1. Is Asia the Answer? Dr. Brian W Tempest www.briantempest.com The 2008 IMS Pharma Strategy Conference New York –12 th February 2008

2. DR. BRIAN W. TEMPEST CSci, CChem, MRSC, BSc, PhD Dr. Brian Tempest advises companies and investment funds on their strategy in Asia based on his wide experience in China, Japan, SE Asia and India where he has lived for the last 9 years and continues to have a home. Tempest has previously been President, Managing Director, CEO, Chief Mentor and Executive Vice Chairman of Ranbaxy Laboratories(the leading Indian Pharmaceutical Company) during the 12 years between 1995 and 2007. He is one of the few westerners (if not the only westerner) to lead a Sensex Nifty 50 Indian blue chip MNC and as a result has a valuable insight into India. Tempest has also been Regional Director Far East for Glaxo responsible for Japan, China, Korea and Taiwan. Tempest has worked in the Pharmaceutical Industry for the last 37 years and led Global Healthcare businesses, R&D and Global Manufacturing Organisations. Tempest has also led Investor meetings across Asia, Europe and USA. He is now a Non Executive Director of Ranbaxy India, an advisor to the JM Financial India Private Equity Fund and a Honorary Professor of the Management School at Lancaster University, UK. He speaks at worldwide conferences on the Challenge from India and China and more information on these presentations is available on www.briantempest.com brian.tempest@gmail.com / brian.tempest@clara.co.ukwww.briantempest.com brian.tempest@gmail.combrian.tempest@clara.co.uk Mobile +91-98100-91192 / Tel:+44 1753 864 616

3. Asia’s Share of the World GDP (at PPP in %) Year 1870 1913 1950 1973 2001 China 17% 9% 5% 5% 12% India 12% 8% 4% 3% 5% Japan 2% 3% 3% 8% 7% Rest of Asia 7% 5% 7% 9% 13% Total Asia 38% 25% 19% 25% 37% Source – WEF - was 59% in 1820 with India 16%, China 33%

4. The View from Europe – the Challenge Source – FT

5. The View from India - a Global Competition

6. The View from the USA – Asian Cars

7. The View from Japan - a Race to Prosperity

8. Japan’s Wealth Advantage Canada 2% Rest of World 10% Japan 27% Germany 4% Italy 4% France 5% UK 6% USA 37% Netherlands 2% Spain 1% Switzerland 1% Taiwan 1% Source: The World Distribution of Household Wealth

9. Is Asia the Answer?  Market drivers  Competition is rising  Branded generics from Asia  IP changes in USA  M&A and Private Equity  East-West Alliances  Drug Development

10. The Asian Productivity Advantage Indiaa usa Pharma view USA 1 chemist Better education x 1.3 1 chemist 70 hours/week Longer working time x 1.3 50 hours/week $ 800 monthly Lower cost x 20 $ 12,000 monthly Sources: IPHMR Conferences, New Delhi August 2004

11. The Asian Education Advantage

12. Engineers/Science graduates p.a – India 0.7m, China 0.5m, EU 0.5m, USA 0.4m, Japan 0.3m

13. Asia’s Youthful Advantage Percentage of Population aged 65 and older 6.9 5 8.3 14.714.8 21.5 29.2 12.3 18.7 21.4 13.2 22.7 ChinaIndiaEuropeNorth America 2000 A 2025 E 2050 E

14. Sources: AXA Framlington Company Expiry 2010 Expiry 2012 Expiry 2011 PfizerAricept - $800mLipitor - $12.1bn Xalatan - $1.6bn Viagra - $1.7bn Detrol - $860m Geodon - $1.1bn Astra ZenecaArimidex - $2.2bnSeroquel - $4.7bnSymbicort - $3.7bn Sanofi-AventisTaxotere - $2bnUS Plavix - $3.8bn Avapro - $2.1bn Lovenox - $3.1bn BMSUS Plavix - $4.8bn Avapro - $1.3bn Abilify - $2.1bn GSKAdvair - $3.8bnAvandia - $2.5bn Patent Expiry Dates 41% 38% 34% 30% 23% % at Risk

15. Asian Competition is Rising CPHI Attendees, Milan, 2 nd – 4 th Oct’07 1.China467 – 33% 2.India189 – 13% 3.Germany96 4.Italy80 5.USA75 6.UK55 7.France55 8.ROW387 Total1404 As registered on July 25, 2007

16. Generics – API’s USA DMF filings by India % Share of USA DMF filings India China 2005 37% 10% 2006 44% 14% Q1’07 48% 17% Q2’07 37% 18% Q3’07 42% 16% Source: US FDA / J P Morgan, 2 may 2007 Source: US FDA, Credit Suisse India China 2004 18748 2005 25287 2006 357128 Source: US FDA / J P Morgan, 6 th August 2006

17. - One in every four ANDAs filed by Indian Companies in top USA FDA filers Source: KPMG - No Chinese generic company has yet filed a USA FDA ANDA but expected in 2008 Generics - ANDAs 24 46 64 144 ANDA Filings in USA by Indian Companies 250

18. Sources: Goldman Sachs 2007 Top 5 Global Pharma Markets 2020 RankCountrySize 1. 2. 3. 4. 5. USA China Japan France India $ 475b $ 125b $ 61b $ 51b $ 43b

19. The Rise of the Indian Middle Class

20. R&D Productivity is Falling

21. Global Pharmaceuticals Sales Trends

22. Global Pharmaceuticals Equity Trends

23. Shareholder Value

24. BCG 100 Challengers CountryTotal State Private China 41 29 12 India 20 0 20 Brazil 13 1 12 Russia 6 3 3 Source BCG

25. Speed of Clinical Trials in India EU India Patients 85650 Sites 225 Time 36m18m Neck Cancer CT Plan Actual Patients 100130 Sites 109 Time 5m2.5m Overactive bladder CT  300 patients, 30 sites $5.6m EU/USA vs $ 1.8m plus 30% faster at $800K per day savings  No. of USA investigators: 2001 - 2006 26,000 18,000 Sources: CT Outsourcing Conference, 24 th July 2007, Mumbai

26. Electronic Data Capture in India % Trials in EDC 2005 2007 25% 45% Savings Paper EDC $2.8m $ 0.5m 2004 data Sources: CT Outsourcing Conference, 24 th July 2007, Mumbai Accuracy - 300 GSK Staff - 2.2m Clinical Data sheets - 450 Trials - No data security issues - Error rate <0.01 / 100k Source: BCG report “Looking Eastward, Sept’2006”

27. Branded Generics  Promotion to doctors rather than pharmacists  Consistent sales year on year  No huge highs & lows for sales and profits  Need field force to promote products  Tend to be profitable  Promoted in conventional manner  Global generic brands  Relevant to Central Europe, East Europe, Latam, Asia  Ranbaxy half branded generics & half commodity generics

28. Branded Generics - the Analyst’s view  “Branded Generics are the most profitable place to be in generics and there are a few markets with better branded characteristics than those of the Middle East and North Africa region” Frances Cloud Nomura September 14 2007

29. Different Global Generic Market Sizes $bn RegionSandoz 2006 IMS 2008 USA2368 West Europe1419 East Europe13NA Japan33 Latam/Canada103 (Canada only) ROW377 Total100

30. ROW Top 10 Generic Markets - $bn

31. IP – USA Pendulum “A key USA Supreme Court ruling KSR VS Teleflex led to Pharmaceutical patents being more easily challenged on the grounds of obviousness, a ruling which immediately came into play when J&J & Merck had a US patent for Pepcid Complete (Famotodine) found to be obvious”. Scrip, July 6 th 2007, p3 The full beneficial impact of this ruling on the generic industry is yet to be seen.

32. Bilateral FTAs - USA Pendulum  Democrats now chairing Committees- Ways & Means  USTR legally required to work within TRIPS  USA has been incorporating TRIPS PLUS IP protection into bilateral free trade agreements  Corrections to bilateral trade agreements eg Peru, Columbia, Panama FTAs TRIPS  Basic product patent  Data protection TRIPS PLUS + Data exclusivity + New forms, isomers etc + New Indications + New Combinations

33. Sources: 1.IMS Midas, March 2005 2.Earth Trend Data Tables 2005 82% of the world population accounts for only 12% of the Global pharmaceutical sales RegionPharma SalesPopulation North America Europe Japan $255 b 47% $158 b 30% $59 b 11% 332 5% 725 11% 128 2% Asia/Africa/Aus Latam 88% $41 b 8% $20 b 4% 18% 4711 73% 558 9% 12% 82% Worldwide$533 b 100%6454 100%

34. Should IP be the same across all Countries? USAThaiChinaIndiaBrazil USD Sources: World Health Report 2005 Per Capita Expenditure on Healthcare 2002

35. Enforcement or Evergreening ? India IP 02/03 06//07 Filed 11466 28882 Examined 9538 14119 Granted 1379 7359 - 140 patent examiners 2007 - 600 more planned - Attrition an issue - Weekly patent journal - IP Appellate Court Source: Business Standard, 16 th Aug’2007 1995 – 2005 FDA cleared 327 drugs 95% pre 1995 – before WTO deal 16 basic patent molecules possible However 9000 Pharma applications - for evergreen changes - for new indications Source: Gopa Kumar “Centre for Trade & Development, Delhi”

36. PCT Filings from Asia PCT Files from Developing Countries 2006 1. Huawei - China 2. LG - Korea 3. Samsung - Korea 4. LG Cem - Korea 5. Elec Telecom – Korea 6. 2TE – China 7. STR – Singapore 8. Ranbaxy – India 9. CSIR – India 10. NHN - Korea Ranbaxy Patent Filings to 2005 24324986146170185

37. M&A activity in India is rising

38. M&A in India YearDeals Investments 2005467 $ 18 b 2006 782 $28 b 2007>1000 $ 70 b Source Grant Thornton Deal Tracker

39. M&A Building the Top Players in the Global Generic Market

40. % PE/VC Share of all Global M&A Deals 5% 6% 9% 16% 17% 21% Sources: Thomson One Banker, BCG Analysis

41. Asian PE Deals CountryNo. of dealsSum Invested - $m China1031489 India901369 Hong Kong5186 Australia2671 Taiwan633 S.Korea3029 Thailand229 Singapore416 New Zealand93 Total2783233 Sources: Thomson Financial in H1 2007 excluding Japan

42. Private Equity Investment in India YearDeals Investments 2004 60 $ 1 b 2005124 $ 2 b 2006 302 $8 b 2007405 $ 19 b Source Grant Thornton Deal Tracker

44. Key Challenges to the Asian Scenario

45. Potential Challenge – Asian Flu* *50% of world chickens bred in Asia

46. CO 2 emission - % of World total in 1990-2000 USA23% EU 2517% China14% Russia7% Japan5% India4% – source: WRI, EIA Potential Challenge – Climate Change

47. Potential Challenge – Infrastructure Source – Manmohan Singh “Our greatest potential will be realised only if we can ensure that our Infrastructure does not become a severe and critical handicap”

48. Corruption Perception Index RankCountry 1Finland, Iceland, NZ 5Singapore 11Austria, Luxemburg, UK 16Germany 20Belgium, Chile, USA 42Mauritius, S.Korea 51South Africa, Tunisia 70Brazil, China, India, Mexico 121Philippines, Russia 163Haiti Sources: Transparency International 2006, selected countries only

49. Potential challenge – Oil prices Source – Assocham A war against Iran could drive oil > $200 a barrel - ‘Times’ 22 nd June 2006 India is expected to import 85% of crude oil by 2012 from 70% today Source – BP

50. Potential Challenge – over the border

51. Potential Challenge - Currency Volatility

52. The Tempest Crystal Ball India will continue to be a Key Driver in the Global Generic Industry Competition is rising – Post TRIPs Indian companies will evolve Discovery companies will continue to be attracted to India for CT, EDC, MO. China will be perceived to be stronger in biology/ toxicology IP changes in US will slowly favor Generics Alliances between Western Biotech and Asians companies will expand. M&A PE deals will grow. Singapore, Vietnam, Bangladesh & Nepal will take a rising importance How to use Asia in Drug Development will become the key opportunity

53. Early discovery leads from USA, Europe or Singapore Molecular optimisation from India Toxicology from China, Central Europe, Singapore Electronic Data Capture India API Manufacture India Drug Formulation Manufacture India, USA Phase 1 Clinical Trials Europe Phase 2,3 heavy use of India Corporate back office India Is Asia the Answer for Drug Development ?

54. “The Indian System looks ramshackle and improvised. But at its best it is capable of brilliance” “When we say the Silicon Valley is built on ICs we don’t mean integrated circuits – we mean Indians & Chinese” “The UK needs to wake up to what India is becoming” Source: DEMOS report – January 2007 Perceptions of Asia

55. Asia economic strength is returning to levels seen in the past India is a global strategic asset for developed markets having many advantages with some challenges. India is a rich location for R&D alliances and CT outsourcing MNCs will dip in & out of India & China South East Asian economies will be driven by India & China Japan will continue to represent a huge share of global wealth “China & India represent the future of Asia and quite possibly the future for the global economy” – Steve Roach, Morgan Stanley Summary

56. Thank You