Showing posts with label US. Show all posts
Showing posts with label US. Show all posts

Saturday, April 27, 2013

So far, it just about fits the prescription

In the past couple of years in particular, Indian pharma companies are seeing the fruits of their labour, particularly in the US generics market. However, retaining their competitive edge may not be as simple

For Big Pharma, this is a period of unprecedented difficulty, a time to retrospect on past failures. However, Indian generic firms are bang in the middle of a potential dream run. As a recent Frost & Sullivan report points out, drugs worth around $150 billion are expected to go off patent protection globally. This naturally opens a huge window of opportunities for Indian drug manufacturers. Are they ready?

Profitability figures certainly suggest that some players are moving away from the shadow of a difficult past in the latter part of the previous decade. Sun Pharma, which has got the highest number of drugs in its ANDA (Abbreviated New Drug Application) pipeline, reported revenues of Rs.40.15 billion, a growth of 29.3% yoy. Its net profit stood at Rs.19.27 billion, growing by 39% yoy; and it gained 13 places in the Power 100 list to rank at 41. The US business of Sun Pharma alone grew by nearly 30% in the same period. Cipla’s profit rose by 16% yoy to reach Rs.11.23 billion in FY 2011-12 and it was ranked 65 in the Power 100 (a gain of 12 positions). Dr. Reddy’s Laboratories, which has just entered the BSE-30, also reported a healthy 28% rise in topline in the fiscal to reach Rs.67.39 billion. Its net profit, however, grew by just 2.1% yoy to Rs.9.12 billion, even as it gained two places to be ranked 80 in the B&E Power 100. The company was stung by the poor performance of its generic version of Zyprexa and falling margins in its core business. Contrarily, launches of generic versions of Caudet and Zyprexa have helped Lupin. It managed double digit growth in US. However, its PAT for FY 2011-12 shrank nominally and stood at Rs.8.04 billion owing to high depreciation and interest costs; taking its rank to 86 (a gain by two positions). The BSE Healthcare Index surged by around 5.6% yoy and has outperformed the Sensex by around 14 percentage points.

In 2010 and 2011, companies like Glenmark, Aurobindo and Sun Pharma were able to further consolidate their positions in the US generics market by bagging around 33% of ANDA approvals from the US Food and Drug Administration (FDA). The FDA approved a 2,244 ANDAs between 2007 and 2011, of which Indian companies grabbed final approval for 694.

Considering the intense competition from their BRICS counterparts, the figure holds high significance. During the same period, aggregate tentative approvals by FDA reached 518, out of which Indian companies secured 200 (FDA data).

Also, Indian companies are consistently growing their para IV filings and niche complex chemistry molecules. Most of these segments, especially injectables, inhalers, ophthalmic, oral contraceptives and controlled release products are set to lose patent guard beyond 2012. Moreover, being characterized by complex manufacturing techniques, entailing greater investments in R&D and manufacturing, these segments have higher entry barriers and thereby potential for higher profitability. Also, the percentage of US FDA approvals won by Indian firms has jumped from 27% to 33%. Raghavendra Saha, Senior Advisor, CII asserts, “In the past 15 years, not even a single new molecule has been found. Hence, it isn’t hard to claim that the era of blockbuster drugs has gone and the future belongs to generics.”

However, Indian companies need to manage their litigation processes well, since this led to massive cost escalations in the past, particularly with Ranbaxy Laboratories (incidentally, the Daiichi Sankyo-owned company declared a loss of Rs.30.52 billion for the nine months ending December 2011, as per its most recent report). Dr. Kamal Kumar Sharma, MD, Lupin Ltd. says, “At Lupin, we do not chase any and everything possible. We try to sort out and identify cases where we have a decent chance of winning.”


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Friday, April 19, 2013

The agony & hope for India’s domestic airlines: call it ‘FDI’

B&E analyses the outcome of allowing foreign carriers to invest in India’s domestic airlines. Finally some good news, many presume. The reality is actually quite the opposite.

If North American carriers have set standards of growth over the years, so have airlines in India. Only difference is – for India’s domestic industry, growth has always come in a package of losses. And over the years, despite optimism galore, all we can discuss aloud are the canyons of losses which have been etched into their financial books. Exaggerated? Turn the clock back to 2006, when airlines around the world returned to their profit-making ways after half-a-decade-long patch of drought. Since then (leading up to FY2010), global airlines have recorded profits amounting to $18.70 billion. Of this, North American carriers contributed $5.7 billion. The Indian carriers on the other hand, have been living on a prayer. Despite a 48.83% jump in total passengers carried (in FY2010-11), a 64% increase in the number of operational airports (to 82), and a 158.13% jump in fleet size, their losses have only escalated. During a five year period, when global airlines made billions, India’s domestic carriers lost $5.43 billion.

The carnage on Indian airstrips for years now, has been visible. Woebegone tales of the big three – Air India (AI), Kingfisher (KFA) and Jet Airways (Jet) – requiring urgent cash infusion have become a daily back-fence talk in the aviation circles. [A fast fact: since FY1997-98 the big three have recorded losses and debt to the tune of $3.186 trillion – roughly three times India’s GDP in FY2010.] So have strikes by pilots and other staff, winding up of operational arms to reduce losses, and problems with ATF prices and taxes levied on it by various States. The big domestic airlines got into a mode of unceremonious self-slaughter by trying to outdo each other played against them. The stifling environment did the rest.

So what is the Ministry of Civil Aviation’s (MoCA) last resort to keep the industry afloat, especially the big three? Attract investments by foreign carriers through the FDI route – MoCA suggests the limit should be 24%, while the Department of Industrial Policy and Promotion (DIPP) recommends that it should be anywhere between 26% to 49%. A piece of smile-winning news after long. But will this prove manna to the ailing Indian carriers?

Many suggest that this move could open up the gates for dollars to flood the Indian aviation space. And if ever foreign airlines would require any convincing, it should not be more bothersome than a tiny gastric event in a marathon. Let us not get befuddled. Forecasting the outcome of allowing FDI in an airline industry that is – to say the least – battered, is no easy task. Forget India, this has been true even in a liberal, transparent environment like US. There was much hope that foreign airline participation and their involvement in the strategic decision-making process would make life easy for ailing US carriers when times got tough. It was not to be. Between 1975 and 2010, US carriers lost a total of $273 billion, and 44 filed for bankruptcy. And how many foreign carriers did we see come to the rescue? For the sake of a 25% ownership – zero!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Monday, April 15, 2013

What America really wants from the Middle East

US has its reasons to interfere in political and policy matters in the Middle Eastern countries. Ushering in an era of liberal democracy is not one of them.

Following the death of Libya’s Muammar el-Qaddafi, Libya’s interim government announced the “liberation” of the country. It also declared that a system based on Sharia (Islamic law) – including polygamy – would replace the secular dictatorship that Qaddafi ran for 42 years. Swapping one form of authoritarianism for another seems a cruel letdown after seven months of NATO airstrikes in the name of democracy.

In fact, the Western powers that brought about a regime change in Libya have made little effort to prevent its new rulers from establishing a theocracy. But this is the price that the West willingly pays in exchange for the privilege of choosing the new leadership. Indeed, the cloak of Islam helps to protect the credibility of leaders who might otherwise be seen as foreign puppets. For the same reason, the West has condoned the rulers of the oil sheikhdoms for their longstanding alliance with radical clerics. For example, the decadent House of Saud, backed by the United States, not only practices Wahhabi Islam – the source of modern Islamic fundamentalism – but also exports this fringe form of the faith, gradually snuffing out more liberal Islamic traditions. Yet, when the Saudi Crown Prince died recently, the US stood by silently as the ruling family appointed its most reactionary Islamist as the new heir to the throne.

So intrinsic have the Arab monarchs become to US interests that the Americans have failed to stop these cloistered royals from continuing to fund Muslim extremist groups and Madrasas in other countries. From Africa to South and Southeast Asia, Arab petrodollars have played a key role in fomenting militant Islamic fundamentalism that targets the West, Israel, and India as its enemies. The US interest in maintaining pliant regimes in oil-rich countries trumps all other considerations.

With Western support, the oil monarchies, have been able to ride out the Arab Spring, emerging virtually unscathed. For the US, the sheikhdoms that make up the Gulf Cooperation Council – Saudi Arabia, Kuwait, Bahrain, Qatar, UAE and Oman – are critical for geostrategic reasons as well. After withdrawing its forces from Iraq, US is considering using Kuwait as a new military hub to expand its military presence in the Persian Gulf region and foster a US-led “security architecture,” under which its air and naval patrols would be regionally integrated. NATO-led regime change in Libya – which holds the world’s largest reserves of the light sweet crude oil that American and European refineries prefer – was not really about ushering in an era of liberal democracy. The new Libya faces uncertain times. The only certain element is that its new rulers will remain beholden to those who helped to install them. US Senator John McCain has already announced that the new Libyan rulers are “willing to reimburse us and our allies” for the costs of effecting a regime change. America’s troubling ties with Islamist rulers and groups were cemented in the 1980s, when the Reagan administration used Islam as an ideological tool to spur armed resistance to the Soviet occupation of Afghanistan. In 1985, at a White House ceremony attended by several Afghan mujahideen – the jihadists out of which the Taliban and al-Qaeda evolved – Reagan gestured toward his guests and declared, “These gentlemen are the moral equivalent of America’s Founding Fathers.” Yet the lessons of the anti-Soviet struggle in Afghanistan have already been forgotten, including the need to focus on long-term goals rather than short-term victories. The Obama administration’s current effort to strike a Faustian bargain with the Taliban, for example, ignores America’s own experience of the consequences of following the path of expediency.
 

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Saturday, April 13, 2013

What the downgrade means for the world?

The American ego has been shattered once again. And this time by the global credit rating agency Standard & Poor’s, which has stripped Uncle Sam of the highest rating for the first time in 70 years. So, what does it mean for the rest of the world?

Washington’s latest drama ended with an agreement to raise the federal government’s debt ceiling in exchange for yet-to-be determined cuts in federal spending of up to $2.4 trillion. But a brief wave of relief at the deal quickly faded as Fed data (released a few days later) highlighted the economy’s slow start to the third quarter of 2011, and Standard & Poor’s (S&P) lowered its rating of US sovereign debt (on August 5, 2011) one notch to AA+ from AAA, stripping Uncle Sam of the highest rating for the first time in 70 years.

The fact that the other two rating agencies, Fitch and Moody’s, did not downgrade US debt might take some pressure off its bond market, but then that does not change the reality that the US recovery has lost momentum. This implies that the global impact of the downgrade is bound to be heavy, if not in the near future then certainly in the long run. No doubt, the exact consequences of the downgrade are difficult to predict, but then considering the size of the US economy, its Treasury market, and the dollar’s status as a reserve currency, the cut to Uncle Sam’s credit rating is bound to spill over throughout the global economy. Reason: While the nation’s budget deficit (for FY2011 the federal budget deficit is estimated at $1.645 trillion, over 10% of GDP from just 1% in 2007) and debt load (as of August 16, 2011, the total public US debt stood at a whopping $14.618 trillion, about 103% of US GDP, and more than $1,30,000 per US tax payer) are out of control (the highest since World War II), President Obama’s recently released 10-year budget plan doesn’t generate the much-needed confidence that the economy’s fiscal problems will be resolved anytime soon.

Even the $2.4 trillion cut on government spending (agreed upon by the Congress on July 31, 2011) over the next decade will not take the US where it really needs to be. In fact, a recent analysis by the Congressional Budget Office (CBO) infers that if US wants to maintain a debt to GDP ratio at current levels up to year 2085 (to avoid scaring off investors), it would require this beleaguered nation to cut its spending, hike taxes, or a combination of both, by an amount that equals 8.3% of GDP each year for the next 75 years. That translates to $15 trillion over the next decade, way above what Obama and the Congress are considering. What’s worse? Lawmakers have agreed on just over $900 billion of the cuts as of now; the remaining $1.5 trillion will be determined by a congressional commission (made up of six Republicans and six Democrats) by late November. If the commission fails to recommend the cuts or Congress votes down their proposal, the federal budget will be reduced automatically by $1.2 trillion, with cuts evenly distributed across defense and discretionary non-defense programmes. This will further worsen the already deteriorating debt situation.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Friday, December 7, 2012

Dare you waste it

Mind your wallet if you waste...

If you are planning to eat Japanese food at Hayashi Ya Japanese restaurant on the Upper West Side of the US, be careful not to leave even bits and pieces of it on your platter. Or else you may end up paying $27.75 instead of $26.95. Amazed! The Hayashi Ya restaurant charges 3% extra if there are leftover of food in your plate. This may seem very weird to most in West who make it a norm to waste much of the food they order for. And it isn’t a home-grown hypothesis. WCBS TV confirms that 27% of all food in the US finds itself in trash bin (works out to a pound of food every day for every American), while Stockholm Water Institute study extends this figure up to 30% or food worth around $48 billion annually. This amusing food-wasting habit of the West leads to annual wastage of 30 million tons of food. However, the UNEP 2009 report depicts an even more grim picture. Food waste in the US could be as high as 50% which means around one-fourth of all fresh fruits and vegetables is wasted between the field and belly. Among all the food-wasted, 15% are never opened in spite of being within expiry date.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

For More IIPM Info, Visit below mentioned IIPM articles.

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Friday, November 2, 2012

‘Missile’d Israel

Israel’s supremacy is in danger

Let’s get the issue straight, what is Israel most afraid of – Iran’s nuclear enrichment program or the prospect of losing its nuclear monopoly in the region? Buoyed by the US’ accomodating approach to its increasing nuclear weapon arsenal, Israel has left no stone unturned to prevent its neighbours from building nuclear capacity in the Middle East. It has often worked jointly with the US to intentionally threaten its neighbours from going nuclear.

According to speculations, Israel might have around 100–150 nuclear warheads. However, the picture with respect to interest or commitment to go nuclear for other countries in the region is quite ambiguous. It starts with Iran. US National Intelligence Estimate judged with ‘full confidence’ that Iran had an active nuclear weapon program on 3rd December, 2007 (just as Iraq had a chemical weapons programme!). It further postulated that Iran would probably be technically capable of producing enough HEU (High Enriched Uranium) for a weapon by 2015. Syria is the second country under suspicion. Israel bombed an officially unidentified site in Syria on September 6, 2007; asserting that it was a nuclear reactor under construction. Press reports suspected North Korea of supplying nuclear reactor to Syria, evidence of which was found by the Institute of Science and International Security later on.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM : The B-School with a Human Face
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Thursday, October 25, 2012

Where India stands today and what needs to be done?

C. Rangarajan, ex- RBI governor and member Rajya Sabha, speaks on where India stands today and what needs to be done

evolution of the crisis

The international financial crisis originated in the sub-prime mortgage crisis which surfaced nearly two years ago in the US With interest rates rising and home prices falling, there was a sharp jump in defaults and foreclosures. However, this would have remained as a purely mortgage market crisis but for the fact that these sub-prime mortgages were securitised and packaged into products that were rated as investment grade. Once doubts about these assets arose, they turned illiquid; it also became very hard to price them. As a result, it started affecting a host of institutions which had invested in these products. These institutions were not confined to US alone. Financial institutions in Europe and to a much lesser extent in East Asia had such assets on their books. With the failure of a few leading institutions and most notably Lehman Brothers, the entire financial system was enveloped into an acute crisis. There was mutual distrust among the financial institutions which led to freezing up of several markets including the overnight inter-bank market. Many think today that letting the Lehman Brothers to fail was a great mistake. The crisis in the financial system has now moved to affect the real sector in a significant way.



regulatory failure

What stands out glaringly in the current episode is the regulatory failure which was twofold. First, some parts of the financial system were either loosely regulated or were not regulated at all, a factor which led to “regulatory arbitrage” with funds moving more towards the unregulated segments. The second failure lies in the imperfect understanding of the implications of various derivative products. In one sense, derivative products are a natural corollary of financial development. They meet a felt need.

However, if the derivative products become too complex to discern where the risk lies, they become a major source of concern. Rating agencies in the present episode were irresponsible in creating a booming market in suspect derivative products. Quite clearly, there was a mismatch between financial innovation and the ability of the regulators to monitor them. It is ironic that such a regulatory failure should have occurred at a time when intense discussions were being held in Basle and elsewhere to put in place a sound regulatory framework.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM : The B-School with a Human Face
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