Page 1 Life Sciences /Biotechnology Attracting Risk capital and Stimulating Alliances and Joint Ventures Vishal Gandhi Asst. Vice President Life Sciences &Technology, YES BANK LTD

Page 2 The Agenda The Journey India – The Vision India – The Opportunity Life Sciences Clusters/Biotech Parks About YES BANK Life Sciences credentials

Page 3 The Journey

Page 4 Statistics 5,500 companies worldwide 500 are publicly owned $60bn USD plus revenue base Hundreds of products on the market

Page 5 What does LS Encompass? Therapeutics – novel and generic Diagnostics Devices R & D Tools and Reagents Instruments Health Care Delivery – hospitals, clinics Services: CRO; Chemistry; Labs; Pharmacy

Page 6 The Changing Global Life Science Industry Key Issues Need to reduce “time to market” Need to sustain profitability Disease and healthcare management Leading to Changing industry structure Outsourcing and Partnerships Research Alliances Mergers & Acquisitions Emerging service areas

Page 7 USA’s USP

Page 8 The Fuel: Capital Government Spending ($27 bn pa) CAPITAL Venture Capital / Private Equity Scientific Expertise CONCEPT TO MARKET

Page 9 Entrepreneurial Environment Faith in Science Motivating Small companies &individuals

Page 10 Recent licensing transactions between Biotechnology and pharmaceutical companies Neurocrine/Pfizer( Indipion, an insomnia agent): Pfizer gains exclusive worldwide development and marketing rights in exchange for upfront, milestone and royalty payments Millennium/Ortho Biotech (Velcade, a first-in-class chemotherapeutic agent): Millennium retains all US commercialization rights whereas Ortho will keep rights out side the US. Millennium will receive royalties from Ortho on sales outside the US and received an upfront payment of USD 15 million. Milestone payments for clinical development, regulatory development out side the US and sales milestones are included Avanir Pharmaceuticals/Peregrine Pharmaceuticals (An anticancer antibody): In exchange of license fee, milestone and royalty payements for Avanir’s antibody Contd.

Page 11 Indian Response Increased focus on R&D Increased focus on CRAM services (including biologics) Marketing alliances Brand acquisition Adoption of product patent regime Life Science focused VC funds Development of Life Science Clusters with shared wet lab infrastructure

Page 12 India - The Vision

Page 13 Statistics Domestic market – $1.46 billion in – Estimated at $5 billion by 2010 India expected to contribute 8% of the world's biotechnology market by Over 200 biotech companies Total bioscience investment of nearly $150 million USD Significant promise of Growth

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Page 19 India – The Opportunity

Page 20 Research & Development India is positioned to grow into a major R&D center for biotechnology companies on the basis of Low Cost Skilled Workforce

Page 21 Advantage India Growing demand for biotechnology products Rich biodiversity Strong R&D base Wealth of well educated human capital.

Page 22 Base Powerful and inexpensive information base India advantage from a clinical trials standpoint Access to large number of patients Sophisticated network Short patient recruitment times

Page 23 Patent Protection being strengthened Regulations established to approve Genetically modified crops Recombinant therapeutics Guidelines for Stem Research Effective 1 st Jan, 2005 TRIPS agreement expected to increase foreign investment and improve the environment for R&D and forging new global alliances Achievements

Page 24 Venture Capital & Government SBIRI (DBT) APIDC-TDB PRDF (DST) NMITLI (CSIR)

Page 25 Life Sciences cluster /Biotech Parks

Page 26 Characteristics of Life Sciences Cluster A Cluster can be defined as a geographically proximate group of companies and associated institutions in a particular field linked by commonalities and complementarities – Where, value of the system as a whole is greater than the sum of its parts – Are usually seeded and evolve organically – It is observed worldwide that innovation driven companies thrive better in clusters

Page 27 Elements of Life Science Cluster R&D Institutions with strong industry linkages Availability of finance Support Services Companies – vendors, suppliers, law firms, VCs Life Science Parks/ Incubators to nurture SMEs Innovative SMEs, Startups Anchor companies Life Science Cluster Good common infrastructure

Page 28 Leading Life Science Clusters According to Minnesota Biomedical and Bioscience Network report on leading life science clusters as of there are – 12 Life Science Clusters in EU (Germany, France, Switzerland, Belgium, Sweden, Finland) – 11 in USA – 14 in Asia-Pacific (including Hyderabad,Bangalore and Uttranchal from India) – 4 in UK and Ireland – 3 in Australia – 3 in Canada – 2 in South America – 1 in Africa – 1 in Middle East

Page 29 Genome Valley Cluster, Hyderabad 600 sq. km in three blocks around Hyderabad designated as Genome Valley for life sciences growth Life Sciences R&D institutions CCMB, IICT, CDFD, NIN, ICRISAT, Univ of Hyderabad etc. Biopharma Companies Shantha Biotechnics, Indian Immunologicals, Bharat Biotech, Biological Evans, Krebs Biochedmicals, Ocimum Biosolutions, Dr. Reddy’s Laboratories etc. Contract Research Organisations Vimta labs, Suven Life Sciences, GVK Biosciences, Magene Life Sciences etc. Hospitals, clinicians involved in R&D and clinical research Dedicated biotech fund - APIDC Venture Capital Life Science Parks/ Incubators ICICI Knowledge Park, SP Biotech Park, ICRISAT Agri-park and Incubator, Incubator at Univ. of Hyd.

Page 30 Offerings of Life Science Clusters Generally infrastructure driven shared facility offering innovation driven SMEs and startups the right location and fulfilling some of the other listed needs – Shared infrastructure & admin support lowering overheads – Low capital investment – ready to use infrastructure – Network creation and international knowledge flow – Competitive environment – Facilitating Technology Transfer, fundraising, marketing – Mentoring for incubatees – Knowledge building - introducing/ strengthening codes and conventions through shared learning Can be government driven, private initiative, public-private partnership or university led – Government’s role in removing entry barriers crucial

Page 31 What VC’s Look For Technology backed by defendable IP Business model Valuation/Exits: 5-10x return Cost of development and time lines Competition

Page 32 VC Value Proposition Financing: long-term equity Business Partner: share risk and reward Networks: Access to expertise and alliances Mentoring Exit

Page 33 India biotech investment opportunities driven by its competitive advantages 1.Drug Discovery: Deep knowledge base of traditional medicine to aid in drug discovery. Large Bio diversity of plant / marine / animal to aid in drug discovery / production & nutraceuticals. 2.Clinical trials: Large drug naïve populations for rapid and low cost clinical trials. 3.Services focusing on the huge domestic market: –Huge domestic markets with specific needs that can provide scale advantages to companies addressing these needs: availability of drugs, diagnostic services, healthcare delivery, health insurance, etc. 4.Contract research/ manufacture: –chemistry skills, that can lead to strength in process design, contract manufacturing, laboratory drug discovery related services. 5.Orphan drug discovery & development: Low cost skilled labor with easy availability provides the ability to build contract manufacturing and services businesses; build drug discovery businesses focused on orphan drugs, etc. 6.Bioinfomatics services : strong IT skills to aid in developing IP in a number of the services areas that Indian companies are involved in. 7.Stem cell / GM crops: Enabling policies that help development in Stem cell/ banking research, GM crops, etc.

Page 34 Tech Transfer

Page 35 Technology Transfer Licenses Potential Licensees/Licensors –Small company that lacks the facilities to do basic research of its own and wishes to buy the products of others’ research –Larger research based-based company which wishes to expand its product line or investigate new areas of research

Page 36 Commercial & Financial Considerations of a Biotech/Pharma License Agreement Commercial & Financial Considerations of a Biotech/Pharma License Agreement ® ____________________________

Page 37® ____________________________ Commercial Clauses Commercial Due Diligence Clauses Commercial Due Diligence Clauses - Clauses Relating to Development - Clauses Relating to Working/Marketing Product-By-Product Product-By-ProductMarket-By-Market

Page 38® ____________________________ Financial Clauses Milestones Milestones Annual Payments/Maintenance Fees Annual Payments/Maintenance Fees Upfront Payments Upfront Payments

Page 39 Life Sciences & Technology

Page 40 Corporates : Private Equity and M&A United Phosphorus Ltd. Advisory for Acquisition of agrichem business in India 2005 Ranbaxy Laboratories Ltd. Exclusive advisor to Ranbaxy for divestment of 100% holding in Ranbaxy Fine Chemicals Limited 2005 Medreich Limited Advisory for private equity fund raising of US$ 25 million 2005

Page 41 Corporates: Business Advisory Large Global Generic Company Advisory for product portfolio analysis and suggested growth strategies for the domestic market 2005 Large Global Pharmaceutical Company Advising a large MNC Company for setting up its R&D facility in India 2005

Page 42 Corporates: Key Relationships

Page 43  Membership of various national & international level bodies  OPPI  IDMA  ABLE  BCIL  TiE  Providing advisory and fund based services to agriculture, life sciences & biotechnology companies and government bodies  Provide advisory services for Infrastructure related projects such as life science and IT parks etc. jointly with YES’ Infrastructure team  Assist customers in their M&A transactions by coupling our sectoral / industry knowledge with the experience of YES’ M&A team Sectoral Focus & Strength  FICCI  CII  PHDCCI

Page 44 M&A League Tables

Page 45 Case Study - Pune BT Park Background oMIDC wanted to set-up the first ever Biotech park at Pune oAn offshoot from new expressway between Mumbai and Pune. oSupporting bio-pharmaceuticals, diagnostics, vaccines companies oMIDC invited private developers for joint development, promotion and marketing of the proposed park Consultants’ Role oCarried out the overall conceptualization of the park oCreated Information Memorandum to invite private participation and created the selection criteria for private partner oProvide hand-holding till the finalization and structuring of the deal with the selected private partner

Page 46 Pune BT Park The Proposed Concept Specialised biotech facilities (BioResource Centre) Common Utilities Specialised office space for customised labs Business Facilitation Centre Common Amenities Block Developed land area for GMP facilities Biotech Park Infrastructure RESIDENTIAL COMPLEX

Page 47 Pune BT Park Current Status oTCG (88% Equity) is developing the park in conjunction with MIDC oThree of YES BANK’s clients have already taken space at the park oYES BANK recently got a client from US for leasing facilities at Pune BT park oTCG has approached YES BANK for advisory services towards building the requisite infrastructure and inviting new tenants Revenue models oSale of Plots and Office Space (Long Term Lease) oRentals from BioResource Centre, Build-to-suite premises oA charge on the IPR generated from the park

Page 48 Government Assignments -examples Advising GOM for developing Mumbai into a Biotech Hub Member of the Screening Committee in SBIRI. SBIRI is a scheme launched by DBT that supports the high-risk pre-proof-of- concept research and late stage development in small and medium companies

Page 49 Thank you