Bala S' Manian

1

Emerging Trends In Emerging Markets

• By
• Bala S. Manian
• May 2004

2
Background Macro Factors

• RD Productivity issues are fundamentally
  changing the dynamics in Life Science universe
• Requires focus on home run opportunities
• Has increased the risk profile of the RD process
  further
• High cost of RD is orphaning attractive
  opportunities
• Several low risk, attractive opportunities exist
• But upfront cost is too high relative to the size
  of the opportunity
• Cost pressures are starting to limit innovation
  and growth

3
RD Productivity in Pharma
RD in B
NCEs
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Increasing Competition
5
Why not simply Out Source?

• It is a knowledge intensive business.
• Requires multi-disciplinary knowledge.
• IP Rights barriers are derived from knowledge
  generation.
• Knowledge production has a direct impact on
  creating shareholder value.

6
Emerging Trends in Emerging Markets

• Enabling niche opportunities to become economical
  through access to low cost RD
• un orphanizing compelling opportunities.
• Enabling faster RD through access to a larger
  pool of skilled resources at affordable costs
• faster, better and cost efficient.
• Enabling the exploration of alternative
  development methodologies by reducing the amount
  of risk capital
• out of box thinking made affordable.

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What are the Big Questions?

• What are the lessons learned from IT experience
  and how not to repeat the mistakes?
• How to focus on low cost of knowledge
  generation and not simply focus on cost
  arbitrage?
• Is it possible to achieve synergistic growth
  leading to highly valued solutions and not
  result in simple execution of discreet tasks?

8
India An Example

• Strength in synthetic and medicinal chemistry.
• Skills in biochemistry and preclinical biology.
• Strength in information technology and
  statistics.
• Ability to become the leading base for clinical
  trials due to
• Access to vast and diverse disease populations
• Better, faster cheaper clinical trails
• Knowledge traits ingrained in the culture

9
Summary

• US Life Sciences industry in a state of
  transition.
• Market valuations are down significantly, while
  costs continue to be very high
• Shortage of relevant and skilled manpower in US
  and in Europe.
• Even when resources are available, FTE costs in
  US/Europe too prohibitive.
• Cost pressures are starting to limit innovation
  and growth.
• A new paradigm is needed to drive new growth
  opportunities.