Ranbaxy Received Warning Letter from German Regulators

Recently Ranbaxy has faced a lot of criticism and received warning letters from western regulators such as USFDA regarding non-compliance with GMP (Good Manufacturing Practices). Ranbaxy has received warning letter from another regulator i.e German regulator for not complying with GMP.

According to The National Competent Authority known as Bezirksregierung Koln“Ranbaxy does not comply with the Good Manufacturing Practice Requirements referred to in the GMP Directive from the European Commission”. The regulator said that it revealed “unsatisfactory investigations into medial trials failures” along with deficiencies with Ranbaxy’s design and operation of its clean rooms as well as controls for the preparation and sterilization of its equipment and controls for its aseptic filling.

The National Competent Authority also said that Ranbaxy’s sterile products are non-compliant and its new GMP certificate for its Dewas India site does not include sterile products. Germany’s regulators have issued a non compliance report for the Dewas Facility where Ranbaxy manufactures cephalosporin antibiotics after an inspection in June 2014 for not complying with Good Manufacturing Practices.

Ranbaxy opens new manufacturing facility in Morocco; eyes $1 bn drug market

Ranbaxy Laboratories has opened a new production facility in Morocco, a move which would help the drug maker access the African nation's USD 1 billion pharma market.

"Ranbaxy Morocco today announced the opening of its new manufacturing facility at Casablanca, Morocco, paving the way for a direct business presence in North Africa," Ranbaxy said in a statement.

The facility has undergone successful audit of the plant by the Moroccan Health Authorities, it added.

"The achievement of this milestone positions Ranbaxy to access a USD 1 billion pharmaceutical market in Morocco," the company said.

Ranbaxy's Head of Africa Mahendra Bhardwaj said: "Morocco is one of the important markets and this manufacturing facility further reinforces our commitment to people of Morocco and the African continent."

The Gurgaon-headquartered firm also plans to extend the supply from the Moroccon manufacturing unit to other African countries in the coming years, the company said.

With the addition of Morocco, Ranbaxy now has three manufacturing facilities in Africa; the other two located in Nigeria and South Africa respectively.

"With five subsidiaries, five representative offices and a strong workforce of nearly a 1,000 people, Ranbaxy's distribution network caters to 44 of the 54 countries in this continent (Africa)," Ranbaxy said.

Ranbaxy became a part of the Daiichi Sankyo Group in 2008 after Japan's third largest drug-maker bought a majority stake for Rs 22,000 crore.

Shares of Ranbaxy Laboratories were trading at Rs 418.50 apiece on the BSE at 1355 hours, up 0.48 per cent from their previous close.

Ranbaxy gets USFDA nod of Aricept generic launch in US

Pharmaceutical major Ranbaxy had got the US Food and Drug Administration (FDA) approval for exclusively selling the generic version of Aricept. Thus, CNBC-TV18 presumes that the company has either launched the Aricept generic or they are very close to launching it, reports Ekta Batra.

The approval has most likely been given via the site transfer of the OHM Labs.

Ranbaxy has six-month exclusivity on the Aricept generic, which is Japanese drug maker Eisai's biggest selling drug in the US with a market of USD 2.4 billion there and USD 3 billion market globally. The drug is used in the treatment of Alzheimer's.

With this, the pharma major expects to generate USD 200 million revenue and USD 110 million profit in the next six months. Ranbaxy, which may start selling the Aricept generic in the US after the patent on the medicine expires on November 25, also expects to add Rs 16 to its EPS.

Aricept launch affirms that Ranbaxy might on track to launch the generic version of Lipitor in November 2011, on which it has exclusivity.

Ranbaxy gets nod for Alzheimer’s drug

Ranbaxy Laboratories Ltd, India’s largest pharmaceutical company by revenue, has received the US drug regulator’s nod to launch its generic version of Pfizer Inc. and Eisai Co. Ltd’s Alzheimer’s drug Aricept (donepezil hydrochloride), two people familiar with the development said.

Analysts expect the company to launch the drug on Monday.

Aricept has estimated sales of about $1.6 billion (Rs.7,312 crore) in the US. Its patent expired on 25 November. In September, the US Food and Drug Administration (FDA) informed Ranbaxy that it had first-to-file status for Aricept in the US. This gives Ranbaxy 180 days of marketing exclusivity for the drug.

While Arun Sawhney, managing director of Ranbaxy, had said in a recent conference call that the company was confident of monetizing the opportunity, FDA’s final approval for Ranbaxy to launch the drug was uncertain. A Ranbaxy official said the company had received approval.

“We expect the company to launch the product on Monday,” a Mumbai-based analyst said, requesting anonymity.

“This is good news for Ranbaxy,” said another analyst with a Mumbai-based brokerage, who also did not want to be named. “We expect it to make approximately $300 million in revenues from the sale of the drug in the exclusivity period. This also gives confidence to investors that the company may be able to get approvals for future first-to-file drugs in the light of FDA and DoJ (department of justice) issues.”

US-based Mutual Pharma got approval to sell its generic version of Aricept orally disintegrating tablets in 2009 for the treatment of dementia. These, however, are different from Ranbaxy’s version. Ranbaxy will also face competition from Greenstone Pharma, the generic pharmaceutical subsidiary of Pfizer Inc, which will launch the authorised generic of Aricept.

Ranbaxy faces an import alert in the US for 30 products and a warning on two of its plants—Paonta Sahib in Himachal Pradesh and Dewas in Madhya Pradesh. FDA has also halted all application reviews from Ranbaxy’s Paonta Sahib plant. Ranbaxy had previously failed to get approval for the generic version of Flomax, which it planned to launch in March.

Ranbaxy appoints Sawhney as the new Managing Director

Ranbaxy Laboratories Limited (“Ranbaxy”) today announced that Atul Sobti will step down from the positions of CEO and Managing Director of Ranbaxy, effective August 19, 2010 and Arun Sawhney, currently Ranbaxy's President, Global Pharmaceutical Business, has been appointed as Managing Director, effective August 20, 2010.

Furthermore, the Board noted its sincere appreciation of Sobti’s efforts during his tenure as CEO and MD as well as for building upon the strong legacy of Ranbaxy as a premier global company.

Ranbaxy to set up drug making unit

Daiichi Sankyo’s first project after the takeover to be set up at Baddi in 6 months.

Indicating that the ownership change has not altered the growth plans of Ranbaxy, the country’s largest drug maker has secured an approval from the Himachal Pradesh government to build a new drug manufacturing facility in Baddi.

The new facility, meant to augment Ranbaxy’s production capacity to serve domestic business, is to come up before March 2010. This is the first new manufacturing project since Japan’s Daiichi Sankyo became its major shareholder last year. Company sources declined to provide details of the project but said it is “well on track to qualify for tax benefits”. The estimated cost of the project is known to be around Rs 40 crore.

While the Baddi project is to augment domestic supplies, Ranbaxy’s Mohali pharma SEZ project, also in the process of execution, is meant for exports. “Our SEZ Greenfield project at Mohali is progressing as per schedule and will augment our already significant manufacturing capability when complete. The product and volume plan would be to try and maximize financial benefit”, a company official said.

Ranbaxy’s domestic drug manufacturing facilities are located at Dewas (Madhya Pradesh), Paonta Sahib (Himachal Pradesh), New Delhi, Jejuri (Maharashtra), Goa, and Mohali and Toansa (Punjab). The Paonta Sahib and Dewas facilities are under the regulatory scrutiny of the United States Food and Drugs Administration and products from these facilities are not allowed to be marketed in the United States. The company is in the process of complying with US regulations and hopes to resolve the problem soon.

India’s growing medicine market is being seen as a major future growth driver by foreign multinational firms. It was one of the triggers for the Ranbaxy acquisition.

The quarterly results of Daiichi, announced in Tokyo today, indicate that Ranbaxy revenues, from both domestic as well as international business, contributed 29.6 billion Yen (Rs 1,487.65 crore). Daiichi has stated that its quarterly revenues from regions including India (excluding major markets like the US, Europe, Japan) saw a 318.7 per cent jump on a year on year basis.

FDA Heat Fails to Scorch Appeal of Indian Pharma

BANGALORE -- Some Indian pharmaceutical companies are facing increased regulatory scrutiny in developed markets and that's perking up the view on the sector.

Generic drug makers like Ranbaxy Laboratories Ltd., Sun Pharmaceutical Industries Ltd., and Lupin Ltd. are in trouble with authorities in the U.S. over issues such as the quality of test data and manufacturing practices at their plants in India and abroad.

These companies are now scrambling to improve standards. As a result, they will be in a better position to increase their business over the next five years when $100 billion worth of drugs will go off-patent, say analysts.

With manufacturing costs nearly 40% lower in India than in the West and the global drive to cut healthcare expenses, India's generic drugmakers are unlikely to lose, they say.

Although competition from other countries such as Israel and China is increasing, India has an advantage in that it has 107 plants approved by the Food and Drug Administration, the highest number outside the U.S., and thrice the number in China.

"These plants are cost competitive. I think that's a huge value proposition," said Hitesh Gajaria, executive director at KPMG, who is bullish on India's generic drug makers.

Stocks in the sector have recovered most of the losses incurred in the wake of the FDA moves. Shares of Lupin, which said May 13 that it had received a warning letter from the FDA for not giving a satisfactory response to some non-compliance issues, have risen 21% since. The benchmark Sensex has risen 28% in the same period.

Lupin, India's fifth-largest drug firm by revenue, sells both generic drugs as well as branded products in the U.S., a market that accounts for about 35% of its revenue.

Following the FDA move, Lupin appointed a consultant to advise it on the regulator's quality requirements. It is also upgrading equipment to improve quality control methods.

Shares of Sun Pharma, the fourth-largest Indian drug firm by revenue, tumbled 13% on June 26 after the FDA seized drugs made by its Caraco Pharmaceutical Laboratories unit in Michigan.

The company subsequently withdrew its revenue forecast for the current financial year. Nomura estimates the FDA action could potentially shave at least 10% of its full-year revenue.

Sun Pharma closed Monday down 0.10% at 1244.75 rupees, 5% below its June 25 closing price.

Mohit Mirchandani, vice president and head of equity investments at Taurus Asset Management, said his fund has not sold any of the pharmaceutical stocks in his portfolio as a result of the FDA moves.

The U.S. is the biggest market for India's generic drugs such as sumatriptan succinate, the generic version of the migraine drug Imitrex.

Companies such as Ranbaxy, which was acquired by Japan's Daiichi Sankyo Co. last year, and Dr. Reddy's Laboratories Ltd. now get almost half their revenue from developed markets like the U.S. and European Union.

Some firms have also started selling generic drugs into newer markets like China, Japan, Brazil and Mexico in a bid to spread their revenue sources, a positive step according to industry watchers.

In June, Dr. Reddy's, the second-largest Indian drug firm by revenue, and GlaxoSmithKline PLC signed a partnership to develop and sell selected generic products across emerging markets, excluding India.

Lupin forayed into Japan, the second largest pharmaceutical market in the world after the U.S., by acquiring a majority stake in Kyowa Pharmaceutical Industry Co. in 2007.

However, not everyone is convinced that Indian pharma stocks are without risk.

Prateek Agrawal, head of equity at Bharti AXA Investment Managers, said the current regulatory climate is a deterrent for investors because some companies may face a sales ban like Ranbaxy unless they handle the situation effectively.

In September, the FDA banned Ranbaxy from selling some of its drugs in the U.S. saying it violated manufacturing guidelines at two plants in India.

Ranbaxy, India's biggest drug maker by sales, Friday reported a profit for the April-June quarter after posting losses in the past three sequential quarters, hit by unfavorable currency bets, regulatory problems in the U.S., and weak demand in emerging markets.

The FDA is now reviewing Ranbaxy's corrective action plan for one of the plants which it submitted in May.

Ranbaxy to set up third unit in Himachal Pradesh

Shimla, India, Pharmaceutical major Ranbaxy and fast moving consumer goods manufacturer Proctor and Gamble (P&G) are among nine companies that have been allowed to set up units in Himachal Pradesh, a senior official said Monday.

“Ranbaxy and Procter and Gamble (P&G) Monday got permission from the state government to set up units in the state,” industries director Manoj Kumar told IANS.

While Ranbaxy will set up its third unit in Solan district on an outlay of Rs.34 crore, P&G will commence its second unit in Baddi with an investment of Rs.18 crore, Kumar said.

Ranbaxy’s first two units are in Sirmaur district, while P&G’s first unit is also located at Baddi.

“We have cleared nine proposals that total an investment of Rs.148 crore,” Kumar said.

The Bharatiya Janata Party (BJP) government has cleared more than 1,500 industrial proposals worth around Rs.10,000 crore in the past 18 months of its tenure.

Himachal Pradesh has 38 industrial areas and 15 industrial estate

Hitch for pharmaceuticals ‘odd couple’

When executives of Ranbaxy Laboratories and Daiichi Sankyo met in Tokyo at the beginning of the year, it was – in the words of one Indian executive – a moment in the pharmaceuticals industry when McDonald’s met a Michelin-starred restaurant.

About a year after Daiichi Sankyo, the Japanese drugmaker, agreed to buy a 64 per cent stake in the Indian generics producer, Malvinder Singh, Ranbaxy’s chairman and chief executive, has unexpectedly left the kitchen.

The departure of Mr Singh at the weekend marks a big shake-up for Ranbaxy, a multinational business crafted by three generations of his family. It also represents a large gamble for the company’s new Japanese owners. The Japanese-Indian corporate relationship is barely tested outside of the carmaking industry in India. And now the Japanese owners are proceeding without the founding family on board in a challenging operating environment.

On top of this, these are testing times for India’s exports. Indian pharmaceutical exports to the US, one of its biggest markets, have fallen about 40 per cent in recent months. The fall is partly due to a costly import ban on some of Ranbaxy’s products by US regulators.

“When Ranbaxy was an independent entity controlled by the Singh family, decisions were taken in one way. It is now a subsidiary of another company and decisions are taken differently,” Atul Sobti, Ranbaxy’s new chief executive, said of the change in management culture over the past months.

For the time being, investors have viewed the weekend’s events optimistically. On the expectation that Mr Singh’s departure might lead to a Japanese buy-out, the share price shot up 21 per cent to Rs277. There was also relief that greater Japanese control might resolve what has been considered an “odd couple” alignment of two very different companies.

Mr Singh’s family built up Ranbaxy’s formidable reputation for breaking into emerging markets and aggressively challenging patent regimes with generic drugs. Ranbaxy’s new Japanese owner, by contrast, is a master of innovation serving only a handful of developed markets with high-quality products.

The odd-couple image was made all the more stark by the price Daiichi paid for control of Ranbaxy. Daiichi’s purchase looked very expensive almost from the moment it was agreed in June. The price of Rs737 a share reflected neither the difficulties Ranbaxy encountered with US regulators over standards at two of its Indian plants nor the global financial crisis.

Ranbaxy’s share price until Monday had coasted at about Rs220 a share. “[The change at the top] looks like it’s good news for both sides. It was always going to be difficult to see how Mr Singh could continue to work with Daiichi given the problems in America and the price [Daiichi] paid,” said Pelham Smithers, an analyst of Japanese equities at Pali International.

Executives at the Indian and Japanese companies claim their tie-up is a trendsetter the pharmaceutical industry will have to follow. They champion a model that marries a generics business spread across 125 countries with more focused Japanese ingenuity and clinical process.

For Daiichi, the attraction lies in Ranbaxy’s dynamic reach into new markets and its global marketing prowess, particularly in the English language. Ranbaxy, meanwhile, sees opportunity for its generic drugs in the Japanese market, the world’s second-largest and most stringent in terms of quality.

Daiichi needs to make the model work for impatient shareholders. At the beginning of the year, it was forced to reveal a staggering Y359.4bn ($3.7bn) loss on its Indian acquisition inflicted by Ranbaxy’s collapsed share price.

Ranbaxy’s management had not expected too many changes at their head office near New Delhi. While Mr Singh remained chairman, executives viewed an overhaul from Tokyo unlikely.

Some, however, will find little surprise in Mr Singh’s departure. The temptation to take the fortune he made out of selling the company and repeat his success elsewhere was overwhelming.

No sooner had he quit than he was talking up opportunities elsewhere in his business empire, such as a hospital group advertising low-cost treatment to international patients.

Buy Generic Viagra online - Better anti-recession prices on Generic Viagra

Generic Viagra – Leading Cost saving with same satisfaction

Since its introduction in the market place, Viagra has won the world over. However, the exorbitant cost of branded Viagra led Pharmaceutical Companies to market different generic versions of Viagra throughout the world. These different products of Cheap Generic Viagra dominated over the branded medicine in terms of volume of sales throughout the world.

Generic Viagra is sold in different names and manufactured by different Pharmaceutical Companies.

There are a number of generic versions of Viagra are available. They are Penegra marketed by Cadila. Also there is Caverta brought by Ranbaxy Laboratories of India.

Also there is Kamagra which is sold in the form of oral jelly.

Each of these generic medicines are basically Sildenafil Citrate which is the main ingredients of branded Viagra also.

All these medicines are also prescription drugs and to be sold through a registered doctor’s prescription only.

Like the branded medicines, these generic drugs are also have their share in the market.

In a study it was reported earlier that Penegra(Viagra Genérico) of Zydus Cadila Healthcare Ltd is largest selling drug in the India Pharmaceutical Market.

Caverta from Ranbaxy Laboratories stood second after Penegra in sales volume in India during the period of study.

So you have the choice to Buy Generic Viagra as your UK, US or doctor in Australia prescribes. Your body conditions should be suitable for taking the medicine.

We can assure you that the generic Viagra, like the branded pills also will enable firm erection and continue to keep the erection. The erection will continue for four hours. But if the erection prolongs beyond four hours please consult a doctor.

INDIAN PHARMACEUTICAL INDUSTRY CAPABLE OF DEALING WITH ANY SITUATION

The recent out break of HINI Influenza A virus (swine flu) in different parts of the world has provided an opportunity to Indian pharmaceutical industry to demonstrate its strength in terms of its ability to alter manufacturing ability in short period. Domestic pharmaceuticals industry, which is ranked at the fourth place globally in terms of the volume, is known for their flexibility in production and price advantages, it offers. Indian drug makers claimed that they have enough capacity to produce requisite doses of antiviral drug, oseltamivir, the generic version of Roche?s Tamiflu - the only medicine available to counter H1N1 Influenza A (swine flu), at a short notice. Indian companies had demonstrated that they can supply the drug if needed at less than one-tenth of its international price. Most of the Indian companies are selling medicines at a price of around Rs 300 per strip of ten, whereas Roche, which holds the patent right over Tamiflu, is supplying the same drug at price of more than Rs 3,000 per strip.

Major drug-makers like Ranbaxy, Hetero, Natco Pharma and Cipla had said they have the capacity to provide over two million capsules in the next few weeks.

?Large pharmaceutical firms such as Ranbaxy, Cipla and Roche have capacities to manufacture the number of doses required in the country,? Indian Drug Manufacturers Association Executive Director Gajanan Wakankar told PTI Economic Services. Any domestic company that is currently producing anti-bacterial drug can easily produce the generic version of Tamiflu, with minor changes in their production line, Wakankar said. Gurgaon-based Ranbaxy said it can produce one million capsules in the next few weeks.?Ranbaxy can provide one million capsules in the next few weeks to the Government of India. If further supplies are required, Ranbaxy is in a position to meet the demand in the coming few weeks,? Ranbaxy Laboratories President Ramesh Adige said.

Cipla Chairman and Managing Director Y K Hamied told PTI there is enough capacity in the country to meet the demand. ?If needed, we can produce 1.5 million doses of Antiflu (Cipla?s a branded generic version of Tamiflu) in four to six weeks time,? he said. According to industry experts, the real strength which Indian companies demonstrated during the recent crisis was its ability to change production line in a short period. Another important factor of Indian companies, which is mostly undermined by the developed countries is that, while shifting the production line in a short notice, domestic pharma majors were still able to maintain the comparative price advantage. This strength is also visible from the fact that none of the government official and other health organization have ever expressed fear about the lack of availability of medicines in case of emergencies.

Whereas health officials and other agencies working in developed countries had expressed fear that in case of largescale outbreak of the virus, there is going to be shortage of medicines. As the local industry might not be able to produce the drug in such large quantity and it would take at least 10-15 weeks for them to shift the production line.

Indian pharmaceutical companies are also pressing hard for the government to allow them to sell the drug in the retail market, industry sources said.

The current directive from the government restricts companies from making the drug available in the open market through chemists and pharmacies that are either standalone or part of a private hospital.

?We can sell only to government hospitals or directly to the government. This is not enough, as it will not reach a large audience. If we have to sell directly to the government it has to be via a tender process,? a senior official of one of the oseltamivirproducing companies said.

Industry observers say that the government?s rationale behind the decision is to ensure that people do not stock up the drug and misuse it.

An official at another drug company that also makes the generic version of tamiflu said that although there is a possibility of panic buying even by people who do not need it, that is unlikely in the current scenario.

Health ministry joint secretary Vineet Choudhary reiterated that the drugs would continue to be supplied through government hospitals and health centres and will not be available in retail market.

Oseltamivir is an antiviral drug that is used in the treatment of both Influenzavirus A and Influenzavirus B. It is a neuraminidase inhibitor and acts as a transition-state analogue inhibitor of influenza neuraminidase, preventing progeny virions from emerging from infected cells. The importance of early treatment is that the protein inhibition is more effective within the first 48 hours. Keeping this in mind, industry observers feel that making the drug available only in government hospitals will make access to medication difficult for people.

Daiichi Sankyo Posts First Loss

TOKYO -- Daiichi Sankyo Co. Tuesday reported a hefty loss for the financial year ended March due to the write-down of its investment in India's Ranbaxy Laboratories Ltd., and projected only a modest recovery this year under the weight of costs in bringing new products to the market.

Its net loss came to 335.80 billion yen, deeper than a 316 billion yen ($3.24 billion) loss the company forecast in late January and a consensus loss of 324 billion yen compiled by Thomson Reuters based on 14 analysts' forecasts.

The loss, however, was in line with market expectations following a local media report about the company's financial outlook earlier this month.

The first ever loss at Japan's third largest pharmaceutical maker by revenue and market capitalization, created from a merger of Sankyo and Daiichi Pharmaceutical in 2005, comes from heavy falls in the share price of Ranbaxy which it acquired last year.

Daiichi Sankyo agreed to buy a majority stake in Ranbaxy before the Food and Drug Administration of the U.S. in September banned the Indian generic drug maker from importing more than 30 generic drugs into the U.S. because of manufacturing violations at two plants in India.

Daiichi Sankyo, known for its blood pressure-lowering drug Benicar/Olmetec and antibacterial agent Cravit/Levaquin, said its sales in the just ended financial year slipped 4.3% to 842.15 billion yen mainly due to the strong yen.

While Daiichi Sankyo is considered by analysts to have the most promising list of new drugs in the development pipeline among Japanese pharmaceutical makers, such products won't come to market and boost the company's profits so soon.

Daiichi Sankyo forecasts a 14% rise in sales to 960 billion yen this financial year to March 2010, with 40 billion yen in net profit - or 59 billion yen before consolidation of Ranbaxy. However, this is far short of 97.66 billion yen net profit booked in the year ended March 2008, just before the Indian company acquisition.

Despite solid sales of its main drugs, the Japanese company expects the stronger yen and costs for clinical studies and sales promotion for new treatments - including heart drug Effient/Efient and blood clot preventing edoxaban - to hinder its profit recovery this year.

The modest profit guidance triggered heavy selling in Daiichi Sankyo's shares on the Tokyo Stock Exchange, losing 9.3% to 1,653 yen in heavy trading.

On Monday, Takeda Pharmaceutical Co., Japan's largest drug maker by revenue, also reported a net loss for the year ended March and provided unimpressive guidance for this financial year due to acquisition costs, the strong yen and limited contributions from new drugs.

Indian Pharma Primed For Growth

Firms hope to capture a share of the $100 billion worldwide market for generic drugs.

Pharmaceutical firms are defying a broad-based slowdown in Indian exports. Growing demand for cheap, generic drugs is proving a particular boon, reflected in a 46% year-on-year rise in exports to the U.S. during December, the last month for which finalized data are available.

Despite rapid growth, Indian pharmaceutical firms have attracted less recognition for their success than their counterparts in the information technology (IT) industry:

--In part, this is because the world of pharmaceuticals is less transparent than that of the Fortune 500 companies targeted by the IT outsourcing industry.

--Reputations have also been tainted by a series of brushes with developed market regulators, notably the November 2008 ban on U.S. imports from two of the largest facilities run by market-leading firm Ranbaxy.

Yet the country's pharmaceutical industry (Indian Pharma) has occupied a number of niches in foreign markets, even as the home market grows rapidly. Most expect their domestic market to grow at around 20% this year and to maintain their operating margins, which are often close to 50%. The most successful companies are becoming serious competitors and collaborators with the largest international pharmaceutical firms.

Generics push. Apart from Ranbaxy (acquired by Dai-Ichi Sankyo of Japan in 2007) and another market leader, Matrix Pharmaceuticals, Indian Pharma has shown considerable independence and entrepreneurialism. It is marked by the desire of Indian firms to acquire companies operating in profitable niches around the world rather than to be acquired themselves. A key thrust for most of the medium and large firms is to capture a share of the worldwide market for generic drugs, which is valued at more than $100 billion, most notably in the lucrative U.S., European and Japanese markets:

--More than 30 Indian companies compete in this area, alongside rivals from countries such as Israel (most notably Teva), and from regions like Eastern Europe and Latin America.

--These companies have gained substantial experience in less regulated markets in parts of Africa, Asia and Latin America, producing off-license drugs originally produced by the large international firms.

--They are seeking greater access to the North American market through U.S. partners and, increasingly, through their own U.S. subsidiaries.

While the U.S. Food and Drug Administration is now more vigilant about malpractice by Indian firms, it has not substantially slowed the growing number of approvals that are being processed for generic drugs developed in India.

Major players. Indian Pharma has also spawned its own contract research outsourcing industry, particularly focused on the research necessary for clinical trials. This is an area of rapid growth. Clinical trials outsourcers now have their own global presence, each serving producers with increasing levels of precision, reliability and efficiency:

--A study by the Organisation of Pharmaceutical Producers of India suggests that this industry will expand from $400 million in turnover during 2007-08 to $1.3 billion in 2011-12 and $3 billion in 2015.

--One large research company, Advinus (which is associated with the Tata conglomerate and has strong international links), recently announced a tie-up with one of the largest clinical trials companies, GVK Biosciences, part of the GVK Reddy group.

--These are fairly new firms, but most others have built their balance sheets over some time. The oldest is Cipla, a 65-year old company with historical associations with Mahatma Gandhi that has developed a new strategy for getting retrovirals and other acute disease treatments cheaply into developing countries, despite opposition from the large international drug firms.

Backed by a large and underserved domestic market, and with massive growth potential in generics exports and research outsourcing, Indian Pharma is primed for substantial expansion. Its firms will see strong growth and good operating margins this year, both in the domestic drug market and in most of their multiple international ventures.

Pharma cos adhere to EHS to attract global business

Globalisation seems to be driving the Indian pharma industry towards better environmental, health and safety (EHS) performances. In order to elevate their global image, several Indian companies are complying with EHS standards to widen their horizons and attract international players.

EHS auditing is becoming a global practice as organisations around the world develop audit standards. Big players across diverse industrial sectors especially from US and European countries are opting for EHS compliance as one of the key mandate in the process of manufacturing outsourcing.

Most pharma companies like Ranbaxy Laboratories, Alembic, Dr Reddy's Laboratories, Cadila Pharmaceuticals, Zydus Cadila, Arch Pharmalabs and USV, among others have ensured a proper EHS management system and other environmental initiatives to attract additional business opportunities in the global arena.

"The Indian pharma world has evolved around industrial development zones set up by various state governments. In earlier years, most of the units could take benefit of the then prevalent lax environmental laws. But now US and European customers are looking beyond our local compliance levels and want companies to adhere to their standards, which are quite exacting and taxing from an investment perspective. This has led to a big challenge for the Indian pharma industry, particularly small scale units, which either have investment concerns or limitations of growth beyond their allotted unit areas in these industrial zones. These developments are bound to result in various units getting disqualified for supplies leading to elimination and consolidation in the pharma world. With quality and cost efficiency as a given, it is only EHS compliance that will stand out for a vendor," says Ajit Kamath, chairman and managing director of Arch Pharmalabs, which has a standalone turnover of Rs 750 crore.

Kamath adds that at a macro level, both China and India have long been viewed as countries with suspect EHS compliance. Companies with orientation of exports to the Western world are faced with no choice but to adhere to EHS. Besides customer audits, many Indian companies have been proactively seeking out ISO14000 and ISO18000 standards to signal EHS compliance.

To be in sync with the green policy of the western world, Indian companies seem to be proactive in adopting a number of green initiatives, including a proper EHS management system.

For Alembic, EHS functions as a major focus are along with other green initiatives like water conservation, replacement of furnace oil by solid fuel bio-mass and stopping the use of ozone depleting chemicals. "Alembic is a 101 year old company and we put a lot of focus in EHS. At present we are working with a number of multinational pharmaceutical companies and this is an important pre-requisite for them in considering Alembic as a partner for their global outsourcing. A good EHS system such as the one we have at Alembic also helps us in terms of an accident free zone, awareness about the safety and periodically training our team and a pollution free environment. Besides, EHS has become a critical area for the leading Indian pharmaceutical companies as more people are investing in it due to the numerous benefits such as safety and health of employees as well as a commitment to the environment. This also results in the enhancement of productivity," says Pranav Amin, director and chief business development officer at Alembic Limited.

According to Amin, an environment-friendly policy could result in additional business opportunities which would affect the top line and bottom-line as an environmentally friendly policy is well respected by pharmaceutical companies all over the world.

The EHS guidelines were created by the International Finance Corporation in 1998. The objective of EHS is to safeguard life, property and the environment. It enables industries to manage risk better, reduce cost and improve health & safety of people in general. Most global pharma companies use environmental, health and safety performance criteria to assess and select contract manufacturers, key API suppliers, contract research and development labs and even logistics centers. This is primarily done to protect the reputation of the global pharma companies while they outsource to India.

Mumbai-based pharma major USV has invested significantly in resources to reduce the ecological footprint of its operations.

The company has put in place the integrated implementation of environmental, occupational health and safety management systems, popularly known as ISO 14001 and OHSAS 18001, at its manufacturing locations in Lote, Baddi and Daman. "In our business, we must also respond to the growing stringency of statutory EHS norms. In this respect, our environmental performance has consistently extended beyond the statutory requirements, like provision of RO plants for recycling of treated effluent to the maximum extent possible, safe solid waste disposal and emission reductions. To increase health and safety awareness across the organisation, we have created a detailed work flow for reporting accidents or incidents, enabling us to better track and analyse these incidents. All our manufacturing plants have fully equipped with occupational health centers. Also, this year all our manufacturing sites have achieved Zero LTA," says Debabrata Gupta, director and chief operating officer at USV.

Pharma companies headed for slower earnings growth: analysts

Mumbai/New Delhi: Indian pharmaceutical firms are likely to post a decline in earnings growth for the quarter ended 31 March as they take a hit from mark-to-market and foreign exchange losses and regulatory action in export markets.

With top players set to announce results this week—beginning with Wockhardt Ltd on 21 April—the average growth in sales in the sector for the quarter is likely to be less than 11%, compared with 14% for the corresponding quarter last year.

Declining sales: A scientist works in a Sun Pharmaceutical laboratory in Mumbai. The average net profit of the Top 10 listed drug makers in India, including Sun Pharmaceutical, is likely to increase by around 9%. Bloomberg

The projection is based on a Mint analysis of results previews by five brokerages—ICICI Securities Ltd, Motilal Oswal Securities Ltd, Angel Broking Ltd, Prabhudas Lilladher Pvt. Ltd and Sharekhan Ltd.

The review showed that the average net profit for the Top 10 listed drug makers—including Ranbaxy Laboratories Ltd, Cipla Ltd, Sun Pharmaceutical Industries Ltd, Dr Reddy’s Laboratories Ltd, Aventis Pharma Ltd, GlaxoSmithKline Pharmaceuticals Ltd, Piramal Healthcare Ltd, Wockhardt Ltd, Cadila Healthcare Ltd and Lupin Ltd—will increase only by 8.8%.

Ranbaxy, the country’s largest drug maker, controlled by Japan’s Daiichi Sankyo Co. Ltd, will likely post a net loss, largely on account of forex losses and a ban on sales in the US on a chunk of its drugs.

Increased interest cost on outstanding foreign currency debts, mark-to-market (MTM), losses and a high income base effect from the corresponding quarter last year are the key reasons cited for the decline in profits. Market-to-market is an accounting practice that values an asset or a liability at current market prices and not at cost.

For several companies, regulatory action in the key export markets such as the US and Europe, coupled with shrinkage in the domestic markets is expected to have had an adverse impact on revenues.

“Operationally, the growth will be strong for Indian pharma companies. The numbers from January to March have been pretty good for the Indian market at least,” said Hemant Bakhru, a pharma analyst with the Hong Kong-headquartered stock broking firm CLSA Ltd. “The export margin will benefit due to the depreciation of the rupee, though concurrently there will be forex losses for companies like Ranbaxy, Biocon (Ltd) and Cipla.”

“With the rupee depreciating by 6.5% in the quarter-on-quarter comparison, many pharmaceutical companies would face MTM transnational forex losses on outstanding foreign currency loans and hedges,” said Motilal Oswal’s preview on pharma earnings.

For example, Ranbaxy and Jubilant Organosys Ltd are likely to report significant MTM losses on foreign currency loans and hedges, though the exact quantum of such losses will depend on the closing rupee-dollar exchange rate on 31 March, the Motilal Oswal report said.

The expected growth of the pharmaceutical companies is lower than that seen in the previous quarters due to a general slowdown in the domestic market—which moderated to 10.8% in this quarter compared with 12-14% in the preceding quarters—and the high base of the year-ago quarter for companies such as Sun Pharmaceutical and Glenmark Pharmaceuticals Ltd, said an earnings analysis by Sharekhan.

During the January-March quarter of 2008, revenues of Sun Pharmaceutical and Glenmark were boosted by their exclusive marketing rights in the US. For Glenmark, a one-time milestone payment that it received from licensing its original research molecules was added towards overall revenue in that quarter. This time, however, there are no such gains.

Sun Pharmaceutical’s revenue from the US market was boosted in the 2008 January-March quarter by its six-month exclusive right in the US generic market for three drugs—Oxcarbazepine, Pantoprazole and Ethyol.

Glenmark, too, had recorded a high margin in the year-ago quarter due to the receipt of milestone income and Oxcarbazepine exclusivity in the US.

In the quarter under review, Sun Pharmaceutical’s US sales, however, were affected following the US drug regulator’s action against its US subsidiary Caraco Pharmaceutical Laboratories Ltd. The regulator held up all new drug approvals for Caraco, though its sales by sourcing products from India remained unaffected.

In the case of Cadila Healthcare Ltd and Torrent Pharmaceuticals Ltd, Sharekhan said, rising staff costs and foreign exchange losses on trade receivables would cause margin pressure.

Ranbaxy will also see declining US revenue and the impact of the import alert will be felt this quarter. For Sun Pharmaceutical, Caraco will be weak since there have been no fresh drug approvals for the company in the US, said Bakhru of CLSA.

The higher interest and depreciation costs (due to acquisitions and/or expansion in capacities) would also affect profits of Cadila, Orchid Chemicals and Pharmaceuticals Ltd, Ipca laboratories Ltd and Opto Circuits India Ltd.

According to another pharma analyst in Mumbai, who didn’t want his firm or himself to be identified, companies with a presence in India and the US will do well but those with high exposure in emerging markets will continue to feel the pinch of trade-level destocking and cross-currency fluctuations.

“Overall, it will be a mixed quarter. Aggregate numbers will not be impressive because three large companies—Ranbaxy, Glenmark and Sun Pharma—will report lower numbers,” he said.