Hale & Tempest Exploring the Structural Changes in the Global Pharmaceutical Marketplace Dr. Brian W Tempest 9 th Annual Global Generic Strategy Summit Barcelona, Spain 14-16September 2010

Hale & Tempest Dr Brian Tempest advises Companies, Banks, High Net Worth Individuals and Investment Funds on their Strategy in the Emerging World based on his wide experience in China, Japan, South East Asia and India where he has lived for the last decade. Brian has worked for Ranbaxy Laboratories since 1995 holding the position of Managing Director and Chief Executive Officer until He was then Chief Mentor and Non Executive Director until He is one of the few westerners to have led a Sensex Nifty 50 Indian blue Chip MNC and as a result has a valuable insight into India. Brian has also been Regional Director, Far East for Glaxo where he was responsible for businesses in Japan, China, Korea, and Taiwan. Brian has worked in the Pharmaceutical Industry for the last 39 years and led Healthcare businesses in North America, South America, Europe, Africa, Middle East, Asia and India. He has also led sessions at Investor Meetings across Asia, Europe and USA. He is now an International Advisor to MAPE – India, Religare -India and UNCTAD - Switzerland. In addition he is a member of the SCRIP Global awards panel. Brian speaks at global conferences on the Challenge from India and China and more information on these presentations can be found on his website Brian has a PhD in Polymer Chemistry from Lancaster University and is a member of the Royal Society of Medicine, the Royal Society of Chemistry and is a Chartered Chemist. He is now Chairman of Hale & Tempest Co Ltd.

Hale & Tempest Healthcare Pressures to 2050

Hale & Tempest Emerging World’s Perceived Economic Health in 2009

Hale & Tempest The Future? - Pharma Vending Machines currently being test marketed in UK Hospitals & Supermarkets 2010

Hale & Tempest Structural Change: Big Pharma

Hale & Tempest Big Pharma- Despite increasing R&D NCE Productivity continues to fall

Hale & Tempest Approvals becoming Difficult Source: Pharmatimes UK July-August 2010

Hale & Tempest Many Drugs withdrawn this Decade Source: Deutsche bank, FDA

Hale & Tempest EC Surprise Anti Trust Raids 2008/9  1 st - GSK, Astra Zeneca, Sanofi Aventis, Pfizer, Wyeth, Teva in January 2008  2 nd – Teva, Servier, Kirka in November 2008  3 rd – Sanofi Aventis France, Novartis France, Teva France in October 2009  4 th – Lundbeck Italy, Teva UK in December 2009

Hale & Tempest Generic Exposure

Hale & Tempest Sales Force Job Cuts in Press since 2009

Hale & Tempest USA – Many OTC Switches this Decade Source: Deutsche Bank

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

Hale & Tempest Emerging World Share of Pharma Growth source IMS

Hale & Tempest Emerging World Share of Pharma Source EIU, OECD, WHO, IMS, Roland Berger

Hale & Tempest Profitability in Branded Generic Markets

Hale & Tempest Big Pharma & the Emerging World source IMS - BRIC, Mexico, Turkey, South Korea

Hale & Tempest India Rankings Abbott now has 7000 reps & 7% Market Share

Hale & Tempest Emerging Markets & Big Pharma

Hale & Tempest A New World Order is Coming with New Alliances

Hale & Tempest Structural Change: Generic Companies

Hale & Tempest Patent Expiries (in 8 Markets)

Hale & Tempest USA Generics Filings Source: Deutsche bank July 2010

Hale & Tempest USA - First to File Lawsuits Source RBC Capital Markets January

Hale & Tempest USA - Litigation Success Rates Source RBC Capital Markets January  Patent Challenges on rise - 65 FTFs in 2009  Success rate at 48% - or 76% including deals  3 courts hold 69% with 36% success e.g. NJ  4 courts never ruled against generics e.g. NY  At risk launches on the rise – 6 in 2009  Teva has 12 of the 28 at risk launches – 2002/9  Settlements on the rise – 54 in 2009  Teva accounts for a third of all settlements  Authorized generics on the rise – 25 in 2009  Watson represents a fifth of all AGs

Hale & Tempest USA Challenge – Size of Product Basket Source: Deutsche Bank

Hale & Tempest Distributors moving into Generics UK Coop – the world’s largest consumer cooperative  GBP£10b UK company  running food stores, banks, insurance, funeral homes, travel agents, farms and pharmacies  3 rd rank pharmacy chain in UK with 800 stores  Owns UK pharmaceutical wholesaler Sants  Opus Marketing JV with Day Lewis Pharmacy Chain offers 113 products under “Prospect” brand  Tianjin Tasly Sants Manufacturing JV opens 2010/11  With Investment GBP£20m, 200 staff

Hale & Tempest Generic Profit Margin Profile in descending order source: Deutsche Bank July 2010

Hale & Tempest Top 22 Generic Companies over $1b Source: Company Reports Generics Bulletin 28 May 2010 (excludes Apotex & Actavis Private Companies)

Hale & Tempest Next18 Generic Companies < $1b Source: Company Reports Generics Bulletin 28 May 2010 (excludes Recalcine Private Company)

Hale & Tempest Structural Changes: Indian Pharma Companies

Hale & Tempest Indian Generics have consistently outperformed USA Generics

Hale & Tempest To understand India, understand the promoter families McKinsey Quarterly 16 Jan 2010  Family ownership -often overlooked  1/3 of S&P500 index, 40% of top 250 Cos Fr/Ge  <30% survive into the 3 rd generation  Survivors do better than their corporate peers  Family Councils, Wealth Management Offices  Every generation has a liquidity event  Families renew their portfolios over time

Hale & Tempest Indian Deals Roaring Ahead July 2010 Grant Thornton Deal Tracker

Hale & Tempest Indian DMFs 62% April 2010

Hale & Tempest Chinese DMFs 22% April 2010

Hale & Tempest India represents 50% of USA ANDAs

Hale & Tempest FDA Approved Manufacturing Sites source FDA

Hale & Tempest Early discovery leads from US, Europe, Taiwan, Singapore Molecular optimisation from India Toxicology from China, Central Europe, Singapore Electronic Data Capture from India API Manufacture from India with Raw Materials from China Drug Formulation Manufacture from India, USA Phase 1 Clinical Trials from Europe Phase 2,3 heavy use of India Corporate back office from India The Indian Drug Development Model

Hale & Tempest India – Share of CRAMS Market

Hale & Tempest Chinese ANDAs are Coming

Hale & Tempest The Tempest Crystal Ball Asia will become the Centre of Gravity for global business Big Pharma will develop Emerging World Strategies, Generics Strategies, OTC Strategies, Vaccine Strategies, VC Strategies Big Pharma will continue to be attracted to India for CT, EDC, MO. and to China for RM/Biology/Toxicology Big Pharma will develop dual IP as well as dual pricing Many Indian families are reviewing their family portfolios and will optimize their holdings. M&A will consequently expand further In Commodity Generics risks and competition will rise further. Branded Generics will continue to be very attractive Monoclonals will be the next generic wave from India

Hale & Tempest Thank You