Indian Life Science Industry

A Presentation
at
The Forum for International Business 07

28th March 2007 Zurich, Switzerland

26 - 27 June, 2002

ICRA Management Consulting Services Limited

Indian Biotech industry enjoys very high growth rates

Market size of Biotechnology industry CAGR

USD million
1450 48.6%

1070
48.5% 50.5% India -
the next
700 51.5%
Biotech
Total sales 442 44.0%
46.9%
Hub?
Domestic 46.7% 51.5%
sales 48.5%
56.0%
Exports 53.3%

2003 2004 2005 2006 Source: BioSpectrum-ABLE Survey

! 2003 - Total industry size $442 million, ~ 1% of global market

! 2006 - Total industry size $1.45 billion, 505 of which was exports
! India was #11 in the world and # 3 in A- PAC in terms of no. of biotech companies

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 Significant global interest in the Indian Biotech industry...

Illustrative, not exhaustive

•bioMerieux
• Bristol-
•CB Chemie
Myers
•Chiron Vaccines
Squibb
•Genetix
• Nobex
Corporation
• Gilead
Sciences
• Genome • Advanta
Exploration • Aventis
• AstraZeneca
• Baxter • Clintec
• Covance • MWG Biotech
• Eli Lilly • Roche
• Monsanto • Shreya
• Novozymes LifeScience
• Parexel • Simbec
• Pharmanet • Syngenta
• Quintiles
Transnational
Companies who have invested in facilities/ offices in India
Companies who have outsourced an activity to Indian companies

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 Biopharma dominates the biotech industry

Breakup of Biotechnology industry by segment • BioPharma - vaccines, therapeutics, diagnostics

Per cent and animal health care products
CAGR
1.8% 17.0%
BioInformatics 4.1%
5.8% 16.9% • BioServices - clinical research, contract research
BioIndustrial 12.8% 9.2% 75.8%
and contract manufacturing
BioAgri 6.0% 11.0% 74.7%
BioServices 7.4%
• BioAgri - Bt cotton seeds, bio-pesticides, bio-
fertilisers (excludes hybrid seeds)

• BioIndustrial - enzymes, organic amino acids,

BioPharma 69.7% 72.2% 54.6% yeast, yeast-based products

• BioInformatics - tools for genomics, proteomic

databases, sequence analysis, database searches
2003 2006
Source: BioSpectrum-ABLE Survey

! BioPharma is the single largest sector in the industry and crossed the USD 1
billion mark in 2006
! BioServices and BioAgri are gaining in importance and having grown the
fastest, touching USD 160 million and USD 130 million respectively
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Biotech exports are comprised mainly of BioPharma and BioServices

Breakup of biotech exports (2006)

Breakup of domestic biotech sales (2006)
Per cent
Per cent
100% = USD 747 million 100% = USD 703 million
BioInformatics BioInformatics
BioAgri 3.0%
BioServices 1.1% 0.6%
1.1%
BioIndustrial
BioIndustrial
1.2%
10.5%
BioServices
20.4% BioAgri
17.8%
BioPharma
BioPharma
74.3%
69.9%

! Driven by exports of vaccines,and ! BioPharma segment driven by increased

of biogenerics in unregulated markets private and Government spending
! Exports of BioServices is due to Big ! BioAgri sector fuelled by the success of
Pharma outsourcing from India Bt cotton seed

Source: BioSpectrum-ABLE Survey © IMaCS 2007

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 BioPharma AND BioAgri companies constitute the top 10 in the
industry

Rank Company Sales($mn) Key focus

1 Serum Institute 156.2 Vaccines; global leader in MMR vaccines

2 Biocon* 152.9 Statins, immunosuppressants and enzymes
3 Panacea Biotec 97.3 Vaccines
4 Mahyco Monsanto 86.9 Bt cotton seeds
5 Rasi Seeds 68.8 Genetically modified seeds
6 Venkateshwara Hatcheries 62.2 Poultry health products
7 Novo Nordisk 38.9 Diabetes treatment
8 Mahyco 26.2 Marketing of transgenic Bollgard cotton
9 Aventis Pharma 25.4 Diabetes treatment
10 Indian Immunologicals 22.8 Animal health; one of the largest producers of Foot
and Mouth Disease vaccines
*Group companies also include Syngene International (custom research), Clinigene (clinical research) and Biocon Pharmaceuticals
(new molecule developments)

! Top 10 companies, are mostly in the BioPharma (human as well as animal

health) and BioAgri segments
! All ten companies have turnover of Rs 100 crore (USD 22 million) or more
and are a mix of Indian companies and MNCs
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Companies have invested heavily in research and infrastructure

Investments by biotech companies Investment as percentage of revenues

USD million Per cent
366.0
2003 31.0%
276.0
2004 26.2%
183.6
137.2 2005 25.8%

2006 25.2%

2003 2004 2005 2006

! Bulk of the investments of the biotech companies have gone into setting up
infrastructure, followed by R&D
! Industry has continued to invest 25% of its revenues or more over the last few
years, with investments crossing USD 360 million in 2006
! Planning Commission has also outlayed USD 448 million for biotech spending

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Government of India has offered several incentives to promote
investment in Biotech

Illustrative, not exhaustive

! 100% foreign equity investment in manufacturing of drugs (except rDNA products

and cell targeted therapies)
! Single window clearance for mega projects with FDI more than USD 22 million
! Depreciation allowance on plant and machinery
! Customs duty exemption on several goods (for example, those imported for clinical
trials)
! 3 year excise duty waiver on patented products
! 100% rebate on own R&D expenditure and 125% rebate if R&D is contracted out to
public funded institutions
! Customs duty exemption for certain equipment to R&D units with manufacturing
facilities, up to 25% of previous year’s export receipts
! 100% tax exemption on profits for first five years and 25% thereafter, for agro
processing industries

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Biotech industry is clustered mainly in the West and South of
India

Roughly 325 companies in biotech

industry in India
• Top 5 companies account for ! Industry clustered mainly in West
~40% of sales and South India
• Top 20 companies account for
! Presence of research institutes and
more than 62% of sales
pharma companies and investor
New Delhi friendly policies of states in these
regions has driven this trend
! Western region (Mumbai,Pune,
Ahmedabad) accounts for ~ 50% of
industry turnover
Mumbai
Hyderabad ! South India (Bangalore, Hyderabad,
Pune Chennai) accounts for 36% of industry
revenues

Bangalore Chennai ! North India, mainly the National Capital

region and Lucknow account for the
rest

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 A strong infrastructure of biotech focussed research institutes exists in
the country
•National Institute of Immunology
•Institute of Genomics & Integrative Biology
•Jawaharlal Nehru University
•National Brain Research Centre
•Institute of Microbial Technology
Chandigarh •International Centre for Genetic Engineering & Biotechnology

• Central Drug Research Institute New Delhi

• Industrial Toxicology Research
Centre
Lucknow
Kolkata
•Indian Institute of Chemical Biology

•Centre for Cellular & Molecular Biology

•National Chemical Laboratory
Pune Hyderabad •Centre for DNA Fingerprinting & Diagnostics
•Indian Institute of Chemical Technology
•National Institute of Nutrition
• National Centre for Biological Sciences •International Crops Research Institute for the Semi-Arid Tropics
• Jawaharlal Nehru Centre for Advanced
Scientific Research Bangalore
• Indian Institute of Science

! Biotech industry has support from world-class scientific institutions

like the National Centre for Biological Sciences (NCBS), Indian Institute
of Science (IISc) and Centre of Cellular and Molecular Biology © IMaCS 2007
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The country has several industry specific advantages

! India has the largest English speaking population, after the US

Availability of ! Science/Engineering stream in India produces 3 million graduates, 700,000 post

skilled graduates and 1500 PhDs every year
manpower
! ~15,000 scientists are engaged in the biotech sector
! Manpower costs much lower in India vis-à-vis competing nations

! Outside the US, India has the world’s highest number of FDA approvals
! World-class facilities for generic manufacturing that comply with internationally
High quality
standards in harmonised standards such as Good Laboratory Practices (GLP), current Good
manufacturing Manufacturing Practice (cGMP) and Good Clinical Practices (GCP)
! Well-recognised for low cost fermentation technology and generic biologicals

! Clinical trials can be outsourced to India as the Indian population has similar genetic
Genetic profile
of Indian profile as US and European patients due to joint Aryan descent
population ! Moreover low penetration of medical treatment in the country and the resulting
speed of patient enrollment for trials is an advantage

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Opportunities in India in Biotech

! BioPharma - custom manufacturing in India

" Indian companies have proven manufacturing strengths in making
generic equivalents of bio drugs
" Indian vaccines have huge market in developing markets
By 2010, industry
! Bioservices - outsource from India expected to achieve
" Services like clinical trials, contract research, data management, revenue of USD 5
clinical development services, site management billion and create 1
! BioAgri - sell in India million jobs

" Area under Bt cotton only 8% of total cotton cultivation, immense

opportunity for further sales
" Another modified genetic crop approved in India is brinjal (expected to
be commercially released by 2007 or 2008). Other biotech crops
approved for multi-location trials - cabbage, cauliflower, corn, peanut,
mustard/rapeseed, okra, pigeon pea, rice, and tomato
" Huge potential for biofertilisers and biopesticides

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In conclusion, the key drivers for the Biotech industry are already
present in India

Education
infrastructure
of ~200
research
Large pool of institutes Government
skilled keen on
manpower supporting
industry

WHY INDIA Presence of

Rich biodiversity biotech parks in
and huge base of PPP mode
natural resources

Large no. of
Manufacturing
companies:
processes are
Pharma - 20,000
competitive and
high quality Biotech - 300

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 Medtech industry offers good potential for growth

! Market size 2006 - $1.32 billion

! Market size 2010 - $1.70 billion

! Though the industry ranks in the top 20 in the world, per capita spending on
medical devices is very low at less than USD 1

! Infrastructure for health care still in a nascent stage

" Currently only 0.7 hospital beds and 0.6 physicians per 1000 population
" Public health system unable to cope with changing disease patterns

! Growing investments in private sector healthcare infrastructure, with corporates

establishing premium hospital chains offering world-class healthcare

! Imports dominate costly and high-end medical equipment, whereas medical

supplies and disposables are dominated by domestic producers

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Cancer diagnostic and treatment equipment is the largest
segment

! Cancer diagnostic and treatment equipment (CD&TE) is the largest segment

in medical devices with market size of ~ USD 270 million, accounting for more
than 20% of market

! Incidence of cancer (oral, pharynx and cervix) is on the rise because of very high
usage of tobacco (almost 40% men and 15% women have tobacco-related cancer)

! Both Government and private sector are adding to hospital capacity in India

! Almost 70% of the CD&TE is imported - linear accelerators, CT scanners, cobalt

and branch therapy systems, X-knives, simulators for treatment planning systems,
mammography and fluoroscopy systems

! Low-end CD&TE is manufactured in India

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 In-vitro diagnostic industry is experiencing rapid growth

! In-vitro diagnostic equipment and reagents market in India estimated at

~USD 150 million, of which equipment comprises 40%

! Overall market estimated to grow at more than 25% annually with

increasing health awareness and developing clinical research market;
almost 60% of equipment and supplies are imported

! ~30,000 laboratories in the country servicing about 1.25 million patients per day

! High end laboratories (offering automated chemistry and hematology systems)

account for 30% of patients, second-tier regional laboratories account for 40% of
patients

! Corporate players establishing diagnostic centres in small towns will drive future
growth of imported systems and reagents

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Business opportunities in India - Medical equipment

! Growth in medical equipment and supplies market to be driven by to be driven

by investment in healthcare spend in India

! Sales prospects good for cancer diagnostic, medical imaging, ultrasonic

scanning, plastic surgery equipment and polymerase chain reaction
technologies

! Way to enter India is by way of technically trained distributor, who would also
offer service support for all medical equipment

! International companies present in India include GE, Siemens, Philips, Baxter,

Bayer, Hewlett Packard, Water, Miles, Bohrienger Mannheim, Pickers and
Coulter

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Thank you

© IMaCS 2007
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 For any clarifications on this document, please
contact…..

R. Raghuttama Rao Arati Sood

Managing Director
IMaCS
4th floor, Electric Mansion
Appasaheb Marathe Marg, Prabhadevi
Mumbai - 400 025
Tel : 91 22 3047 0047
Fax: 91 22 3047 0081
email: raghuttama.rao@imacs.in
Manager
IMaCS
Building No. 8, 2nd Floor, Tower-A
DLF Cyber City, Phase - II
Gurgaon - 122 0002
Tel : 91 124 454800
Fax: 91 124 454850
email: arati.sood@imacs.in

© IMaCS 2007
Printed 4-Apr-07
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