policy is described in the Pharmaceutical Policy, 2002, released by the Ministry of Chemicals and Fertilizers in February 2002. The new formula for deciding which bulk drugs will be price-controlled is as follows:

For bulk drugs with a sale of Rs 5 to 20 crores, the drug will be price-controlled if a formulator controls more than 50% of the market; And for bulk drugs with a sale of above Rs 20 crores, the drug will be price-controlled if a formulator controls more than 90% of the market; The method for controlling prices of formulations would continue as before, as per the 1995 DPCO.

Certain drugs will be exempt from price control. The criteria for exemption are:

15 year exemption for new drugs developed through indigenous R & D

Exemption till expiry of the patent for drugs whose process has been patented under the Indian Patents Act, 1970.

And formulations involving new drug delivery systems registered under IPA 1970.

As far as mark-ups are concerned, the maximum allowable post-manufacturing expenses (MAPE) that was 40% under the DPCO of 1979, is 100% for all indigenously manufactured drugs. Secondly, a drug covered by patent can be exempted from price control. Thirdly, if the manufacturer can produce evidence to satisfy the National Pharmaceutical Pricing Authority (NPPA) that the cost per day per medicine is less than Rs 2 per day, that will also be exempt from price control. This will take commonly used essential drugs like aspirin, paracetamol, iron, folic acid, furazolidone, B complex, etc., out of price control.

In a country like India, with low purchasing power, high dependence on allopathic medications, poor medical delivery, large number of dubious private practitioners, poorer enforcement, it is necessary to have:

y y y y y

A regulatory list of essential drugs Control over the release into the market of irrational drugs Adoption of generic names to limit the excessive use of brands Control over fake and substandard drugs Control on the prescription of drugs in excessive dosage or for ailments for which they are not necessary.

Drugs price control becomes complicated when there is as is the case at present, a plethora of irrational fixed dose combinations.

The drug industry feels aggrieved that the Indian pharmaceutical industry is sought to be reined in through unfair and over enthusiastic price control measures. Given the large volume of fake and spurious drugs in the Indian market, the industry believes that the imposition of restrictive price controls on drugs will result in a further boost to their manufacture. The National Campaign Committee on Drug Policy takes a different view. It makes the following points:

The number of price-controlled drugs was brought down in 1995 from 166 to 74. This led to a spiral in drug prices

In the decade of the 1990s, the span of price controls has come down from in excess of 60% of the industrys turnover to around 30%. But R & D expenditure has not spurted and is at around 2% of sales.

It is true that drugs that are still under product patent protection elsewhere are much cheaper in India because of the process patent regime that is to continue till 2005, after which this price advantage may be lost on those that continue to be under product patent.

But off-patent drugs are generally more expensive in India than in Sri Lanka or Bangladesh.

Drugs price control is not unique to India and is exercised effectively in market economies like Australia and the United Kingdom. In countries where the state provides health insurance (as in the UK, Canada, some countries in Europe), and in others where health insurance companies or health management organizations exist, pressure is mounted by the providers to compel manufacturers to reduce the cost of medicines. Markets mechanisms alone are not relied upon even in these countries stabilize prices. In India where there is no health insurance to speak of, and where government drug purchases are just 5-6% of the total drug market, drugs cannot be treated on par with other consumer goods, and the State has to play a proactive role in their pricing.

 Patent (Amendment Act)

Patent Reform in India: The campaign to protect public health concerns regarding public health and the development of the domestic pharmaceutical industry lay at the core of the century old debate in India on how to shape the patent system to best serve the national interest. The Indian patent system has suffered continuous modifications over the past decade, partly as a reflection of the diverging standpoints and changing priorities of government, national industry, public health NGOs and other stakeholders. More recently, Indian patent laws have been amended to comply with the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Since the 1970s, former government officials, parliamentarians, legal and political experts, trade unionists and social activists have organized in NGOs and worked in alliance with the national pharmaceutical industry to influence the process of reform of the Indian patent system. Their goal has been to ensure that the patent system does not hinder but promotes the availability of medicines at affordable prices that meet national public health needs. The development of the national pharmaceutical industry in India is linked to the extent that national patent laws have allowed them to legally produce quality generic versions of many medicines even while these are under patent in other countries. By and large generics are less expensive than patented medicines. Moreover, increased generic competition often leads to a drop in the overall prices of medicines. Given that India remains the major global supplier of generic medicines, public health activists have been working to ensure the production and availability of generic medicines to treat patients in India and other developing countries. Up until the latest amendment of the Indian Patents Act in 2005 that introduced protection for product patents, the alliance has rejected changes to the patent law perceived to limit the production, availability and distribution of generics and have pressured the government to introduce provisions to give pre-eminence to public health over intellectual property. It has been more than two years since the Indian Patent Act of 1970 (the Act) was amended to make it compliant with the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement. The amendments were made amidst much expectation, protest and confusion. Despite having had ten years to put the amendments together, the Indian Government had to resort to a hurried Presidential Ordinance in December 2004 to amend the Patent Act. In March 2005, after an invigorating public debate involving all stakeholders, legislators were able to come out with amendments that attempted to strike a balance between promoting innovation and ensuring that Indians had continued access to affordable medicines and so that India remained the pharmacy of the developing world. The amendments changed the paradigm under which most, if not all, Indian pharmaceutical companies built their businesses. Now that the first product patent in the pharmaceutical sector has been granted (Patent No. 198952 granted on 21st February, 2006 to Roche, on pegylated interferon- conjugates) and a challenge to a key amendment has come to an unsuccessful end at the Madras High Court, this paper takes a look at what the impact of the amendments have been so far and what they could be in the future.

CHAPTER-4 RANBAXY PHARMA

 History (Mission, Vision)

1961 The Company was incorporated on 16th June, 1961 at Delhi. The Company Manufacture drugs, medicines, cosmetics and chemical products. The company also markets a wide range of products including a number of life saving antibiotics.

1973 The shareholders of the Company offered for sale to the public during October simultaneously with the public issue of shares 63,535 equity shares of Rs 10 each of the Company at par.

1977 The Company had set up a joint venture company with local participation in Nigeria. The equipments to be supplied against the Company's contribution to the equity capital were ordered. These were shipped during 1978 and were received and installed in Nigeria. Production commenced in early 1980.

1984 Ranbaxy Investments Ltd., Medicare Investments Ltd., and Chemical invest Ltd., became subsidiaries of the Company.

1985 Approval of the Malaysian Government was received for a joint Venture project. The project commenced production in July 1987. In October the Company made a rights issue of 1,00,000 equity shares of Rs 10 each linked to 15,00,000-15% secured redeemable non-convertible debentures of Rs 100 each, both at par on the following basis: (i) 9,09,000 equity shares tied to 13,63,500-15% debentures to the existing equity shareholders and holders of the convertible parts of 13.5% secured debentures in the

ratio 27 debentures and 18 equity shares for every 50 equity shares or 10 convertible parts of the 13.5% debentures held. (ii) 71,000 equity shares tied to 1,06,500 debentures as Preferential allotment to equitable basis to employees, and (iii) 20,000 equity shares tied to 30,000 debentures to business associates. The issue was oversubscribed and the Company allotted a further 2,50,000 equity shares tied to 3,75,000 be dentures to retain oversubscription.

Ranbaxy Drugs Ltd. became a subsidiary of the Company. Montari Agro Chemical Investment Ltd., Montari Chemicare Investments Ltd., Chahel Investment & Trading Co., Ranpharm Investment Ltd., Raicure Investment Ltd., & Vidyut Inv. are subsidiaries of the Company.

1986 9.8% Pref. shares redeemed. debentures. 39,510 equity shares were issued in conversion of 13.5%

1987 An antibiotic plant at Toansa, Dist. Hoshiarpur (Punjab) and the Nalidixic Acid plant as SAS Nagar (Punjab) were commissioned. 7,000-11% Pref. shares redeemed. 45,680 equity shares were issued in conversion of 13.5% debentures. (Final conversion).

1988 A new broad spectrum oral fluoro quinolone of loxacin under the Brand name Zanocin was launched in the market in April 1990. The Company offered 16,64,775-12.5% secured fully convertible debentures of Rs 100 each for cash at par aggregating to Rs 16,64,77,500. Of these, 15, 85,500 debentures were offered to the shareholders on rights basis in the proportion 30 debentures: 100 equity shares (all were taken up). The balance 79,275 debentures were offered to the employees (including Indian working Directors) (all were taken up). Additional 2,49,716 debentures were allotted to retain oversubscription (2,37,825 debentures to the shareholders and 11,891 debentures to the employees).Each debenture was converted into 2 equity shares of Rs 10 each at a premium of Rs 40 per share on 31.3.1989. Accordingly, 38,28,982 equity shares of Rs

10 each were issued. Subject to necessary approvals being obtained, the Company proposed to issue 13,67,097-12.5% secured redeemable partly convertible debentures of Rs 300 each on rights basis to the existing equity shareholders in the ratio of 9 debentures for every 100 equity shares held. Simultaneously, the Company proposed to offer, 68,355 debentures to the

employees/workers of the Company. As per the proposed terms of issue, part-A of Rs 200 of each debenture will be converted into four equity shares of Rs 10 each at a premium of Rs 40 per share at the end of 6 months from the date of allotment. The non-convertible part-B of each debenture will be redeemed at par at the end of 7th year from the date of allotment.

1990 A new plant was set up at Sahibzada Ajit Singh Nagar for the production was commissioned. A

bulk facility to produce newer fluoroquinolones was also being set up at Dewas. On 1st June, the scheme of arrangement for spinning-off the pharmaceutical plant at Okhla, New Delhi of the Company to Pharmax Corporation Ltd. was approved by the Honourable high court of Punjab & Haryana. Tata Hotels Ltd. is a subsidiary of the Company with a holding of 7,500 equity shares of Rs 10 each out of 7,600 equity shares issued. Since 1990, Tata Hotels Ltd. ceased to be a subsidiary of the company.

1991 The Company proposed to undertake backward integration into fermentation based products such as Penicillin and Cephalosporin-C. These were to be implemented at Paonta Sahib in Himachal Pradesh, a new complex being developed for bulk drugs. 2,250 Pref. shares were redeemed on 3.9.91. 60, 75,988 bonus equity Shares were issued in prop. 2:3.

1992 The Company offered 13, 67,097-12.5% partly convertible debentures of Rs 300 each on Rights basis in the proportion of 9 debentures: 100 equity shares held. All were taken up. Additional 2, 05,065 debentures were allotted to retain oversubscription. 68,355 debentures of Rs 300 each were also issued to the employees' on an equitable basis. (All were taken up). Additional 10,250 debentures were allotted to retain oversubscription. Part A of Rs 200 of the face value of each debenture was to be compulsorily converted into 4 equity shares of Rs 10 each at a premium of

Rs 40 per share at the end of six months from the date of Allotment of debentures. Part B of Rs 100 of the face value of each debenture was to be redeemed at par at the end of 7 years from the date of allotment of debentures.RLL has three successful overseas joint ventures in Nigeria, Malaysia and Thailand. A joint venture recently incorporated in India with Eli Lilly - a leading original research company in pharmaceuticals

1993 During September the Company offered 24,51,719-12% fully convertible debentures of Rs 300 each on Rights basis in the proportion 15 debs 200 equity shares held (all were taken up) (18611 debs. were kept in abeyance). Another 1, 22,586-12% debentures were offered to the employees as an equitable basis (all were taken up). Part A of Rs 125 of each debenture was to be converted into one equity share of Rs 10 each at a premium of Rs 15 per share on the date of allotment. Accordingly 25, 55,694 equity shares were allotted on 5.12.93. Part B of Rs 175 of each debenture was to be converted into one equity share of Rs 10 each at a premium of Rs 165 per share on the expiry of 12 months from the date of allotment. Accordingly 25, 55,690 equity shares were allotted on 6.12.1994. The Company also offered 40,86,197-15% Non-Convertible debentures with warrants attached to it on Rights basis in the proportion 25 NCDS with warrants 8,200 equity shares held (all were taken up).Another 2,04,310-15% NCDS were also offered to the employees on an equitable basis (all were taken up). These would be redeemed in three installments of Rs 66, Rs 67 and Rs 67 each at the end of 6th, 7th and 8th year respectively from the date of allotment debentures. Each NCP carries a warrant entitling the holder to apply for one equity share of Rs 10 each at a premium of Rs 115 per share at one or more installment as may be decided by the Board during the period between 36th months and 60th months from the date of allotment of NCDS at half yearly intervals.

1994 The Expansion and Modernization plant for manufacture of Ranitidine and Amoxycillin and a pilot plant for R&D at Toansa were commissioned. A new plant for manufacture of pharmaceutical dosage forms at Paonta Sahib was completed. The company allotted one hundred thousand warrants without any face value to entities of the management group on 28th July.

Each of such warrants entitles the holder to subscribe to fifty equity shares of Rs 10 each at a premium of Rs 390 per share within a period of 18 months from the date of allotment.

1995 A Global Alliance Agreement was signed with Eli Lilly and the Company, for marketing of pharmaceutical products in U.S.A. and other countries. For the purpose of Indian joint venture, a company under the name Ranbaxy Lilly Company was incorporated. A joint venture in U.S.A. for marketing of products from the Indian joint venture as also select Lilly and Ranbaxy products was proposed. For the purpose, a company under the name Lilly Ranbaxy Pharmaceuticals LLC was incorporated in the state of Indiana, U.S.A.

1996 RLL bought a drug firm in Ireland in Jan.'96. In 1996, it acquire six leading brands from Gufic. Croslands Research Laboratories, a leading manufacturer of dermatological pharmaceutical formulations has been merged with RLL. In Oct.'98 it sold off the Glat (Global Alliances and Technologies) division of Croslands to French pharma major Galderma.

1997 The name of Ranmax Laboratories (Nigeria) Ltd., was changed to Ranbaxy (Nigeria) Ltd. 1, 50,000 equity shares of Rs 10 each (prem. Rs 630 per share) allotted on 12th June, to Ranbaxy Employees Welfare Society on exercise of rights attached with warrants allotted to the society. 2,23,958 equity shares of Rs 10 each (prem. Rs 115 per share) allotted on 1.8.1997 on exercise of right attached with warrants allotted along with NCDs of Rs 200 each on rights basis. 6,56,423 equity shares of Rs 10 each (prem. Rs 115 per share) allotted on 1st February 1998 on exercise of right attached with warrants allotted along with NCDs of Rs 200 each on rights basis.

1998 It has become India's first pharmaceutical company to launch prescription products under its own name and label in the U.S., the world's largest pharmaceutical market with an estimated 1997 sale of $ 101 billion. The company has entered the U.S. ethical prescriptions market through

Ranbaxy Pharmaceuticals Incorporated (RPI), a wholly-owned subsidiary of the Ranbaxy Laboratories Ltd. The entry has been made with Cefaclor capsules and suspensions.

1999 Pharma Majors Ranbaxy Laboratories Ltd and Glaxo Ltd announced an agreement for comarketing of an advanced dosage form of the antibiotic cephalexin. According to the comarketing agreement, Ranbaxy will market the new dosage form as Sporidex AF, while Glaxo extends its phexin line with its innovated product. Ranbaxy Laboratories Ltd and Cipla have entered into a strategic partnership to jointly market a select basket of drugs. Ranbaxy Laboratories Ltd has signed an agreement with Glaxo for the co-marketing of an advanced dosage form of the antibiotic, Cephalexin.

2000 The Company has filed an investigational new drug application for its new asthma molecule Rbx-4638 with the Drugs Controller General of India (DCGI). Ranbaxy is the first company in the country to file an INDA for such a novel drug compound.- Eli Lilly Ranbaxy, a 50:50 joint venture between Ranbaxy Laboratories and the US-based Eli Lilly & Co., has introduced HumaPen, a new ergonimically designed, resusable insulin delivery service.

2001 Ranbaxy Laboratories is set to reap a windfall after existing the joint venture with the billion US pharma major, Eli Lilly by selling its 50 per cent stake made at an equity investment of Rs 7.2 crore for more than ten times at Rs 78 crore. July 3: The US-based Eli Lilly has bought the 50 per cent stake owned by Ranbaxy Laboratories in the joint venture Eli Lilly Ranbaxy for million.

2002 Ranbaxy subsidiary receives tentative approval for commercialization of Lisinopril + Hydro chlorothiazine Tablets. Ranbaxy Laboratories US subsidiary has received temporary approval for an anti-hypertension drug, Prinizide, issued by US Food and Drug Administration. Ranbaxy terminates manufacturing agreement with Eli Lilly Ranbaxy Laboratories has recieved approval for launching the anti-asthma compound - Montelukast in India. Ranbaxy obtains FDA approval

to launch Ceftin Ranbaxy obtains exclusive marketing rights for Nifedipine-XL from Penwest, USA. Ranbaxy Laboratories and Wockhardt on March 7th announced a strategic business alliance for the US, the world's largest market for pharmaceutical products.

2003 Prof Virander S Chauhan and Dr Kanury V S Rao from the International Centre for Genetic Engineering, and Prof Samir K Brahmachari from the Institute of Genomics and Integrative Biology, all from Delhi, are the seven scientists who bagged Ranbaxy Research Awards for the year 2001. Ranbaxy Laboratories has rolled out the GlaxoSmithkline's antibiotic called Augmentin, in the US market Ranbaxy Launches next Generation Anti-Retroviral for the first time in India Ranbaxy Laboratories Ltd on February 10, 2003 has announced the launch of a high end advanced Cephalosporin, Cefprozil, under the brand name Refzil O

2004 Ranbaxy Laboratories Ltd announced that all the necessary formalities and consents required for the conclusion of the acquisition transaction of RPG (Aventis) SA have been obtained and that the acquisition is now complete. With this, RPG (Aventis) SA France has now become a wholly owned subsidiary of Ranbaxy. Ranbaxy receives USFDA approval to commercialise Minocycline Hydrochloride Tablets USP -Ranbaxy Laboratories Ltd has informed that the Stock Exchange, Ahmedabad has advised delisting the securities of the Company effective January 15,

2005 Receivs approval from the U.S. Food and Drug Administration, to manufacture and market Clarithromycin XL 1000 mg tablets. Ranbaxy in alliance with Novavax to step in to biotech sector Ranbaxy Laboratories Ltd enters into collaborative agreement with National Chemical Laboratories, Pune and Department of Science & Technology in the area of New Drug Discovery. On May 24, 2005 launches its approved generic formulation of Clarithromycin immediate release (IR) tablets, 250 mg and 500 mg, in the US markets.

2006

Ranbaxy Laboratories enters into a strategic alliance with Zenotech .Ranbaxy ties up with Ipca to tap US market. Ranbaxy signs licensing agreement with Swiss Company Debiopharm, for NCE Drug in the Gastroenterology Segment .Ranbaxy signs licensing agreement with Swiss Company Debiopharm, for NCE Drug in the Gastroenterology Segment. Ranbaxy Appoints Atul Sobti as COO.

2007 Ranbaxy Laboratories Ltd and GlaxosmithKline (GSK) on February 06, 2007 have signed a new multiyear R&D agreement that modifies and expands the terms of their strategic alliance established in 2003 to provide the Company expanded drug-development responsibilities and further financial opportunities.Ranbaxy unveils asthma inhalation capsules Ranbaxy

Laboratories Ltd has received final approval from the U.S. Food and Drug Administration (FDA) to manufacture and market Amlodipine Besylate Tablets, 2.5 mg (base), 5 mg (base) and 10 mg (Base).

2008 Ranbaxy Laboratories on July 28 said it has launched the generic version of Omeprazole capsules, used in the treatment of acid related diseases in the US healthcare system.

2010 Ranbaxy Laboratories Limited (Ranbaxy) has launched a New Chemical Entity (NCE), Lulifin (Luliconazole), in the Indian Dermatology market. This follows a strategic in-licensing agreement with Summit Pharmaceuticals International Corporation, Japan (SPI) allowing Ranbaxy, exclusive marketing rights, for India, 7'he introduction of this NCE, significantly strengthens Ranbaxy's presence in the Dermatological segment.

Company Profile: Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company, is an integrated, research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. Ranbaxy today has a presence in 23 of the top 25 pharmaceutical markets of the

world. The Company has a global footprint in 46 countries, world-class manufacturing facilities . In June 2008, Ranbaxy entered into an alliance with one of the largest Japanese innovator companies, Daiichi Sankyo Company Ltd., to create an innovator and generic pharmaceutical powerhouse. The combined entity now ranks among the top 20 pharmaceutical companies, globally. The transformational deal will place Ranbaxy in a higher growth trajectory and it will emerge stronger in terms of its global reach and in its capabilities in drug development and manufacturing. Ranbaxy Laboratories is quite the rainmaker in India's pharmaceutical business. The company is one of India's largest drug manufacturers and a top global generics producer. Anti-infective amoxycillin (not to be confused with the common antibiotic, amoxicillin) and ciprofloxacin, and cardio drug simvastatin are among Ranbaxy's top sellers; all come in several administration forms. The company also makes treatments for gastrointestinal, musculoskeletal, and central nervous system disorders, as well as diabetes, pain, allergies, and HIV/AIDS. Its R&D focus includes new forms of existing drugs and metabolic disease treatments. Japanese drugmaker Daiichi Sankyo owns a controlling stake in Ranbaxy. Ranbaxy Laboratories Ltd. is the largest pharmaceutical company in India, and one of the world's top 100 pharmaceutical companies. Long a specialist in the preparation of generic drugs, Ranbaxy is also one of the world's top 10 in that pharmaceutical category as well. Yet, with India's agreement to apply international patent law at the beginning of 2005, Ranbaxy has begun converting itself into a full-fledged research-based pharmaceutical company. A major part of this effort has been the establishment of the company's own research and development center, which has enabled the company to begin to enter the new chemical entities (NCE) and novel drug delivery systems (NDDS) markets. In the mid-2000s, the company had a number of NCEs in progress, and had already launched its first NDDS product, a single daily dosage formulation of ciprofloxacin. Ranbaxy is a truly global operation, producing its pharmaceutical preparations in manufacturing facilities in seven countries, supported by sales and marketing subsidiaries in 44 countries, reaching more than 100 countries throughout the world. The United States, which alone accounts for nearly half of all pharmaceutical sales in the world, is the company's largest international market, representing more than 40 percent of group sales. In Europe, the company's purchase of RPG (Aventis) S.A. makes it the largest generics producer in that market. The company is also a leading generics producer in the United Kingdom and Germany and elsewhere in Europe. European sales added 16 percent to the company's sales in 2004. Ranbaxy's other major markets include Brazil, Russia, and China, as well as India, which together added 26 percent to the group's sales. Ranbaxy posted revenues of $1.18 billion in 2004. The company, which remains controlled and led by the founding Singh family, is listed on the National Stock Exchange of India in Mumbai. Ranbaxy Laboratories had its origins in the early 1960s when Ranjit Singh and Gurbux Singh, two employees of a Japanese pharmaceutical company operating in India, formed their own pharmaceutical preparations company in Amritsar, in Punjab state. The two merged their names to form the name for their company, Ranbaxy.

Through the 1960s, India's pharmaceutical market remained dominated by foreign drug makers. The domestic pharmaceutical manufacturing industry was limited in large part to the dosage preparation, packaging, and distribution of existing formulations. Like many Indian drug companies of this period, Ranbaxy linked up with a European pharmaceutical company, and began production in 1962. Ranbaxy's owners sought additional financing and turned to a local moneylender, Bhai Mohan Singh. By 1966, the pair had built up debts to Singh of more than the equivalent of $100,000. When Singh, a native of Pakistan who had arrived in India at the beginning of that decade, came to collect, the Ranbaxy partners offered to turn over their company to him instead. Singh agreed to the deal and launched the Ranbaxy family on the path toward building one of India's largest business empires. Under Bhai Mohan Singh, Ranbaxy initially maintained its course of preparing and packing existing branded pharmaceutical products for the Indian market. The entry of Singh's eldest son, Parvinder, into the company in 1967, however, set the company on a new course to become a fully independent pharmaceutical company. Parvinder Singh had just graduated with a PhD in chemistry from the University of Michigan. The younger Singh's background in chemistry complemented his father's business flair. Yet Parvinder Singh himself quickly displayed a talent for business and was credited, in large part, with guiding the company into the ranks of the global pharmaceutical leaders. Ranbaxy's good fortune came in 1970, when the Indian government passed legislation that effectively ended patent protection in the pharmaceutical industry. Indian pharmaceutical manufacturers were now able to produce low-cost, generic versions of popular, yet expensive drugs, revolutionizing the drug industry in India and in much of the world. The Singhs quickly took advantage of India's large, highly trained, yet inexpensive workforce, building up a strong staff of chemists and chemical engineers. The company struck pay dirt early on, when it launched Calmpose, a generic formulation of the hugely popular Roche discovery, Valium. Released in 1969, Calmpose immediately placed Ranbaxy on India's pharmaceutical map. The company expanded quickly, and by 1973, Ranbaxy opened a new factory, in Mohali, for the production of active principal ingredients (APIs). This facility enabled the company to expand its range of generic medications and ingredients. To finance its growth, the company listed on the Indian Stock Exchange that year. Ranbaxy's ability to produce generic medications at far lower cost than its branded competitors placed the company in a strong position for international expansion, especially in less developed markets. The company began its internationalization early on, launching a joint venture in Nigeria. That operation opened a production facility in Lagos in 1977. Ranbaxy expanded its production at home as well, opening a new state-of-the-art dosage plant in Dewas in 1983. In 1987, the company became India's leading antibiotic and antibacterial producer when it completed a new API plant in Toansa, in Punjab, that year. The Toansa facility backed up Ranbaxy's plans to enter the U.S. market, and in 1988, the Toansa plant received Food and Drug Administration (FDA) approval.

Ranbaxy formulated a new strategy, that of becoming a full-fledged pharmaceutical company. The driving force behind the company's new direction was Parvinder Singh, who was named the company's managing director in 1982. Nonetheless, Bhai Mohan Singh remained in control of the company. As part of its new strategy, Ranbaxy launched its own research and development center in 1985. The company also stepped up its marketing efforts, launching a new dedicated marketing subsidiary, Stancare, that year. By 1990, the company had a new product to sell, when Ranbaxy was granted a U.S. patent for its doxycycline antibiotic preparation. The following year, the company was granted a U.S. patent for its cephalosporin preparations, and the company built a new state-of-the-art facility for their production in Mohali. A major milestone for the company came in 1992, when it reached a marketing agreement with Eli Lilly & Co. The companies set up a joint venture in India to produce and market Lilly's branded pharmaceuticals for the domestic market. At the same time, Lilly agreed to begin marketing Ranbaxy's generic medications in the United States. In this way, Ranbaxy gained widescale access, backed by the highly respected Lilly, into the world's single largest drugs market. Parvinder Singh took over as head of the company--ousting his father in what was described as a family feud--in 1992. By then, Ranbaxy had grown into one of India's largest pharmaceutical companies on the basis of its generics production. Yet as pressure grew on India to begin enforcing international drug patents, the company itself appeared to have reached a crossroads-whether to remain focused on copying generic molecules, or to begin developing new drugs inhouse. The company chose the latter, and in 1993 adopted a new corporate mission to announce its reformulated ambitions: "To become a research-based international company." Ranbaxy made good on its mission--by the middle of the next decade, nearly 80 percent of its sales came from outside of India. As a first step, the company launched a new joint venture, in China, backing its entry into that market with a production facility in Guangzhou. The following year, the company established subsidiaries in London, England, and in Raleigh, North Carolina. In 1995, the company stepped up its U.S. presence with the purchase of Ohm Laboratories Inc., which gave the company its first manufacturing plant in that market. Ranbaxy then launched construction of a new and state-of-the-art manufacturing wing, which, completed that year, gained FDA approval. This new facility enabled Ranbaxy to step up its presence in the United States, and in 1998 the company began marketing its generic products under its own brand name. That year, in addition, the company filed an application to begin Phase I clinical testing on its first in-house developed NCE. The following year, the company's NDDS efforts paid off as well, when Bayer acquired the rights to market Ranbaxy's single daily-dosage ciprofloxacin formulation. Ranbaxy's international expansion continued as well, with the launch of marketing operations in Brazil. As the largest pharmaceuticals market in Latin America, that country was the cornerstone of the company's plans to expand throughout the region. Ranbaxy also expanded in Europe, with

the agreement in 2000 to acquire Bayer's Germany-based generics business, Basics. The company also added production plants in Malaysia and Thailand. Parvinder Singh died in 1999 and longtime righthand man D.S. Brar took over as company leader, naming family outsider Brian Tempest as company president. The new management team continued Singh's expansion strategy, opening a new manufacturing plant in Vietnam in 2001. Ranbaxy also sought new alliances, and in 2003 the company reached a global drug discovery and development partnership with GlaxoSmithKline. That agreement called for Glaxo to handle the later-stage development process for Ranbaxy created molecules. The company's international expansion also took a major step forward at the end of 2002, when it agreed to acquire RPG (Aventis) in France, that country's leading generic drugs producer. Ranbaxy's sales had by then topped the $1 billion mark, placing the company not only as the leader in India's pharmaceuticals industry, but also among the ranks of the world's top 100 pharmaceuticals companies. Ranbaxy also boasted a place among the world's top ten generic drugs producers. In addition, the company had advanced a growing number of its own NCE and NDDS molecules into clinical testing. The company's transition into research-based product development was seen as crucial as India announced its intention to enforce international drug patents at the beginning of 2005. Ranbaxy appeared prepared to meet this challenge, however, and confidently set its sights on boosting its annual sales past $2 billion by 2007 and to more than $5 billion by the beginning of the next decade. International growth remained an essential part of that strategy. The company began negotiations for a major acquisition in Germany at the end of 2004, which was expected to be completed in 2005. The company also launched construction of a new $100 million production facility in Brazil. Meanwhile, Ranbaxy continued to increase its research and development budget, with the goal of generating as much as 40 percent of its revenues from its in-house innovations by the 2010s. Ranbaxy expected to remain India's drug leader into the new century. Principal Subsidiaries Basics GmbH (Germany); Gufic Pharma Ltd. (98%); Ohm Laboratories Inc. (United States); Ranbaxy (Hong Kong) Ltd.; Ranbaxy (Malaysia) Sdn. Bhd. (56.25%); Ranbaxy (Netherlands) B.V.; Ranbaxy (S.A.) Proprietary Ltd.; Ranbaxy (UK) Ltd.; Ranbaxy Do Brasil Ltda.; Ranbaxy Drugs and Chemicals Company; Ranbaxy Drugs Ltd.; Ranbaxy Egypt Ltd.; Ranbaxy Europe Ltd. (United Kingdom); Ranbaxy Farmaceutica Ltda. (Brazil; 70%); Ranbaxy Fine Chemicals Ltd.; Ranbaxy France SAS; Ranbaxy Ireland Ltd.; Ranbaxy Nigeria Ltd. (84.89%); Ranbaxy Panama, S.A.; Ranbaxy Pharmaceuticals Inc. (United States); Ranbaxy Poland Sp. z.o.o.; Ranbaxy PRP (Peru) S.A.C.; Ranbaxy Unichem Company Ltd. (Thailand; 88.56%); Ranbaxy USA, Inc.; Ranbaxy Vietnam Company Ltd.; Ranbaxy (Guangzhou China; 83%); Ranbaxy, Inc. (United States); Ranchem Inc. (United States); Ranlab Inc. (United States); RanPharm Inc. (United States); Rexcel Pharmaceuticals Ltd.; Solus Pharmaceuticals Ltd.; Unichem Distributors (Thailand; 99.96%); Vidyut Investments Ltd.; Vidyut Travel Services Ltd.

Principal Competitors RPG Enterprises; GlaxoSmithKline Consumer Healthcare Ltd.; East India Pharmaceutical Works Ltd.; Dr. Reddy's Laboratories Ltd.; Cipla Ltd.; Concept Pharmaceuticals Ltd.; Khandelwal Laboratories Ltd.; Dabur India Ltd

Mission & Vision Ranbaxy's mission is To become a Research-based International Pharmaceutical Company. The Company is driven by its vision to Achieve significant business in proprietary prescription products by 2012 with a strong presence in developed markets. R&D Ranbaxy views its R&D capabilities as a vital component of its business strategy that will provide a sustainable, long-term competitive advantage. The Company has a pool of over 1,200 R&D personnel engaged in path-breaking research.

Ranbaxy is among the few Indian pharmaceutical companies in India to have started its research program in the late 70's, in support of its global ambitions. A first-of-its-kind world class R&D centre was commissioned in 1994. Today, the Company has multi-disciplinary R&D centers at Gurgaon, in India, with dedicated facilities for generics research and innovative research. The R&D environment reflects its commitment to be a leader in the generics space offering value added formulations and development of NDA/ANDAs, based on its Novel Drug Delivery System (NDDS) research capability. Ranbaxys first significant international success using the NDDS technology platform came in September 1999, when the Company out-licensed its first once-a-day formulation to a multinational company.

In July 2010, Ranbaxys New Drug Discovery Research (NDDR) was transferred to Daiichi Sankyo India Pharma Private Limited as part of the strategy to strengthen the global Research and Development structure of the Daiichi Sankyo Group. While NDDR will now become an integral part of Daiichi Sankyo Life Science Research Center in India, based in Gurgaon, Ranbaxy will continue to independently develop and later commercialise the anti-malarial new drug, Arterolane + PQP, which is currently in Phase III trials. Ranbaxy will also explore the

further development of late stage programs developed by NDDR in the last few years, including the development programs in the GSK collaboration. Within Ranbaxy, R&D of Generics will now get a sharper focus, as the Company is increasingly working on more complex and specialist areas.

 Products
Using the finest R&D and Manufacturing facilities, Ranbaxy Laboratories Limited manufactures and markets generic pharmaceuticals, value added generic pharmaceuticals, branded generics, active Pharmaceuticals (API) and intermediates.

The Company remains focused on ascending the value chain in the marketing of pharmaceutical substances and is determined to bring in increased revenues from dosage forms sales.

Ranbaxy's diverse product basket of over 5,000 SKUs available in over 125 countries worldwide encompasses a wide therapeutic mix covering a majority of the chronic and acute segments. Healthcare trends project that the chronic treatment segments will outpace the acute treatment segments, primarily driven by a growing aging population and dominance of lifestyle diseases. Our robust performance in Cardiovascular, Central Nervous System, Respiratory, Dermatology, Orthopedics, Nutritionals and Urology segments, clearly indicates that the Company has strengthened its presence in the fast-growing chronic and lifestyle disease segments.

Top 10 Products (2010)

Valacyclovir Simvastatin Co-Amoxyclav Ciprofloxacin and Combinations Amoxycillin and Combinations Isotretinoin

 Ketorolac Tromethamine Loratadine and Combinations Ginseng+Vitamins Cephalexin Atorvastatin and Combinations

 Marketing mix
The company has an organized marketing and sales team to reflect better alignment of product/field deployment with the therapeutic area concept to bring synergies in marketing efforts. Ranbaxy operates in India through its marketing divisions which are as follows: y y y y y y y y y y y y y Pharma Stan care Crossland Rextar Ranbaxy CV Super specialty Dreamland Maxim URO Rexcel CV life Asthma Solus

Promotional strategies Ranbaxy Laboratories Limited, India's largest pharmaceutical company, headquartered in India, is an integrated, research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. The Company has a ground presence in 46 countries, manufacturing operations in 7

countries and sells products in over 125 countries. The Company has adopted a multi-pronged strategy. Acquisition of generic brands overseas, strong emphasis on brand marketing in the US and Europe, entering high potential new markets with value added product offerings, are the major thrust areas. Successful business development transactions form a key component of its business strategy.In each of our partnerships, we strive to build enduring, mutually beneficial relationships that can produce positive results for both parties. We are interested in sales and marketing partnerships and product acquisition opportunities in all the markets where we operate. We are exploring opportunities through Licensing and Alliances to draw maximum value from such arrangements. We continue to evaluate opportunities to add to our product basket, enhance our therapeutic presence and expand our distribution reach. Company growing faster than the market. One of the largest distribution networks that comprises 2500+ skilled field force. Dedicated task forces for specialised & chronic therapies A strong player in the NDDS segment. Key brands include Cifran OD (Ciprofloxacin), Zanocin OD (Ofloxacin) & Sporidex AF (Cephalexin) Strong brand building capabilities, reflected in the fact that around 20 brands feature in the Top-300 brands of the Industry list. Leading brands are Sporidex (Cephalexin), Cifran (Ciprofloxacin), Mox (Amoxycillin), Zanocin (Ofloxacin) & Volini (Diclofenac) A well-built customer interface, with one of the highest customer coverage across India, and an excellent franchise with both Generalists & Specialists. This is proven by Ranbaxy Indias Corporate Image being perceived as Best-in-Class by customers (source: AC Nielsen ORG MARG Report, June 2004) Great emphasis is placed on Knowledge Management and Medico-marketing initiatives such as Advisory Board Meetings, Post Marketing Surveillance Studies and Continuous Medical Education programs. These have resulted in an excellent customer relationship with the medical fraternity. More than 2000 interface programs (Symposia, CMEs) are conducted and about 20 Clinical Papers published annually With a futuristic approach, the India operations attempt to capitalize on the fast- emerging, high-growth segments with innovative products and services:

CHAPTER-5 DR. REDDYS LABS  History (Mission, Vision)

1985 The Company was incorporated on 2nd November. The Company was promoted by Dr. K. Anji Reddy and his associates who were also the promoters of Standard Organics, Ltd. - In May, the Company issued 7, 50,000 equity shares of Rs 10 each for cash at par linked to 1, 50,000 - 15% secured redeemable non-convertible debentures of Rs 100 each for cash at par in proportion of one debenture for five equity shares held including the oversubscription from the public. The allotment was made as follows: (i) 12,550 equity shares linked to 2,510 debentures were issued to business associates (ii) 850 shares linked to 170 debentures were issued to the employees (iii) 2,80,500 shares linked to 56,100 debentures issued to the non-resident Indians and 1986 10, 06,500 equity shares then issued at par out of which 2, 56,500 equity shares were reserved and allotted to promoters, etc. The remaining 7,50,000 equity shares were issued linked to debentures of which the following shares were reserved for preferential allotment: (i) 15,000 shares to business associates of the Company (only 12,550 shares taken up); (ii) 37,500 shares to employees of the company (only 850 shares taken up) and 3,00,000 shares to non-resident Indians (only 2,80,500 shares taken up). The balance 3,97,500 shares along with the unsubscribed portion of 58,600 shares out of the preferential quota were offered for public subscription during June.

1988 13,660,500 number of equity shares forfeited. 15 months, a plan was drawn for the expansion and modernization of formulations division. ICICI and IFCI sanctioned term loans of Rs 198 lakhs and Rs 132 lakhs respectively. 1989

An explosion at the Company's plant resulted in stoppage of production for 2 months. Two new products namely, a Ciprolet and Enam were introduced by the Company's formulation division while the Company's bulk drug division commenced manufacture of ciprofloxacin, a new drug. The Company exported goods such as Methyldopa, Cephalexin etc., worth Rs 2.68 crores. 6,83,125 rights shares issued (prem. Rs. 15 per share; prop. 1:2). Additional 1,02,470 shares allotted to retain oversubscription. Another 34,155 shares (prem. Rs 15 per share) allotted to employees. 1990 The Company started manufacturing a new bulk drug by the name Omeprazole which was launched in the market by the brand name "OMEZ".

1991 10,92,950 bonus equity shares issued in prop. 1:2.

1992 32,78,850 bonus equity shares issued in prop. 1:1.

1993 Subject to necessary approvals being obtained, a separate company in the name of `Dr. Reddy's Diagnostics Ltd.' was to be set up for the manufacture of diagnostics kits. The Company proposes to invert to the extent of 60% in the equity capital of the company.

1994 The Company proposed to invest Compact Electric Ltd., which was in the process of setting up a plant at Chennai for manufacturing energy efficient electric filament/discharge lamps in Collaboration with Li-Tech Corporation, South Korea. The Company set up subsidiary `Reddy Hong Kong Ltd. in Hong Kong for marketing the Companys products in Main Land China and Far East countries. `Reddy Biomed Ltd.' was incorporated as a joint venture between the Company and a Russian Company `Joint Stock Company of open type named after 1:1. Machnikov' for manufacturing and marketing formulation in Russia. Effective 1st April, Standard Equity Fund was merged with the Company. Pursuant to the scheme of amalgamation

2,63,062 equity shares of Rs 10 each of the Company were issued to the shareholders of erstwhile Standard Equity Fund in the ratio of one equity share of the Company for ten equity shares of the erstwhile Standard Equity Fund Ltd.

1995 Formulation division launched two new products namely Lanzap, an anti-Ulcerant drug and Peristil, drug for gastric disorder. The bulk drug division commenced the production of six new products viz., Finasteride, Nimesulide, Fluoxetine, Hydrochloride, Terbinafine, Hydrochloride, Risperidone and Clozapine. The Company was in the process of setting up a subsidiary in the Antilles Kingdom of Netherlands for licensing the manufacture and marketing of drugs. 263,062 equity shares issued to the shareholders of erstwhile standard Equity Fund Ltd. Pursuant to the scheme of amalgamation.

1996 Four new products viz. Nise, Stamlo Beta, Sparfloxacin and Finast were launched. Finast, a drug for treatment of benign prostiate enlargement was launched for the first time in India. Under the bulk drugs category two new drugs viz. Sparfloxacin & Croratidine were launched. The diagnostics division entered into a technical collaboration agreement with Board of Radiation and Isolope, technology for manufacture & marketing of radioimmonuassay kits for the production of diagnostic and therapeutic recombinant protections, the Bio-technology division entered into a technical collaboration agreement with Viral Therapeutics Inc. U.S.A.

1997 In view of the company's long term plans in the area of diabetic care, the company launched Reclide (Glicazide), its first product in the theraupeutic segment. Also, in its commitment to promote innovative products, the company entered into a marketing alliance to market Netacryl, a bio adhesive (n-butyl-2-cyno acrylate) used for the closure of external surgical and post traumatic wounds. The Company set up a Critical care division to commercialise products from the research foundation and the first product to be marketed by the division was Miitotax an anticancer product used in the treatment of breast and ovarian cancer. The city-based drug major Dr. Reddy's Laboratories has perfected the formulation of an anti-diabetic compound, glitazone for

commercial marketing. 1998 Dr. Reddy's Laboratories (DRL) has launched its first anti-cancer drug Mitotax (Paclitaxel). The product is produced in-house at Dr. Reddy's Research Foundation (DRF) from the extracts of the yew tree and formulated in a dedicated facility in Hyderabad. Dr. Reddy's Laboratories (DRL) has ended its collaboration with the French company, bioMerieux. The collaboration agreement, which envisaged DRL to market bioMerieux's diagnostic reagents and instruments in India, has come to an end on 13th November. Dr. Parvinder Singh, Chairman & Managing Director of Ranbaxy Laboratories and Dr. K Anji Reddy, Chairman of the Rs 5000 million Dr. Reddy's Group of pharmaceutical companies, were conferred with the prestigious `Ishidate Award' of the Federation of Asian Pharmaceutical Associations (FAPA). The merger with Cheminor Drugs (the swap ratio at nine shares of Dr. Reddy's Laboratories for 25 shares of Cheminor), has made DRL the third largest pharmaceutical company in Inida with participation in every element of the value chain. 1999 Dr. Reddy's Laboratories Ltd. (DRL) has set up an in-house effluent treatment plant at its bulk pharmaceuticals manufacturing facility located at Bollaram Industrial Development Area. Dr. Reddy's Laboratories is setting a new trend in the Indian pharmaceutical sector by installing a satellite' discovery research laboratory in the United States. The company has two US-FDA approved plants. It has been exporting its products to the UK, Switzerland, Germany, Spain, Italy and the Netherlands. It also started exporting its formulations in a big way to Russia and has set up an office there. DRL has signed a joint venture agreement with the Khetan group, Nepal, for setting up a joint venture for the manufacture and marketing of finished formulations in Nepal and other neighbouring countries. It also signed a marketing and distribution agreement with Organics, Israel, for a wide range of sophisticated diagnostic kits. The products are recognized by WHO and other leading organisations in the healthcare industry.

2000 Dr. Reddy's Laboratories and the Gribbles Group of Australia have signed a memorandum of

understanding to form a joint venture company for establishing a network of 50 pathology laboratories and up to 200 specimen collection centres in India over the next five years. The Board has approved merger of Cheminor Drugs Ltd. with the company. Nine equity shares of the company will be allotted for every 25 equity shares of CDL held. The Company has decided to issue 7,50,000 equity shares under ESOS. The employees of the formulation unit-II of the company at Bachupally have decided to go on an indefinite strike from 17th June.

2001

In April 2001, as a first step towards taking its molecules through clinical development on its own, Dr. Reddy's Laboratories has selected Simbec Research Limited, a well-known UK-based Clinical Research Organization (CRO), for conducting clinical trials of DRF 4832. DRF 4832 is a PPAR agonist for treatment of cardiovascular complications. Dr. Reddy's Laboratories Ltd. has ended a two-year-old marketing partnership with the US-based Schein Pharmaceutical Inc following Schein's takeover by Watson Pharmaceutical Inc. The Company has entered into an exclusive co-marketing and development agreement with Par Pharmaceuticals Inc., the US-based manufacturer and distributor of a broad line of generic drugs. Dr Reddys Laboratories has gone online with all its phase III and phase IV clinical trials on new products using an application being deployed on a website. Eli Lilly has sued Dr Reddy's for infringement of one of the patents on olanzapine, the key ingredient in Lilly's antidepressant drug Zyprexa. 2002 The Board has appointed Mr. Krishna G.Palepu as Additional Director on the Board of the Company. Dr Norton Peet to head Dr. Reddy's discovery services venture. Appointment of Mr Anupam Puri as Additional Director, Recommended a dividend of Rs 2.50 on equity share of Rs 5 each. To convene AGM on August 26, 2002, to re-appoint Mr Satish Reddy as Managing Director and COO for a period of 5 years wef October 01, 2002 subject to the approval of the shareholders. Dr Reddy's appoints Uday Saxena as Chief Scientific Officer. Dr Reddy's Laboratories Ltd has informed that the Company has granted 1813 stock options to an employee of the Company at the meeting of the Compensation Committee of Board of Directors held on August 26, 2002.The options have been granted at a price of Rs 884 per option,

which is equivalent to weighted average share price of the Company of last 30 days on BSE. Data Edge deploys direct material procurement solution for Dr Reddy's. -DCGI orders for the removal of word 'filgrastim' from its anti-cancer drug Grastim -Introduces VRS scheme in the company -Decides to revoke interim dividend of Rs 2 per share -Signs definitive agreement to acquire BMS Lab & Meridian Healthcare UK

2003 -Withdraws pediatric dosage of Nimesulide from the market -Launches Ibuprofen - First product under Dr Reddy's label in the US market -Unveils Tolterodine Tartrate drug for the treatment of urinary incontinence -Novartis discontinues trials on Dr Reddy's compound DRF-4158 -Drops three new compounds from its research pipeline that were undergoing or had completed pre-clinical development or animal trials -Dr Reddy's anti-diabetis drug receives a set back as Danish Pharma company Novo Nordisk suspends the trails on the drug -Announces completion of Insulin trails by Novo Nordisk -Pfizer files patent application against Dr Reddy's -Announces the completion of a 15 year agreement with Leiner Health -Filed a second case against Pfizer in the US -Announces ANDA filing for Olanzapine ODT

2004 -Dr Reddy's files Abbreviated New Drug Application with USFDA for Sumatriptan -Dr Reddy's appoints Dr Dennis Langer as President for North America -Rotary Club presents Vocational excellence award to Anji Reddy -Launched Redotil (racecadotril), the first anti-hypersecretory agent for the management of acute diarrhea in India -Dr Reddy's Laboratories shifts North American headquarters from its old home office in Upper Saddle River in New Jersey to more modern facilities in the Somerset Corporate Centre at Bridgewater in central New Jersey

- Dr Reddy's acquires US firm Trigenesis - Dr Reddy's' Omez gets 'WordStar' award -Dr Reddy's Laboratories Ltd, the Hyderabad-based global pharmaceutical major, has obtained the tentative approval of the United States Food and Drugs Administration (USFDA) for the abbreviated new drug application filed on Fluconazole, indicated for the treatment of fungal infection

2005 -Dr Reddys launches India's first drug for treatment of diabetic foot ulcers -Dr Reddys wins World Star awards for anti-counterfeit & patient protection packaging -DRL unveils new program for underprivileged youth -India's Dr Reddy's Laboratories Ltd has received approval from the US Food and Drug Administration to market nizatidine tablets in multiple strengths -Dr Reddys sets up India's first major drug development company -Dr Reddys launches 'Voboliv' Metaoxine to enter hepatoprotactives market -Dr Reddys announces the launch of "Save The Foot" initiative to reduce Diabetic Food Amputations

2006 -Dr Reddys Laboratories Ltd has informed that the Company has entered into an agreement with Merck -Dr Reddys Laboratories Ltd has launches 'Z&D'- a Zinc Sulphate formulation indicated as Adjuvant therapy along with ORS in the management of Acute and persistent Diarrhea. Available in 10 & 20 mg Dispersible orange flavoured Tablets as well as in 10mg/ml & 20mg/ml Dry Syrup for pediatric use, this product is intended to supplement the ORS (Oral Rehydration Salt) market. -Dr Reddy's launches 'Doxobid' - a new oral bronchodilator for asthma & COPD -Dr Reddys Laboratories Ltd has filed a shelf registration statement on Form F-3 with the U.S. Securities and Exchange Commission relating to a proposed offering of American Depositary Shares, or ADSs of up to 13.5 million shares, excluding the underwriter's over-allotment option.

2007 - Dr Reddy's Laboratories Ltd rolled out Redituxa, its brand of rituximab, a monoclonal antibody (MAb) used in the treatment of Non-Hodgkin's Lymphoma (NHL). -Dr Reddys Laboratories Ltd has appointed Ms. Kalpana Morparia as an Additional Director on the Board of the Company by way of a circular resolution dated June 05, 2007. -Dr. Reddys launches Reditux Monoclonal Antibody Treatment for Non-Hodgkins Lymphoma -Dr. Reddys is the first company to get USP certification for its APIs -Dr. Reddy's launches Glimy MP 1 and Glimy MP2. Triple drug combination ideal to address the triple defects in diabetes

2008 - Dr Reddys Laboratories Ltd has acquired Jet Generici Sri, a Company engaged in the sale of generic finished dosages in Italy. -Dr Reddy's Laboratories Ltd has signed a definitive agreement to acquire BASF's pharmaceutical contract manufacturing business and related facility in Shreveport, Louisiana, USA. - Hyderabad: Dr Reddy's Laboratories Ltd unveiled Omez Insta for patients suffering from severe gastritis and those on Ryle's tube feeding in India. - Dr Reddys Laboratories Ltd has appointed Dr. Bruce L A Carter as an Additional Director on the Board of the Company.

2009 - Dr Reddys Laboratories Ltd has has appointed Dr. Ashok S Ganguly as an Additional Director on the Board of Directors of the Company with effect from October 23, 2009. -Dr. Reddy's launches Strea C10 and Strea A15 in India -Dr. Reddy's launches Bispec in India -Dr. Reddy's joins American Chemical Society Green Chemistry Institute Pharmaceutical Roundtable

2010

- Dr Reddy's Laboratories announced the launch of Cresp. It is a darbepoetin alfa that is approved for the treatment of anemia. It is due to chronic kidney disease or chemotherapy. Mission and Vision Dr. Reddy's doesn't have a mission but they define a Core Purpose. Core Purpose To help people lead healthier lives Vision To become a doscovery led global pharmaceutical company Values y y y y y Quality Harmony and Social Responsibility Respect for the individual Collaboration and Teamwork Innovation and Contineous Learning

Products
y y y y y y y y y y y y y y y

Ciprofloxacin Hydrochloride Ramipril Terbinafine HCI Ibuprofen Sertaline Hydrochloride Ranitidine HCI Form 2 Naproxen Sodium Naproxen Atorvastatin Montelukast Losartan Potassium Sparfloxacin Nizatidine Fexofenadine Ranitidine Hydrochloride Form 1

y y y y

Clopidogrel (Not in US due to 2007 patent case) Omeprazole Finasteride Sumatriptan

Top-10 brands in India

y y y y y y y y y y

Omez Nise Stamlo Stamlo Beta Enam Atocor Razo Reclimet Clamp Mintop

CEO G. Prasad Chairman of the Board Anji Reddy Director Anupam Puri Director J. Moreau Director Kalpana Morparia Director Ravi Bhoothalingam Director Omkar Goswami Director Ashok Ganguly Director

Bruce LA Carter Director Bruce Carter

R&D
Dr. Reddy's has focused on R&D activities to become a leading global pharmaceutical company. It has established research centers in Hyderabad, India, and Atlanta, USA, with a global R&D team of over 650 scientists, of which approximately 300 are engaged in drug discovery and development. Establishing a research center in the USA helps the company in understanding the disease mechanism and thereby developing treatment molecules. It conducts research on various health diseases such as diabetes, cardiovascular, anti-infectives, inflammation and cancer.The company has five NCEs in clinical development and three in active pre-clinical development. Dr. Reddy's has world-class capabilities in product development, chemistry, intellectual property, and regulatory mechanism. It has established expertise in synthetic and analytical chemistry to develop innovative and cost-effective manufacturing processes.The company has filed 81 patents with USPTO, of which 41 have been granted. It manages all operations across the entire pharmaceutical value chain - developing API, formulations, discovery, research, and custom pharmaceutical services. It has recently become compliant with SOX-404 of the Sarbanes Oxley Act, which ensures that it has best-in-class internal control processes and corporate governance procedures
Business Strategies

The company has employed various innovative business and talent recruitment strategies that strike the right balance between local marketspecific requirements and global capabilities. Some of these strategies include acquiring products in a market, entering into deals for selling authorized generic versions, entering into alliances with companies that complement its pipeline of products, and entering into acquisitions and joint ventures to accelerate profit growth. The generics market in the USA presents a substantial opportunity since 75 per cent of branded pharmaceutical drugs are going off-patent by 2010, and the government is planning to reduce cost on healthcare. The company plans to build a diversified generic and branded business model with the dual purpose of increasing affordability and accessibility for patients through generic drugs, and satisfying unmet medical needs through proprietary branded drugs. It intends to continue its strategy of employing an integrated and diversified business model that operates globally. The company's vision is to become a discovery-led pharmaceutical company and it aspires to be the leading and most profitable pharmaceutical company from India. Dr. Reddy's is committed to achieving these goals while promoting a triple bottom line approach focussing on people (society), planet (environment), and profit (economics) - collectively forming the basis for its sustainable business practices and numerous corporate philanthropy initiatives.

CHAPTER-6 CIPLA PHARMA  History (Mission, Vision)

Cipla is 2nd largest pharmaceutical company in India in terms of retail sales. Cipla manufactures an extensive range of pharmaceutical & personal care products and has presence in over 170 countries across the world. Cipla's product range includes Pharmaceuticals, Animal Health Care Products, OTC, Bulk Drugs, Flavours & Fragrances, and Agrochemicals. Cipla also provides a host of consulting services such as preparation of product and material specifications, evaluation of existing production facilities to meet GMP, definition of appropriate plant size and

technologies etc.

The origins of Cipla can be traced back to 1935, when Dr Khwaja Abdul Hamied set up "The Chemical, Industrial and Pharmaceutical Laboratories Ltd", popularly known by the acronym Cipla, in a rented bungalow, at Bombay Central. Cipla was registered as a public limited company on August 17, 1935. Cipla's first product was launched into the market in 1937. In 1940, during the Second World War when the drug supplies were cut off, Cipla started producing fine chemicals. In 1944, Cipla bought the premises at Bombay Central to build a modern pharmaceutical laboratory. In 1946, Cipla's product for hypertension, Serpinoid, was exported to the American Roland Corporation. In 1952, Cipla set up first research division for attaining self-sufficiency in technological development. In 1960, Cipla started operations at second plant at Vikhroli, Mumbai. In 1968, Cipla manufactured ampicillin for the first time in India. In 1976, Cipla launched medicinal aerosols for asthma. In 1982, Cipla's fourth factory became operational at Patalganga, Maharashtra. In 1984, Cipla developed anti-cancer drugs, vinblastine and vincristine in collaboration with the National Chemical Laboratory, Pune. In 1991, Cipla pioneered the manufacture of the antiretroviral drug, zidovudine. In 1994, Cipla's fifth factory began commercial production at Kurkumbh, Maharashtra. In 1997, Cipla launched transparent Rotahaler, the world's first such dry powder inhaler device. In 2000, Cipla became the first company, outside the USA and Europe to launch CFC-free inhalers. In 2002, Cipla set up four state-of-the-art manufacturing facilities set up in Goa. In 2003, Cipla launched TIOVA (Tiotropium bromide), a novel inhaled, long-acting anticholinergic bronchodilator. In 2005, Cipla set up a state-of-the-art facility for manufacture of formulations at Baddi, Himachal Pradesh.

History of Cipla Ltd. Khwaja Abdul Hamied, the founder of Cipla, was born onOctober 31, 1898. In 1935, he set up The Chemical, Industrial & Pharmaceutical Laboratories, which came to be popularly known as Cipla. He gave the company all his patent and proprietary formulas for several drugs and medicines, without charging any royalty. On August 17, 1935, Cipla was registered as a public limited company with unauthorized capital of Rs 6 lacs. The search for suitable premises ended

at 289, Belasis Road (the present corporate office) where a small bungalow with a few rooms was taken on lease for 20 years for Rs 350 a month. Cipla was officially opened on September 22, 1937 when the first products were ready for the market. July 4, 1939 was a red-letter day for Cipla, when the Father of the Nation, Mahatma Gandhi, honored the factory with a visit. He was" delighted to visit this Indian enterprise", he noted later. From the time Cipla came to the aid of the nation gasping for essential medicines during the Second World War, the company has been among the leaders in the pharmaceutical industry in India. On October 31, 1939, the books showed an all time high loss of Rs 67,935. That was the last time the company ever recorded a deficit. In 1942, Dr Hamied's blueprint for a technical industrial research institute was accepted by the government and led to the birth of the Council of Scientific and Industrial Research (CSIR), which is today the apex research body in the country. In 1944, the company bought the premises at Bombay Central and decided to put up a "first class modern pharmaceutical works and laboratory." It was also decided to acquire land and buildings at Vikhroli. With severe import restrictions hampering production, the company decided to commence manufacturing the basic chemicals required for pharmaceuticals. In1946, Cipla's product for hypertension, Serpinoid, was exported to the American Roland Corporation, to the tune of Rs 8 lacs. Five years later, the company entered into an agreement with a Swiss firm for manufacturing foromycene. Dr Yusuf Hamied, the founder's son, returned with a doctorate in chemistry from Cambridge and joined Cipla as an officer incharge of research and development in 1960. In 1961, the Vikhroli factory started manufacturing diosgenin. This heralded the manufacture of several steroids and hormonesderived from diosgenin. 1935 The Comp. was incorporated at Mumbai. 1979 The Comp. acquired a plot of land from MIDC at Patalganga in Kulaba district of Maharashtra State about 55 kms from Mumbai. 18,773 Bonus equity shares issued in proportion 1:1. 1984

The name of Comp. was changed from The Chemical Industrial & Pharmaceutical Laboratories Ltd., to the present one with effect from 20th July. 1985 37,546 Bonus equity shares issued in proportion 1:1 in January 1986. 1986 During August, the Comp. obtained the consent of Controller of Capital Issues to issue 3,00,00015% secured non-convertible redeemable debentures of Rs 100 each aggregating to Rs 300 lakhs by private placement. The entire issue was subscribed by public financial institutions. They are redeemable at a premium of 5% during 1993-94. 1987 The Comp. launched several new products viz., Asthalin & Beclate Rotahalers/Rotacaps-dry powder inhalation devices for asthma, presolar capsules - the first synergistic combination of beta blocker & a sustained release calcium channel blocker for hypertension, Restyl tablets - the first anxiolytic-cum-anti depressant, Theo-Asthalin SR tablets - the first sustained release combination of two widely used bronchodilators, bromolin dry syrup & bromolin-250 capsules antibiotic-cum-mucolytic agents, dilgard tablets - a new calcium channel blocker for angina, ibugesic plus suspension - a non steroidal anti inflammatory & anti-pyretic analgesic for paediatric use. 75,092 Bonus equity shares issued in proportion 1:1. 1989 The latest drugs introduced during the year were Ciplox tablets [250 and 500 mgs] & infusion [50 & 100 ml], a broad spectrum fluoroquinolone antibacterial for severe infections, cefadur capsules [250 and 500 mgs] & syrup [30 ml], a cephalosporin antibiotic, Ulcimax tablets [20 and 40 mgs], a long-acting H2 antagonist for peptic ulcers & theoped syrup, a paediatric bronchodilator. Sales in the Company `PROTEC' division exceeded Rs 5.50 crores for second year of its operations.

1990 The Comp. launched several new products viz., Aerocort inhaler, an anti-inflammatory bronchodilator, Norflox eye/ear drops - a broad spectrum fluoroquinolone antibacterial, Pirox Gel - the first topical piroxicam formulation in the country, Cofenac tablets - an antiinfammatory analgesic, Kinetal 400 tablets - a multi-functional drug for vascular insufficiency, Novaclox Ped tablets - a dispensible combination antibiotics, Terfed tablets & Suspension - a new non-sedative antihistamine, Depryl tablets - a broad - spectrum antidepressant, Asthalin Respirator Solution - a bronchodilator for pressure ventilation in acute asthma. The Comp. spent Rs 4.22 crores on R&D & Rs 8.09 crores on modernisation & expansion of plant and machinery. 1991 The new products launched during the year were lomac capsules - a new antiulcerant, cromal inhaler - the first optimum - dose inhalant prophylactic for asthma, ciplox eye drops - the total bactericide for ocular infections, etosid injection - the first injection of indigenously manufactured etoposide for cancer therapy, proflox tablets - a key fluoroquinolone antibiotic & vasopril tablets - an ACE inhibitor for long-term management of hypertension. The research and development wing of Comp. developed during the y ar felodipine - the latest anti-hypertensive drug, selegilinje - a new bulk drug for the treatment of Parkinson disease, cetirizine HCI - an anti-histamine drug & nimodipine - a cerebral vasodilator. Work on the anti-AIDS drug AZT reached an advance stage of development. The research & development wing also developed anthelm intics oxfendazole and oribendazole, two veterinary products for exports. - In May, 6,000 equity shares offered at par as rights to pref. shareholders in prop. 1:1. Only 5,216 shares taken up. Allotment of 5 equity shares pending. 1992 Some of new products introduded were Zidovir capsules an antiretroviral for HIV injection, Cipril tablets for hypertension, Optipres eyedrops for glaucoma patients, Felogard for hypertension, Nodine, a non-narcotic analgesic, etc. In compliance with the provisions of Companies Act, 1956, the Company redeemed its 6,000 preference shares of Rs 100 each as on

30th September. Pref. shares redeemed on 30.9.92, 1,55,395 bonus equity shares issued in prop. 1:1. 1994 New products introduced were - Beclate Aquanase - a major advancement in allergic rhinitis; Cytoplatin - an anticancer agent; Forcan - an antifungal; Imusporin - an immunosuppressant in organ transplantation; Kelfer - an iron chelator for thalassaemia; Lanzol - a proton pump inhibitor; Nuzac - an antidepresant; Odirox - a macrolide antibiotic and Qinarsol - for chloroquin-resistant malaria. Equity shares subdivided 155,39,500. Equity shares allotted shares issued in prop. 1:5. The Company manufacturing unit at Kurkumbh, which was commissioned in April. The second phase of expansion of location was under way and this was to provide specialised facilities for manufacture of new chemical entities. 1995 Effective 4th July, the Comp. was forced to declare a lock-out as some of workmen at the Vikhroli Unit resorted to indiscipline. The Company initiated steps to mitigate the impact it could have on production. New products introduced were - Acivir - antivirus herpes, Anlopres antivirus herpes, Anlopres - Calcium channel blocker in hypertension and angina, Anlopres AT a combination antihypertensive, Budecort 200 - a higher strength corticosterord in bronchial asthma, Budenase AQ - a corticosteroid protection in allergic rhinitis, cronal - a nast cell stabiliser in allergic conjunctivitis, cytonid - a antiandrogenic agent in prostate cancer, Norflox an antidiarrhoeal in diarrhoea of mixed origin, optipes S - betaxocol eye drops, profenac - antiinflammatory eye drops, Terfed D - a combination antihistamine & decongestant, Trivedon 20 used in ischaemic heart disease. A new chemical entity, candocuronium iodide - a neuromuscular blocking agent was manufactured, other new bulk drugs manufactured include: Acyelovir antiviral, Amlodipine besylate - antihypertensive and antianginal, Febantel veterinary anthelmintic, Flutamide - antiandrogen, Flutivcasone dipropionate - a corticosteriod, zenprolide acetate - GMRH analogue. 13,43,383 rights equity shares issued [Prem. Rs. 60/-s]. However, the Rights issue was underwritten. 1996

The products launched during the year were Azee [azithromycin capsuless] - a new macrolide antibiotic; Budecort [budesonide rotacapss] - dry powder inhaled corticosteriod therapy for asthama; Cipril H [lisionopril + hydrochlorothiazide tabletss] - a combination antihypertensive; Ciplox TZ [ciprofloxacin + tinidazole tabletss] - the combination bactericide for aerobic/anaerobic infections; Entosec [secnidazole tabletss] - single dose therapy for amoebiasis/trichomoniasis; Fincar [finasterid tabletss] - for beign prostatic hyperphasia; Metolar [metaprolol injections] - beta-blocker protection for post myocardial infarction and Zoflut [fluticasone propionate creams] - a new topical corticosteroid. 1997 The products introduced during the year were; Alerid-D - an antihistamine & decongestant for cold & congestion, Amlopres L - a tablet for hypertension, Apuatears - an eye drop, Azee 1000 a single dose for STDs, Budecort Respules - neubulised corticosteroid therapy for asthma, Dilgard XL - a diltiazem, Glumet - tablet for obese diabetics, Glygard - tablet for abese diabetics, Glygard - tablet for diabetics, Ipranase AQ [ipratropium nasal sprays] an anticholinergic therapy for rhinorrhoea, Ocutim [an eye drops] - a glaucoma therapy in acquafilm formulation, Osteifos 10 - tablet for osteoporosis, Prolyte Fizz - a rehydration effervescent tablet, Pylokit - an advanced H pylori kit, Risnia - an a typical antipsychotic, Stavir - an antiretroviral for AIDS, Synclar 250 - an advanced macrolide antibiotic, Theoday - a tablet for asthma, Zoflut Lotion - a topical corticosteroid. The bulk division of Comp. had taken up, the development and manufacture of some new drugs viz., budesonide - antiasthmatic corticosteroid, carvedilol - alpha/beta blocker, ebastine antihistamine, formoterol fumarate - antiasthmatic, meloxicam - for osteroarthritis & rheumatoid arthritis, moclobemide - antidepressant, mometasome furoate - antiflammatory corticosteroid, pantorazole sodium sesquihydrate - antiulcerant, sildenafil citrate - erectile dysfuncion. The Comp. has developed form-fill-seal equipment for first time in India, for manufacture of sterile formulations. This was commissioned at Vikhroli factory & is working to its full capacity. Additional capacities were set up at Kurkumbh for manufacture of effervescent tablets, soft gel capsules & injectable formulations. The Comp. has incurred a capital expenditure of Rs 22.73

crores during the year. The Rs. 3.69 billion Cipla has finalised a marketing joint venture with Australia-based Genpharm, as part of its strategy to consolidate its global presence. Pharmaceutical major Cipla Ltd grabbed the attention of traders at the Mumbai Stock Exchange [BSEs] on December 26 after a large block of about 75,000 shares of Comp. valued at little over Rs 5 crore changed hands. The Rs.369-crore Cipla Ltd has entered into a souring arrangement with US-based Geneva Pharmaceuticals, a wholly-owned subsidiary of Swiss multinational Ciba, for a range of generic drugs. 1998 Pharmaceutical companies, Cipla & Wockhardt, will be seeking shareholders' approval for a proposed share buyback at their forthcoming annual general meetings. In a notice to shareholders, Cipla has proposed introduction of new article, Article 64 A, in the Articles of Association of Comp. to enable the Comp. to purchase & re-issue any of its shares. The existing Article 64 prohibits the Comp. from buying its own shares and applying any of its funds for purchase of any shares of the company. The share price of Cipla Ltd, the leading pharmaceutical company scaled a new peak of Rs 920 on the Mumbai Stock Exchange on Sept 29 following fresh bull charge. The scrip opened at Rs 900 & shot up to Rs 920 during mid-session & closed at Rs 884 following hectic trading activities. 1999 Ranbaxy & Cipla, have entered into a strategic partnership to jointly market a select basket of drugs. The alliance will bring forth their strengths in the strongly emerging cardiovascular & perennial anti-infectives market. As a first step, the two molecules being jointly launched are Carvedilol, a new generation antihypertensive & Cefpodoxime Proxetil, an advanced third generation oral cephalosporin. The Rs 541-crore Cipla has forged a strategic alliance with the UK-based Neolab for marketing a range of generic drugs. The alliance, while improving the Indian company access to the multi-

billion dollar European market for off-patent drugs, will also see Cipla rake in royalties on sales of products covered under the deal. - Cipla latest tie-up in the international market comes close on the heels of company strategic partnership with the Delhi-based Ranbaxy Laboratories for a select basket of drugs. - The Mumbai-based Cipla is working on abbreviated new drug applications [ANDAss] in collaboration with international generics firms for a range of products like flutamide [for advanced prostatic cancers] and felodipine, for hypertension. 2000 Cipla & Ranbaxy Laboratories have expanded an existing partnership by adding one more new drug in their co-marketing arrangement. 2001 Cipla has tied up with the US-based Zenith Goldline & United Research Labs for marketing Flutamide, an oncology drug, and Felodipine, a cardiovascular drug, in the US & European markets. Domestic pharma giant, Cipla, has despatched its first free consignment of anti-AIDS drug, `Nevirapine', to the Indian Government for distribution under the public health system. 2002 Reduces the price of its anti-HIV medicines such as Stavir, Lamivir, Nevimune, Dinex, Indivan, Triomune, Efavir & Duovir Revokes interim dividend of Rs 5 per share on face value of Rs 10 per share for FY 2001-02 Company included in the World Health Organization [WHO's] list of HIV-related products Chairman & Managing Director YK Hamied was presented with the lifetime contribution award for excellence in the pharmaceutical industry by Union chemicals and fertilisers minister SS Dhindsa Resigns from Indian Pharmaceutical Alliance [IPAs] over Patents Bill 2003

Applies its requisition for Abbreviated New Drug Application [ANDAs] with US regulators for a post-menopausal drug National Pharmaceutical Pricing Authority [NPPAs] issues notices to Cipla along with Ranbaxy for overcharging the products. Completes research studies on three Anti-HIV Drugs. Registers Stavudine, Nevirapine, other anti-AIDS products in South Africa 2004 Signs long-term agreement with Morton Grove Pharmaceuticals Inc [MGPs] of Illinois, US, for product launch in the US market. Avesthagen forges alliance with Cipla. Cipla has joined a global initiative taken up by Vatican in collaboration with global generic pharmaceutical manufacturers & the International Federation of Catholic Pharmacies & Academics to float CUMVIVIUM. Cipla join hands with Pentech Pharma Indian pharma major Cipla, a pioneer in supplying cheap generic AIDS drugs in Africa, has patented its three-in-one combination tablet Triomune in South Africa, Cipla introduces 'Duova' to fight chronic obstructive pulmonary disease. Launches a new treatment for arthritis in technical collaboration with California-based Cymbiotics Inc. 2007 Cipla unveils anti-malaria global initiative. 2008 Cipla Ltd has appointed Mr. Pankaj Patel as a Director in casual vacancy with effect from March 05, 2008.

 Products

Cipla's products include: Pharmaceuticals: Cipla manufactures anabolic steroids, analgesics/antipyretics, antacids,

anthelmintics, anti-arthritis, anti-inflammatory drugs, anti-TB drugs, antiallergic drugs, anticancer drugs, antifungal, antimalarials, antispasmodics, antiulcerants, immunosuppressants etc,

Animal Health Care Products: These include: aqua products, equine products, poultry products, products for companion animals, and products for livestock animals.

OTC: These include: child care products, eye care products, food supplements, health drinks, life style products, nutraceuticals & tonics, skin care products, and oral hygiene products.

Flavor & Fragrance: Cipla manufactures a wide range of flavors, which are used in foods and beverages, fruit juices, baked goods, and oral hygiene products. Cipla fragrances have wide ranging applications such as in personal care products, laundry detergents and room fresheners.

Major Achievements of Cipla:

y y

Manufactured ampicillin for the first time in India Lauched etoposide, a breakthrough in cancer chemotherapy, in association with Indian Institute of Chemical Technology

y y y

Launches transparent Rotahaler, the world's first such dry powder inhaler device Launches transparent Rotahaler, the world's first such dry powder inhaler device Became the first company, outside the USA and Europe to launch CFC-free inhalers

Mission and Vision Cipla started with a vision to build a healthy India. And along the way realized, that in our own small way, we could contribute to making the world a healthier place. Well continue to bring a smile on as many faces as we can to heal the world as much as we can. Because therell always be a better world out there for those who have the passion to create it. At Cipla we enjoy challenges and creating change for the better for patients and doctors, and for our own people. Some of our most successful managers are in their 20s and 30s, and still

rising because they work with energy and passion. If you are looking for a mission for life, look up our Careers section The mission is always to make the life of the patient better. Cipla research & development While our skills are among the best in the world, what makes us different is our multidisciplinary approach to research. Our research capabilities are extensive, from Chemical Synthesis, Delivery Systems and Medical Devices to Process Engineering, Animal Health Products, Neutraceuticals and Biotechnology. We believe theres no use in developing life-saving medicines if we cant make them affordable for the patient. Today, across 170 countries, there are millions of patients who get to use a Cipla product to prevent, to cure, or for relief from suffering. In their cure and relief lies the ultimate purpose of what we do. At Cipla, this has been the driving force behind our continuous quest for quality. And quality is an obsession here for the 7000 people who walk into work every morning. World-class quality is reflected in everything we do from start to finish. Youll see concern for the environment in our manufacturing processes, air and water systems, safety practices, and above all, in our people. We strive not just to meet international specifications, but to exceed, to excel, to meet what we call the Cipla benchmark. In fact, we have set standards for the world to follow and have contributed to more than 125 monographs in the last 15 years - to British, European, US and international pharmacopoeia. Today companies from around the world seek strategic alliances with Cipla for product development, technical support and marketing. In a small way, we even help countries set up their pharmaceutical infrastructure and train their professionals, contributing to their quest for self-reliance just the way we began healing India, seven decades ago. Over the years, we have taken on the challenges facing the world, tackling the newer dimensions of diseases, like AIDS. At a time when it was a death sentence and medication was unaffordable

to most, Cipla opened the doors of hope to millions and millions of patients by becoming the first company in the world to offer the Triple-Drug AIDS Cocktail for less than a dollar a day. One out of every three HIV-AIDS patients under treatment in Africa uses a Cipla drug. Equally inspiring has been Ciplas fight against asthma. We partnered with the medical fraternity to shatter myths, spread awareness and empowered asthma patients to lead a fuller life. We have the worlds largest range of asthma medication and delivery systems. This relentless commitment to asthma inspired us to set up the Chest Research Foundation. Its one of the few Institutes in the world thats dedicated to clinical and allied research in the field of Chronic Respiratory Diseases.

 Organization structure
Cipla has incorporated a unique, flat organization structure that seems to work for them.Brother, MK Hamied, looks after marketing and his cousin Amar Lulla heads the financedivision, while YK Hamied is responsible for Cipla's overall vision and strategy.

CHAPTER- 7 SUN PHARMACEUTICAL INDUSTRIES  History (Mission, Vision)

1983 The Company was incorporated as a partnership firm by Dilip Sanghvi & his family to manufacture pharmaceutical formulation at Vapi, Gujarat. It was converted into a public Ltd. Company effective 1st March. The Company was promoted by Dilip Sanghvi. The Company specializes in selected therapeutic segment to psychiatry, cardiology, neurology and gastroenterology.

1994 The Bulk drug plant at Panoli was commissioned. The second formulation plant at Silvana was commissioned in April. During October, the company undertook to enhance the production capacity of bulk drugs at Panoli from 62,000 Kgs. p.a. to 92000 Kgs. p.a. Also formulation unit was to be enhanced to 1800 millions tablets p.a. from 570 million tablets p.a. The Company proposed to modernise the formulation unit at Vapi and increase its capacity from 480 million

tablets to 1440 million tablets p.a. It was also proposed to set up additional facilities at the R&D centre SPARC. 71, 85,000 No. of equity shares issued to promoters etc.

1995 In the synergy division two more products viz. `Clofranil SR and Syndopa CR were introduced. The Company entered into a MOU with Knoll Pharmaceuticals Ltd., for acquisition of their Ahmednagar unit manufacturing bulk drugs. 35,92,500 No. of equity shares allotted as bonus shares in prop. 1:2. 3,23,400 Rights shares issued at a premium of Rs 130 per shares. During October 1994, the capital issued 37,00,300 No. of equity shares of Rs 10 each at a premium of Rs 140 per share to the public.

1996 18 new products were launched across the company's six focused marketing divisions and 4 more line extension including drug delivery systems were launched. The Company acquired controlling stake in MJ Pharmaceuticals Ltd. SPIL and its group company Virtuous Finance Ltd., which are the major shareholders of MJPL with more than 50 per cent of shareholding, had signed a MoU with erstwhile promoters the Shah family, on November 1.

1997 The Company acquired 78,36,000 No. of equity shares of Rs 10 each. The Chennai based Tamil Nadu Dadha Pharmaceuticals Co. Ltd. It was merged with the company in the ratio of 4:1 effective 1st April. With this, IDPL brings to sun pharma extensive product strengths across the areas of gynecology, fertility, oncology, pain mengeners and duaesthelics. Sunkalp Laboratories Ltd., Sun Pharma Industries Ltd., Russia & Sun Pharma Global Inc. is all subsidiaries of the Company. 4,13,633 No. of equity shares allotted to erstwhile shareholders of Tamil Nadu, Dadha Pharmaceuticals pursuant to a scheme of amalgamation. The boards of Tamilnadu Dadha Pharmaceuticals Ltd. (TDPL) and Sun Pharmaceuticals Ltd. have approved a 1:4 swap ratio for the merger of the companies. The company also set up a state of the art research centre named Sun Pharma advanced Research Centre (SPARC) in Vadodara.

Sun Pharmaceuticals to set a new tablet manufacturing facility at Silvassa in Dadra and Nagar Haveli as part of its strategy to maximize benefits on the tax shelter front. The new unit is expected to come up close to Sun's existing formulations facility at piparia in Silvassa.

1998 During the year the company launched Duracard that not only affects Blood pressure but also has beneficial effect on the cholesterol profile and glucose metabolishm. Another product launched was Cardivas that has an ability to pump blood through the body there by reducing the strain on the heart during heart failure. The company also launched Muvera, an anti inflammatory drug and Octapeptide Octride, an emergency medication in treating oesophagel varices, severe bleeding in the upper part of the gastrointestinal tract and also in the treatment of acromegaly an endocrine disorder caused by the excess growth of hormone secretion. 2, 08,000 shares of Rs. 10 each allotted to shareholders of erstwhile Milment Labs. Pvt. Ltd. Pursuant to a scheme of amalgamation. Sun Pharmaceuticals Industries has converted its partnership export entity, Sun Pharma Exports, into a 100 per cent subsidiary, effective from 5th May. Sun Pharma Exports, a partnership firm in which SPIL held 80 per cent stake, to Sunkalp Laboratories, a 100 per cent subsidiary of SPIL, with effect from 12th May. In addition to this the company has set up state-of-the-art facilities for R&D in Baroda to carry out research in Pharmaceuticals.

1999 A leading Indian Company will set up a pharmaceutical plant in Bangladesh under a joint venture. The hiving-off of Sun Pharmaceutical Exports into a 100 per cent subsidiary and increase in interest burden affected the bottom line.

2000 The Company has merged its wholly owned export subsidiary Sun Pharma Exports with itself. The Company is looking at an over 70 per cent growth rate in India, driven primarily by the company's products and education services segment. As per the Scheme of Amalgamation, SPIL shall issue four equity shares of Rs 10 each of SPIL to the members of SPEL for every five

equity shares held in SPEL. The Company, on 1st April, allotted 3, 08,44,466 Bonus Equity Shares of Rs. 10/- each, to the shareholders of the Company in the ratio of 2 Bonus Equity shares for every 1 Equity share held by the shareholders and Bonus equity Shares will be entitled to any dividend declared after 1st April. The Company has launched Edegra (Sidenefil) in 25, 50 and 100mg. During June 2000, the company introduced several products including Celact (celecoxib), Oleanz (olanzapine), Rofact (rofecoxib), Nodict (naltrexone), Fexotrol

(fexofenadine), Zelast (azolastine) and (Ketorid(ketotifen). In June 2000, Sun Pharma merged its 99.28% subsidiary Sun Pharmaceuticals Exports.

2001 Sun Pharmaceutical Industries Ltd has approved the merger of the ailing Pradeep Drug Company Ltd. Sun Pharmaceutical Industries Ltd. is to merge its research arm. Sun Pharmaceutical Advanced Research Centre Ltd. During 2000-01, across the company's eight specialty divisions, 33 new products were launched. Taking the lead for new products among the therapy areas were cardiology (6 products), diabetology (4) and opthalmology (6). Likely brand outperformers among these are the antihypertensive Irovel (Rapilin, Pioglit, and Rezult) for antidiabetics and the erectile dysfunction treatment Edegra. The company, ranked 5th by domestic prescription product sales, has been consistently adding to market share from 2.47% in November 2000to 2.78% in November 2001 (ORG Retail Chemist Audit, November 2000 and 2001). Forbes Global, the prestigious international magazine recently rated Sun Pharma among the best 200 global companies for 2002 (turnover less than 0mill).

2002 Caraco Pharmaceutical Laboratories, associate of Sun Pharmaceuticals, has received US Food and Drug Authority (FDA) preliminary approval for metformin hydrochloride, a molecule used to treat diabetes. Currently, the company is in process of merging Pradeep Drug Company (PDC) with itself. The company shareholders have approved the merger w.e.f. 1 April 2000. The scheme has been duly sanctioned by BIFR at its meeting held on Jan 2002. Sun Pharma has made an open offer to the investors in Ahmedabad, Calcutta, Madras, Pondicherry and Delhi stock exchanges to purchase the shares at price of Rs 600 per share. The offer is limited to those shareholders whose names

are registered as members of the company as on 26/03/2002, the record date. Sun Pharmaceutical Industries has launched Lupride Depot IM, a novel drug delivery system of prostate cancer drug leuprolide acetate, which would enable the drug to be injected once in a month as against once in a day or once in three days drugs. Mr Keki Mistry, Managing Director of HDFC, has been inducted into the board of directors of Sun Pharmaceuticals Industries Ltd. The Board of Directors of Sun Pharmaceutical Industries Ltd at its meeting held allotted 18,71,77,232 6% Cumulative Redeemable Preference Shares of Re 1 each as Bonus Shares in the ratio of 4:1 (Ie 4 Preference Shares of Re 1 each for every one equity shares of Rs 10 each) to the equity shareholders of the company as on the record date October 10, 2002.

2003 Sun Pharmaceutical Industries Ltd (Sun Pharma) has announced the Buyback of fully paid-up equity shares of the Company of face value of Rs 10 each and / or Rs 5 each (being face value and paid up value subsequent to the splitting of the equity shares of Rs 10 into 2 equity shares) not exceeding 2,000,000 equity shares of Rs 10 each and/or 4,000,000 equity shares of Rs 5 each i.e. not exceeding equity shares of face value of Rs 20,000,000 being less than 25% of the paid-up equity share capital of the company for an aggregate amount not exceeding Rs 1200,000,000 upto a maximum price of Rs 750 per equity share of Rs 10 each or upto a maximum price of Rs 375 per equity share of Rs 5 each from the existing shareholders and beneficial owners of the shares of the company from open market through stock exchanges. Sun Pharmaceuticals Industries Ltd has informed the Exchange that the Board of Directors at its meeting held on January 30, 2003 accepted the resignation of Shri R K Baheti, Senior Vice President - Finance and Company secretary of the Company w.e.f 31/1/2003 and the Board appointed Shri Kamlesh H Shah as the Company Secretary w.e.f. 31/1/2003. Sun Pharmaceuticals US-based associate, Caraco Pharmaceutical Laboratories, has received the approval from the US Food and Drug Administration (US FDA) to manufacture and market yet another generic drug, this time for the treatment of mild to moderate cardiac failure, in the US. The drug, Digoxin, is the generic form of Glaxo Wellcomes Lanoxin, the company said. Sun Pharmaceutical Industries Ltd has informed BSE that it has further redeemed 1, 42, 99,833, 6% Cumulative Redeemable Preference Shares of Re 1 each amounting to Rs 1,42,99,833 in the fifth

lot out of the total paid - up Preference Share Capital of the company. Sun Pharmaceuticals Industries Ltd has informed the Exchange that the company pursuant to the earlier intimation about Redemption of Preference Shares, have extinguished /cancelled 3,01,20,608 shares - 6% Cumulative Redeemable Preference Shares of Re.1/- each consisting of 2,98,37,008 Preference Shares in demat mode and 2,93,376 Preference Shares in physical mode. Board approved to close buy back of shares. The company's equity shares will be delisted from Vadodara Stock Exchange Ltd.

2004 Sun Pharma acquires common stock and options from 2 large shareholders of Caraco, increasing stake to over 60% from 44% at a total outlay of about million. By 2007, this stake has reached 75% on a diluted basis. The formulation site in Halol, India (the erstwhile MJ Pharma site) receives approval from USFDA, UK MHRA, South African MCC, Brazilian ANVISA and Columbian INVIMA. The BT Stern Stewart survey places Sun Pharma among the top 20 wealth creators in India and among the top 3 wealth creators in the pharma sector. Construction at a formulation manufacturing site at Jammu is completed. Our first joint venture manufacturing unit, in Dhaka, Bangladesh is commissioned. This modern site is spread over 25,000 sq. ft. Two of Sun Pharma's API factories receive USFDA approval, taking the total number of US FDA approved sites to three. Sun Pharma acquires a Cephalosporin Actives manufacturer, Phlox Pharma, with European approval for cefuroxime axetil amorphous. By 2007, a formulations facility to make sterile and non sterile formulations have been built, and the API and non-sterile sections have been approved by the USFDA. Niche brands are bought from the San Diego, US based Women's First Healthcare. (WFHC, not listed). These brands are the gynecological Ortho-Est (estropipate), and the antimigraine preparation Midrin. Forbes Global ranks Sun Pharma in the list of most valuable companies for 2004 (turnover less than bill).

2005 Sun Pharma buys a plant in Bryan, Ohio, US and the business of ICN, Hungary from Valeant Pharma. Sun Pharma acquires the intellectual property and assets of Able Labs from the US District Bankruptcy court in New Jersey in December

2005. Dilip Shanghvi, the CMD, receives the E&Y Entrepreneur of the Year award in healthcare and life sciences for 2005. Sun Pharma is selected by Forbes amongst the best 200 companies (sales less than USD 1 billion) in Asia. This is the fourth time in 5 years that the company has been selected.

2006 Announced the demerger of innovative business with pipelines, people, equipment and funding, into a new company.

2007 Completed the demerger of the innovative business, with requisite legal and regulatory approvals. SPARC ltd, the new company, is listed on the stock exchanges in India, the first pure research company to be so listed. In May 2007, we, along with our subsidiaries, signed definitive agreements to acquire Taro Pharmaceutical Industries Ltd., (TAROF, Pink Sheets), a multinational generic manufacturer with established subsidiaries, manufacturing and products across the U.S., Israel, Canada for 4 mill. This all-cash deal is subject to Taro Shareholder approval and requisite regulatory clearances

2008 Sun Pharmaceutical Industries Ltd on January 30, 2008 announced that it has commercially launched generic Pantoprazole Sodium Delayed Release (DR) Tablets, 40 mg, which is AB-rated to Wyeth's Protonix DR Tablets. Sun's product is being sold in the United States by its marketing partner Caraco Pharmaceutical Laboratories. In November 2008, we along with our subsidiaries, acquired 100% ownership of Chattem Chemicals, Inc.,a narcotic raw material importer and manufacturer of controlled substances with a approved facility in Tennessee. This will offer vertical integration for our controlled substance dosage form business in the US.

2010 Sun Pharmaceutical Industries Ltd has appointed Shri. Kal Sundaram, as an Additional Director on the Board of Directors of the Company and as the Chief Executive Officer of the Company with effect from April 01, 2010.

COMPANY PHYLOSOPHY Sun Pharma's philosophy envisages working towards high levels of transparency, accountability, consistent value systems, delegation across all facets of its operations leading to sharply focused and operationally efficientgrowth. The company tries to work by these principles in all its interactions with stakeholders, including shareholders, employees, customers, suppliers and statutory authorities. Sun Pharma is committed to learn and adopt the best practices of corporate governance. VISION The Sun Pharma of tomorrow will have brands registered in major markets of the world, and in most markets, promoted by a high quality field force. With a strong network and established company equity, we would be an excellent partner for a company seeking to license out products across markets. MISSION We are an international specialty pharma company, with a presence in 30markets. We also make active pharmaceutical ingredients. In branded markets, our products are prescribed in chronic therapy areas like cardiology, psychiatry, neurology, gastroenterology, diabetology and respiratory. In the time since, we have crossed several milestones to emerge as an important specialty pharma company with technically complex products in global markets, and a leading pharma company in India. We are leader in each of the therapy areas that we operate in, and are rated among the leading companies by key customers. Strengthening market share and keeping this customer focus remains a high priority area for the company.

 Marketing mix
Swot analysis Strengths:

Sun Pharma is highly regarded for its ability to launch new products with a great amount of speed and consistency.

y y

The company has only 20% exposure to the DPCO. The past growth rate of the company has always been double that of the industry as a whole.

Weaknesses: y y Continuous losses of Caraco Pharma are a major concern for Sun Pharma. The profit margins are declining for the company

Opportunities: y The relaxation of DPCO will be a big boost for the company and this might marginally improve the profit margin. y The company has already made ANDAs (Abbreviated new drug application) in USA and it provides a great opportunity for growth for the company. y The company has entered the US market through its subsidiary Caraco Pharma. This provides a great opportunity for the company to make the

CHAPTER-8 LUPIN LABS History (Mission, Vision)

Lupin Chemicals Ltd (LCL) was promoted by Lupin Laboratories Ltd. The company was incorporated on 31.03.83 as a Private Ltd company and subsequently converted into a Public Ltd company with effect from 23.12.91. The company does not have any subsidary. The company is setting up a project for the manufacture of 93 tpa of Rifampicin, an essential anti-tuberculosis, anti-leprotic, life saving drug from a very basic stage of fermentation. It is an import substitute product. To finance the project the company is coming out with a PCD issue aggregating to Rs.45.6 crores. 2002 Lupin Ltd has successfully introduced AkuriT, a revolutionary simplified therapy as per WHO's guidelines for treatment of tuberculosis Crisil has upgraded the rating assigned to Lupin's nonconvertible debentures from D to BB+. Lupin Ltd has enhanced its capacity of manufacturing various products at its formulations plants at Aurangabad and Manideep in Madhya Pradesh. Lupin receives Final FDA Approval for Trandolapril. Lupin Ltd inducted PricewaterHouseCoopers to implement SAP to faultlessly connect its 28 sales depot. Lupin Ltd has cut down its debt by Rs.20cr . 2003 Lupin Ltd has commissioned its facility at Mandideep near Bhopal, Madhya Pradesh for the manufacture of Lisinopril. Lupin Ltd announces VRS for its employees in a bid to trim its wage bill. Pharmaceutical major Lupin Ltd has divested about 12.55% of its equity holding in the

company to CVC International, a private investment arm of the US based financial conglomerate Citigroup. Lupin is closing down its South African Operations and is setting up two subsidiaries in Hongkong and the US. Lupin Ltd has received the appproval of US Food and Drug Administration for cefuroxime axetil 250 mg and 500 mg tablets Dr.Kamal K Sharma has been appointed as the Additional Director of the company. The company has received USFDA's approval for cefotaxime sterile vials for injection. Secured US FDA nod for generic Claforan marketing Lupin receives USFDA approval for Caftriaxone Sterile Vials for injections Lupin plans to list shares on NYSE. Lupin set up new herbal product division Lupin submits INDA for psoriasis 2004 Launches Ezedoc, a specialty drug for the cholesterol management segment Lupin has appointed Vinod Dhawan as President - Business Development (Latin America, Japan, Australia, and New Zealand). Mr.Dhawan will be responsible for the development of Lupin's business strategy for these markets, with focus on, among others, product selection, entry strategy, marketing and sales, and regulatory compliance. Lupin Limited has informed that at the EGM of the Company held on December 05, 2003, the members of the Company have by means of a special resolution determined to delist shares of the Company, from the following exchanges : 1) The Calcutta Stock Exchange Association Ltd. 2) The Stock Exchange, Ahmedabad, 3) Jaipur Stock Exchange Ltd., 4) The Delhi Stock Exchange Association Ltd. The Company has initiated action to secure de-listing of the equity shares of the Company, from the aforesaid exchanges. The Equity shares of the Company are listed on the NSE and BSE and will continue to be listed and traded on NSE and BSE. Enters into an agreement with Baxter Healthcare Corporation, a global medical products company headquartered in the United States whereby Baxter will exclusively distribute the Company's generic version of ceftriaxone sterile vials for injection in the USA Floats new division - Lupin Herbal, dedicated to research-based phytomedicines. Unveiled nine herbal products in therapeutic areas, including diabetes, pediatrics, gastro intestinal, pain management and gynaecology 2004 Delists Shares from Ahmedabad Stock Exchange. Lupin Pharmaceuticals, Inc., wholly owned subsidiary of the Company has entered into an agreement with Allergan, Inc. in the United States to promote Zymar (gatifloxacin opthalmic solution) 0.3% in the pediatric specialty area. Lupin Ltd has launched its anti-infective product Suprax (cefixime Oral Suspension) in the US market.

Shares of Lupin Ltd delisted from the Delhi Stock Exchange. Shares of Lupin Ltd delisted from Jaipur Stock Exchange. Ind Swift Ltd ties up with Lupin Ltd for a Co-marketing pact to launch Nitazoxanide, an anti-diarrhoeal / anti-helmintic drug for the first time in India under the brand name Netazox and Nizonide respectively. 2005 Lupin launches Ceftriaxone vials in the US market Lupin enters into co-operation agreement with Kyowa for Japanese market. Lupin receives USFDA approvals for Cephalexin Oral Suspension. Lupin has entered into an agreement with GSK Philippines tomanufacture and supply the 4 & 2 Drug FDCs for marketing in Philippines. Lupin receives approval for conducting phase II clinical trials of Investigation New Drug candidate LLL-3348 (Desoris) from the Drug Controller General of India. 2006 Lupin joins hands with ItalFarmaco to launch Lupenox in India Lupin receives DCGI approval to conduct Phase II clinical Trials for Psoriasis NCE Lupin & Aspen Pharmacare enters into MoU for establishment of JV Lupin joins hands with ItalFarmaco to launch Lupenox in India Lupin Ltd has announced that the Company has signed a MoU to acquire a 51% equity in Artifex Finance CVA, Belgium, along with its subsidiaries including Dafra Pharma Ltd (Dafra), a Belgian pharmaceutical Company focussed on anti-malaria. Lupin ties up with Italian co 2007 Lupin Receives US FDA Approval for Simvastatin Tablets. Lupin gets MHRA Approval for Lisinopril in UK Lupin Ltd has announced that it has received Euro 20 million from Laboratoires Servier of France for the sale of additional patent rights for Perindopril. Lupin receives DCGI Approval to conduct Combined Phase IIb/III. Clinical Trials for it's herbal Psoriasis NCE Lupin Ltd on April 27, 2007, has announced that the Department of Science and Technology (DST), Government of India and the Company have joined hands for the clinical development of the Company's Migraine and Psoriasis projects. Lupin receives Best New Manufacturer of the Year Award from AmerisourceBergen 2008 Lupin Limited has appointed Mr. R.V. Satam as Secretary & Compliance Officer of the Company w.e.f. May 01, 2008. Lupin enters into agreement for Suprax 400 mg tablets. Lupin Launches SUPRAX 400 mg Tablets in the US. Lupin expands its product basket in JapanKyowa receives Ten product approvals 2009 Lupin receives USFDA approval for Levetiracetam Tablets. Lupin ties up with leading Institutes for PhD Program Lupin in Equity Partnership with Multicare Pharmaceuticals Philippines, Inc.

Lupin Expands Branded Play; Announces Acquisition of Worldwide Rights for its first NDA AllerNaze 2010 Lupin Limited has launched Ilyalgan (sodium hyaluronate), an osteoarthritis drug, available in the form of an injectable through leading orthopaedics and physiotherapists across the country. Hyalgan40 is the original research molecule of the Italian pharma giant I-'IDIA and is the world leader in HA therapy, marketed in over 60 countries globally. Lupin Limited's U.S subsidiary, Lupin Pharmaceuticalss Inc. (LPT) has received the final approval for the company's Abbreviated New Drug Application (ANDA) for its Imipramine Pamoate capsules, 75 mg, 100 mg, 125 mg and 150 mg from the U.S. Food and Drug Administration (FDA). Commercial shipments of the product have already commenced. In April 2004, Lupin Limited (Lupin) became the first Indian pharmaceutical company to receive an ANDA approval for Cefixime3. The company subsequently launched its first branded product - anti-infective Suprax (Cefixime Oral Suspension) in the US With the launch of Suprax, Lupin was catapulted to a different league, setting it apart from other pharmaceutical companies selling only active pharmaceutical ingredients (APIs) and generics. Headquartered in Mumbai, Lupin is a leading pharmaceutical company in India manufacturing bulk drugs and formulations. In the fiscal 2004-05, Lupin generated sales of Rs. 12,123 million, 4% more than in the previous fiscal and reported net profit of Rs. 844 million as compared to Rs. 987 million in the fiscal 2003-04. About 52% of Lupin's revenues came from the domestic market while 48% came from exports. Anti-TB (tuberculosis) drugs, cephalosporin and cardiovascular contributed to about 89% of its revenues while 11% came from markets such as nutraceuticals and other therapeutic segment. Founded in 1968 with an initial capital of just Rs. 5000, Lupin witnessed significant growth to become a large, Rs 3 billion plus organization in the early 1990s. The company had grown at an average annual growth rate of 40% since its inception, twice as fast as the growth of the Indian pharmaceutical industry. Lupin too made significant investments in R&D, infrastructure, exports, herbal markets and other therapeutic segments to compete effectively with domestic and global pharma majors. According to Lupin's top management, "As the country switches on to the product regime, radical changes are expected to affect the pharmaceutical sector. A deep-rooted shift in business policy has taken place within the company by placing a strong emphasis on R&D to create proprietary intellectual property. The budget for this activity was stepped up substantially during the year to ensure that the company has a complete portfolio of products to take on the patent regime. The history of the pharmaceutical industry in India can be traced back in the early nineteenth century. Initially, allopathic11 medicines were brought into India by the British and later these medicines were imported in bulk from Britain. These medicines soon became popular among urban Indians. After the first few decades of their introduction in India, pharma products were being imported from more technologically advanced countries such as Germany. The production of allopathic medicines within India started with the establishment of Bengal Chemical and Pharmaceutical

Works in 1901 by Acharya P.C.Ray. On April 01, 2000, Lupin Chemicals and Lupin Laboratories merged to form Lupin Limited. Lupin derived its name from the 'Lupin flower,' believed to have healing power. The company was a brainchild of Dr. Desh Bandhu Gupta (Gupta), an honorary doctor of philosophy with a master's degree in chemistry. He started his career teaching chemistry at Birla Institute of Science and Technology, Pilani, Rajasthan. Incorporated in the year 1972, Lupin Laboratories set up a formulations unit and an in-house R&D centre in 1980. Lupin's R&D centre received recognition from the Department of Science and Technology (DST) in the year 1981. In the same year, Lupin was ranked 62 among Indian pharma companies with sales of Rs. 30 million. The company then strengthened its position in the anti-TB market with the introduction of Rifampicin. Several factors contributed to the success of Lupin. Significant among them was the vision and leadership of Gupta, who was actively involved in day-to-day functioning of the company. He envisioned Lupin as an innovation-led transnational company. From the beginning, Lupin saw great potential for itself in the export markets. After establishing itself as a major bulk drug exporter, Lupin set its sights on the global generics market. The global generics market proved to be a major challenge. Not only was Lupin foraying into unknown territory, but also had to deal with the uncertainties of fluctuating currencies, regulatory issues, patent litigation, unstable political scenarios in some countries and pricing pressures on the generic. Lupin had two dedicated divisions - AAMLA (Asia, Africa, Middle East and Latin America) and the team for CIS to understand global markets and develop entry strategies. These divisions also identified potential alliance partners within these countries. These divisions identified the US, Europe, CIS (Russia, Belarus, Uzbekistan, Azerbaijan, and Kazakhstan) as the major markets... The initial growth of the Indian Pharmaceutical Industry (IPI) was extremely slow owing to lack of sufficient funds for pharma research and marketing, few entrepreneurs operating in the industry and lack of government support

Mission
Lupins mission is to become a transnational pharmaceutical company through the development and introduction of a wide portfolio of branded and generic products in key markets.

Our Vision
Lupin Pharmaceuticals, Inc. is committed to bringing innovative products for the healthcare professional to improve the health and well being of individuals. Lupin Pharmaceuticals, Inc. is well positioned for growth in the US market. We can capitalize on the strengths of our parent company, Lupin Limited:
y

Scientific expertise to develop new and improved products and product line extensions;

y y

Manufacturing technology, expertise and infrastructure; Financial resources.

Products
Generics Lupin Pharmaceuticals, Inc. entered the U.S. generic pharmaceutical market in 2003 with the ANDA approval for cefuroxime axetil. Since then we have received more than a dozen FDA approvals. Six of Lupin's 14 ANDA approvals were the first granted by the US FDA, reinforcing our ability to submit high quality dossiers and gain on time approvals. We are vertically integrated, from process development of the API to the submission of dossiers for finished dosages. This provides control over the supply chain and the ability to offer quality products at the right time and at competitive prices. Our integrated manufacturing capability provides a portfolio of the highest quality generic products. Expanding the product portfolio, Lupin Pharmaceuticals, Inc. is geared to file 15 or more ANDAs per year in some of the following areas: Oral and injectable cephalosporins; Cardiovascular; Controlled release ANDAs; Paragraph IVs. Our oral and injectable cephalosporin facilities, US FDA approved manufacturing sites and the new tablet and capsule facility in Goa, allow us to file and manufacture a wide range of finished products for the US market. Specialty Lupin Pharmaceuticals, Inc. is committed to developing a branded pharmaceutical presence for pediatric practice in the US market. We are committed to identifying, developing and marketing prescription drugs for children of all ages. Lupin has created a dedicated national sales force to call upon pediatricians. Lupin Pharmaceuticals, Inc., is very pleased to offer Suprax, an important anti-infective product in pediatric and other physician practices within the United States. Suprax is now available in tablets and suspension formulations. Lupin Pharmaceuticals, Inc., has an exclusive license in the United States to use the Suprax trademark. We plan to expand our family of pediatric products to help meet needs of children. Our focus is

on in-house product development with our proprietary oral controlled release and taste masking platforms. Lupin Pharmaceuticals, Inc. is also open to marketing alliances, and to licensing/acquisitions. API Lupin is recognized as a leading manufacturer of cephalosporin APIs, with FDA approval to manufacture complex oral and injectable cephalosporins. Lupin is fast gaining share in the cardiovascular segment manufacturing a wide range of ACE-inhibitors and cholesterol reducing agents. Lupins capabilities in sterile processing, synthetic process development and fermentation skills coupled with its intellectual property strengths, puts the company in a very strong position to offer a diverse portfolio of niche APIs to its customers.

Manufacturing / R&D Lupin Pharmaceuticals, Inc. provides the advanced manufacturing capabilities and processes that create quality specialty and generic products. Lupin is amongst the world's largest manufacturers of products in its chosen therapeutic areas. Lupin has manufacturing operations in 5 cities in India and also a site in Thailand. Our plants are located at Mandideep, Aurangabad, Tarapur, Ankleshwar and Goa, in India. The new tablet/capsule facility in Goa, India allows Lupin to file and manufacture a wide range of finished products for the US market: Diverse / Integrated manufacturing capability; Synthetic APIs; Fermentation products; Oral and injectable finished products. We have cost leadership with large scale, complex products. Lupin was founded to meet the very basic need for effective treatment of tuberculosis. Our success is tied to continually meeting the need for basic products to promote human health. Our company strives to bring important new products to market each year. We expect our products to come from:
y y y

In-house product development; Licensing and acquisitions; Marketing alliances.

Lupin is also seeking to be the partner of choice for product development. Our scientists apply

know how and expertise to develop NCEs or to solve difficult formulation challenges. We strive for continued growth and are avidly interested in learning about prospective opportunities in the specialty pharmaceutical market. We are also open to collaborating to develop innovative products formulated with Lupins drug delivery and taste masking technology. Our API business unit is seeking partners for Lupin developed API's.

Organizational Structure The Department of Pharmaceutical Services organizational structure serves as a visual representation of managers span of control, responsibilities and line of authority. The organizational structure enhances communication, teamwork and decision-making within the Department. It also outlines the formal authority and communication network within the Department. Each employee is encouraged to use this organizational structure to verify that communications, suggestions and/or problems are directed to the individual directly responsible for that area. Employees are encouraged to contact and/or communicate with the person to whom they are directly responsible to address issues or concerns. Any issues that cannot be resolved by an employees direct supervisor are directed to the next highest level of the organizational structure. Vanderbilt University Hospital and Clinics (VUH): The VUH Department of Pharmaceutical Services is comprised of four (4) service/practice areas, each of which is managed by an individual at the Director level (VUH & Clinic Org Chart) The four Directors report to the Administrator - Pharmaceutical Services, who in turn, reports to the Associate Hospital Director for Professional Services as part of the larger Medical Center. The four (4) Pharmacy service/practice areas are: Inpatient Operations. Ambulatory Operations. Business Services. Clinical/Education & Research Services. Monroe Carell Jr. Childrens Hospital at Vanderbilt (MCJCHV): The MCJCHV Department of Pharmaceutical Services is managed by the Director of Pharmacy who reports to the Director of Operations for MCJCHV. The Director of Operations reports to the Chief Operating Officer (COO) for MCJCHV. Three service areas are managed by the following individuals: Assistant Director who is responsible for both inpatient and outpatient operations, Manager of the Retail Pharmacy, and Manager of Clinical Services (VCH Org Chart) The three service areas include: Inpatient Operations Retail Operations

Clinical / Education & Research Services Corporate Services: Some pharmacy services are more effectively provided via a corporate services delivery model from a centralized location to more than one facility in the VUMC organization. These services are managed jointly by VUH and MCJCHV. The following are examples of pharmacy corporate services: 1. Ambulatory Clinic 2. Billing 3. Chemotherapy Management 4. Financial Management 5. Investigational Drug 6. Pharmacy Informatics 7. Policy and Compliance 8. Procurement 9. Technician Program 10. Total Parenteral Nutrition

CHAPTER -9 AUROBINDO PHARMA  History (Mission, Vision)

Aurobindo Pharma was born of a vision. Founded in 1986 by Mr. P.V.Ramaprasad Reddy, Mr. K.Nityananda Reddy and a small, highly committed group of professionals, the company became a public venture in 1992. It commenced operations in 1988-89 with a single unit manufacturing semi synthetic penicillins (SSPs) at Pondicherry. Aurobindo Pharma had gone public in 1995 by listing its shares in various stock exchanges in the

country. The company is the market leader in semi-synthetic penicillin drugs. It has a presence in key therapeutic segments like SSPs, cephalosporins, antivirals, CNS, cardio-vascular, gastroenterology, etc. Over the years, the Aurobindo Pharma has evolved into a knowledge driven company. It is R&D focused, has a multi-product portfolio with multi-country manufacturing facilities, and is becoming a marketing conglomerate across the world. Aurobindo Pharma created a name for itself in the manufacture of bulk actives, its area of core competence. After ensuring a firm foundation of cost effective production capabilities and a clutch of loyal customers, the company has entered the high margin speciality generic formulations segment, with a global marketing network. The formulation business is systematically organised with a divisional structure, and has a focused team for each key international market. Aurobindo believes in gaining volume and market share in every business/segment it enters. Aurobindo has invested significant resources in building a mega infrastructure for APIs and formulations to emerge as a vertically integrated pharmaceutical company. Aurobindos five units for APIs and four units for formulations are designed for the regulated markets. 1986 The company was incorporated on 26th December as a Private Limited company and was converted into a Public Limited company with effect from 30-4-1992. The company is registered with the Registrar of Companies, Andhra Pradesh at Hyderabad. The chief promoters of the Company are Shri P.V. Ramaprasad Reddy and Shri K. Nityananda Reddy. Aurobindo Pharma Limited is one of the leading manufacturers of life saving anti-biotic bulk drugs in India with excellent track record of profitability and growth. The Company has developed inhouse technology for manufacture of the bulk drugs as well as formulations. The Company is one of the largest manufacturers of Ampicillin and Cloxacillin in India. 1992 Another unit was also set up for the manufacture of CMIC Chloride, a bulk drug intermediate at Pashamylaram, near Hyderabad. Through another Company namely, Chaitanya Organics Pvt. Ltd., which is now being merged with Aurobindo Pharma Limited. The Company issued Bonus Shares in the ratio of 1:1 in May, in the ratio of 2:1 in June, 1993 and in the ratio of 7:20, in November 1994. The Company follows the Mercantile System of Accounting and recognises Income and Expenditure on Accrual basis. 1993 The Company has set up two more units during the year, viz.,

i) Bulk drug unit at Bollaram, near Hyderabad. ii) Formulations unit at Kukatpally, near Hyderabad. The Company is setting up a Bulk Drug cum Formulation Plant to produce sterile Bulk Drugs like Ampicillin Sodium (Sterile) IP/BP, Cloxacillin Sodium (Sterile) IP/BP, and cephalosporins (Sterile) Bulk Drugs and Formulations in the dosage forms like sterile powder injectables, small volume parenterals, Capsules and Tablets. 1994 The installed capacity of the Pondicherry Unit of the Company is increased from 204 TPA to 300 TPA during the current year. The Bollaram unit is for the manufacture of anti-biotic bulk drugs, namely Cloxacillin, and Dicloxacillin mainly for exports. During the Year, the Company has upgraded the plant and increased the installed capacity from 78 TPA to 84 TPA. The Company has set up a separate block in the same premises during the current year, 1994-95 for manufacture of high value drugs namely Astemizole, Domeperidone, Famotidine and Omeprazole, with an installed capacity of 9 TPA. The Kukatpally unit is for manufacture of pharmaceutical formulations with an installed capacity of 360 lakhs tablets and 480 lakhs capsules per annum. During the current year the Company has increased the installed capacity of the merged company Chaitanya Organics Pvt. Ltd., from 120 TPA to 144 TPA. Further a new bulk drug intermediate namely DCMIC Chloride is also manufactured in this unit from April. The Company has also expanded the above unit by setting up a separate block for manufacture of Norfloxacillin and Pefloxacillin with an installed capacity of 60 TPA. The Company proposed to acquire two generators of 250 KVA capacity each as standby arrangement. The company has entered into domestic formulations market in 5 States and plans to launch in other states shortly. The Company has agency set-up at Srilanka, Thailand, Russia and Nigeria for marketing its products. It proposes to set up its own marketing offices at Hongkong, Moscow and Nigeria to promote bulk drug sales. The Company has a connected power load of 500 KVA from A.P.S.E.B. In addition, 3 Generators of 125 KVA capacity each have been installed as a stand by arrangement. The Company is a member of Patancheru Effluent Treatment Plant Limited and Jeedimetle Effluent Treatment Plant. All the Assets and Liabilities of M/s. Chaitanya Organics Pvt. Ltd. will be taken over by M/s. Aurobindo Pharma Ltd. with effect from 1st April, on completion of amalgamation formalities. As per the scheme of amalgamation it is proposed to issue one equity share of M/s. Aurobindo Pharma Ltd. of Rs 10/each credited as fully paid up for every one equity share of Rs 10/- each fully paid up Held in M/s. Chaitanaya Organics Pvt. Ltd. to the Shareholders of M/s. Chaitanya Organics Pvt. Ltd. 1995 In January, Videocon International and Videocon Appliances sold tranche of Aurobindo shares to the public at a premium of Rs 180. 1997

Glaxo (India), the Indian subsidiary of the UK-based multinational, is understood to be negotiating with the Hyderabad-based Aurobindo Pharma for an alliance to meet its global bulk drug requirements. The annual capacities now stand at 300 million of capsules and 840 tonnes of bulk drugs. The company proposes to manufacture fourth generation cephalosporins such as 7ACA, cephalexin, cephatoxime and cephazolin. 1998 AUROBINDO Pharma Ltd is setting up two wholly-owned subsidiaries in the US and Hong Kong to increase its presence in the international market. The company is one of the largest bulk manufacturers of semi-synthetic penicillin (SSP) products such as ampicilin and Amoxycillin. It is the world's fourth largest producer of ampicillins and fifth largest producer of amoxycillins. The company has also launched new formulations like auronim Suspension in the paediatric segment. The company has obtained the shareholders permission to invest 50 ,00,000 in the share capital of Aurobindo Pharma (Miami) Inc in USA and 60,00,000 in the share capital of Aurobindo Pharma (Hong Kong) Pte Ltd. The company would be launching several new formulations including Roxythromycin, Clarithromycin, Sporfloxocyin, besides Sephradin, a semi-synthetic, in the domestic market. Among sterile products to be launched by the company are Cephazolin, Cehatoxin and Azithromycin. 1999 The Hyderabad-based Aurobindo Pharma had received in-principal approval from the Board of Industrial and Financial Reconstruction (BIFR) in March to buy the plant. APL is today the most cost-efficient producer of SSPs in India and a low cost international producer of other value added bulk drugs and drug intermediaries. Aurobindo currently manufactures three types of drugs including cephalosporin-based formulations, drugs for gastroenterology and pain-related products. The company proposes to deploy the issue proceeds to part-finance its R&D thrust and the growth of its formulations business. APL plans to meet the further funds requirement for its capital expenditure programme, if any, through internal accruals. The board of directors has allotted 5,51,000 equity shares of Rs.10 each at a premium of Rs.480 per share by private placement on preferential basis to FIIs, FIs, MFs and bodies corporate etc. Aurobindo Pharma Ltd, the largest domestic manufacturer of penicillin-based bulk antibiotics, plans to form joint ventures in Brazil and China by the end of financial year 1999-2000 (April-March). 2000 Aurobindo Pharma Ltd. a major producer of semi-synthetic penicillins in the country, proposes to set up two joint venture companies in the US to manufacture cephalosporins and noncephalosporins. Aurobindo Pharma is setting up two joint ventures for formulations in the US, with an investment of million. As per the scheme of Amalgamation equity shares of Aurobindo Pharma Limited will be exchanged to the shareholders of Sri Chakra Remedies Limited for every 100 equity shares held by them.

2001 The Company has launched an exclusive anti-viral division Immunus -- to educate and to provide preventive drug care for HIV/AIDS patients in the country. Hyderabad based Aurobindo Pharma has restructured its management responsibilities in view of major growth initiatives to be taken to create a platform for penetrating attractive global markets. P V Ramaprasad Reddy, former managing director, has been appointed executive chairman, while K Nityananda Reddy, former joint managing director and co-promoter, has been appointed managing director, APL informed the Bombay Stock Exchange on July 4. This new structure is expected to enable the company to concentrate on the strategies of change being pursued by it to achieve the goal of becoming a research and development-based international pharmaceutical company, it said, adding that the changes had received board approval. Aurobindo Pharma Ltd today announced the launch two more drugs-- Efavirenz (Viranz) and Nelfinavir (NELVEX)-- for the treatment of AIDS. 2002 Three existing Directors, Mr Srinivas Lanka, Mr A J Kamath and Mr A Siva Rama Prasad have stepped down from the directorship, thus making room for appointment of independent external directors. Accordingly, their resignations were accepted. While Mr Srinivas Lanka will be considered for reappointment as non-executive independent Director, Mr A J Kamath will assume the responsibility of group financial advisor. Further, it is planned to retain the services of Mr A Siva Rama Prasad for group operations. Aurobindo Pharma to allot further equity shares/warrants to promoters. Srinivas Lanka re-inducted into the Board of Aurobindo Pharma. Sathyamurthy appointed as Additional Director of Aurobindo Pharma.

2003 The Board of Directors of Aurobindo Pharma Ltd has approved the appointment of Dr K A Balasubramanian as an additional director on the Board of Directors of the company. Dr Balasubramanian shall be an independent, non-executive director. Aurobindo informed BSE that Citadel Aurobindo Biotech Ltd, a 50:50 Joint venture company introduced Aztreonam a Monabactam Betalactam antibiotic for the first time in the Indian Pharma Market with a brand name 'TREONAM'. Aurobindo Tongling (Datong) pharmaceuticals Ltd, China , a JV between APL and Shanxi Tongling Pharmaceuticals co. has set up for manufacture of pharmaceutical products for the local market. With a view to manufacture Pen G, a raw material essential for the production of semisynthrtic pencillin, Aurobindo has infused Rs 59cr in a flagship Aurobindo(Datong) Pharma Ltd. Aurobindo Pharma has launched second joint venture company in US for the purpose of Research and Development. Allots 950,000 equity shares to promoters/directors by way of conversion of warrants. Aurobindo Pharma has launched second joint venture company in the United States for the

purpose of R & D in alliance with Salus Pharmaceuticals. Aurobindo Pharma has filed around 20 patents in the areas of central nervous system, cardio-vascular, and anti-cholesterol segments. Out of this it is able to obtain 2 of them in United States of America. UTI sold 3 pc stake from the company.Board approves the issue on a preferential basis, of an aggregate upto 3,100,000 equity shares of Rs.5/- each at a price of Rs.302/- per equity share (including a premium of Rs.297 per equity share), totalling up to Rs.93.62 cr Company ropes in Merlion India Fund 1, Mauritius, for allotting 31 lakh equity shares on a preferential basis at a price of Rs 302 per share, including a premium of Rs 297 per share, totalling Rs 93.62 crore 2004 Ms P. Suneela Rani, has sold 6,80,000 equity shares of Rs 5 each of the company, constituting 1.4 per cent of equity of its current paid-up equity of Rs 24.2 crore. These shares were sold in the open market from December 23-31 last year Aurobindo Pharma Ltdhas announced that it has received its first Certificate of Suitability (CoS) approval from the European Directorate for Quality Medicines (EDQM) for its product in the therapeutic segment of gastroenterology. Aurobindo Pharma Ltd has informed that the members at the EGM of the Company held on December 26, 2003 have unanimously approved the following special resolution : 'Issue of equity shares under preferential allotment guidelines of SEBI'. Further, the Company has also informed that delisting of securities of the company from Ahmedabad Stock Exchange was approved w.e.f. January 15, 2004. Aurobindo Pharma Ltd has informed that pursuant to the application of the Company, its securities have been removed from the list of the Ahmedabad Stock Exchange (ASE) w.e.f. January 15, 2004. 2005 USFDA part of Department of health and human science approves UNIT VIII facility as a site to manufacture APIs for the US Market. Aurobindo AIDS drug receives US FDA clearance. Aurobindo Pharma gets EDQM approval for Flucloxacillin Sodium Aurobindo Pharma receives approval for Sertraline Hydrochloride Tablets. Aurobindo Pharma receives approval for Cephalexin Capsules by US FDA Aurobindo's receives final approval of Mirtazapine Orally Disintegrating Tablets 2006 Aurobindo Pharma receives final approval of Mirtazapine ODT 45mg for US marketAurobindo Pharma receives final approval of Mirtazapine ODT 45mg for US market. Aurobindo Pharma Ltd has announced that the US FDA has granted tentative approval for the Company's Simvastatin Tablets USP 5 mg, 10 mg, 20 mg, 40 mg and 80 mg Aurobindo receives US FDA approval for Didanosine (Chewable) Tablets. Aurobindo Pharma Ltd has announced that it has received the marketing authorization approval from Medicines

Evaluation Board (MEB), NETHERLANDS for Mirtazapine 15, 30 and 45 mg orally disintegrating tablets containing the active ingredient Mirtazapine. Aurobindo Pharma Ltd has appointed Mr. A.Mohan Rami Reddy as Company Secretary of the Company. Aurobindo Pharma receives final approval for SIMVASTATIN tablets from USFDA. Aurobindo arm acquires Dutch firm Pharmacin. 2007 Aurobindo Pharma Ltd has received one more approval from USFDA for Cefadroxil capsules 500 mg. Aurobindo Pharma Ltd has announced that on June 13, 2007 the Company unveiled their new Logo and Corporate Identity at a ceremony in Hyderabad. 2008 Aurobindo Pharma Ltd has announced that the Company has received an approval from the US Food & Drug Administration to market its 300mg Cefdinir Capsules in the US market. The drug falls under the Anti-bacterial segment and is a generic equivalent of Abbott Laboratories, OMNICEF. Aurobindo Pharma Ltd has appointed Mr. K Raghunathan as an Additional Director of the Company at the Board Meeting held on January 30, 2008. Aurobindo Pharma Ltd has announced that the Company has been awarded ARV contract worth Rs 70 crores for 3 products which are WHO/ USFDA pre-qualified by National Aids Control Organization (NACO). Aurobindo Pharma Ltd has got final clearance from the US Food and Drug Administration (USFDA) to manufacture and market Didanosine Delayed Release capsules in 125 mg, 200 mg, 250 mg and 400 mg. The drug is indicated for treatment of HIV - 1 infections in adults. It is the generic version of Bristol Myer Squibb's Videx EC delayed-release capsules. 2009 Aurobindo Pharma Ltd has received Swissmedic approvals for Amlodipine Besylate Tablets and Metformin Hydrochloride Tablets. 2010 Aurobindo Pharma has received final approval from the United States Food and Drug Administration for its product Ceftazideme injection in different dosages.

Vision:

To become Asia's leading and one among the top 15 generic Pharma companies in the world, by 2015" Mission: Aurobindo's mission is to become the most valued Pharma partner for the World Pharma fraternity by continuously researching, developing and manufacturing a wide range of pharmaceutical products complying to the highest regulatory standards.

PRODUCTS

THERAPEUTIC Anti-Allergic Anti-Diabetic Anti-Emetic Anti-Fungal Anti-Malarial Anti-Obesity Anti-Pyretic Anti-Retoviral Anti-Viral Anti-Biotic Cardiovascular CNS GI-Tract Histamine Life-Style Osteoprotic

OTC Pain Management Respiratory Urology

Research & Development

The Company's R & D strengths are in developing intellectual property in the area of noninfringing processes and resolving complex chemistry challenges. In the process, Aurobindo Pharma is developing new drug delivery systems, new dosage formulations, applying new technology for better processes. The APL Research Center, two in Hyderabad covers over 13000 sq meter, and provides a nurturing environment to a multi-disciplinary team of over 700 scientists striving for excellence. The Centre meets GLP requirements, and is focused on the areas of organic synthesis, analytical research, dosage form development, pharmacology, bio-equivalence studies and drug delivery systems. The instrumentation and analytical knowledge base at the Centre facilitate.. Process development life cycles of less than three months, even if it involves complex multi step synthesis with multiple hilarity. Complete impurity profiling in all products developed. Development of analytical methods and specifications from raw materials, to non-compendia finished products. In-house synthesis of reagents for analyzing oregano lithium and noble metals. Accelerated and real-time stability studies. This reflects the Companys commitment towards developing innovative technologies and creating a knowledge base in chemical synthesis, high quality generic formulation and development of drug delivery systems.

CHAPTER-10

GLAXOSMITHKLINE PHARMACEUTICALS

History (Mission, Vision)

1924 The Company was incorporated in India on 13th November under the name of H.J.Foster & Co. Limited as an Agency House for distributing the well-known Baby Food Glaxo of the then U.K. Company, Joseph Nathan & Co. two years later, the company became a wholly-owned subsidiary of Joseph Nathan & Co.

1950 On 1st March, the company changed its name to Glaxo Laboratories Ltd.

1956 During the year the first major steps towards basic manufacture was undertaken with the establishment of vaccine manufacturing facilities.

1960 A milk drying plant was opened near Aligarh, U.P.

1961 During the year a large and highly complex fine chemicals plant making vitamin A, steroids and other drugs from basic stages was commissioned in Thane.

1962 During the year, the company took over the business of the Indian branch of Allen & Hanburys Ltd., U.K., as this company was acquired by Glaxo Laboratories Ltd., U.K.

1968 During the year Glaxo group limited acquired the whole capital of BDH Group Ltd. With effect from 1st July, the company became a Public Ltd. Company and its name was changed to Glaxo Laboratories (India) Ltd.

The main objects include the manufacture, distribution, sale and export of medicinal, chemical, biological, immunological, Veterinary and other therapeutic preparations, food for infants and invalids, dietetic foods, cereals and foodstuffs of all descriptions, all Classes and kinds of chemicals, cosmetics and diary, farm and garden produce. During the year, the company diversified the activities of Aligarh Factory, by introducing the manufacture of other food products viz., Glaxose-D' and Casilan and by the installation of packing facilities for milk food and Glaxose-D. The Technical Collaboration Agreement with Glaxo Group, the Company took immediate steps to establish a Research and Development unit at Thane.

1970 During the year the company acquired Vasant Vijay Mills premises adjacent to its premises at Worli. During the same period, the new R & D unit was completed at Thane.

1982 Glaxo Group Ltd., U.K., disinvested 28, 00,000 equity shares in the Company. 56, 00,000 No. of Equity shares issued (prem. Rs. 5 per share) in Jan.

1983 18, 00,000 shares were offered as right (Except to Glaxo Group Ltd. U.K.) in 1:2, 2, 50,000 shares reserved for business associated of the company and 35,50,000 shares offered to the public. Pref. capital was repaid on 12.4.1983.

1984 In 1984-85, the company acquired the entire shareholding of Glindia Investments Ltd., Sesame Investments Pvt. Ltd. and Samgir Investments Pvt. Ltd., which thereby became subsidiaries of the company.

1986 During the year, a new company was registered under the name of K G Gluco Biols Ltd. for the manufacture of products derived from maize in partnership with the Karnataka State Industrial

Investment and Development Corporation Ltd.

Also another company under the name of

Vegepro Food & Feeds Ltd. was incorporated as a joint venture with Pradeshiya Industrial and Investment Corporation of U P Ltd. For implementaion of the soyabean project.

1987 As at 30th June, Glaxo Group Ltd., U.K., which is a wholly owned subsidiary of Glaxo Holdings Ltd., held 40% of the paid-up capital of the Company. The name of the company was changed to Glindia Limited with effect from 11th March. During the year family product division introduced two new products viz., Farex-Veg and Farex Egg. The facilities for the manufacture and packing of dextrose monohydrate based products at Aligarh were modernised and commissioned during the year. Letters of intent were received for the manufacture of salbutamol, an antii-asthmatic and labetalol, an anti-hypertensive and their formulations.

1988 The Company launched in the market, `Fortun', a latest generation cephalosprim injectible antibiotic. Production of the bulk drug `Ibuprofen' had to be stopped due to reduction in its price by more than 50%. The company issued 20,00,000 - 14% redeemable secured non-convertible debentures of Rs. 100 each in order to meet normal capital expenditure and for working capital requirements.

1989 With effect from 17th July, the name of the Company was again changed from Glindia Ltd., to `Glaxo India Limited.' During the year two new products namely, complan mango and lime sip were manufactured.

1990 During the year three products launched viz., Vitamilk, Minitmilk and Rozana. In July Company made an issue of commercial paper for Rs.10 crores.

1991

In January, company again issued commercial paper for Rs.9.8 crores.

1992 During the year company received industrial license for expansion of its anti-ulcerant bulk drug ranitidine to 75 tonnes at Ankleshwar and for manufacture of beclomethasone inhalers at Nasik. During the same year company sold the trade investment in Vegepro Foods & Feeds Ltd. During the year company made three issues of commercial paper each for Rs.15 crores. Despite a prolonged strike at Ankleshwar, it was possible to maintain a limited supply of bulk drugs manufactured at that factory. New products launched during the year included MINIT MILK, a dairy whitener, GLACTO I & II, infant milk food formulae, FAREX RICE and AQUAVEETA an oral rehydration product. The Company has an R&D Centre which is recognised by the Department of Scientific and Industrial Research.

1993 During the year a formal agreement was signed with H J Heinz Company of USA for the disposal of the family product division. In July, the company issued 40,00,000 equity shares of Rs.10 each at a premium of Rs.55 per share on rights basis in the proportion of 1:5 and 897,960 equity shares of Rs.10 each at a premium of Rs.55 per share were issued to Glaxo Group Ltd. UK on preferential basis in the Ratio 1:5. Another 2,44,875 equity shares of Rs.10 each at a premium of Rs.55 per share were offered to the employees and 2,54,865 shares of Rs.10 each at a premium of Rs.55 per share were offered to Glaxo Group Ltd. UK were offered to maintain their shareholdings at 51%. The Company allotted 44,89,800 new equity shares of Rs. 10 each for cash at a premium of Rs. 65 per share to Glaxo Group Ltd., U.K. to enable them to increase their shareholding in the Company from 40% to 51% of the equity share capital.

During the year, the Company made three issues of Commercial Paper, each for Rs. 15 crores and for 90-day tenure.

The Company has recently received from the Credit Rating Information Services of India Ltd. (CRISIL) the highest rating of P1+ for its Commercial Paper programme. The Company has received an Industrial Licence for substantial expansion for its anti-ulcerant bulk drug Ranitidine to 75 tonnes at Ankleshwar. The Company has also received a Letter of Intent for manufacture of Beclomethasone Inhalers at Nashik.

1994 During the year company sold the family product division to H J Heinz India Pvt. Ltd., for a total consideration of Rs.180 crores. 298,87,500 bonus shares issued to the existing shareholders in ratio of 1:1. CETZINE, second generation anti-histamine and a research product of UCB Belgium, was launched during the year under a co-marketing arrangement. The Company launched two anti-TB products, ZUCOX & RIZAP, with the novel concept of a patient-friendly compliance kit. BECORIDE and BRCORIDE JUNIOR which are used in the management of Asthma were also introduced.

1995 Glaxo India has entered into a marketing tie-up with Grampian Pharmaceuticals, a UK-based veterinary products maker. The company has struck a major deal with the UK-based 160 million pound company, Grampian Pharmaceuticals, which will boost Glaxo's presence in the veterinary market. The deal is part of tripartite agreement between Glaxo, Grampian and Global Parenterals, a Bangalore based Pharma Company. Global Parentals has put up a modern manufacturing facility for producing Grampian's products. The Grampian range of veterinary products is likely to contribute around 6 to 7 per cent to the total AFC business of Glaxo which has a large product range for cattle and poultry segments. Glaxo entered fisheries market a few years ago through a collaboration with a Canadian company to market Ovaprim, a fish spawning agent. Grampian products will complement Glaxo's range in these three segments of the market.

During the year, oral liquids dpt. was substantially upgraded and the newly designed and reconstructed tablet facilities at Worli started production during the end of the year. The Company issued Bonus Shares in the ratio of 1:1 which were allotted on 21st February. The Company has launched special Respiratory, Dermatology and Hospital Sales teams to further sharpen its focus in these areas. ZUCOX PLUS Tablets, PHEXIN KID Tablets, CETZINE Syrup, CEFTUM 500 TABLETS, ZOVATE-S, SALBUTAMOL RESPIRATOR SOLUTION and LIVOGEN WITH ZINC capsules were launched to improve market share in the relevant therapeutic segments. The Ankleshwar factory was awarded the Glaxo Wellcome plc Chief Executive's Trophy 1994 for Innovative Health, Safety and Environmental Management Strategies.

1996 To improve the position of the Company in Oncology and Dermatology segments, specialised Onco and Dermo teams were formed. In order to tap the potential of the vast growing rural market, a Rural Marketing Team has been set up. The Company was awarded The Marketing Company of the Year award by the Institute of Marketing and Management, New Delhi. The Company was also adjudged the most respected pharmaceutical company of India by An opinion poll conducted by BW/Marg. Chemical factories at Thane and Ankleshwar are being expanded to meet demand for local production and for exports. The Thane Factory was awarded the Glaxo Wellcome plc Chief Executive's Trophy for 1995 for Elimination of Hazards through Innovative Process Development.

1997 During the year chemical factories at Thane and Ankleshwar are being expanded to meet additional demand for local and export market. Glaxo India Ltd has won The Analyst Award 1996 (category 1-large), awarded by the Institute of Chartered Financial Analysts of India (ICFAI). Glaxo (India) has emerged as the largest pharma company in India after its merger with Burroughs Wellcome with a combined market share of 7.2 per cent. In recent years, Glaxo has restructured its operations and ownership structure.

Glaxo India Ltd is reconsidering its agreement with Jayant Vitamins Ltd for manufacturing Celin range of Vitamin C bulk drugs.

1998 During April, the company issued 20, 00,000 -14% redeemable secured non-convertible debentures of Rs. 100 each in order to meet normal capital expenditure and for working capital expenditure. The shares of Glaxo, Burroughs Wellcome, Smithkline Pharma and SmithKline Consumer zoomed on news of merger moves on the Mumbai and National stock exchanges. The four pharma stocks were among the top 10 gainers in BSE's specified section. Glaxo will be able to launch two products from Takeda, the largest Japanese drug company. One is an anti-cancer product and the other Idebenone, used in the treatment of memory loss and stroke. Shares amounting to two per cent of the Rs.59.77-crore equity of Glaxo India changed hands on 21.05.98 on the Mumbai Stock Exchange and the National Stock Exchange. Glaxo India has finalised a marketing tie-up through its Qualigens Fine Chemicals (QFC) division with UK-based Oxoid Ltd. QFC will market a range of Oxoid's culture media and microbiological products. Qualigens Fine Chemicals (QFC), a division of Glaxo India, has entered into a tie-up with the U.K.-based Oxoid Ltd, for making a range of culture media and microbiological products.

1999 Pharma Majors Ranbaxy Laboratories Ltd and Glaxo Ltd announced an agreement for comarketing of an advanced dosage form of the antibiotic cephalexin. Glaxo India Ltd, a 51% subsidiary of Glaxo Wellcome, will now be in a position to market the whole range of Bristol-Myers products consisting of medicines, beauty care, nutritional and medical devices. Ranbaxy Laboratories and Glaxo are considering the option of extending their co-marketing alliance to select overseas markets.In March, the two pharma majors had enteredinto an alliance for co-marketing an advanced dosage form of the antibiotic, Cephalexin, in the country. Ranbaxy Laboratories Ltd has signed an agreement with Glaxo for the co-marketing of an advanced dosage form of the antibiotic, Cephalexin.

Glaxo (India) entered into an agreement with ICI (India) to acquire five veterinary brands with a turnover of about Rs 10 crore.

2000 Glaxo Group Ltd. holds 30,485,250 No. of equity shares of Rs 10 each of the company. This holding is 51 per cent of the total paid-up share capital of the company. The company has a 40 per cent share of the domestic TB market. Glaxo India's veterinary division Glaxo Agrivet Farm Care (AFC) has tied up with the .8-billion Merial, the world's largest animal health company, to market the later's poultry vaccines in the country. Merial is a joint venture between American major Merck & Company Inc and Rhone Poulenc SA. Crisil today reaffirmed the FAAA (highest safety) rating assigned to a fixed deposit (FD) programme of Glaxo India and a P1+ (very strong rating) assigned to its Rs 45-crore commercial paper (CP) programme. The company has launched Hepitec 100 mg for chronic Hepatitis B. Glaxo has just introduced Seretide (a combination of salmeterol xinafoate and fluticasone propionate in a single inhaler-the Accuhaler-for treating asthma. Glaxo India Ltd., India's leading pharmaceutical company has tied up with Goodhealthnyou.com to spread awareness on asthma. Glaxo India, the number one pharmaceutical company by market share, has sold its 30 year old brand Anovate to an unlisted company, US Vitamins (USV) The Company has launched a 24-hour phone-in helpline to clarify HIV/AIDS-related doubts in the city. Glaxo India Ltd. has signed a memorandum of understanding with E-Merck India to sell the rights, title and interest in the registered trademark of Livogen, a liver tonic, as part of its restructuring plan. Glaxo India Ltd. has sold its `Livogen' brand to E Merck India Ltd. for a total consideration of Rs 8 crore. In Dec. 2000, Glaxo Wellcome plc and SmithKline plc have merged under an agreement. They now form a new company named GlaxoSmithKline plc. The new company is well-placed to respond to the healthcare challenges of the twenty first century with market leadership in major

therapeutic categories. With this merger, Glaxo India is now an affiliate of GlaxoSmithKline plc, which holds 51% of the equity.

2001 Glaxo and Allergan India have entered into a marketing alliance for the former's eye-care brand, `Catalin'. The Company is with SmithKline Beecham Pharmaceuticals (India) Ltd. & also to approve the scheme of amalgamation and other related matters. Glaxo (India) and SithKline Beecham Pharmaceuticals (India) have proposed to merge their Indian operations allotting one equity share of GIL for every two shares of SBPI held by the shareholders. Pharmaceutical major Glaxo India has recieved the Drug Controller General of India's nod for its recombinant technology-based Hepatitis-C vaccine. The amalgamation of Glaxo India Ltd and SmithKlineBeecham Pharmaceuticals India Ltd received approvals from the Karnataka High Court and Bombay High Court on September 27th. The company has launched Celex, a clarithromycin anti-infective formulation under licence from and manufactured by Abbott India, Ventoride for asthma (combination of salbutamol and beclamethasone) and fluticasone cream, a corticosteroid. It has adopted the acquisition route, amongst others, to grow. It acquired two groups. The Burroughs Wellcome India Ltd. (BWIL) merger came about after the parent was merged with Glaxo Plc. Subsequently, it acquired the Biddle Sawyer Group, the approval for which was received. It has a wide product range that covers around 14 therapeutic groups. However, the benefits of the wide coverage are offset by about 70% of the company's products falling under the drug price control order (DPCO), shackling realisations. MAX GB Ltd is a 50:50 joint venture between Max India and Gist Brocades of Netherlands, and Glaxo India Ltd, have entered into an alliance for manufacturing cephalexin from the drug intermediate, 7 ADCA. In an agreement reached between the two partners, Max GB will supply 7 ADCA to the company, who will convert it into bulk Cephalexin for the joint venture company at one of the company's manufacturing facility, which will be made available for this purpose.

The companies - Trident Chemical Works, Meghdoot Pvt Ltd and Biddle Sawyer are currently 100% subsidiaries of the company. It has not been decided whether the companies are to merge between themselves prior to merger with the company, or be merged individually. By virtue of its acquisition of the BS group, it will be able to launch two products from Takeda, the largest Japanese drug company. One is an anti-cancer product and the other Idebenone, used in the treatment of memory loss and stroke. In October 2001, Smithkline Beecham Pharmaceutical (India) Ltd was merged with Glaxo India Ltd to become GlaxoSmithKline Pharmaceuticals Ltd.

2002 In March 2002, the Board of Directors of the Company approved the Scheme of Arrangement for the Demerger of the marketing undertaking of Meghdoot Chemicals Ltd (wholly owned subsidiary) into the company and the simultaneous amalgamation of Croydon Chemical Works Ltd (wholly owned subsidiary) with the Company. Glaxosmithkline Pharmaceuticals Ltd has shut down the business of its wholly-owned subsidiary, Biddle Sawyer Ltd., the main reason for closure was high manufacturing costs. R R Bajaaj appointed as Additional Independent Director of GlaxoSmithkline Pharma. GSK has informed the Bombay Stock Exchange on October 11 that at the meeting of its board held on October 10, R R Bajaaj was appointed as additional independent director with effect from October 10, 2002. GlaxoSmithkline Pharmaceuticals Ltd has informed BSE that GlaxoSmithkline plc, has announced that Mr V Thyagrajan Vice-Chairman & Managing Director of the company has been appointed as Senior Vice President and Area Director, Asia Pacific wef January 01, 2003. Brings down the total number of stockists from 6,000 to 4,500, and reduces the number of C&F agents from 60 to 31. -Completes VRS programme at its Worli Factory -Worli Factory ceases operations -Wins case against govt on alleged overpricing charge -Shailesh Ayyangar, former executive vice-president, sales and marketing, appointed as country head of French drugmaker Sanofi-Synthelabos Indian arm

-GlaxoSmithKline Pharmaceuticals (GSK) decides to obtain raw materials like viles, syringes and bottles from its Indian subsidiary -Rs 252-crore plant for producing Horlicks, GlaxoSmithkline (GSK) Consumer Healthcare Ltd.'s flagship product, launched at Sonepat, Haryana -Zyban, the buproprion brand, acquires more than 50 pc of anti-smoking drug segment -Puts its manufacturing unit at Ankleshwar in Gujarat on the block -Patent Controller of India rejects the application ofGlaxo-SmithKline Pharmaceuticals for exclusive marketing rights (EMR) on the company's anti-diabetic drug Rosiglitazone and its derivative, Rosiglitazone Maleate -Company enters into a Memorandum of Understanding dated August 12, 2002 pursuant to which the Company agrees to sell its entire shareholding (including the shares held by its nominees) in Meghdoot Chemicals Ltd (MCL) together with its right, title and interest for the manufacturing business of MCL to Maneesh Pharmaceuticals Pvt. Ltd. -Patents Controller of India rejects GlaxoSmithKline Pharmaceutical's (GSK) application for exclusive marketing rights for Avandia, an anti-diabetic drug for type-2 diabetes, which is owned by the firm's British parent -Pulls Ranbaxy, Novartis and others to court for using stolen bacteria from GlaxoSmithKline to make generic versions of the antibiotic, Augmentin -Pall Pharmalab Filtration, subsidiary of US-based Pall Corporation, ties up with Qualigens Fine Chemicals of GlaxoSmithKline to market its analytical chemistry products used for sample preparation and mobile phase filtration -Offers VRS for workers at Ankleshwar manufacturing unit -Signs agreement with Glenmark Pharmaceuticals Ltd. for sale of Ankleshwar unit -Glenmark Pharmaceuticals Ltd (GPL) purchases GlaxoSmithkline Pharmaceuticals Ltd's (GSK) Active Pharmaceutical Ingredient (API) manufacturing facility. The acquisition also includes movable and immovable property, located at Ankleshwar for Rs 14 crore -Scheme of Arrangement between Croydon Chemical Works Ltd and Meghdoot Chemicals Ltd with the Company approved by the Bombay High Court -S Kalyanasundaram appointed as MD of Glaxosmithkline Pharmaceuticals 2003

-Files a special leave petition (SLP) before the Supreme Court, against Karnataka High Court order which contends that prices of controlled medicines notified by the government would apply to all batches of medicines, old and new, with the retail dispenser, irrespective of the date they were released to the market -Focuses on around 30 brands to power growth and sidelines low-margin products, including those falling under price control -Sells its office premises located at Cunnigham Road, Bangalore to Dawat-E-Hadiyah Trust, Mumbai, for a consideration of Rs 231 million -Lowers AIDS drug prices in USA -Allows Novartis to sell generic Augmentin -Delhi High Court orders KPS Enterprises not to manufacture and market their products under the brand name Astocalcium or Astocalcium Vet or any mark deceptively similar to Glaxo's Ostocalcium or Ostocalcium Vet -Sues Dr. Reddy's Laboratories Ltd. for patent infringement -Ranbaxy Laboratories Ltd and GlaxoSmithkline plc (GSK) have entered into a drug discovery and clinical development collaboration covering a wider range of therapeutic areas.

2004 -Dr. Ashoke Banerjee has been appointed as an Executive Director in the vacancy caused by the resignation of Mr. N. Ranthi Dev, with effect from January 1, 2004. -GlaxoSmithKline Pharmaceuticals Ltd sells plot in Worli for Rs 107.6 crore to I-Ven Realty Ltd, a joint venture between ICICI Venture Funds Management Company Ltd and Oberoi Constructions. -Glaxosmithkline has launched a pivotal Phase III study of a new cervical cancer vaccine -Augmentin becomes the No. 1 pharmaceutical brand, as rated by IMS -Launches Priorix (measles, mumps, rubella vaccine) -Receives prestigious Multi Cultural Diversity Award from GlaxoSmithKline Consumer Healthcare Limited, U.S. for the Famili Vaccines programme, selected from 83 entries received from markets world-wide

2005

-Glenmark signs marketing agreement with US firm -Foundation stone laid for GSK vaccines plant at Nashik -Launch of oral contraceptives: Elogen (desogestrel and ethinylestradiol) and Zerogen (progesterone only pill) -Enters the diabetes therapeutic segment with the launch of Windia (rosiglitazone) and Windamet (rosiglitazone and metformin)

2006 -Augmentin grows to a Rs. 100 crore brand -In-licensing alliance with Eisai Pharmaceuticals, Japan and launch of Parit (rabeprazole; gastrointestinal therapy area) -GlaxoSmithKline divests its Agrivet Farm Care (AFC) Business

2007 -Launches Carzec (carvedilol) and Zemetril (cefprozil) -GlaxoSmithKline divests its Qualigens Fine Chemicals (QFC) Business -Launches Arixtra (fondaparinux sodium), an antithrombotic drug used in treating Deep Vein Thrombosis (DVT) and Acute Coronary Syndrome (ACS)

2008 -GlaxoSmithKline (GSK) Pharma has entered into a pact with Japan's Astellas Pharma Inc for exclusive rights to sell the latter's injectable anti-fungal agent Micafungin, branded Mycamine, in the local market. -GlaxoSmithKline (GSK) Pharma has inked a co-promotion agreement with Daiichi Sankyo India Pharma Ltd for anti-hypertensive drug Olmesartan Medoxomil and its combination products. -Launches Boostrix (Tetanus Toxoid, Reduced Diphtheria Toxoid and Acellular Pertussis Vaccine, Adsorbed), Infanrix (Diphtheria and Tetanus Toxoids and Acellular Pertussis Vaccine, Adsorbed) and Rotarix (Human Rotavirus Vaccine, Live Attenuated) vaccines

-Launches Tykerb, a drug in combination with capecitabine, is indicated for the treatment of patients with advanced or metastatic breast cancer whose tumours overexpress HER2+/neu (ErbB2+) and who have failed on prior therapy including trastuzumab -Launches Benitec (Olmersartan) and Benitec-H (Olmesartan + Hydrochlorothiazide) an antihypertensive drug in-licensed from Daiichi Sankyo Company Limited, Japan

2009 - GlaxosmithKline cinched a deal with Dr Reddy's to manufacture over a 100 products. -Launches Cervarix [Human Papillomavirus (Types 16 and 18)] vaccine -Launches Dermocalm for treatment of Dry Itchy skin -Commences Albendazole production in Nashik to treat Lymphatic Filariasis

Mission and Vision Mission: Our global quest is to improve the quality of human life by enabling people to do more, feel better and live longer. Vision: We want to become the indisputable leader in our industry-not simply in term of size, but in how we use that size to achieve our mission and improve the quality of human life. Becoming the indisputable leader in our industry means conquering the challenges that face us an industry, and as a global society. We at GSK dedicate ourselves to delivering innovative products that help million of peoples around the world live longer, healthier and happier live. Products The company's products include:
y y y

Advair Alben Amerge

y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y

za Alli Amoxil Aquafresh Arixtra Arranon Augmentin Avandia Avodart BC Powder Beano Beconase Biotene Boniva Boost Ceftin Coreg Coreg CR Dexedrine Flixonase Geritol Gly-Oxide Goody's Powder Horlicks Imitrex Keppra Lamictal Lanoxin Levitra(Bayer healthcare) Lovaza Lucozade

y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y

Macleans (toothpaste) Nicoderm Nicorette NiQuitin Pandemrix Panadol Panadol night Parnate Parodontax Paxil Promacta Ralgex Relenza Requip Ribena Sensodyne Serlipet Setlers Tagamet Treximet Tums Trizivir Twinrix Tykerb Valtrex Ventolin HFA Veramyst Vesicare Wellbutrin Zantac Zofran

Zovirax

Organisation Structure
Managing director : Chairman Of the Board: Vice Chairman Of the Board: Director : Director : Director : Director : Director : Director : Director : Director : Hasit Joshipura Deepak Prekh V. Thyagrajan P. Nayak R.Bajaaj Nihal Kaviratne V.Naraynan Simon Harfrod D.Sundaram P.V.Bhide A.M. Nimbalkar

 Marketing mix

GlaxoSmithKline plc (LSE: GSK NYSE: GSK), often abbreviated to GSK, is a global pharmaceutical, biologics, vaccines and consumer healthcare company headquartered in London, United Kingdom. It is the world's third largest pharmaceutical company measured by revenues (after Johnson & Johnson and Pfizer). It has a portfolio of products for major disease areas including asthma, cancer, virus control, infections, mental health, diabetes and digestive conditions. It also has a large consumer healthcare division which produces and markets oral healthcare products, nutritional drinks and over-the-counter medicines, including Sensodyne, Horlicks and Gaviscon. Its primary listing is on the London Stock Exchange and it is a constituent of the FTSE 100 Index. It has a secondary listing on the New York Stock Exchange. Della Reese, the jazz singer and actress, seemed a natural choice to star in ads for Avandia, when Glaxo signed her on in 2004. Not only does Ms. Reese have broad appeal, known most recently

for her role in the television series. Touched by an Angel, but she has Type 2 diabetes. And while she was Avandias main spokeswoman, from 2004 to 2006, Ms. Reese represented a important target in Avandias marketing: African-American consumers. Because Type 2 diabetes is a disease twice as likely to affect black Americans as non-Hispanic white people in this country, Avandias maker, GlaxoSmithKline, has long placed a marketing focus on African-Americans much more so than any other maker of diabetes drugs, according to industry executives. In the eight years that Avandia has been for sale, becoming a $3-billion-a-year worldwide best seller, Glaxos African-American focus in the United States has won the company praise in the advertising industry and from some black doctors. They credit the campaigns for putting a friendly face on a drug for a disease that too often goes untreated, particularly among minority groups. But now that Avandia is dogged by safety questions a Congressional hearing today will address concerns that the drug may increase the risk of heart attacks some black advertising executives wonder if Glaxos advertising strategy could end up working against the company.

Avandia has such a large African-American niche, Id expect competitors now to step up their outreach to African-Americans, said Howard Buford, the founder and chief executive of Prime Access, a multicultural advertising agency in New York. Alternatives to Avandia include Byetta, which is marketed by Amylin Pharmaceuticals and Eli Lilly. It and others could benefit if doctors started encouraging patients to drop Avandia. So far, though, many doctors seem to be playing wait and see.

Avandias main competitor in this country is a drug called Actos, which had a comparable number of total prescriptions written last year, about 11.3 million, according to Verispan, a health care information company based in Yardley, Pa. Actos is made by Takeda Pharmaceuticals of Japan, which does not conduct significant consumer advertising in the United States. A spokesman for Takeda said the company had no plans to increase its advertising to consumers in light of safety concerns about Avandia. So, the competitive issue raised by Mr. Buford could be largely theoretical.

Still, Mr. Buford said it would be incongruous if Glaxos black outreach did come back to haunt the company, because Glaxo had worked to overcome what he described as a deep distrust of the drug industry among many African-Americans, particularly older people. He said the skepticism traces in part to the notorious Tuskegee syphilis experiment from the 1930s to 1970s in which the federal government allowed black sharecroppers to go untreated in order to study the diseases physical effects.

There is still a lot of distrust, Mr. Buford said. And yet, some other ad industry executives said that because Glaxo had helped raise diabetes awareness in recent years among AfricanAmericans, the company might now have a reservoir of good will that it could draw upon. For them to advertise a drug to African-Americans that could help save lives and provide information, that is important, said Jo Muse, the chairman and chief creative officer of Muse Communications, a multicultural agency in Hollywood. Thousands of African-American men, in particular, have been affected in a positive way by direct-to-patient advertising. A spokeswoman for Glaxo said she could not comment on the companys marketing strategy. Ahead of todays hearing by the House Committee on Oversight and Government Reform where Moncef Slaoui, Glaxos chairman of research and development, is scheduled to testify, the company has been scrambling to address safety questions about Avandia that were raised on May 21 in a New England Journal of Medicine article.

The company has posted a video on its Web site featuring an executive, Dr. Anne Phillips, addressing the health concerns. And on Tuesday, the company ran a full-page ad in more than a dozen newspapers, including The New York Times, with an open letter to patients from Dr. Ronald L. Krall, its chief medical officer.

As leaders in diabetes, we understand that managing your Type 2 diabetes is not easy, the letter said, in part. We also understand the confusion and concern you may have experienced following recent press coverage about the safety of Avandia. GlaxoSmithKline stands firmly behind Avandia. Glaxo, which spent a total of $25.7 million on Avandia advertising, last year, according to TNS Media Intelligence, has by no means ignored potential white customers.

After all, black Americans represent only about 13 percent of the population. And although they are more likely to develop Type 2 diabetes, the number of non-Hispanic white Americans in this country with the disease outnumbers African-American patients, 13.1 million to 3.2 million, according to the American Diabetes Association.

Latinos have been another important group for diabetes drugs, and an audience that Glaxo has also made a target with some of its Avandia advertising. The American Diabetes Association does not have national figures on the percentage of Type 2 diabetes patients in this country who are Hispanic. Caucasians featured in Avandia ads have included the actress Jane Seymour, who was in a 2001 television spot, just a few years after she starred in the TV series Dr. Quinn, Medicine Woman.

And currently, a Glaxo-sponsored Web site about health, www.stepitupdiabetes.com, features the white fitness coach Bob Harper, who is the exercise guru on the NBC reality series. The Biggest Loser. Various Avandia advertisements depicting everyday people feature Caucasians. But there is no disputing that Glaxo has made a special effort to reach African-Americans with its Avandia advertising, ad executives say. You see in the broad diabetes category an acknowledgment or nod toward the African-American community, but GlaxoSmithKline was definitely a leader and one of the first groups to really use a more targeted effort, said Croom Lawrence, the vice president for strategy and insight at RTC Relationship Marketing, a direct marketing advertising agency in the WPP Group. That was really the face of this brand.

And it was a brand-building effort that at least until now had been considered generally effective, as evident in the awards for multicultural marketing in 2001 and 2002 that Glaxo won at the DTC National Conference, an annual conference about marketing drugs to consumers.

Generally among marketers, efforts to reach black audiences often include ads featuring AfricanAmericans that run in magazines like Ebony, Essence and Jet or on the television network Black Entertainment Network. But those ads do not always run in mainstream media.

With Avandia, however, ads featuring a black couple or a black grandfather with his grandson also ran in mass-market magazines like Sports Illustrated, Readers Digest and Ladies Home Journal. Direct mail and outdoor advertising have also promoted Avandia to potential black patients. And African-Americans appear as prominently, if not more so, than any other group on Avandias Web site. Whenever safety questions start clouding a drug, pharmaceutical companies tend to expend most of their crisis-control effort trying to persuade current customers to keep refilling their prescriptions. Any thought of acquiring new patients tends to be deferred until the controversy is resolved. And so, for Glaxo, maintaining Avandia customers will probably involve continuing its strategy of mainstream ads, with an African-American emphasis, outside ad executives said. And some advertising industry executives say Glaxo may now be able to build on a reputation with Avandia for having provided important information to black consumers. This is an audience that has not had the benefit of advertising in the past, said Byron E. Lewis, chairman and chief executive of the Uniworld Group, an agency in New York that created the multicultural ads for Avandia from 2001 to 2004. Pharmaceutical companies in general have been seeing a higher return on direct-to-consumer advertising for minority groups, because many of the people in those audiences might not otherwise go to a doctor about a problem, said Mr. Muse of Muse Communications. Dr. Gerald L. DeVaughn, president of the Association of Black Cardiologists, said he was awaiting more evidence before deciding whether to advise his patients to stop taking Avandia in light of the concerns about potential cardiac risks. Patients have not been asking him about the news reports about the suspected risks, Dr. DeVaughn said.

While some ad executives said the new concerns about Avandias level of cardiac risk may cause Glaxo to lose customers, others said that the company could hold onto many of its black customers if Glaxo is now seen as having effectively communicated the pros and cons of Avandia over the years and having encouraged people to seek out medical help in their decisions.

None of this exists in a vacuum, said Mark A. Robertson, the director of business development for UniWorld, the former Avandia agency. Glaxo has always promoted and motivated people to see their doctors to ask what is best for them.

Promotional strategies We're proud of our products, and believe in selling them with truth and integrity. Our pharmaceutical sales representatives present the benefits and appropriate use of medicines to physicians, pharmacists, and other healthcare professionals. To enable our reps to present these medicines properly, we provide in-depth science training; then we give our reps entrepreneurial responsibilities to help them succeed. We're dedicated to their continual learning and development, which may be one reason why they're consistently ranked in the top five worldwide by a leading survey of physicians. Our pharmaceutical business function focuses on several major therapeutic areas, including disorders of the central nervous system, respiratory and metabolic systems, and infectious diseases. We're also a leader in medicines that treat depression, diabetes, asthma, migraine, HIV, and cancer.

 R and D activities
We have a dedicated drug discovery unit in Tres Cantos, Spain which leads drug discovery initiatives in malaria and tuberculosis. The dedication of an entire research unit to these diseases allows the concentration of resource and activity in the area and maximises our efficiency in making available new medicines and vaccines. The unit at Tres Cantos employs 50 dedicated full-time scientific staff, whose skills include chemistry, biology, biochemistry, toxicology, cytotoxicology, assay development, and in vivo and in vitro screening - basically all the skill sets needed to assess disease targets and find drug candidates for further development. The Metabolic and Viral Diseases Centre of Excellence in Drug Discovery based in Research Triangle Park, North Carolina, leads the effort in discovering new HIV/AIDS therapies. Our Biologicals (vaccines) facility in Rixensart, Belgium is involved in the discovery and development of vaccines including a malaria vaccine, a TB vaccine and an HIV vaccine.

Once a drug candidate has been identified, clinical development is continued at the most appropriate place in the global R&D network, depending upon the requirements of the particular development program. Use of our wider network for clinical development capitalises upon the advantages of scale offered by the R&D organization and gives access to vital clinical expertise, external collaborations and networks. For example, many clinical trials are conducted in developing countries, because that is where the patients and local healthcare professionals with relevant clinical expertise reside.

CHAPTER -11 CADILA HEALTHCARE

Company Profile:

Cadila Healthcare Limited

Type

Public

Industry

Pharmaceuticals 1954

Founded

Headquarters

Ahmedabad, India

Key people

Pankaj Patel, Chairman INR 3 billion (2010)

Revenue

Net income

11000 (2010)

Employees http://www.zyduscadila.com/

Website

'Cadila Healthcare' is an Indian pharmaceutical company head quartered at Ahmedabad in Gujarat state of western India. The company is the fifth largest pharmaceutical company in India, with US$290m in turnover in 2004. It is a significant manufacturer of generic drugs. Cadila Pharma has developed a drug named Roserin which has reduced the cost of curing TB by 33%.

 History (Mission, Vision)

Cadila Laboratories was founded in 1952 by Ramanbhai Patel (19252001), formerly a lecturer in the L.M. College of Pharmacy, and his business partner Shri Indravadan Modi. The company evolved over the next four decades into one of India's established pharmaceutical companies. In 1995 the Patel and Modi families split, with the Modi family's share being moved into a new company called Cadila Pharmaceuticals Ltd. and Cadila Healthcare became the Patel family's holding company. Cadila Healthcare did its IPO on the Bombay Stock Exchange in 2000. Its stock code on the Bombay exchange is 532321. In 2001 the company acquired another Indian pharmaceutical company called German Remedies. On June 25, 2007, the company signed an agreement to acquire 100 per cent stake in Brazils Quimica e Farmaceutica Nikkho do Brasil Ltda (Nikkho) for around 26 million dollars. 1995 The Company was incorporated as Cadila Healthcare Private Ltd. on May 15, under the company act, 1956 and subsequently the Company was converted into a public company and then renamed as Cadila Healthcare Ltd., effective from Juy 17, 1996.

The name Cadila shall be used only for Cadila Healthcare Limited (Zydus Cadila), Cadila Pharmaceuticals Limited (CPL) and Cadila Laboratories Limited (CLL). The Company is Flagship Company of Zydus Cadila Group. The Company's operations include pharmaceuticals (human formulations, veterinary formulations and bulk drugs); diagnostics, herbal products, skin care products and other OTC products.

The Company has 6 subsidiaries Indon Healthcare Ltd., Zydus Pharmaceuticals Ltd., Zudus Aqrovet Ltd., Zoom Properties Pvt. Ltd., Zydus International Pvt. Ltd., Ireland and Zydus Healthcare S.A. (Pvt) Ltd., South Africa.

Zydus Cadila signed an agreement with Anda Biologicals, France, for Marketing and distribution of diagnostic kits. And to appoint a maximum of two distributors in India.

1996 Zydus Cadila signed an agreement with Centeon L.L.C., USA and Centeon Pharama GMBH, Germany for Exclusive rights to sell and distribute plasma products in India and Nepal.

In May, Zydus Cadila signed an agreement with Acta Services Srl., Rome for distribution of Diagnostic instrument Acto 1 Analyser manu. By Acta. In June, Zydus Cadila signed an agreement with China Resources Gulin Pharma, Works, China, for exclusive supply of Artesunate Granules to Zydus Cadila. In July, Zydus Cadila signed an agreement with Shimizu Chemical Corporation, Japan, for Marketing of specified products by Zydus Cadila in India. 1997 A Scheme of Arrangement and Amalgamation was sanctioned by honorable High Court of Gujarat by order passed on May 2 issued on August 16th. Zydus Cadila would issued 1,48,423 fully paid-up equity shares of Rs 10/- each to the shareholders of Patel Group in exchange for the Assets transferred to them of Transferor companies. Zydus Cadila has also tied-up with Regional Research Laboratory Jammu, to develop Enzymatic Resolution for Paroxetine HCL and some other enzymatic products.

1998 In February, Zydus Cadila signed an agreement with Apotex SA Pty. Ltd. for manufacturer of Amoxycillin, Ampicillin, Co - trimoxazole, paracetamol. Zydus Cadila has also entered into a joint venture with Korea Green Cross Corporation, Korea, to manufacture and market recombinant Hepatitis B vaccine in India.

1999 In April, Zydus Cadila signed an agreement with Ethical Holdings Plc, Beta Pharma, and Ethical Pharma South America S.A. for Know-how Licence Agreement to manufacture, marketing and sell transdermal pharmaceutical formulations. In September, Zydus Cadila signed an agreement with Cherry Valley Farms Ltd., UK for supply of vaccine eggs. Zydus Cadila has entered into a

50:50 joint venture with Byk Gulden of Germany, a renowned, research-oriented Pharma company of Germany and the world-wide patent holder of the novel proton pump inhibitor, Pantoprazole. During the year under report, the Company had issued 2,00,000 12% Cumulative Redeemable Preference shares of Rs. 100/- each fully paid to the members of the Company, which are redeemable at par on 1st July,

2001. During the year under report, Indon Healthcare Limited and Zydus Aqrovet Limited, have become wholly owned subsidiaries of the company. During the year under report, the Company has undertaken to set up a new project for manufacturing the bulk drug-Losartan at Ankleshwar. The Company laid the foundation for a new feed supplement plant, at Vatwa. The feed

supplement for poultry and cattle has been developed by tie company's R & D bio-tech department.

The Company has set up a joint venture company to manufacture the break-through molecule Pantoprazole. The Company is also undertaking discovery research projects with Byk Gulden as a pan of the Joint Venture. The Company has entered into a technical-cum-marketing tie-up with the Swiss Serum and Vaccine Institute, Berne, Institute to launch a range of vaccines in India. The Company has entered into a joint venture with the Haffkine institute to undertake research in the field of human vaccine and equine sera. A new State-of-Art Research & Development centre being set-up with the capital cost of approximately Rs. 25.00 crores in the Village: Moraiya. Taluka: Sanand, Dist.: Ahmedabad.

During the year under report the Company has launched several new products in the market : Vac Typh, HB Vac, Xylodac, Losartan, Losacar was the first to be launched in India & Matergam P. The Company has set up manufacturing premises to manufacture the feed supplement - Improval at GIDC Vatwa. Shir Pranlal Bhogilal was appointed as an additional Director of the Company with effect from 15th December, 1998 pursuant to Section 260 of the Companies Act, 1956. Shri Mukesh M. Patel Director of the Company retires by rotation and he is eligible for reappointment. A new welfare policy has been introduced for employees of the Company.

2000 The Company is setting up wholly owned subsidiaries abroad and plans to acquire overseas companies to market products. The Company has entered into License Agreement for phased Manufacture and technical know-how transfer with Swiss Serum and Vaccine Institute, Switzerland for the manufacture of Purified Cuck Embroy Vaccine. The Country's fifth largest pharmaceutical company is considering offering stocks to its employees through an employees' stock option scheme.

 Products
From nine pharmaceutical production operations in India as well as a major R&D operation Zydus Cadila develops and manufactures a large range of pharmaceuticals as well as diagnostics, herbal products, skin care products and other OTC products. The company also makes EverYuth Naturals Walnut Scrub & Ultra Mild Scrub -India 's leading scrub brand , EverYuth Naturals Golden Glow Peel-Off-the no. 1 in the peel-off category and a face wash range .It is also the maker of Sugar Free, India's most popular artificial sweetener, and Nutralite, India's most popular cholesterol-free margarine. A result of in-house Research and Development initiatives and collaborations with worldrenowned institutions; Cadila Pharmaceuticals' product basket includes: branded and generic formulations covering more than 50 therapeutic segments; Biotechnology products and diagnostic kits, Plant Tissue Culture, etc. In the services realm, the gamut of offerings covers Clinical Research, Contract Research & Manufacturing, etc. Cadila Pharmaceuticals is the only Indian manufacturer of Streptokinase and Hyaluronic Acidbased products. Hyaluronic Acid containing products include Visial for Ophthalmology and Halonix for intra articular use. Streptokinase is used in management of heart attack. The company also manufactures rabies immunoglobin and diagnostic kits for detection of HIV and HCV. Cadila Pharmaceuticals is working in areas of novel vaccine adjuvants, Sepsis management and therapeutic vaccine for pancreatic cancer.

Group companies also manufacture Tablet Presses, Capsule filling machines, pharma machinery parts and hospital disposables like gloves, etc. To the World from Cadila Pharmaceuticals 1. World's first Sparfloxacin Eye Drops (Scat Eye Drops) 2. World's first parenteral formulation of Rabeprazole (Rabeloc I.V.) 3. World's first Probiotic combined with anti-infective agent (Symbiotic) 4. World's first manufacturer of a unique immunomodulator (IMMUVAC) 5. World's first whole blood, rapid HIV detection kit (NEVA HIV) Champion Brands:

ENVAS Cadila Pharmaceuticals makes India's No.1 ACE inhibitor, Envas, which has been listed among the country's top 50 Pharma Brands, across all categories. Other CPL brands in top 300 brands of Indian Pharmaceutical Industry are Aciloc and Haem-Up.

ACILOC A Ranitidine preparation, Aciloc is one of India's best selling brands in this category.

LMX, SYMBIOTIK, CLAX Antibiotics with live Lactobacilli combination, LMX, SYMBIOTIK, CLAX are the first brands of its kind in India, for which Cadila Pharmaceuticals has applied for a worldwide patent. This unique innovation has already been granted Indian, UK and US, Eurasian & Sri Lankan patents.

RABELOC, ACILOC RD, ZASO, MIXULIN, MONTELAST AND NODON is some of the best selling brands in their categories.

CPL is the first company in India to introduce RABEPRAZOLE and FOSINOPRIL formulations.

 R and D activities

Spread over more than 1,05,000 sq. ft. area, Cadila Pharmaceuticals R & D facilities, recognized by the Department of Science & Technology, Government of India, are manned by a 150-strong scientists pool. A centralized Quality Control & Analytical Research Laboratory has been set up to meet the domestic and international quality standards. The Company has expanded operations by building further on already existing set-up by investing in new premises, to include modern, state-of-theart amenities.

One of the few companies in the country carrying out collaborative research, Cadila Pharmaceuticals taps the best scientific talent in the country and has collaborations with more than 30 leading Research and Development centers in India.

CHAPTER-12 AVENTIS PHARMA  History (Mission, Vision)

1956 The Company was incorporated as Hoechst Fedco Pharma Pvt. Ltd., on 31st March. The word Private' was deleted on 19th April, 1961 as the Company was deemed to be Public Limited Company under Section 41-A of the Act. The Company manufactures bulk drugs, drug intermediates, veterinary formulations and pesticides. They established with financial and technical collaboration of Farbwerke Hoechst AG (now Hoechst AG), West Germany, which is one of the largest chemical and pharmaceutical manufacturing groups in the world. Under the Licence and Technical Collaboration Agreement dated 11th July, made between Hoechst AG and the Company, the Company was inter alia granted the right to use the word `HOECHST' in its corporate name and the use of the trade marks owned by Hoechst AG in India in respect of various pharmaceutical preparations which would be manufactured and marketed by the Company in India on the terms and conditions mentioned in the said Agreement. 10,000 Pref. and 10,000 No. of Equity shares of Rs 100 each issued to promoters. 5000 Pref. and 9,867 No. of Equity shares as Rights in proportion to holdings.

1957 The Company set up a manufacturing unit at Mulund, for production of basic drugs. In also manufactures intermediates including some of the latest discoveries in the Hoechst Group involving high technology and application of sophisticated modern manufacturing techniques. It Also supplies basic drugs to other pharmaceutical companies in India as well as to Europe.

1961 28,133 No. of Equity shares issued as Rights.

1967

37,800 bonus equity shares issued, propn., 3:5. In June and August, 17,000 No. of Equity shares issued as Rights.

1969 57,222 Bonus equity shares issued in the proportion 49:100.

1974 1,64,990 Bonus equity shares issued in the proportion 94:100,

1979 1,70,256 Bonus equity shares issued in the proportion 1:2.

1982 The Company set up a manufacturing unit at the Kandla Free Trade Zone to cater to the increasing export market for its products. 2,55,384 Bonus equity shares issued in the proportion 1:2.

1984 The main objects of the public issue was to achieve the voluntary dilution of Hoechst AG's holding in the Company from 50% to 40% and also to provide the requirements of long term resources for capital expenditure to be incurred on account of normal replacement and renovation of capital assets, continuous modernisation and upgradation programmes to achieve efficiency and use of the lates techniques and methods of manufacture to impart high quality and sophistication to the product range. 1,19,538 No. of equity shares issued (Prem. of Rs 100 per share) in July, of which 3,800 shares to business associates and 9,600 shares to employees including working directors) were reserved for preferential allotment. The balance 1,78,138 shares offered for public subscription.

1986

The Land and building water works, plant and machinery of the Company were revalued as on 31st December. A new company under the name Hoechst Nepal Pvt. Ltd., was incorporated as a subsidiary of the Company in February in Nepal.

1987 A new extension of the Haemaccel plant at Mulund and a multi-purpose fine chemicals plant for bulk drugs at Ankleshwar went into commercial production. During the year, an industrial licence was obtained for the manufacture of Petoxifylline (TRENTAL), 2 tonnes of Ciclopiroxolamine (BATRAFEN), an antifungal drug and 5.30 lakhs TPA of diagnostic reagents at Ankleshwar.

1988 Industrial licence was, received for the manufacture of 2 lakh doses of purified chick embroy cell culture vaccine (Human rabies vaccine) known as RABIPUR. The Company obtained Central Government approval under the M.R.T.P. Act, 1969 to the establishment of a new undertaking for producing, processing and selling hybrid and high - yielding varieties of seeds. The Company issued 2,30,000 - 14% secured redeemable non-convertible debentures of Rs 100 each on private placement basis. These are redeemable at a premium of Rs 5 per debenture on 1st February,

1989 The Company re-entered the antifugual market with the introduction of BATRAFEN which was an original research product of the Company's collaborators Hoechst AG, West Germany. The Company introduced a new insecticide HOSTATHION. FLAVOMYCIN, a modern performance promoter for poultry was launched during the year. The Pharma formulation plant was commissioned at Ankleshwar in October; liquid injectible automatic filling line was commissioned in Mulund in September.

1990 New pharma products introduced were TARIVID (a modern oral antibacterial), AVIL retard (sustained release formulation for treatment of allergies) and TABLON (a formulation containing Ibuprofen for the treatment of pain). In co-operation with Boots Pharmaceuticals Ltd.,

a new anti-arthritic drug `FLUROFEN' was introduced. A letter of intent were received for BARALGAN Ketone and fomulations, Glybenclamide and formulations, Hostathion technical and formulations, Fenbendazole substance and formulations and Ethion technical and formulations at the Company's works in Ankleshwar. Industrial license was received for manufacture of LASIX retard besides receiving endorsement for manufacture of 13 tonnes of AVIL maleate.

1991 A new herbicide Klass (Diuron) was introduced during the year. `Butox' and `Tolzan' were the new products introduced for external and internal parasites. Industrial licences were received for manufacture of Tonophosphan, Berenil and Fenbendazole and their formulations at Ankleshwar. Letters of intent were received for manufacture of Novalgin tablets and Roxatidine and their formulations at Ankleshwar and Lasiride and Betrafen and their formulations at Mulund. The Company revalued its free-hold land, buildings etc and the net surplus of Rs 470,733,868 arising out of it was transferred partly to capital reserve (Rs 149,489,737) and to Revaluation reserve (Rs 321,244,131).

1992 A modern anti hypertensive `Rene Dil' and latest anti-ulcer drug. `Rotane' were introduced during the year. Industrial licences were received for manufacture of Baralgan, Glybenclamide, and their formulations, Roxatidine, Lasiride and formulations and Novalgin tablets at Ankleshwar and Batrafen formulations at Mulund. Letters of intent were received for manufacture of Ranipril and formulations, Tabalon tablets and Tarivid tablets at Ankleshwar and cosavil syrup and Streptase formulations at Mulund. An additional super centrifuge and auxilliary equipments for the PCEC plant in Ankleshwar were installed and commissioned.

1993 19,38,411 No. of Equity shares of Rs 10 each issued at a premium of Rs 60 per share to Hoechst AG to raise its capital from 40% to 51%.

1994

A product cardare, an ACE inhibitor was introduced. An oral typhoid vaccine called typhonal was also introduced. Candur-R and antirabies vaccine was launched during the year. With effect from 1st April, the Scheme of Arrangement was sanctioned for transfer of the company's agrochemicals division to Hoechst Schering Agrofoo Ltd. In terms of the scheme every

shareholder of the Company holding 50 shares, were allotted 10 shares of Rs 10 each of Hoechst Schering Agrofoo Ltd. without any payment. Roussel India, Ltd. in which the Company held 4,18,560 No. of equity shares out of 6,27,840 No. of equity shares of Rs 100 each issued is a subsidiary of the Company. 115,15,311 shares issued at a bonus shares in proportion 1:1.

1995 The new products such as ACE inhibitor, Cardace etc. were attributed. The Company launched INSUMAN (human insulin) apart from Floxidin a new broad spectrum antibiotic. Due to the technical difficulties, the Company had to close both foot and mouth disease vaccine and Candur DHL plants. Roussel India Ltd., the Company's subsidiary was amalgamated with the Company. Accordingly the name of the Company was changed to Hoechst Marion Roussel Ltd., effective 1st January, 1996.

1996 `Insuman' an anti-diabetic drug was launched. The production of `Baralgan' was suspended as per the Govt. order. The capacity of Rabipur plant at Ankleshwar was expanded from 1.8 million doses to 3.5 million doses per annum to meet the increased demand for the product. The Company proposed to set up a joint venture company with Chiron Corporation, USA for manufacture of vaccines of Chiron group. The company proposed to take up 49% of the share capital of the said company.

1997 The Company proposed to introduce four new products viz. Frisium (anti-epileptic). Amaryl (oran anti-diabetic) cefrom (4th generation cephalosporin) and Targocil (Glycopeptide). The German drug multinational Hoechst Roussel is buying out the equity stakes of Colour Chem and two individual entrepreneurs in its Indian joint venture, Hoechst Roussel Vet Private Limited, to

Convert it into a fully-owned subsidiary. Currently, Hoechst Roussel Vet GmbH, along with its subsidiary Hoechst Schering Agrevo Ltd, holds 51 per cent equity in the joint venture. HoechstHuabei Pharmaceuticals Co. Ltd is a 50:50 Greenfield joint venture between Hoechst Marion Roussel and North china Pharmaceutical Group Corporation (NCPC). Hoechst Marion Roussel recently forged a manufacturing joint venture for vaccines with the Chiron group in India.

1998

Hoechst Marion Roussel (HMR), a 51 per cent subsidiary of Hoechst Marion Roussel, Germany, has a significant presence in pharmaceutical and agrochemicals industries. The new joint venture company will manufacture the anti rabies vaccine Rabipur and other vaccines of the Chiron Group. HMRL had purchased the 33.33 per cent shareholding of Roussel Laboratories UK in Roussel India, to make the latter a 100 per cent subsidiary of HMRL. The company is all set to transfer its animal healthcare business to a joint venture company, in which HMR will have a 49 per cent stake and Chiron Corporation of the US 51 per cent. Hoechst proposes to enter into a joint venture with Chiron Corporation of USA for the manufacture of vaccines.

1999 Hoechst Marion Roussel has launched a voluntary retirement scheme (VRS) at its Mulund factory in Mumbai.

2000 The Company plans to introduce variants of brands like Allegra and Tavanic in the domestic market. The Company has re-designated Ramesh Subrahmanian as deputy Managing director of the company with effect from 1st July. The Company and Rhone-Poulenc Rorer (India) Ltd. two separate Indian subsidiaries of the French Pharmaceuticals and Chemicals major, Aventis SA, are implementing employee stock option schemes as part of the parent company's worldwide strategy. Hoechst Marion Roussel Ltd. will acquire 29,55,608 No. of Equity shares of RhonePoulenc Rorer at Rs 15 per share. Hoechst Marion Roussel will now be known as Aventis Pharma even as it aims to maintain a leading position within the Indian pharma sector.

2002 Aventis Pharma Ltd has informed that the Board of Directors of the company has, at its meeting held on October 30, 2002 appointed Mr W Wagner as a Director of the company in the casual vacancy caused by resignation of Mr J Silvestre. Bombay High Court sanctions amalgamation of Rhone-Poulenc Rorer with Aventis Pharma Ltd. Aventis Pharma increased its sales to Rs.261cr by 16% as against the corresponding period of the previous year.

2003 Aventis Pharma Ltd has filed a lawsuit against alleging patent infringement on Six Orange book patent. CRISIL withdrew its AAA rating for the Rs.30cr non-convertible Debenture issue of Aventis Pharma Ltd. Mr.M.G. Rao and Dr.S Bhattacharya has been appointed as Alternate Directors to Dr.Carlo de Notaristefani and Mr.W.W.Wagner. Aventis Pharma has appointed Mr.Ramesh Subramanian, MD as the Vice-president of the Respiratory Sales for North-East and Mid-Atlantic US.

2004 Aventis Pharma Ltd has informed that the Company had entered into a Joint Venture (JV) Agreement in April 1998 with Chiron Corporation, USA (Chiron) for the manufacture of the anti-rabies vaccine, Rabipur and for the grant of distribution rights in India to the Company for certain Chiron vaccines.

2007 Aventis Pharma Limited has appointed Mr. Eric Le-Bris as an Additional Director. Aventis Pharma Limited has appointed Mr. S.C. Ghoge as Alternate Director to Mr. Eric Le-Bris. Mr. Ghoge being an employee of the Company has been appointed a Wholetime Director.

2008 Mumbai: Aventis Pharma has launched insulin drug Lantus in a prefilled disposable pen called Solostar.

Our Vision Our vision is to lead the way in the well-being sector. Our Mission We aim to be the countrys most valued supplier and provider of pharmaceuticals, healthcare products and health information in order to improve quality of life and deliver outstanding value to our customers and stakeholders. Our Values Leadership we always seek for the right blending of business practices and processes through training and motivation that enable our people to commit and respond with passion, conviction and innovation to the challenges of todays healthcare market. Quality We are committed to excellence. We do our jobs right every time and we strive for continuous improvement. We work with global pharmaceutical laboratories such as Sanofi Aventis, Novartis, Bayer Healthcare, Bayer Schering Pharma, Merck Consumer, Cephalon, 3M, Alcon, SSL International, Ciba Vision, Adcock Ingram, Aspen Pharmacare, Boiron, Milupa and Nutricia. Integrity We take responsibility for our actions and follow through on commitments.

 Organization structure

CEO Chairman of the Board

Chris Viehbacher Serge Weinberg

Director Director Director Director Director Director Director Director Director Director Director Director Director

Uwe Bicker Lord Douro Gerard Van Kemmel Klaus Pohle Jean-Rene Fourtou Claudie Haignere Christian Mulliez Suet-Fern Lee Carole Piwnica Robert Castaigne Thierry Desmarest Lindsay Owen-Jones Igor Landau

 Marketing mix
Getting your brand noticed early in its lifespan is crucial to pharma product position strategy, said Corinne Le Goff, VP, marketing, at Sanofi-Aventis. The most money we can make at the beginning, the better, Le Goff said at the Center for Business Intelligence's 3rd Annual Pharmaceutical Market Research Summit in Philadelphia. Marketing strategy should begin in tandem with early-stage drug development, although investitures should be kept at a minimum until proof of concept is established, she said. Average marketing research budgets were $2.5 million in 2007, down 22.7% from 2006, according to Le Goff. If it won't cost you much to be wrong, you should not spend much on market research.

Le Goff cited the growing importance of managed care organizations and pharmacy benefits management, and noted that government is now the largest payer for pharmaceuticals. She also questioned sales reps ability to impact individual physicians, given limited access. Are we really teaching physicians in four minutes? wondered Le Goff. Regarding DTC TV campaigns, marketers should test at least three executions per winning concept, said Le Goff. If we put everything in one bucket we think patients will be market drivers solelythat may not be true. Aventis Pharma India has reported excellent results, with a 33.5 per cent growth in its net profit to Rs 40.6 crore for the December quarter. While other multinational players have been reporting sluggish sales in domestic markets, Aventiss marketing strategy has helped it to grow its net sales by 15.11 per cent in the December quarter. Profit growth has also been aided by the companys other income rising 93.5 per cent to Rs 6 crore in Q4 CY04 this income stream has grown due to increased interest and dividend income. The company has been focusing on expanding the proportion of its highmargin strategic brands like Allegra (an anti-allergic medication) and Cardace (medication for hyper-tension and cardio-vascular segment) in its sales. Its portfolio also includes medications like Avil and Soframycin that have become quasi-OTC brands, thereby not requiring substantial promotional expenses. Also, a close alignment with its parents portfolio has helped to ensure regular product launches in the domestic market Lantus, for the diabetes segment, is one example. Regular product launches are an essential element to build sales momentum. As a result, operating profit grew 31.67 per cent to Rs 60.7 crore in Q4 CY04 and operating profit margins have also expanded 397 basis points to 30.64 per cent. Going forward, the company is expected to play an expanded role in its parents global operations, as well as launch products from its parents portfolio. The stock was up 2.29 per cent in Friday trade and currently trades at about times 18 estimated.

 R and D activities
Sanofi Aventis' R&D center in China has become operational, expanding the company's presence in the country. The facility was set up in 2005 and has already been involved in several global registration studies for a selection of the company's products including Lantus, Plavix, dronedarone, idrabiotaparinux and rimonabant. Sanofi reportedly made an investment of $90m to enhance capacity at its manufacturing facility in Beijing in April 2009, which according to Chris Viehbacher, CEO of the company, was evidence of Sanofis belief in the strategic importance of the Chinese market. Thomas Kelly, vice president of Sanofis operations in China, said: "We hope to become the first multinational drug company that completes truly home-grown research activities and will cooperate with local partners." Marc Cluzel, vice president of R&D at Sanofi, said: It is expected to accelerate the development of therapies and health solutions for the mass population in the region. Reportedly, the French drugmaker is also pursuing R&D activities in Russia, South Korea and India as part of its ongoing strategy to expand in biologics, generics and emerging markets.

CHAPTER-13 IPCA PHARMA  History (Mission, Vision)

1949 Ipca Laboratories Ltd. was incorporated on 19th October, in Mumbai, under the name `The Indian Pharmaceutical Combine Association Limited'. The Company manufacture pharmaceutical products such as tablets, capsules, vials and ampoules. The Company was promoted by a group of medical professional viz. Dr. N.K. Chaina, Dr. A.M. Desai, Dr. N.S. Tibrawala, K.M. Shroff, S.F. Kirawal, U.H. Dalal and K.B. Mehla.

1964 The name was subsequently changed to `Ipca Laboratories Ltd.' on 6th August 1964. The name was further changed to `Ipca Laboratories Private Limited' on 13th January 1966. The name of the company was again changed to `Ipca Laboratories Ltd.' on 9th August 1988. The company became a Public Limited Company on 24th March, 1993.

1975 The management of the company was taken over by Amitabh Bachchan, Ajitabh Bachchan, Jaya Bachchan, M.R. Chandurkar, and P.C. Godha.

1994 The Company undertook to set up a modern plant at Athal, Silvassa, for manufacture of pharmaceutical formulations. Plant and machinery comprising blenders, auto tablet coaters, fluid bed dryers, etc., procured indigenously. The Tatlam bulk drug unit capacity was increased to 500 TPA.

1995 9,225,000 No. of equity shares allotted to promoters, friends, relatives and associates (of these, 225,000 were Rights shares at a premium of Rs 120 per share). During February, the Company

issued 3,275,000 No. of equity shares of Rs 10 each at a premium of Rs 120 per share of which 150,000 shares reserved for allotment on a preferential basis to employees of the Company (all were taken up). Balance 3,125,000 shares issued to the public (all were taken up).

2002 R S Hugar, former managing director of Global Trust Bank, has joined the board of directors of Ipca as non-executive chairman with effect from June 11, 2002.

2003 Launched new domestic marketing division, ACTIVA dedicated to Rheumatology Care. First Company in India to have such division for marketing superspeciality molecules. Launched new domestic marketing division, Hy Care dedicated to Cardio-Diabetology segments. Wholly owned subsidiary Ipca Pharmaceuticals Inc. incorporated in United States of America. Wholly owned subsidiary Ipca Laboratories (UK) Ltd. Incorporated in United Kingdom. Forbes, a leading US business magazine, selected among its top 200 successful, rising companies outside USA, with sales under USD 1 Billion.

2004 Members of the Company have approved the amalgamation in the nature of merger of Innotech Pharma Ltd., a 100% subsidiary of the Company, with Company. Ipca Laboratories Ltd. unveils novel injectable antibiotic combination of cefotaxime sodium with sulbactam sodium for the first time in the country under the brand name 'Sultax'. Received 'Lifetime Achievement Award' for the year2002-03 from from CHEMEXIL (Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council)for export promotion over the years. Commissioned new formulation plant at Silvassa. Forbes Asia, a leading US business magazine selected Ipca, for the second consecutive year as one among the first 200 'Best under a Billion Company' in Asia

2005

Ipca Laboratories Ltd has informed that the Company has entered into a Joint Venture (JV) agreement with Chongqing Holley Holding Company Ltd of China. Merger of Innotech Pharma

Limited with Ipca Laboratories Limited in August, 2005. Acquires Cardiac brand ISORDIL from Wyeth Limited. Forbes Asia, a leading US business magazine selected Ipca, for the third consecutive year as one among the first 200 'Best under a Billion Company' in Asia.

2006 Ipca Laboratories Enters into Strategic Alliance with Ranbaxy Pharmaceuticals Inc., for the US Market. Ipca Laboratories launches fixed dose ACT combination and stops manufacturing of single ingredient Oral Artemisinin derivatives. Ipca's new plant at Dehradun commenced operation on 5th May, 2006

2007 Ipca - Ranbaxy Alliance received U.S. FDA marketing approval for Atenolol Tablets. Ipca Laboratories granted US FDA approval for Hydroxychloroquine sulfate tablet. Ipca Laboratories Acquisition of 100% shareholding of formulation dossier registration holding companies in Australia. Ipca launched eighth domestic marketing division, 'Altus' which caters to intensivists and surgeons. Ipca has been awarded by Forbes Inc., as one of the 'Best under a Billion' Forbes Global's 200 Best Small Companies, 2007. In the past, company has received same award for three consecutive years' 2003, 2004 and 2005.

2008 Ipca Laboratories receives US FDA approval for Propranolol Hydrochloride Tablets. Tonira Pharma's Nandesari unit (API plant at Baroda) receives US-FDA approval. Ipca Laboratories Ltd has re-appointed Mr. Premchand Godha as the Managing Director of the Company for a further period of 5 years w.e.f. April 01, 2008. Ipca-Piparia, formulation manufacturing unit receives MHRA-UK approval. This is the 3rd plant after Athal and Kandla receiving this qualification. WHO prequalify Ipca's dossier of ARTESUNATE + AMODIAQUINE Co Blister making Ipca the 2nd company in the world and the first Indian company to receive this prequalification.

2009 Ipca received Best Patent Award during the year 2007 - 08

2010 Ipca Laboratories Ltd has informed that the Board of Directors of the Company at its meeting held on January 21, 2010, inter alia, appointed Mr. Anand T Kusre as a Director of the Company.

Mission statement We will consider and support Corporate Social Responsibility in our operations and administrative matter and we will integrate our business values and operations to meet the expectations of our share holders, customers, employees, regulators, investors, suppliers, community and environment with best interest.

Vision statement To become a fully integrated pharmaceutical company with global prominence.

 Organization structure
BOARD OF DIRECTORS: R.S.Hugar Premchand Godha M.R.Chandurkar Executive Directors: A.K.Jain, T.Ramachandran, Babulal Jain, Dr.V.V.Subba Rao, V.A.Gore Audit Committee: Babulal JainDr. V.V.Subba raoV.A.Gore Corporate Management Team J.L.Nagori President- operation Dr.Ashok Kumar President- R & D (chemical) M.D.Sharma President- Domestic Marketing Y.K.Bansal President- R & D (formulation) Prakash Shanware President- HR Pranay Godha President- Bulk Activity Chairman Managing director Managing director

Gen.Rejesh Srivastava Sr. vice President- Commercial N.Guhaprasad Sr. vice President- Int. Marketing

 Products

1. TRIMETHOPRIM 2. TRIMETHOXY BENZALDEHYDE 3. TRIMETHOXY TOLUENE 4. 6 BROMO METHOXY NAPHTHALENE 5. PARA METHOXY ACETOPHENONE 6. PARA BROMO TOLUENE 7. VERATRIC ACID 8. ACETYL YARA YARA 9. ANISOLE 10. DL - NAPROXEN

 R and D activities
Ipcas Research and Development comprises of two sections: 1. Active Pharmaceutical Ingredients and Drug Intermediates 2. Formulation Development Both the departments are supported by the Analytical Development cells which are fully equiped with all modern instruments (like NMR, LC-MSMS, GCMS etc) required to carry out research on day-to-day basis. Units are geared to continuously innovate and remain competitive by developing/acquiring abilities to find simple and effective solutions to practical problems, solutions which are free from Patent Infringement issues.

1. Active Pharmaceutical Ingredients/Drug Intermediates: The Active Pharmaceutical Ingredients/Drug Intermediates Research and Development department at Mumbai is supported by two more units located at Ratlam and Indore. All the R&D units are recognized by the Department of Science and Industrial Research, Government of India. Research & Development units at Ratlam and Indore are also supported by facilities required for scale up of the processes from grams to kilo as well as to Pilot level. Strengths: Innovative chemistry-driven process research leading to the generation of non infringing routes for APIs/Drug Intermediates and Intellectual Property. Ipca has highly qualified and experienced groups of people capable of handling patent-related issues, which includes various aspects of patenting and patent evaluation. Impurity Profiling of APIs: This includes identification and characterization as well as structural elucidation of unknown impurities (present in APIs), followed by their synthesis. Analytical developments: New method developments. Method validations for getting products registered in Regulated Markets. Process Research: Process development/improvements to make products competitive and profitable in the long run by giving major emphasis on: Non-infringing processes Alternative cost effective routes increasing plant friendliness. Improving selectivities/reducing impurity levels by sensitive chemistry inputs. Reducing effluent generation. 2. Formulation Development: Our Formulation Development Laboratory located at Mumbai has been gearing up for a state-of the-art R&D facility (in line with the US-FDA requirements). The current R&D activities are also approved by the Department of Science and Technology, Government of India. The laboratory is well equipped with various ultramodern equipments and technologies required for conducting high quality research activities. Some of the equipments available in the R&D are: y y High Sheer Mixer (GMP model Fluid Bed Drier

y y y y y y y y y y y y y

Fluid Bed Processor Ganscoata Walk-in Stability Chambers Dissolution Apparatus with intrinsic dissolution assembly Bilayer Tablet Compression Machine Equipments for liquid orals and semi-solid Hard gel capsule facility Blister packing machine with Alu-Alu facility Press-cota Roll compactor Pelletisation facility Facility for Effervescent tablets (low RH area) Reverse laminar flow

The key activities of R&D-Formulations are: Novel Drug Delivery System (NDDS): R&D in this area attempts to improve the efficiency with which the medicine is absorbed in the body. Novel Drug Delivery Systems (NDDS) efforts are directed towards: Cardiac Care Antiinfectives Antidiabetics. Ipcas R & D laboratory has filed patents across the world for products based on the NDDS. Ipcas strength in this segment of R&D puts the company in an excellent position to compete in the growing markets for generic drugs in Europe and USA. Abbreviated New Drug Application (ANDA): The filing of ANDAs received a major boost after Ipca opened its wholly owned subsidiary in New Jersey, USA. The company will now be working on ANDAs to address the growing opportunity in USA. Ipcas research endeavors are well supported by worldclass infrastructure comprising: y y y y Analytical Research Clinical Research International Regulatory Affairs Corporate Quality Assurance

Intellectual Property Cell

 Promotional strategies

Kandla (Gujarat) Operational since 1993. Facility approved by UK-Medicines and Healthcare products RegulatoryAgency(MHRA),Australia-Therapeutic Goods Administration (TGA),South AfricaMedicines Control Council (MCC), Brazil-Brazilian National Health Surveillance Agency (ANVISA), Oman-Ministry of Health(MOH), Uganda-National Drug Authority (NDA) and Tanzania-Food & Drugs Authority (FDA). Formulations manufacturing plant for betalactam tablets, capsules and dry powders. Ratlam (Madhya Pradesh) Active Pharmaceutical Ingredients Plant Operational since 1985. Facility approved by US-Food and Drug Administration (FDA), Australia-Therapeutic Goods Administration (TGA), Geneva-World Health Organization (WHO) and Europe-European Directorate of the Quality of Medicines (EDQM). Formulations Plant Operational since 1983. Formulations plant manufacturing Tablets, Liquids and Injectables. Facility approved by Brazil-Brazilian National Health Surveillance Agency (ANVISA), South Africa-Medicines Control Council (MCC), Geneva-World Health Organisation (WHO), Uganda-National Drug Authority (NDA), Oman-Ministry of Health (MOH) and Tanzania-Food & Drugs Authority (FDA). Silvassa (Union Territory of Dadra & Nagar Haveli) Operational since February, 2004. Formulations plant manufacturing tablets. THE-INDIAN-MARKET:

A country of 1.06 billion people spanning a whole subcontinent, across 3,287,590 sq. km, 29 states and 6 union territories, speaking 15 differentofficial languages, with myriad distinct cultures, and a heritage that goes back 5000 years, India is a country of diversity and depth like no otherin the world. This is Ipcas domestic market Our domestic product range spans Formulations, Active Pharmaceutical Ingredients (API) and Drug Intermediates across therapeutic segments:Antimalarials, Antiemetics, Antibiotics, Analgesics, Antiarthritics, Antidiabetics, Cardiac Care, Cough & Cold Therapy, Dermatology, andNeuropsychiatry segments. Ipca manufactures over 150 formulations in virtually every dosage form: tablets, capsules, oral liquids, dry powdersfor suspension, and injectables (liquid and dry). Our finished formulations are available in over 400,000 retail shops, catered to by a network ofover 1500 wholesalers. 1500 sales and marketing personnel service over 200,000 doctors across the country. DOMESTIC APIs AND DIs: Ipca has been playing a leading role in the domestic Active Pharmaceutical Ingredients (APIs) and Drug Intermediates (DIs) market, with over 20 years of experience in the Antimalarial and Antihypertensive therapeutic segments. We are the firstmanufacturer in India for APIs like Atenolol, Pyrantel Pamoate and Hydroxychloroquine Sulfate. Our domestic pharmaceutical customers includeAlembic, Bayer, Cipla, Dr.Reddys, Merck, Nicholas Piramal, Pfizer, Ranbaxy, and Wockhardt, among others. FORMULATIONS MARKETING The speciality-focussed restructuring of Ipcas domestic marketing strategy has given birth to 8 selfadministered marketing divisions. Results are encouraging; in 2007, our domestic formulations business has grown at the rate of 16%against an industry growth of 14% during the same period (ORG-IMS). Brands like Glycinorm, HCQS, Lariago, Malirid, Movon, Pari,Perinorm, Ramcor, Solvin, Sultax, Tenolol, Tenoric, and Zerodol have become brand leaders in their respective therapeutic segments,and 4 of these are also rated among the Top 300 Indian Brands (all categories) by ORG-IMS. DOMESTIC DIVISION : Pharma Division

The largest of Ipcas divisions, handling the largest number of brands, this division manages our newer Antimalarials, Antihypertensives,Antibacterials, Non Steroidal Anti-Inflammatory Drugs (NSAIDs) and Cough preparations. Recently it launched Zerodol (Aceclofenac), a countryfirst. Some of the other leading brands managed by this division are: Tenolol (Atenolol), Larither (Artemether), Roxeptin (Roxithromycin), andTenoric (Atenolol + Chlorthalidone). I ntima Division Ipcas second largest division, Intimas marketing focus is on established Anti-Infectives, and mature brands of Ipca in the Antimalarial andAntiemetic segment. Of the several brands that Intima handles 2 are ranked among India s Top 250 brands (cross category). Some of Intimasleading brands are: Lariago (Chloroquine Phosphate), Perinorm (Metoclopramide), Pacimol (Paracetamol), Nemocid (Pyrantel Pamoate) andEltocin (Erythromycin Estolate). 3C Division The focus of this division is on Cardiovascular and Antidiabetic segments and it currently manages 24 brands. Through the introductions ofnewer dose and dosage forms, the division focuses on fulfilling the need for dose-titration, which is an essential component in the managementof diabetes and cardiovascular diseases. Some of the leading brands managed by it are: Glycinorm (Gliclazide), Glycinorm-M (Gliclazide +Metformin), Lisoril (Lisinopril), Simlo (Simvastatin), Calchek (Amlodipine), Piomed (Pioglitazone), Metagard CR (Trimetazidine ControlledRelease) and Xtor (Atorvastatin). BIONOVA Division Bionovas focus area is Dermatology. It has already made its mark by leading in the oral antiacne segment with brands like Azifast (Azithromycin) and Acutret (Isotretinoin). Also offered are fast growing brands like Leset (Levocetirizine) and Nipcan (Fluconazole

INNOVA Division Innova marks Ipcas entry into the Indian Neuropsychiatry segment. Already to its credit are segment leaders such as Pari (Paroxetine), Sove(Zolpidem), and Ozapin MD (Olanzapine Mouth Dissolving). Recently, Innova launched Pari CR India s first Paroxetine with Controlled ReleaseTechnology, an international patent for which have been filed. ACTIVA Division

A super-speciality division, Activa was the countries first Rheumatology and Orthopaedic focused division. It markets a growing portfolio ofdynamic brands, including: HCQS (Hydroxychloroquine Sulfate), Folitrax (Methotrexate), Saaz (Sulfasalazine), and Movon (Aceclofenac), thefirst Aceclofenac in India . Today, Activa is a leader in its segment with a 39% market share, and is also Ipcas fastest growing division. HYCARE Division The marketing focus of this division is on the growing need for Cardiac and Antidiabetic products. HyCare markets all major molecules for themanagement of cardiovascular disease, Type II diabetes and its related complications. Glyree (Glimepiride), Glyree-M (Glimepiride + Metformin)and Zilast (Cilostazole) are some of the leading brands of HyCare. ALTUS Division Ipca's youngest division, Altus caters to the need of intensivists, both surgical and non-surgical, with a basket of oral and injectableAntibiotics like Keftragard, Keftragard V, Lactagard, Lactagard 2:1, Tazofast, Primegard, Keftra, Foloup, Supraheal and Sultax(Sulbactum + Cefotaxime), a world first. The 7-S-Model---------------------IPCA LABOTARIES LIMITED: The 7-S-Model is better known as McKinsey 7-S. This is because the two persons who developed this model, Tom Peters and Robert Waterman, have been consultants at McKinsey & Co at that time. They published their 7-S-Model in their article Structure Is Not Organization (1980) and in their books The Art of Japanese Management (1981) and In Search of Excellence (1982).The model starts on the premise that an organization is not just Structure, but consists of seven elements: Those seven elements are distinguished in so called hard Ss and soft Ss. The hard elements (green circles) are feasible and easy to identify. They can be found in strategy statements, corporate plans, organizational charts and other documentations.The four soft Ss however, are hardly feasible. They are difficult to describe since capabilities, values and elements of corporate culture are continuously developing and changing. They are highly determined by the people at work in the organization. Therefore it is much more difficult to plan or to influence the characteristics of the soft elements. Although the soft factors are below the surface, they can have a great impact of the hard Structures, Strategies and Systems of the organization. Division

Innova marks Ipcas entry into the Indian Neuropsychiatry segment. Already to its credit are segment leaders such as Pari (Paroxetine), Sove(Zolpidem), and Ozapin MD (Olanzapine Mouth Dissolving). Recently, Innova launched Pari CR India s first Paroxetine with Controlled ReleaseTechnology, an international patent for which have been filed. Division A super-speciality division, Activa was the countries first Rheumatology and Orthopaedic focused division. It markets a growing portfolio ofdynamic brands, including: HCQS (Hydroxychloroquine Sulfate), Folitrax (Methotrexate), Saaz (Sulfasalazine), and Movon (Aceclofenac), thefirst Aceclofenac in India . Today, Activa is a leader in its segment with a 39% market share, and is also Ipcas fastest growing division. Division The marketing focus of this division is on the growing need for Cardiac and Antidiabetic products. HyCare markets all major molecules for themanagement of cardiovascular disease, Type II diabetes and its related complications. Glyree (Glimepiride), Glyree-M (Glimepiride + Metformin)and Zilast (Cilostazole) are some of the leading brands of HyCare. Division Ipca's youngest division, Altus caters to the need of intensivists, both surgical and non-surgical, with a basket of oral and injectableAntibiotics like Keftragard, Keftragard V, Lactagard, Lactagard 2:1, Tazofast, Primegard, Keftra, Foloup, Supraheal and Sultax(Sulbactum + Cefotaxime), a world first. The 7-S-Model---------------------IPCA LABOTARIES LIMITED: The 7-S-Model is better known as McKinsey 7-S. This is because the two persons who developed this model, Tom Peters and Robert Waterman, have been consultants at McKinsey & Co at that time. They published their 7-S-Model in their article Structure Is Not Organization (1980) and in their books The Art of Japanese Management (1981) and In Search of Excellence (1982).The model starts on the premise that an organization is not just Structure, but consists of seven elements: Those seven elements are distinguished in so called hard Ss and soft Ss. The hard elements (green circles) are feasible and easy to identify. They can be found in strategy statements, corporate plans, organizational charts and other documentations.The four soft Ss however, are hardly feasible. They are difficult to describe since capabilities, values and elements of corporate culture are continuously developing and changing. They are highly

determined by the people at work in the organization. Therefore it is much more difficult to plan or to influence the characteristics of the soft elements. Although the soft factors are below the surface, they can have a great impact of the hard Structures, Strategies and Systems of the organization. Description: The Hard Ss Strategy Actions a company plans in response to or anticipation of changes in its external environment. Structure Basis for specialization and co-ordination influenced primarily by strategy and by organization size and diversity. Systems Formal and informal procedures that support the strategyand structure. (Systems are more powerful than they aregiven credit) THE SOFT Ss

Style / Culture The culture of the organization, consisting of two components: Organizational Culture: the dominant values and beliefs, and norms, which develop over time and become relatively enduring features of organizational life. Management Style: more a matter of what managers do than what they say; How do a companys managers spend their time? What are they focusing attention on? Symbolism the creation and maintenance (or sometimes deconstruction) of meaning is a fundamental responsibility of managers. Staff The people/human resource management processes used to develop managers, socialization processes, ways of shaping basic values of management cadre, ways of introducing young recruits to the company, ways of helping to manage the careers of employees Skills The distinctive competences what the company does best, ways of expanding or shifting competences Shared Values / Superordinate Goals

Guiding concepts, fundamental ideas around which a business is built must be simple, usually stated at abstract level, have great meaning inside the organization even though outsiders may not see or understand them. Effective organizations achieve a fit between these seven elements. This criterion is the origin of the other name of the model: Diagnostic Model for Organizational Effectiveness. If one element changes then this will affect all the others. For example, a change in HR-systems like internal career plans and management training will have an impact on organizational culture (management style) and thus will affect structures, processes, and finally characteristic competences of the organization. In change processes, many organizations focus their efforts on the hard Ss, Strategy, Structure and Systems. They care less for the soft Ss, Skills, Staff, Style and Shared Values. Peters and Waterman in In Search of Excellence commented however, that most successful companies work hard at these soft Ss. The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values. These problems often come up in the dissatisfying results of spectacular mega-mergers. The lack of success and synergies in such merger is establish effective common systems and structures. The 7-S Model is a valuable tool to initiate change processes and to give them direction. A helpful application is todetermine the current state of each element and to compare this with the ideal state. Based in this it is possible todevelop action plans to achieve the intended state. Growth strategy: Ipca is a market leader in the anti-malarial therapeutic category in India, enjoying 45% market share. Antimalarial drugs accounted for 40% of its revenues around a decade ago, but now they contribute only 17%. This is due to a diversified product mix that includes therapeutic areas like cardio-vascular, diabetes, non-steroidal anti-inflammatory drugs and anti-bacterials . Till a few years ago, over half its portfolio comprised drugs which were under price control, but that proportion has now fallen to 13-14%. The company also plans to foray into oncology another attractive therapeutic area. In 05, Ipca entered into an agreement withR anb axy Labs for manufacturing drugs to be sold by the latter in the US.It has signed two more such agreements with companies in the US and Canada. The branded formulations business(spread across India, CIS, Asia, Africa and Latin

America) is set to be its biggest growth driver. Ipca expects itsdomestic formulations business to grow by 20% and the international segment to grow 40% this year. System The IPCA project aims to develop a new intelligent interaction mechanism that will enable people with severe motor and speech disabilities to control standard, and especially web-based, applications. The system will be based on a flexible combination of existing non-invasive sensors and encoders able to control different physiological parameters, and a set of software tools that will allow the user to interact with existing computer applications. IPCA will facilitate user interaction with different Internet applications and services. IPCA has two components: Multi-channel Monitoring System (MMS), based on non-invasive sensors able to control several physiological parameters from the user such as: EMG, EDR, accelerometers, RR/RA, etc. Ambient Navigation Toolkit (ANT) that will interface between the MMS and some standard software applications, by providing keyboard and/or mouse emulation functions. Its components are: o Smart Web Browser that will facilitate user interaction with Internet services o Training system o Personal profile manager o On-screen keyboard with scanning and word prediction capabilities o Emotional Response Monitoring System Structure Ipca is always willing to try new structures in new situations. The dynamic change in the business requirements is effectively handled by maintaining a flexible organization structure and

openness. Delegation of authority and responsibility and freedom to work has enhanced decentralization resulting in quick and effective decision making. The senior management including Executive Directors and Managing Directors interact with employees at different levels at different forums. Employee level or category does not restrict the access to top management. The non- hierarchical reporting and feedback are being used effectively and have improved communication amongst all levels. Nippon Tokusei i-spear (eye spear) Nippon Tokusei u-drape (microscope drape) Nippon Tokusei i-custom pack, (phaco pack) Nippon Tokusei i-dispoable gown Nippon Tokusei i-solation gown Disposable cutter, Medicel Switzerland XXK100 Fluidic System, Medicel Switzerland

Growth strategy: Ipca is a market leader in the anti-malarial therapeutic category in India, enjoying 45% market share. Antimalarial drugs accounted for 40% of its revenues around a decade ago, but now they contribute only 17%. This is due to a diversified product mix that includes therapeutic areas like c vascular, diabetes, non-steroidal anti- inflammatory drugs and anti-bacterials . Till a few years ago, over half its portfolio comprised drugs which were under price control, but that proportion has now fallen to 13-14%. The company also plans to foray into oncology -another attractive therapeutic area. In 05, Ipca entered into an agreement withR anb axy Labs for manufacturing drugs to be sold by the latter in the US.It has signed two more such agreements with companies in the U Canada. The branded formulations business(spread across India, CIS, Asia, Africa and Latin America) is set to be its biggest growth driver. Ipca expects itsdomestic formulations business to g 20% and the international segment to grow 40% this year. System The IPCA project aims to develop a new intelligent interaction mechanism that will enable and

disabilities to control standard, and especially web-based, applications. The system will be based on a flexible combination of existing non-invasive sensors and encoders able to control different physiological parameters, and a set of software tools that will allow the user to interact with existing computer applications. IPCA will facilitate user interaction with different Internet applications and services also makes the Indian pharmaceutical companies minnows in the field.Besides price, there are many other hurdles that the Indian pharmaceutical companies face in their path to discovery. For instance, DRR had to abandon development of drugs to treat diabetes and obesity after disappointing result in the early phase of clinical trials. Such inevitable bottlenecks often have a discouraging effect on market capitalization for the company. Nevertheless, Indian giants have come up with another and rather simple solution to this problem, by creating separate spin-off companies, solely dedicated to R&D which are divorced from their presently remunerative outsourced work. This was started by DRR and soon followed by Ranbaxy, Sun Pharma, Nicholas Piramal and Glenmark. The patents so far executed by Indian pharma/biotech companies are mostly derivative compounds where they seek to ever green, a molecule. Real discovery will take time and it is estimated that even the success met by companies like DRR will take another 6-7 years before they yield results. With one in every scientist abroad being Indian, there is no doubt that India has plenty of talent. For now harnessing this potential remains a distant reality for the companies trying to make a real mark on the pharmaceutical world.

Outsourcing and other services

It has been well recognized that the global pharmaceutical industry is facing a number of challenges at present. The difficulties the industry is experiencing have forced all drug companies to change their current operation models. They are now forced to pursue more efficient, cost-effective and productive ways to conduct their operations, whether in R&D or manufacturing. The keys for them to make a quick turnaround are to get drug discovered quicker, developed faster, manufactured cheaper and marketed wider.

Outsourcing has been proven to be one of the effective solutions for drug companies to quickly turn the situation around as it provides them with the desired efficiency, flexibility and agility.

Among all emerging countries for outsourcing, India have risen rapidly and become stars in the global pharmaceutical outsourcing arena as both countries possess the unique combination of low cost and quality service. The current global financial crisis has also greatly enhanced the importance of these two countries to many drug companies around the world who are vigorously seeking cost reduction.

However, India also possess its own, unique features and characteristics, not only in the pharmaceutical-related industries but also in almost every aspect of social structure. To many companies who are interested in conducting outsourcing or investment in either country, it is always a challenge to decide which country best fits their investment goals.

The report, Comparison of Pharma Outsourcing between China and India, has conducted so far the most complete and comprehensive comparisons between China and India. It first time revealed the similarities and differences between these two countries in a broad rang of areas. It also revealed the advantages and disadvantages of each country in pharmaceutical outsourcing and the strengths and shortcomings of their service capabilities. Besides, the report also made in-depth comparisons of pharmaceutical and biotechnology industries between China and India including their R&D capabilities of innovative medicines.

The report provides a clear insight into the current development states of pharmaceutical outsourcing industries in each country including their market sizes and service capabilities in each technical area. In addition, it provides valuable advices to pharmaceutical and biotech companies who are interested in outsourcing to either country of how to appropriately evaluate each country and decide which one best fits their development goals and outsourcing strategies.

The report is a must-read book to all professionals in the industries of pharmaceutical, biotechnology, financial investment and outsourcing service that are interested in either one of these two countries. It is also a valuable reference book to drug regulatory agencies and other government agencies that are involved in strategic planning for development of pharmaceutical industry in their own countries. Key Findings of the Report:

In many aspects China and India are very similar. Both are located in Asia and the most populated countries in the world. Both are still developing countries with low wages for most workers in most industries. However, there are also significant differences between these two countries in the areas related to pharmaceutical industry. Each country possesses its own features and characteristics. In general, China is better equipped in industry infrastructure than India. Chinese pharmaceutical market is also much bigger than Indias. However, the business operation style and philosophy in Indian companies are closer to the Westerner than in Chinese companies. Indian companies are also more familiar with the Western regulations than Chinese companies. They also have broader global presences than Chinese companies. China is better in education of biology than India. The biotechnology industry in China is also more advanced than in India. However, Indian pharmaceutical companies have invested more in R&D and have a much broader product scope than Chinese companies. In traditional pharmaceutical sector, Chinese companies are still limited to manufacturing of traditional products which are marketed in the limited number of countries. But, in the biotech sector, Chinese companies possess much stronger capabilities in R&D and manufacturing of macro compounds than Indian companies. In professional outsourcing service, the two countries provide close service scopes and possess close service capabilities. However, there are still differences in each service sector between these two countries. In discovery service, Chinese companies and Indian companies possess close skills and offer similar services and qualities. However, in target identification and validation as well as those related areas such as research in genomics and proteomics, Chinese companies possess stronger service capabilities than Indian companies; whereas in small molecule drug R&D, Indian companies are more capable than Chinese companies. In preclinical research service, Chinese CROs possess better service capabilities than Indian CROs; whereas in clinical research service, it is just opposite. In process R&D and scale-up synthesis, both countries possess similar capabilities. However, Indian companies possess better

skills and capabilities than Chinese companies in formulation, manufacturing and marketing of generic drugs. Major pharma and biotech companies play different strategies in these two countries. In India, they more tend to form close collaborations such as risk-sharing outsourcing with an Indian company to co-develop drug candidates, but very few of them are willing to permanently set up a decent size of R&D center or manufacturing facility in the country. In stark contrast, almost all major pharma and biotech companies have invested hundreds of millions of dollars in China to establish their wholly-owned R&D centers and large scale manufacturing and marketing facilities. Many of their China R&D centers have already reached decent sizes and gained strong capabilities. They are ready to conduct full-scale research independently. The outsourcing models between the Western companies and the Asian companies are also not limited to just straight outsourcing. Rather, it has extended to including all types of activities such as product marketing and drug candidate licensing. Also, the interesting outsourcing service providers are not just limited to those professional ones. Any pharma or biotech companies in any of these two countries could become outsourcing partners as long as they possess the desired capabilities. The pharma outsourcing industries in both countries have grown rapidly in the recent few years. They are currently valued at about $1.42 B in China and $1.77 B in India, respectively; each occupying only about 2% share in the global pharma outsourcing market. On the other hand, both markets are posed to still grow rapidly in the future as they are driven by a number of positive factors. However, China appears to have higher future growth potential than India as it has fewer growth resistors. It will very likely catch and even surpass India after 2010. At present, India is better than China in small molecule drug R&D and manufacturing. But China is superior over India in biotechnologies including the R&D and manufacturing of macro compounds. India offers better product quality but China has more cost reduction advantage. In terms of investment opportunities, China seems to present more attractions than India as its industry infrastructure and biotechnologies are more advanced.

The report is written based on the in-depth investigations and studies of pharmaceutical outsourcing industries in both China and India. It first carefully selected, among a large pool of companies, top 50 best outsourcing service providers in each country. It then conducted detailed comparisons among these selected companies in more than twenty different areas.

The comparison is performed in four different ways: Head-to-head comparison of two countries including advantages and disadvantages of each country in pharmaceutical outsourcing; Head-to-head comparison of pharmaceutical outsourcing industries between the two countries including their development history and pattern, current market sizes and service capabilities, strengths and shortcomings, and future growth potentials including the growth drivers and resistors; Head-to-head comparison of top outsourcing service providers of each country; Head-to-head comparison of popular outsourcing models in each country. The objective of the comparison is to provide readers an unbiased depiction of the pharmaceutical outsourcing industry in each country with the emphases on revealing each countrys strengths, weakness, advantages and disadvantages in outsourcing.

CHAPTER-14 SCOPE OF PHARMACEUTICAL INDUSTRY Over the years pharmacy has grown in the form of pharmaceuticals sciences through research aand development processes. It is related to product as well as to services. The various drugs dis covered and developed are its products and the healthcare it provides comes under the category of services.Pharmacy involves all the stages that are associated with the drugs i.e. discovery, development, action, safety, formulation, use, quality control, packaging, storage, marketing, etc. This profession has a large socio-economic relevance to the Indian economy. In India this sector is among the future economy drivers. It is committed to deliver high quality drugs and formulations at an affordable price, so that majority of people can afford them. This profession has a large socio-economic relevance to the Indian economy. In India this sector is among the future economy drivers. It is committed to deliver high quality drugs and formulations at an affordable price, so that majority of people can afford them. The transformation of the sector from conventional pharmacy to drug experts, which is both desired and necessary to reach the global standards, has already made commendable progress. Liberalization, privatization and globalization (LPG) have helped the Indian pharmaceutical companies to achieve international recognition. It's remarkable to note that today several Indian pharma companies are approved by US FDA and are listed at NASDAQ. The multibillion-dollar pharma industry grows mainly through knowledge wealth creation. This sector has transformed a lot over the years. The big pharma companies that were there about 1520 years back are not in picture these days. The analysis of Indian pharmaceutical sector shows that the innovative products, product life cycle management and marketing management steps taken by the pharma companies have led them to flourish. And the companies that refused to change their strategy lost the race. Cipla and Sun Pharma are two companies that are focused on new product development and have grown tremendously. Accounting for two percent of the world's pharmaceutical market, the Indian pharmaceutical sector has an estimated market value of about US $8 billion. It's at 4th rank in terms of total pharmaceutical production and 13th in terms of value. It is growing at an average rate of 7.2 % and is expected to grow to US $ 12 billion by 2010. Over the last two years the pharmaceutical market value has increased to about US $ 355 million because of the launch of new products. According to an estimate, 3900 new generic products have been launched in the past two years. These have been by and large launched by big brands in the pharma sector. And in the year 2005 Indian pharmaceutical companies

captured around 70% of the domestic market. As in the present scenario, only a few people can afford costly drugs, which have increased price sensitivity in the pharmaceutical market. Now the companies are trying to capture the market by introducing high quality and low price medicines and drugs. With the Product Patent Act, which came into action in January 2005, this industry is able to attract big MNCs to India. Earlier these big firms had apprehensions in launching new drugs in the Indian market. At present, a large number of Indian pharmaceuticals companies are looking for tie-ups with foreign firms for in-license drugs. GlaxoSmithKline is among the top choices for the firms that wish to launch their product in India, but do not have any branch over here. Contract research and pharmaceutical outsourcing are the new avenues in the pharmaceutical market. Contract manufacturing is growing at a very fast pace and is estimated to grow to US $30billion, whereas contract research is estimated to reach US$6-10 billion. Indian multinational companies like Dr.Reddy's Lab, Cipla, Ranbaxy, etc have created awareness about the Indian market prospects in the international pharmaceutical market. Approvals given by Foods and Drugs Administration (FDA) and ANDA (Abbreviated New Drug Application)/DMF (Drug Master File) have played an important role in making India a cost-effective and high quality product manufacturer. Furthermore, the changes that took place in the patent law, change of process patent to product patent, have helped in reducing the risk of loss for intellectual property. Industry Strengths: Capital Investment in Technology: Owing to the availability of advanced technology at low costs, the companies can produce drugs at lower costs. Cost Effective: The filing cost of ANDAS and DMFs is comparatively low for the Indian companies. Manpower: There is a large pool of technical experts available at modest salaries. Contract Research & Contract Manufacturing: There is a good scope for contract research and contract manufacturing. Infrastructure: There is a well-developed infrastructure for the pharmaceutical industry. Generic Drugs: In the last few years, the generic drug-manufacturing segment has received huge investments, in the process making it more competitive and efficient.

Contract research and manufacturing The amendment of the Indian Patent Act in 2005 has proved to be a decisive moment for the Indian pharmaceutical industry. This is especially so for Contract Research and Manufacturing Services (CRAMS) in India. The amendment has assisted the global pharmaceutical companies to look at the Indian pharma supply chain and as a consequence, led to the growth of the CRAMS market. Today, be it drug discovery, development or manufacturing, India is by far the most preferred outsourcing destination. With low manufacturing cost, high-quality research and skilled labor, the Indian CRAMS market present both a competitive threat and a partner opportunity for foreign pharmaceutical companies. Today, the global pharmaceutical industry is at a defining moment. The ever-increasing cost of R&D tied with low level of new drug development has made it tough for the companies to introduce quality drugs at a competitive price. Global pharma companies are concerned at the large number of drugs which are at the threshold of losing their patent rights. These companies have found an option to save on costs by outsourcing some of their research and manufacturing activities. It is in this scenario that CRAMS has begun to play a major role and has brought new opportunities to many Indian pharma companies. Contract Research (including clinical trials and CDM) during2006 is estimated to be USD 366 million, a growth of 45 % overprevious year and is expected to scale up to USD 2.5billion by 2011. Contract manufacturing in 2006 was USD 659 million andgrowing at 48% over pervious year and expected to be worth USD 2.5 billion in India by 2011. CRAMS - Major Players Contract manufacturing: Large Pharma companies - Ranbaxy, DRL, Wockhardt, Cipla, Nicholas Piramal and Lupin covering formulations, APIs, generics, NDDS, NCEs and biopharma Medium sized companies - Focused contract mfg companies- Matrix Labs,Shashun , Strides Arocolabs, Cadila, Jupiter biosciences, Jubilant Organosys,Orchid Pharmaceuticals, Dishman, IPCA, and Divis Labs contract manufacturing of APIs for global MNCs. Contract Research: Large Companies dedicated units/companies Medium sized CROs Chembiotek (TCG Group), Reliance Research and Development Services Integrated contract Research and contract mfg synergy Strategies followed International certifications of plants FDA/MHRA Acquisition of mfg plants abroad for customer acquisition (Dr Reddys,Nicholas)

Research and development India acknowledged Intellectual property rights by embracing the patent regimen and then enforced it from January 1st, 2005. Since then, a new wave of progress has swept the country. Post 2005, pharmaceutical and medical biotechnology companies experienced some very critical changes, and since then, the only real differentiator has been innovation. With the acknowledgement of the intellectual property rights there was an uprising in the almost 20,000 strong fragmented industry of the 90s change as it would mean the reinvention of the entire sector, where replication would have to give way to innovation. Earlier they had thrived with little or no need to have a robust new product pipe lines, as only process patents were recognized in India. Lack of product patents motivated Indian companies to be become masters of re-engineering. It was this fact that made India a preferred destination for outsourced manufacture. India dominates the Active Pharmaceutical Ingredient (API) market and it is said that one in two APIs is procured from India. The business model of API manufacturers is largely price driven and their competitiveness questionable due to a 30% annual increase in operational costs, increased wages, appreciating rupee and spiraling logistic cost. Outsourced research is also on the rise and here again the industry has to grapple with lack of trained labour, attrition and increasing operational expenditure. Although Indian companies will and should cash in on the outsource bonanza, innovation is clearly the only long-term solution. At the moment, Indian companies neither have manpower capability to go from molecule to market nor do they have deep pockets that would keep them afloat over at least 12 year period (the average time needed for commercializing a patented molecule). The mid-cap companies find unique ways and means to enter the US market without R&D or infringement. Introducing high-value patented products is out of the question. Despite these obstacles, a few large companies have made efforts to build intellectual property. In the 2007-08, Ranbaxy filed 208 patents while CIPLA filed 53. It is beneficial for Indian companies to enter the new drug discovery zone as the cost of developing a new molecule in India is 1/5 of the American cost. It is to capitalize on this price advantage, pharmaceutical companies in India have significantly increased their R&D spend. This used to typically be 7% of sales but has now significant rise to 10-15%. However, this is still only a fraction of what their American and European counterparts spend. This also makes the Indian pharmaceutical companies minnows in the field. Besides price, there are many other hurdles that the Indian pharmaceutical companies face in their path to discovery. For instance, DRR had to abandon development of drugs to treat diabetes and obesity after disappointing result in the early phase of clinical trials. Such inevitable bottlenecks often have a discouraging effect on market capitalization for the company. Nevertheless, Indian giants have come up with another and rather simple solution to this problem, by creating separate spin-off companies, solely dedicated to R&D which are divorced from their presently remunerative outsourced work. This was started by DRR and soon followed by Ranbaxy, Sun Pharma, Nicholas Piramal and Glenmark. The patents so far executed by

Indian pharma/biotech companies are mostly derivative compounds where they seek to ever green, a molecule. Real discovery will take time and it is estimated that even the success met by companies like DRR will take another 6-7 years before they yield results. With one in every scientist abroad being Indian, there is no doubt that India has plenty of talent. For now harnessing this potential remains a distant reality for the companies trying to make a real mark on the pharmaceutical world. Outsourcing and other services It has been well recognized that the global pharmaceutical industry is facing a number of challenges at present. The difficulties the industry is experiencing have forced all drug companies to change their current operation models. They are now forced to pursue more efficient, cost-effective and productive ways to conduct their operations, whether in R&D or manufacturing. The keys for them to make a quick turnaround are to get drug discovered quicker, developed faster, manufactured cheaper and marketed wider. Outsourcing has been proven to be one of the effective solutions for drug companies to quickly turn the situation around as it provides them with the desired efficiency, flexibility and agility. Among all emerging countries for outsourcing, India have risen rapidly and become stars in the global pharmaceutical outsourcing arena as both countries possess the unique combination of low cost and quality service. The current global financial crisis has also greatly enhanced the importance of these two countries to many drug companies around the world who are vigorously seeking cost reduction. However, India also possess its own, unique features and characteristics, not only in the pharmaceutical-related industries but also in almost every aspect of social structure. To many companies who are interested in conducting outsourcing or investment in either country, it is always a challenge to decide which country best fits their investment goals. The report, Comparison of Pharma Outsourcing between China and India, has conducted so far the most complete and comprehensive comparisons between China and India. It first time revealed the similarities and differences between these two countries in a broad rang of areas. It also revealed the advantages and disadvantages of each country in pharmaceutical outsourcing and the strengths and shortcomings of their service capabilities. Besides, the report also made in-depth comparisons of pharmaceutical and biotechnology industries between China and India including their R&D capabilities of innovative medicines. The report provides a clear insight into the current development states of pharmaceutical outsourcing industries in each country including their market sizes and service capabilities in each technical area. In addition, it provides valuable advices to pharmaceutical and biotech companies who are interested in outsourcing to either country of how to appropriately evaluate each country and decide which one best fits their development goals and outsourcing strategies. The report is a must-read book to all professionals in the industries of pharmaceutical, biotechnology, financial investment and outsourcing service that are interested in either one of these two countries. It is also a valuable reference book to drug regulatory agencies and other

government agencies that are involved in strategic planning for development of pharmaceutical industry in their own countries. Key Findings of the Report: In many aspects China and India are very similar. Both are located in Asia and the most populated countries in the world. Both are still developing countries with low wages for most workers in most industries. However, there are also significant differences between these two countries in the areas related to pharmaceutical industry. Each country possesses its own features and characteristics. In general, China is better equipped in industry infrastructure than India. Chinese pharmaceutical market is also much bigger than Indias. However, the business operation style and philosophy in Indian companies are closer to the Westerner than in Chinese companies. Indian companies are also more familiar with the Western regulations than Chinese companies. They also have broader global presences than Chinese companies. China is better in education of biology than India. The biotechnology industry in China is also more advanced than in India. However, Indian pharmaceutical companies have invested more in R&D and have a much broader product scope than Chinese companies. In traditional pharmaceutical sector, Chinese companies are still limited to manufacturing of traditional products which are marketed in the limited number of countries. But, in the biotech sector, Chinese companies possess much stronger capabilities in R&D and manufacturing of macro compounds than Indian companies. In professional outsourcing service, the two countries provide close service scopes and possess close service capabilities. However, there are still differences in each service sector between these two countries. In discovery service, Chinese companies and Indian companies possess close skills and offer similar services and qualities. However, in target identification and validation as well as those related areas such as research in genomics and proteomics, Chinese companies possess stronger service capabilities than Indian companies; whereas in small molecule drug R&D, Indian companies are more capable than Chinese companies. In preclinical research service, Chinese CROs possess better service capabilities than Indian CROs; whereas in clinical research service, it is just opposite. In process R&D and scale-up synthesis, both countries possess similar capabilities. However, Indian companies possess better skills and capabilities than Chinese companies in formulation, manufacturing and marketing of generic drugs. Major pharma and biotech companies play different strategies in these two countries. In India, they more tend to form close collaborations such as risk-sharing outsourcing with an Indian company to co-develop drug candidates, but very few of them are willing to permanently set up a decent size of R&D center or manufacturing facility in the country. In stark contrast, almost all major pharma and biotech companies have invested hundreds of millions of dollars in China to establish their wholly-owned R&D centers and large scale manufacturing and marketing facilities. Many of their China R&D centers have already reached decent sizes and gained strong

capabilities. They are ready to conduct full-scale research independently. The outsourcing models between the Western companies and the Asian companies are also not limited to just straight outsourcing. Rather, it has extended to including all types of activities such as product marketing and drug candidate licensing. Also, the interesting outsourcing service providers are not just limited to those professional ones. Any pharma or biotech companies in any of these two countries could become outsourcing partners as long as they possess the desired capabilities. The pharma outsourcing industries in both countries have grown rapidly in the recent few years. They are currently valued at about $1.42 B in China and $1.77 B in India, respectively; each occupying only about 2% share in the global pharma outsourcing market. On the other hand, both markets are posed to still grow rapidly in the future as they are driven by a number of positive factors. However, China appears to have higher future growth potential than India as it has fewer growth resistors. It will very likely catch and even surpass India after 2010. At present, India is better than China in small molecule drug R&D and manufacturing. But China is superior over India in biotechnologies including the R&D and manufacturing of macro compounds. India offers better product quality but China has more cost reduction advantage. In terms of investment opportunities, China seems to present more attractions than India as its industry infrastructure and biotechnologies are more advanced.

The report is written based on the in-depth investigations and studies of pharmaceutical outsourcing industries in both China and India. It first carefully selected, among a large pool of companies, top 50 best outsourcing service providers in each country. It then conducted detailed comparisons among these selected companies in more than twenty different areas. The comparison is performed in four different ways: Head-to-head comparison of two countries including advantages and disadvantages of each country in pharmaceutical outsourcing; Head-to-head comparison of pharmaceutical outsourcing industries between the two countries including their development history and pattern, current market sizes and service capabilities, strengths and shortcomings, and future growth potentials including the growth drivers and resistors; Head-to-head comparison of top outsourcing service providers of each country; Head-to-head comparison of popular outsourcing models in each country. The objective of the comparison is to provide readers an unbiased depiction of the pharmaceutical outsourcing industry in each country with the emphases on revealing each countrys strengths, weakness, advantages and disadvantages in outsourcing.

CHAPTER-15 SWOT ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY Strengths:

y y y y y y y y y y y y

Cost effective technology Strong and well-developed manufacturing base Clinical research and trials Knowledge based, low- cost manpower in science & technology Proficiency in path-breaking research High-quality formulations and drugs High standards of purity Non-infringing processes of Active Pharmaceutical Ingredients (APIs) Future growth driver World-class process development labs Excellent clinical trial centers Chemical and process development competencies

Weaknesses:
y y y y y y y

Low Indian share in world pharmaceutical market (about 2%) Lack of strategic planning Fragmented capacities Low R&D investments Absence of association between institutes and industry Low healthcare expenditure Production of duplicate drugs

Opportunities:
y

Incredible export potential

y y y y y y y y y

Increasing health consciousness New innovative therapeutic products Globalization Drug delivery system management Increased incomes Production of generic drugs Contract manufacturing Clinical trials & research Drug molecules

Threats:
y y y y y

Small number of discoveries Competition from MNCs Transformation of process patent to product patent (TRIPS) Outdated Sales and marketing methods Non-tariff barriers imposed by developed countries

CHAPTER-16 FUTURE PROSPECT The dream of Indian pharmaceutical companies for marking their presence globally and competing with the pharmaceutical companies from the developed countries like Europe, Japan, and United States is now coming true. The new patent regime has led many multinational pharmaceutical companies to look at India as an attractive destination not only for R&D but also for contract manufacturing, conduct of clinical trials and generic drug research. With market value of about US$ 45billion in 2005, the generic sector is expected to grow to US$ 100billion in the next few years. The Indian companies are using the revenue generated from generic drug sales to promote drug discovery projects and new delivery technologies. Contract research in India is also growing at the rate of 20-25% per year and was valued at US$ 10-120million in 2005. India is holding a major share in world's contract research business activity and it continues to expand its presence. Clinical Research Outsourcing (CRO), a budding industry valued over US$ 118 million per year in India, is estimated to grow to US$ 380 million by 2010, as MNCs are entering the market with ambitious plans.

By revising its R&D policies the government is trying to boost R&D in domestic pharma industry. It is giving tax exemption for a period of ten years and relieving customs and excise duties of all the drugs and material imported or exported for clinical trials to promote innovative R&D.

The future of Indian pharmaceutical sector is very bright because of the following factors: y Clinical trials in India cost US$ 25 million each, whereas in US they cost between US$ 300-350 million each. y Indian pharmaceutical companies are spending 30-50% less on custom synthesis services as compared to its global costs.

In India investigational new drug stage costs around US$ 10-15 million, which is almost 1/10th of its cost in US (US$ 100-150million). Indias largest pharmaceutical company by revenue, Ranbaxy Laboratories Ltd, has launched an initiative to reach out to smaller towns and villages and invest more in research with an eye on becoming the leader in the generic drugs market in the next two years. Ranbaxy chief executive and managing director Atul Sobti says that with the new initiative, the firm expects to reach a minimum 3,50,000 doctors by 2012, up from the current 200,000.

The company has already hired nearly 1,500 marketing personnel since the strategy, named Viraat, was kicked off in Januarytaking its workforce to 4,300. Ranbaxy is aiming to overtake Cipla Ltd as the market leader. Two-thirds of the new hires are field personnel, who will spread out into towns and rural areas to push the companys over-the-counter and prescription drugs. The rest have been hired at managerial levels Where is the pharmaceutical industry today? Medical progress: Undeniably, research-based pharmaceutical companies have made enormous progress in the treatment of many illnesses, including infectious diseases, childhood diseases, some types of cancer, cardiovascular disease, diabetes and hepatitis. Looking back over the past century, it is clear that medical science has made breathtaking advances. This is shown, for instance, by the fact that life expectancy has risen enormously to Presentation by F.B. Humer around 80 years, compared with 55 in the late nineteenth/early twentieth century when Roche was established. Even so, it is still not possible to treat the causes of most diseases. Cost of research and development: However, remaining at the cutting edge of technology in the face of such rapid advancement is becoming increasingly expensive. Despite the enormous progress that has been made, developing a new drug is still a bit like looking for a needle in a haystack: only one in 10,000 substances screened eventually becomes a fully fledged product that can be used to treat patients. And as I have said, it takes 10 to 15 years to achieve that. That costs an average of about CHF 1 billion for each drug brought onto the market (including opportunity costs and the cost of failures). Over the past 20 years the cost of developing new drugs has increased by a factor of eight. Last year Roche invested more than CHF 5 billion in research and development and spending will be a good deal higher this year. Despite the high sums involved, there is still no guarantee of success, let alone a guarantee that prices or volume sales will be acceptable. The cost and complexity of research have increased substantially. At the same time, political pressure on prices has risen and that has evidently increased the attendant business risks. Those are the main reasons for the progressive consolidation of our industry. Fifteen years ago, the ten largest companies commanded 25% of the global market; today their market share is over 50%.

 Geographical shift: Another fact is that in recent years the pharmaceutical industrys centre of gravity has shifted from its traditional home market of Europe to America. While European companies used to dominate the champions league comprising the top ten pharmaceutical companies the top players today are US companies. Even so, Switzerland can boast two players in this league. Twenty years ago, the European and American pharmaceutical markets were roughly equal in size. Today the US market is twice the size of the European market and far more profitable (if price levels in the United States were the same as in Europe, it would be impossible to maintain funding of industrial research and development at the present level). This ongoing trend has serious implications for research and innovation. For some time now, European companies have been channelling more than half of their research spending to North America, whereas twenty years ago Europe accounted for two thirds of global pharmaceutical research. The United States has a clear edge both in terms of output, in other words, the number of new active ingredients for pharmaceuticals, and in terms of input, that is, R&D spending (USD 20 billion are spent on drug development in the United States every year). The shift away from Europe is one outcome of years of misguided and short-sighted policies in Europe. For pharmaceutical companies, globalisation not only means an increasingly tough race to innovate; the United States, Europe and Switzerland are also competing fiercely for jobs and investment. And it will not be long before Asian countries like China, India and Singapore narrow the gap to the global elite in the field of research. New knowledge is sourced where it is available and cost-effective, and where the general framework is right. As a consequence, at the end of last year Roche became the first pharmaceutical company to open a research centre in Shanghai. This is a challenge to Roches established research facilities, including those in Switzerland, to maintain the dynamism of their research work and ensure they remain internationally competitive Presentation by F.B. Humer. Over the past 15 years, the EU has lost ground (to the US) as a centre for the pharmaceutical industry. Fortunately, this European trend seems to have by-passed Switzerland indeed the importance of pharmaceuticals for the Swiss economy has grown disproportionately. What will the future bring? Major trends point to a new era in medicine Let us look ahead to the future. Not that I have any prophetic ability . However, there are a number of fairly clear trends that are likely to have a significant impact on the pharmaceutical industry. Trend 1: Demographic change The industrialised countries in other words, Japan, Europe and the United States will increasingly be confronted with the phenomenon of an ageing population and its consequences for all areas of life. Today, there are about 450 million people worldwide over the age of 65 (that is 7% of the global population). This figure will virtually double by 2020

 more than triple by 2050 (to 17% of the global population). In the USA alone, there will be more than 80 million people over 65. Globally, about 400 million people will be over 80. The ageing population represents a growing burden on healthcare systems (in fact, on all social security systems). Per capita healthcare spending is highest among the over-65s because the death rate is highest in this age group. Chronic illnesses have already replaced infectious diseases as the main cause of death (in absolute terms). The older people are, the higher the (statistical) risk that they will suffer from a chronic illness. Cancer is a case in point: according to US studies, people over 65 are 17 times more likely to get cancer of the colon than younger people. Given the demographic trend, progress in medicine and disease prevention will take on a more significant role in a bid to alleviate the problems caused by rising demand for care for the elderly. The aim of medical research is to ensure that people do not simply live longer, but that they remain healthy and independent for as long as possible so they are not dependent on care. That is also the goal for the development of innovative drugs. One example is Alzheimers disease, which is a focus of Roches research in Switzerland. Alzheimers disease is one of the main reasons why many old people need care: Potentially, it could affect any of us. Statistically, 10 percent of the people in this room will die of Alzheimers. It is estimated that about 8% of over-65s in Switzerland and nearly 30% of over-85s suffer from Alzheimers disease. Ageing is still the only known risk factor for this disease. Alzheimers is still incurable. However, innovative drugs slow the pace of development. A novel drug from Roche (a monoclonal antibody) which will shortly be entering clinical trials, could represent a major step forward in the treatment of this disease. Prevention is an important factor, too: the most recent diagnostic studies indicate possible ways of identifying the disease before it breaks out, so preventive measures and possible methods of treatment can be considered. Such tests will have their price, but the alternative is permanent and Presentation by F.B. Humer. Intensive nursing care accompanied by a reduction in the quality of life. Early diagnosis could thus prolong and improve life and also help save costs. Healthcare economics studies show that improving the general condition of people suffering from dementia as a result of progress in psychopharmacology, for example can reduce the cost of care by up to EUR 10,000 per patient and year. Emerging countries like China and India face a completely different situation. Rapid economic and population growth will drive up demand for health care. The enormous potential of the Chinese market has become something of a clich. One fact that is perhaps less well known is that if the recent growth rates continue, India is likely to have a larger population than China within the next 40 years. The Indian middle class is already larger than the entire population of the United States. Thanks to rising disposable incomes, 50-60 million Indians can now afford private health insurance. The industry therefore needs a presence in these growing markets. One major reason why healthcare spending is increasing worldwide is that GDP is rising: as we become more affluent we are prepared to spend more on healthcare, and this will not change in

the future. A second major factor is the trend towards personalised medicine. Trend 2: More individual medical treatment One major problem is that drugs often do not have the expected effect. We all know that and most of us have probably experienced it either ourselves or in our families. The Pharmaceutical Research and Manufacturers Association of America estimates that about USD 100 million are wasted every year in the United States alone because patients take drugs that are ineffective or have serious side effects. There are many reasons for this. The most common is that the drugs are not taken, either because people forget, or because they are afraid of side effects. Alternatively, the medication may react with other drugs being taken at the same time. However, there is also another possible reason. The biological make-up of everyone here in this room is different. Today, we know that that is due to genetic differences. Although 99.9 percent of genes are the same in all people, the remaining 0.1 percent can contain differences in the DNA sequences that store genetic information. It is therefore perfectly plausible that doctors could treat you and I more effectively if the difference between us could first be determined with the aid of a lab test, enabling them to prescribe the most effective personalised medicine for each of us. Is this merely a science fiction scenario? Well, yes and no. Firstly: clear advances have already been made towards personalised medicine. Roche is a leader in this sector. A good example here is breast cancer. Breast cancer remains the most common type of cancer in women: one in ten will contract this disease sometime in her life. Presentation by F.B. Humer. We are now also aware that there are different types of breast cancer and we understand the reasons for this: for example, in one aggressive form of the disease, extremely high concentrations of an abnormal form of the growth factor Her2 are found in the malignant cells. Together with its subsidiary Genentech, Roche has produced a genetically engineered drug (monoclonal antibody) to block the action of this growth factor. This means if this abnormality is identified before treatment, the patient can be given more specific, personalised treatment. The Roche Centre for Medical Genomics in Basel is currently conducting in-depth research into the personalised treatment of rheumatoid arthritis. This is one of the most serious forms of arthritis, affecting one percent of the population. No really satisfactory treatment is available at present . We at Roche see a chance of helping these patients with our product MabThera/Rituxan, which has been used to treat leukemia for some time now. It has been discovered that for a percentage of rheumatoid arthritis sufferers, MabThera/Rituxan is something akin to a wonder drug. However, this does not apply to all patients. Optimum treatment could be achieved if it were possible to test patients first to establish whether they will respond to the drug. That is the challenge facing us at present. Roche Diagnostics recently passed a milestone on the road to personalised medicine. Last year the introduction of our first DNA chip (AmpliChip CYP450) caused a stir in Europe and the United States. As the first DNA chip test in the world to receive regulatory approval, it

represents a pioneering new discovery. This test can be used to show whether people metabolise a drug faster or more slowly as a result of their genetic make-up. The chip provides information that can aid the selection and dosage of a range of medications (for example, anti-depressants, psychopharmaceuticals, painkillers and drugs to treat cardiovascular disease). Estimates indicate that systematic use of the AmpliChip test before treatment could improve overall efficacy by 10-20% and avoid 10-15% of all serious side effects. These molecular genetic findings open up scope for new approaches to medical research in the medium to long term. Personalised genetic analysis enabling doctors to investigate the complete genetic make-up of their patients and then prescribe drugs and treatments specifically intended to minimise side effects is still a very distant prospect. However, even complete genetic mapping will never enable us to answer all medical questions. Our lives are not simply dependent on genetics environmental factors, lifestyle and our economic situation are also major causal factors of disease. However, one thing is already clear: we are on the brink of a revolution in the diagnosis and treatment of many diseases. A revolution that will accompany us over the next 50 years. This is what makes our business so fascinating. Trend 3: The rising importance of diagnostics plus pharmaceuticals A third trend is the huge progress made by modern diagnostics, especially in combination with pharmaceuticals. Diagnostic procedures will continue to gain importance, allowing the earliest possible identification of predispositions for certain diseases and, as we have just seen, more effective treatment. Increasingly, this will include disease prevention. At present, laboratory services account for an average of just 1% of overall healthcare costs. However, these services and the information they provide have enormous potential to raise the efficiency of healthcare as a whole, allowing optimization of the remaining 99% of spending. This potential needs to be tapped. The prospects for patients suffering from cancer would improve considerably if diagnostics were used more widely than in the past. More than 90 percent of cancer patients could live five, ten or more years with current methods of treatment if the disease were identified earlier. Further advances in molecular diagnostics are therefore the best way of improving the prognosis for cancer patients in the short term. For example, in the first half of this year Roche will be launching a diagnostic chip (AmpliChip p53) to determine how aggressive a tumour is. At the end of the year we will be launching a chip to diagnose leukemia (every year 80,000 people worldwide contract leukemia). So far, eight to ten different technologies have had to be used. Diagnosis takes days and the error rate is high. The new chip will allow diagnosis in a few hours and with an accuracy of over 98 percent. This new technology will have economic as well as medical benefits: it will cost around EUR 1,500, making it far less expensive than current diagnostic costs of around EUR 2,500, even though it has significant advantages. Diagnostic information can improve the efficiency of all aspects of medical care. Roche is the only leading healthcare company dedicated to innovation in both pharmaceuticals and diagnostics. This twin-track approach means that we can develop solutions for the entire spectrum of healthcare needs.

Trend 4: Biotechnology There is no doubt that modern biotechnology is a key technology of the 21st century. Together with automation and information technology, it is starting to open up new perspectives for all areas of the life sciences, and especially for medicine. Highly potent, selective biopharmaceuticals have already proven very successful, especially in the treatment of cancer. In future, the treatment selected will depend on the genetic pattern of the tumour. A knowledge of the genetic differences between patients can also aid the development of new drugs. If we know which patients will not tolerate a potential new medication, or will not respond to treatment, these patients can be excluded from clinical trials at the development stage. That would enable us to pursue a number of projects that have previously had to be halted due to side effects or low average efficacy even though excellent results were obtained in specific patient groups (Herceptin; Tarceva). These social and scientific trends indicate that research-based pharmaceutical or, to be more precise, healthcare companies like Roche should not be regarded as part of the problem in the healthcare sector as the Swiss media commonly do at present. Instead, they should be seen as part of the solution, helping to make healthcare more efficient. And now I would like to say a few words about costs versus benefits, a central aspect of the current healthcare debate. Costs versus benefits The (internationally) high quality of our healthcare system The cost savings that can be achieved as we have seen through innovative drugs (scientifically proven) Moreover, healthcare economists agree that medicines are the healthcare cost component whose cost-efficiency has been examined most rigorously. In Switzerland, they only account for only about 11% of our healthcare costs. That is precisely why I refuse to look at medical progress and the benefits provided by our healthcare system simply from a one-sided cost viewpoint. The central issue is not whether healthcare costs are steadily rising, but what society obtains in return. Scientific progress and economic and demographic trends have a major impact on the future of healthcare and the healthcare sector. In the end, the infrastructure and resources provided for healthcare depend to a large extent on political decisions. Political and regulatory framework As I pointed out at the beginning, politics has a major impact on the future of our industry. Regulations on clinical trials, patent protection, parallel imports, marketing approval requirements and reimbursement prices do not only determine the pace of innovation; they also play an important role in determining the relative attractiveness of different locations. The devastating effects of misguided industrial policy can be seen clearly in Germany. For years the leading German pharmaceutical companies were nicknamed the pharmacy of the world. Now they have all but disappeared. The global success of the Swiss pharmaceutical industry is attributable to its high level of investment in research and development and the fact that so far the regulatory framework has basically been favourable. Other European countries increasingly see the successful Swiss model, which balances the

interests of industrial and healthcare policy, as exemplary. In the international competition to attract business to a country, innovative capability is rapidly becoming more important. However, innovation is not a state, it is a highly dynamic process. Alongside the necessary material resources, research and innovation are dependent on a framework that fosters innovation: through public attitudes: acceptance of new technologies and a general willingness to accept economic risk determine the extent to which a country can pursue innovative research and development through political/legislative developments: in other words, providing incentives and rewards for innovation through pricing and patents to protect the fruits of innovation through taxation; for example incentives to create venture capital and encourage private investment in research. This innovation-friendly framework requires constant adaptation to new requirements the prospects for pharmaceutical research have never been more fascinating or more promising. Never have there been better conditions for achieving medical breakthroughs and thus commercial success. It is up to us to determine our future.