The document discusses recommendations for Gedeon Richter, a generics pharmaceutical company, to address challenges from industry trends toward lower-cost generics and biosimilars. It recommends that Gedeon Richter partner with a biotech firm to develop a biosimilars business, outsource generics manufacturing to India to lower costs, and focus resources on the higher-growth biosimilars market to strengthen its position and financial performance.

1. Gedeon Richter Producing the Next Generation of Generics Erica Chau | Andy Chiu | Nicole Lee | Lisa Liu | Haonan Zhang

2. Agenda The Company The Industry The Challenges Recommendations Conclusion The Company The Industry The Challenges Recommendations Conclusion

3. Market Position Composition of Global Pharmaceutical Market CAGR 2004-08 (%) Pfizer Bayer 40 Servier 30 Gedeon Richter GlaxoSmith Kline 20 Sales growth 2007-08 (%) The Company The Industry The Challenges Recommendations Conclusion Zentiva Novartis Sanofi-Aventis 10 Krka 5 10 15 20 25

4. Sales Composition The Company The Industry The Challenges Recommendations Conclusion

6. Well-diversified export base

7. Strong position in gynecological drug market

8. Early investor in biotech

9. Long-term value in biosimilars

10. Potential growth in branded products and OTC medicines

11. Increasing focus on generic drugs

12. Size of firm limits extensive global expansion

13. Sales are highly correlated with stability of CIS region

14. Stricter governmental policies and regulations

15. Declining domestic sales

16. Increasing competition in generic market and downward pricing pressuresThe Company The Industry The Challenges Recommendations Conclusion

17. Rising Health Care Costs The Company The Industry The Challenges Recommendations Conclusion

18. Industry Structure Shift Traditional Pharmaceutical Industry New Pharmaceutical Industry The Company The Industry The Challenges Recommendations Conclusion Licensing deals & alliances

19. Industry Growth Comparison The Company The Industry The Challenges Recommendations Conclusion

20. Business Concerns Company facing increased pressure from the trend toward biosimilars Customers demanding less expensive generic drugs The Company The Industry The Challenges Recommendations Conclusion

21. Our Recommendations Prepare Gedeon Richter for industry trend toward biosimilars Company facing increased pressure from the trend toward biosimilars Customers demanding less expensive generic drugs The Company The Industry The Challenges Recommendations Conclusion Partner with biotech firm to develop biosimilar business Outsource generics manufacturing to India

22. Why Biosimilars? The Company The Industry The Challenges Recommendations Conclusion

23. What Are Biosimilars? The Company The Industry The Challenges Recommendations Conclusion

24. GR Experience in Biotech Management made a decision in 2006 to start recombinant biotechnological activities Gedeon Richter and Helm AG acquired Strathmann Biotech for R&D laboratory, pilot plant, and manufacturing unit The Company The Industry The Challenges Recommendations Conclusion Constructed a biotechnology plant in Budapest, operational in 2009 Made a greenfield investment in manufacturing plant in Debrecen for mammalian cell development

25. Potential Partners The Company The Industry The Challenges Recommendations Conclusion Yes No

26. Shifting Focus The Company The Industry The Challenges Recommendations Conclusion

27. Outsource Generics to India Why Outsource? Frees current resources to focus on biosimilars Low costs help GR compete in generics market The Company The Industry The Challenges Recommendations Conclusion Maintains current generics business line

28. Outsource Generics to India Why India? Large pool of skilled labor for low cost to reduce production costs by approximately 40% Indian government building facilities that are compliant to Western standards The Company The Industry The Challenges Recommendations Conclusion Produces 30% of world’s generics – high capacity and capability Substantial export potential with well-established connections to other countries

29. Financial Results Actual DCF The Company The Industry The Challenges Recommendations Conclusion

30. Financial Results Proforma DCF The Company The Industry The Challenges Recommendations Conclusion

31. Strategy Analysis Potential Risks/Weaknesses How We Address the Concern Potential of relationship with partners failing Perform extensive analysis of potential biotech partners India has strength in generic manufacturing and distribution; perform frequent quality control Compromising quality of generics business Maintain well-diversified portfolio; have higher rate of success by partnering; by entering the biotech market which is outpacing the traditional pharma market Failure to realize return on biosimilar investment The Company The Industry The Challenges Recommendations Conclusion Increase potential of earning more Sharing profits Extensive analysis of countries prior to entering Country risk

33. Finalize the contract with the pharmaceutical manufacturing company

35. Examine facilities of viable generics manufacturing options in India

36. Start negotiations with the Indian companies

37. Finalize the contract with the biotech firm

39. Leasing out Property & Equipment The Company The Industry The Challenges Recommendations Conclusion

40. Timeline of Patent Expiries The Company The Industry The Challenges Recommendations Conclusion

41. Problems with Biosimilars The Company The Industry The Challenges Recommendations Conclusion

42. Biotech partnering with RG Benefits for Biotech Firm Strong trend towards partnerships Decreases risk of unsuccessful discovery process and increases financial support The Company The Industry The Challenges Recommendations Conclusion Knowledge on regulations in the EU Increases international reach and marketing skills