1. www.cvchem.com Bhaskar R. Venepalli President CiVentiChem LLC PO Box 12041 Research Triangle Park, NC 27709 Tel:919-642-0100; Fax:919-642-0103 Cross-Border R&D Alliances – A Perspective from US Companies

2. www.cvchem.com US Pharmaceutical industry US Pharmaceutical industry New products development New products development $$ Spent vs. products approved $$ Spent vs. products approved Innovation – Where? Innovation – Where? Alliances Alliances Key success factors Key success factors Conclusion and examples Conclusion and examples Cross-Border R&D Alliances – A Perspective from US Companies

3. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies

4. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies

5. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies

6. www.cvchem.com US Pharmaceutical industry US Pharmaceutical industry Mergers Mergers Living off few blockbuster drugs Living off few blockbuster drugs Sales revenue vs. R&D spending Sales revenue vs. R&D spending New products approved New products approved Conclusion and key learnings Conclusion and key learnings Cross-Border R&D Alliances – A Perspective from US Companies

7. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies Global Sales 2001 Sales% of Global Word Audited Market($ Billons)Sales North America$181.8050% Europe8824 Japan47.613 Asia, Africa, Australasia27.98 Latin America18.95 Total$364.20100% C&E News, Dec 12, 2002

8. www.cvchem.com Aventis : Fisons, Hoechst, Marion Dow, May & Baker, Rhone-Poulenc, Rorer, Roussle Uclaf Aventis : Fisons, Hoechst, Marion Dow, May & Baker, Rhone-Poulenc, Rorer, Roussle Uclaf GSK: Allen&Hanburys, Beckman, Beecham, Burroughs, Wellcome, Glaxo, Smith Kline & French GSK: Allen&Hanburys, Beckman, Beecham, Burroughs, Wellcome, Glaxo, Smith Kline & French Novartis : Biochemie, Ciba, Geigy, Sandoz Novartis : Biochemie, Ciba, Geigy, Sandoz Pfizer : Agouron, Kabi, Monsanto (Searle), Pfizer, Pharmacia, Upjohn, Warner-Lambert Pfizer : Agouron, Kabi, Monsanto (Searle), Pfizer, Pharmacia, Upjohn, Warner-Lambert Wyeth (formerly AHP): American Cyanamid, Ayerst, Genetics Institute, Lederle, Whitehall, Wyeth Wyeth (formerly AHP): American Cyanamid, Ayerst, Genetics Institute, Lederle, Whitehall, Wyeth US Pharmaceutical Companies – Path to Dominance by Mergers

9. www.cvchem.com Top Ten Pharmaceutical Companies Changes at the top – Mergers? 1990 Global2000 Global Market RankCompanyNationalityShareCompanyNationalityShare 1Merck & Co.U.S.3.80%PfizerU.S.7.10% 2Bristol-Myers SquibbU.S.3.5Glaxo SmithKlineU.K.6.9 3GlaxoU.K.3.3Merck & Co.U.S.5.1 4SmithKline BeechamU.K.2.9AstraZenecaU.K.4.4 5Ciba-GeigySwiss2.8Bristol-Myers SquibbU.S.4.1 6American Home ProductsU.S.2.6NovartisSwiss3.9 7HoechstGerman2.6Johnson & JohnsonU.S.3.9 8Johnson & JohnsonU.S.2.2AventisFrench3.6 9Eli LillyU.S.2.2PharmaciaU.S.3.2 10BayerGerman25.2American Home ProductsU.S.2.6 Top 10 Total 28.40% 45.20% C&E News Dec 12, 2002

10. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies C&E News, July 7, 2003

11. www.cvchem.com Of 1,035 drugs approved by US FDA between 1989 and 2000: Of 1,035 drugs approved by US FDA between 1989 and 2000: Only 351 were based on NMEsOnly 351 were based on NMEs 674 contained APIs already available with other brands – new formulations674 contained APIs already available with other brands – new formulations Old drugs in new bottles!!!

12. www.cvchem.com R&D Spending by big pharma – Key learnings R&D Spending by big pharma – Key learnings Innovation is the key for successInnovation is the key for success Complicated further - Genome informationComplicated further - Genome information New product development – Slow processNew product development – Slow process CompetitivenessCompetitiveness It is a RISKY Business: A possible solution –It is a RISKY Business: A possible solution – Diversify risk through AlliancesDiversify risk through Alliances Cross-Border R&D Alliances – A Perspective from US Companies

13. www.cvchem.com High Risk Process: 11-15 Years, $800MM+ Preclinical Pharmacology Preclinical Safety Millions of Compounds Screened Idea Drug 11 - 15 Years 1 - 2 Products Discovery Exploratory Development Full Development Phase I Phase IIPhase III 015 5 10 Clinical Pharmacology & Safety ~100 Discovery Approaches R&D Cost for NME Introduction

14. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies

15. www.cvchem.com Peter Drucker defines innovation as the “Purposeful response to change” Peter Drucker defines innovation as the “Purposeful response to change” Innovation is a social process Innovation is a social process Innovation is NOT just technology – It is new partnerships, new governance structures, new ways of doing business Innovation is NOT just technology – It is new partnerships, new governance structures, new ways of doing business Thus Innovative scenario implies that all citizens are competitive in the new economy Thus Innovative scenario implies that all citizens are competitive in the new economy “Globalization” of innovation in life sciences “Globalization” of innovation in life sciences Competitiveness = Innovation

16. www.cvchem.com “Globalization” of innovation in life sciences “Globalization” of innovation in life sciences R&D centers in many parts of the world R&D centers in many parts of the world Scientists in India are as good as scientists in other countries Scientists in India are as good as scientists in other countries Alliances across borders Alliances across borders Cross-Border R&D Alliances – A Perspective from US Companies

17. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies

18. www.cvchem.com Cross-Border R&D Alliances – Opportunities

19. www.cvchem.com Alliances with in USA Alliances with in USA Fee for serviceFee for service IP ownershipIP ownership Milestone paymentsMilestone payments EquityEquity Proven to be successful - examplesProven to be successful - examples Global Alliances Global Alliances Cross-Border R&D Alliances – A Perspective from US Companies

20. www.cvchem.com Global Alliances – Challenges Global Alliances – Challenges DistanceDistance Different time zonesDifferent time zones LanguageLanguage Communication channelsCommunication channels BT is different from ITBT is different from IT Cross-Border R&D Alliances – A Perspective from US Companies

21. www.cvchem.com Global Alliances – Success factors Global Alliances – Success factors Honesty and trustHonesty and trust IP issuesIP issues Meet delivery targetsMeet delivery targets Fulfill the commitments madeFulfill the commitments made “Under-commit and over-deliver”“Under-commit and over-deliver” Cross-Border R&D Alliances – A Perspective from US Companies

22. www.cvchem.com R&D Alliances – Opportunities for Indian companies R&D Alliances – Opportunities for Indian companies Discovery chemistryDiscovery chemistry Computational and in-silico design - bioinformaticsComputational and in-silico design - bioinformatics BiologyBiology Methods developmentMethods development API and intermediate manufacturingAPI and intermediate manufacturing Cross-Border R&D Alliances – A Perspective from US Companies

23. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies Types of alliances for Indian companies Types of alliances for Indian companies Fee for serviceFee for service Joint VentureJoint Venture PartnershipsPartnerships Subsidiaries and branchesSubsidiaries and branches Lessons for Indian companiesLessons for Indian companies Move away from fee for service to more closer relationships like future royalties Move away from fee for service to more closer relationships like future royalties

24. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies Alliances by CiVentiChem Alliances by CiVentiChem Formation of a subsidiaryFormation of a subsidiary Indus BioSciences Indus BioSciences

25. www.cvchem.com About CiVentiChem in RTP, NC About CiVentiChem in RTP, NC Modern laboratoryModern laboratory Capacity to work from milliliter to 50 litersCapacity to work from milliliter to 50 liters Access to excellent scientific talent and facilitiesAccess to excellent scientific talent and facilities Established relationships with several pharma/biotech companiesEstablished relationships with several pharma/biotech companies High pressure/temperature equipmentHigh pressure/temperature equipment Access to UNC-Chapel Hill, Duke and NC StateAccess to UNC-Chapel Hill, Duke and NC State Cross-Border R&D Alliances – A Perspective from US Companies

26. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies – CiVentiChem Services Discovery Development Genomics Genomics Sequenci ng Target ID Screening Natural Products and Synthesis HTS LeadOptimizationPre-ClinicalDevelopment Lead ID ClinicalTrials FDA Launch ($$$$) TargetValidation AssayDevelopment Cell Biology Chemistry Biology SystemPathways Proteomics Proteomics

27. www.cvchem.com Our Customers Our Customers Pharma, Biotech, Virtual, Crop Sciences etcPharma, Biotech, Virtual, Crop Sciences etc Their needs Their needs Global capabilities- small to large scaleGlobal capabilities- small to large scale Quick serviceQuick service Good communication and customer serviceGood communication and customer service Novel methodologiesNovel methodologies New technologies and productsNew technologies and products A new initiative - Indus BioSciencesA new initiative - Indus BioSciences Cross-Border R&D Alliances – A Perspective from US Companies

28. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies

29. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies 12,000 Sq Ft modern R&D laboratory in Hyderabad, India In the vicinity of IICT and Osmania University Contract R&D, scale-up synthesis and technology development

30. www.cvchem.com Indus Biosciences Cross-Border R&D Alliances – A Perspective from US Companies Customers CiVentiChem Primary contact

31. www.cvchem.com Our services Our services Discovery support and lead optimizationDiscovery support and lead optimization Chemists - FTE at CiVentiChem and IndusChemists - FTE at CiVentiChem and Indus Synthesis of intermediates, APIs, reference standards and metabolitesSynthesis of intermediates, APIs, reference standards and metabolites Small and large scale synthesisSmall and large scale synthesis Commercial or contract manufacturingCommercial or contract manufacturing Goal is to establish a win-win relationsGoal is to establish a win-win relations Cross-Border R&D Alliances – A Perspective from US Companies

32. www.cvchem.com Cross-Border R&D Alliances – A Perspective from US Companies In Summary In Summary Cross border alliances are beneficialCross border alliances are beneficial Mutual commitmentMutual commitment It is like marriage – all partners must work hardIt is like marriage – all partners must work hard Can lead to a great successCan lead to a great success