Ahmedabad Pharma Cluster - Newsletter- January 2008

Pharma Industry News

Will Gujarat Pharma cos face Dragon fire Our Bureau AHMEDABAD
The economic times, 7th January

IF GUJARAT Pharma industry has been dealing with tax holidays announced by a few states, competition from China could just add to the list of its concerns. Chief minister Narendra Modi who raised the concern during the Pharma centenary celebration, said that if China and parts of the world are consuming pills manufactured in India, looking at the Asian giant’s strengths in API manufacturing, the day might not be far when the world starts consuming pills made in China.
The chief minister asked the state industry, which has a 42% share in India’s pharmaceutical turnover and a 22% in national exports, to focus more on the research.
Indian Pharma industry is way ahead in generic drug production and stands tall in formulation business. China, is currently more into API (Active Pharmaceutical Ingredient) manufacturing and is not a threat to the Indian Pharma industry. But the pace of growth of the Chinese economy is surely a matter of concern for the Indian industry.
As per a KPMG report, Gujarat’s Pharma exports for the year 2005-06 accounted for 60% of formulation drug export. The SWOT analysis of the KPMG report also pointed out to the low spend on research and development, relatively inadequate technical manpower and limited international exposure for most small to medium scale companies.
KPMG also said that the state could capitalize on SEZ-led exports, fast growing contract research and manufacturing services (CRAMS), research and development and generic segments to tackle the competition from tax haven states.
The sector witnessed 54% CAGR (compounded Annual Growth Rate) in capital investments over the last three years. Valued at $4.4 billion in 2005-06, Gujarat’s Pharma industry has grown at 88% between 2002-03 and 2005-06, as against the 18% growth registered by the Pharma industry of India as a whole, in the corresponding period.
While the rupee is gaining strength against the dollar, the Pharma companies might lose the price advantage in the international market in the coming years. However, KPMG executive director Hitesh Gajaria discounted the fear of losing out in the international market. He said the shift of international clientele may take place at the lower end and not the higher end Pharma drug products.
If Alembic Chemical Works is one of the oldest Pharma companies set up in Vadodara in 1907, state boasts of 3,500 drug manufacturing units in Gujarat. Prominent companies include Zydus Cadila, Torrent Pharma, Sun Pharma, Alembic, Claris, Intas Pharmaceuticals and Dishman Pharmaceuticals.

Drug cos face stricter checks on road to pricing freedom
NPPA TO PRESCRIBE INCENTIVES FOR THERAPEUTICALLY-ACTIVE INGREDIENTS

Gireesh Chandra Prasad NEW DELHI
The economic times, 7th jan

PHARMACEUTICAL companies will now have to face in-depth scientific scrutiny on how therapeutically useful are the ingredients that go into a medicine in order to charge a price for it. The drug price watchdog, National Pharmaceutical Pricing Authority (NPPA), is revamping its pricing norms to incentivise companies for using sophisticated ingredients and packaging material but will subject them to a greater technical scrutiny on whether they actually improve the quality of the medicine. If the ingredients and packing material are found to enhance the quality and shelf life of the drug, then that brand would be granted a higher price.
Companies have been claiming that the rigid pricing norms prevent them from adopting high-quality inputs and packaging. The tough scrutiny of ingredients, aimed at ensuring that unnecessary cost is not passed on to consumers, will be outsourced to expert agencies.
Presently, NPPA prescribes a lower cost slab for inputs called excipients that merely change a drug’s colour or other physical properties, while therapeutically active ingredients are given a higher cost mark up. Because of this, companies often tend to pass the higher-cost excipients as inputs that are critical for the efficacy of the medicine. Now, the regulator has decided to review the list of ingredients to see if anything the industry uses is missing. Once it is ascertained, the regulator will evolve pricing norms for those components with the help from experts.
NPPA is also in the process of roping in the Indian Institute of Technology, Kanpur, to ascertain whether a particular ingredient improves a drug’s efficacy or is used to overcharge the consumer. The institute’s help will be sought on a caseto-case basis when a company approaches the regulator for getting price approval for a particular drug.
Besides, NPPA is also going to allow enough price flexibility to companies for using futuristic packing materials if they enhance the shelf life of a drug. The regulator will allow companies to claim a higher cost for such sophisticated packing material.
NPPA will rope in Indian Institute of Packaging, Mumbai, for technical advice. The regulator has also signed an MoU with the Indian Institute of Science, Bangalore, in this regard.

Exercise aimed at ascertaining whether a particular ingredient improves a drug’s efficacy or is used to overcharge the consumer The tough scrutiny of ingredients will be outsourced to expert agencies NPPA is also in the process of roping in the Indian Institute of Technology, Kanpur Regulator will approach Indian Institute of Packaging, Mumbai, for technical advice

Drug cos plan late-stage deals with MNCs
Writankar Mukherjee KOLKATA
The economic times, 7th jan

IN A distinct shift in their new drug development strategy, Indian pharma majors such as Dr Reddy’s Lab (DRL), Nicholas Piramal, Wockhardt and Sun Pharma are now looking at late-stage (Phase III) research collaboration with MNCs for their new chemical entity (NCE) pipeline. The idea is to commercialise the drugs in the West and negotiate larger milestone payments of $200-300 million per molecule. This comes at a time when the Indian industry have developed a critical mass of over 50 NCEs and intends to commercialise these blockbuster drugs 2010 onward. Analysts believe the strategy to go for such latestage deals shows that Indian companies are now keen to open a revenue stream from such research.
DRL has decided to invest till the Phase II stage of research. “Once an NCE completes Phase II trials, its proof of concept is proved. We will then look for co-development of the drug or license it out to an MNC. This will ensure much higher milestone payments from the partner and a bigger opportunity to launch the product ourselves,” DRL MD Satish Reddy said. Milestone payments, which come from the MNC partner as and when the molecule successfully completes each stage of research, are much higher when such partnerships are forged in late Phase II or Phase III stage. “While a collaboration in Phase I ensures a milestone payment of $3- 5 million, it is around $10-20 million for Phase II. The returns, at $200-300 million, are substantially higher for Phase III collaborations,” Nicholas Piramal India director Swati A Piramal told ET.
“When a company independently takes a drug to Phase III stage, the rewards will be much higher since it undertakes substantial risk. The chance of a failure is also far less in those stages,” adds Sun Pharma CMD Dilip Shanghvi.
Analysts feel Indian companies over the years have developed sharper skills in conducting NCE research. “While the players have rapidly gained expertise in early stages of drug development, they do not as yet posses the financial clout or the experience to take an NCE up to the final stage of commercialisation,” KPMG India executive director Hitesh Gajaria said. Here, a collaboration or out-licensing deal with an MNC helps. A late-stage collaboration ensures wider access to the high-margin western markets such as the US and Europe.

Pharma cos find uphill tax haven too steep

It's all about celebrating life. At 100, Gujarat Pharma industry is getting busier in fortifying health and shareholders' wealth. SEZs and exports, R&D and acquisitions, the industry is on the growth path. And longevity is the promise. ET checks the pulse

Madhvi Sally & Parag
Dave CHANDIGARH/AHMEDABAD
The economic times, 5th jan

THE hilly drive is not exactly enjoyable for pharma companies who have set up base in the tax havens of Himachal Pradesh and Uttarakhand. Unplanned growth, lack of infrastructure, shortage of skilled manpower and truck cartels have been reasons enough to give industrialists a nightmare.
A group of businessmen having a cup of tea at Hotel MG Regency in Baddi had a good laugh when they learnt that B.Sc students don’t know what a litmus test is. Or a commerce graduate fails to name the President of India. Added to this the companies have to adhere to the 70% local employment norms.
Random industrial development in the area of Baddi- Barotiwala-Nalagarh belt after the announcement of the industrial package for the state of Himachal Pradesh in 2003, which has been extended to 2010, has seen the influx of a large number of companies. The prominent Gujaratbased companies like Alembic Limited, Torrent Pharmaceuticals, Zydus Cadilla, Paras Pharmaceutical. The rush saw the already week infrastructure crumbling further. “A single lane, 7 metre wide road which was earlier used for the local traffic is now bearing the load of hundreds of vehicular traffic including 45 feet long containers. The bridges in the internal roads of the township too were not designed to cater to the traffic flow,” said chairman of Confederation of Indian Industries, Himachal Pradesh, Rajendra Guleria. During the 2007 monsoon, the main bridge connecting Chandigarh with Baddi caved in and is yet to be repaired.
An emerging pharma SME, promoted by a Gujarati, with base in Solan, faced a typical problem. The company wanted to sink a borewell. When the work was almost complete, the village pradhan stopped the work insisting on a no-objection certificate (NoC) from the village body. After the SME acquired the NoC promising water supply through tankers to the villagers, an official from a government agency insisted on the company getting another NoC, this time from the government. Simply put, bribes alone could let borewell run.
The Gujarat state chairman of Indian Drug Manufacturers Association Shailesh Choksi says that small players who migrated from Gujarat the going is indeed tough owing to competition. With a large number of big players setting up their own units in the tax havens, there not enough contract manufacturing work left for the small players to survive.
For 57-year-old DK Patel of Ahmedabad-based Acme Life Sciences, a formulation company, Baddi was natural choice over Haridwar. “Connectivity with Delhi and proximity with Chandigarh made me settle for Baddi,” he said. However, to move up the hills, Mr Patel had to get his senior management staffers from Ahmedabad. Even his cook is from Gujarat. If Mr Patel could afford to relocate his workforce and personal staff, not many smaller companies can afford to do this.
“High attrition rate of trained supervisors and skilled technical persons is a big challenge. People move to MNCs for better wages and other benefits,” said a Vadodara-based businessmen who did not want to be named. He added, “I will pay Rs 3,000 to a machine operator in Gujarat. But, in Himachal Pradesh, you have to pay Rs 5,000. And the wages are increasing.”
Truck unions and the formation of a cartel is another major problem the industry has to face. In 12 districts of Himachal Pradesh, more than 35 truck unions currently operate, largely well-established in the industrial hubs of Baddi-Barotiwalla-Nalagarh, Paonta Sahib, Kala Ambala and Shimla.

THEY ARE PROMISING AND HAVE MEGA PLANS.SMALL IN SIZE,YET DREAMING BIG,ET LOOKS AT A FEW SHINING STARS IN STATE PHARMA INDUSTRY

the Econokmic Times, 5th January 2008
•INTAS BIOPHARMACEUTICALS
It is Gujarat’s youngest biotech company. For Intas Biopharmaceuticals Limited (IBPL), set up in 2000, the turning point came with the introduction of its first product Neukine (GCSF) in 2004. The company became the first company in the world to introduce biogeneric Peg – GCSF. Most of its products are for oncology as the company sees a strong future in the segment which is growing at 20% in India. IBPL director Mani Iyer says that the company believes that the biopharmaceutical sector in India would offer big opportunities and scope in recombinant therapeutics, vaccines, diagnostics & antibodies. The company is focusing on the EU markets. IBPL expects that in the next 5 to 6 years, exports should be more than 20% of our revenues. The annual turnover of IBPL is net sales of Rs 2,609.44 lakh (2006-07) and had registered profit of Rs 26.90 lakh for the same period.
•HINDUSTAN BIOSYNTH
Hindustan Group of Companies is an emerging corporate in the harma sector with focus on contract marketing. The company came into existence in the year 1992.
The company diversified into herbal medicines by setting up Hindustan Biosynth Ltd in the year 2005-06 from third party manufacturing work. Says KS Chhabra, MD, Hindustan Biosynth, “We had to think of some new way, and we looked at herbal medicine for our future growth.”
The company has two manufacturing units at Por GIDC and is growing at rate of 30%. It exports to Russia and CIS countries and would target regulated markets in Europe in the next 18 months.

•TROIKAA PHARMACEUTICALS
Troikaa Pharmaceuticals was founded in the year 1984 with 15 employees and an initial capital of Rs 8 lakh. In the first year of its operation, the company achieved a turnover of Rs 16 lakh. Today the turnover stands at Rs 105 crore. The first product for the company was Tropaque — an X-ray diagnostic equipment that was discontinued after 5 years.
The turning point for the company came with the launch of diclofenac injectables and tablets — Dynapar — AQ in the year 1994. It turned out to be a blockbuster drug. The company launched the new version of the diclofenac injection again in the year 2001. The drug contributes Rs 20 crore per annum to its revenues. The company’s major focus is on pain management drugs, critical cardiac care and oral care. It has registered a growth of 48% last year and expect to grown in same pace in coming years. In the domestic market, it has presence in Gujarat, Maharashtra, MP, Kerala, Karnataka, Bihar and Rajasthan, while in the international market, it has presence in South East Asia, Latin America, West Africa and East Africa. The company has two state of the art manufacturing facilities, one each in Ahmedabad and Dehradun, four marketing divisions and more than 1,100 employees. Troikaa has the capability to manufacture high quality critical care injectables, tablets and topical preparations. For the year ended on March 2007, the company’s turnover stood at Rs 105 crore.

•CORONA REMEDIES
Though a tough task, Corona Remedies is eyeing 100% growth. The seven-year-old harma entity is now aiming to conquer international markets and its sales turnover would cross Rs 21 crore this fiscal. Company director Nirav Mehta says that in December 2000, the promoters started the venture with a capital of Rs 5 lakh. During the last fiscal, the company reported turnover Rs 9.48 crore and it has already garnered the revenues worth Rs 15.51 crore till December 2007, which is expected to reach to Rs 21.15 crore. The zero debt company set up a manufacturing facility at Solan in Himachal Pradesh with an investment of Rs 2 crore having capacity of 10 lakh capsule, 5 lakh tablets and 7,000 bottles a day. It has about 100 sales representatives and intends to double the salesforce by 2010. By 2010 the company having two units and over 350 employees wants to achieve turnover of Rs 50 crore. Mr Mehta says our employees are our strengths and we honour their contribution by awarding them.

•ACRON PHARMACEUTICALS
After completing 44 years of operations, Acron Pharmaceutical, one of the oldest small scale harma players is now set to grow fast with new generation taking over the decision-making. The company wants to emerge as a leading formulation manufacturer. Pharma graduate from Mumbai University C P Patel formed the company at Naroda in Ahmedabad. The then governor of Gujarat K Vishwanathan inaugurated the plant in 1978. Acron MD Jaydeep Patel says that during last fiscal, the company reported a turnover worth Rs 6 crore.

IDMA urges centre to clarify on 'clinical trials' in the D&C Amendment Bill
Thursday,January 24th 2008,
pharmabiz

Indian Drug Manufacturers' Association (IDMA) has urged the centre to clarify the term 'clinical trial' mentioned in the proposed Drugs and Cosmetics (Amendment) Bill, 2007 under which Central Drugs Authority of India is being planned.

According to the IDMA sources, the definition of the term 'clinical trial' under the Section 2 (aaii) was substantially different from the existing definition of clinical trials under Rule 122DAA of the Drugs and Cosmetics Rules, 1945. The proposed definition covers not only drugs but also cosmetics.

According to a memorandum submitted recently by IDMA to the Centre, the IDMA said, "the definition of clinical trails is not in line with Rule 122 (DAA) and Schedule Y. We suggest that the word 'any drug' used in the definition of clinical trial should be substituted by `investigational new drugs'. Such change is necessary to harmonize the requirement for clinical trials with the international guidelines on good clinical practices".

The proposed Section 5N of the proposed bill would bring all post marketing trials and academic research to a complete halt. The surveillance studies generate useful data on local population for drugs that are not tested extensively before marketing in India, the association sources said.

Commenting over the confirmatory trials, the IDMA claimed that these trials were conducted on marketed products so as to confirm its efficacy & safety from other relevant parameters. "Since these products are already marketed, there is no need to seek permission to conduct such clinical trials. Confirmatory trials that are performed before actual launch can also be exempted," the memorandum said.

IDMA said that the multiple trials, which were extension of the originally performed trials, may be exempted from the requirement of the permission by the CDA. The bill proposed to cover clinical trials for cosmetics also. However, the requirement of cosmetics registration was totally different from drugs and therefore the clinical evaluation of cosmetics would not be the same as required for drugs, according to the IDMA.

"It is therefore suggested that at this stage, the proposal to cover the clinical trials of cosmetics should be dropped. For this purpose, the word "Cosmetics" used in the definition of clinical trials under section 2 (aaii) and used in Section 5N should be omitted,'' it said.

It also said that the punishments clause under Section 5(O) should make a distinction between clinical trials conducted strictly in accordance with the good clinical practices and in compliance with all ethical requirements without obtaining permission and unauthorized clinical trials causing adverse effect or grievous hurt to the volunteers.

Johnson & Smith to consolidate generic business, enters cosmeceutical product devpt

Wednesday, January 23, 2008 08:00 IST
Pharmabiz

Johnson & Smith Co., a Bangalore-based pharma company, is all set to consolidate its operations in generics business and intends to focus more on cosmeceutical space where it is developing products to control dry skin and prevent sun tan.

The company already manufactures antibiotics cosmeceutical and painkillers for the national market sold under the brand name 'Pacin'. These products are made at its Bangalore facility in Peenya Industrial Area. However, a major portion is outsourced from units located in the excise free zone at Baddi in Himachal Pradesh. The company used to be a leading contract manufacturer prior to the excise free zone announcement.

The announcement of the excise duty exemption in 2005 led Johnson & Smith to chalk out a two-pronged strategy for survival. One was to opt for a third party manufacturer in the excise free zone for its generics and the other was to move into development and manufacture of a range of cosmetics. Today, both these initiative have benefited the company. "We were far sighted and hence were able to capitalize on both the business development initiatives. Today, our generics to cosmeceutical business ratio is 30:70, " Askok Bohra, director, Johnson & Smith Co. told Pharmabiz.

To begin with, Johnson & Smith's cosmeceutical range under the brand name 'Bioline' has moisturizing lotion, cold cream and lip balm to prevent dry skin conditions which if neglected to lead to serious dermatology disorders. Right now, all products are popular in the southern markets. It has also made its entry into the northern region. It has been accepted for its quality and pricing going by the repeat orders. The target audience is the middle class population. To create an awareness, the company allocated Rs. 1 crore budget last year and Rs. 60 lakh this year for publicity works.

With Sunscreen products are becoming popular in India, Johnson & Smith is getting ready to market a broad-spectrum of ultraviolet coverage or higher sun protection factor (SPF) sun screen range. It will begin with 15SPF, followed by 18 and 12 SPF.

India has a two per cent share of the global cosmeceutical market of $ 5.1 billion. There are both large and small companies from the national and international arena vying for a share of the market. Going hand in hand with the efficacy of the product is the affordability which is becoming a critical deciding factor to purchase in India. In this regard the company's Bioline range stands to gain going by the response for far. We have an edge on both quality of content and cost, added Bohra.

PHARMA TO GET AMPLE CENTRAL SUPPORT
The Economic Times, 18th Feb 2008

THE pharmaceutical sector is growing at about 12% in the last couple of years, faster than the overall economy and the manufacturing sector. The turnover of Indian pharma industry is estimated at $17.5 billion; comprising a domestic market of $11.5 billion and exports worth $6 billion. It globally ranks fourth in terms of volume and 13th in terms of value. India contributes about 22% of the global generic drug market in terms of value. The growth can be attributed to an increase in incomes giving people greater access to health care and efforts by the government to increase health spending from the earlier 0.9% of GDP to over 1% now through schemes like the National Rural Health Mission and the Rashtriya Swasthya Bima Yojna. The latter provides health insurance cover of Rs 30,000 a year to poor families in the next five years. Another feature of the industry is its increasing acquisitions abroad.
Health care finds a prominent place in the National Common Minimum Programme. One of the major objectives of the government is to raise public spending on health care from nearly 1% to at least 2-3% of GDP over the next few years. Another major commitment is to ensure availability of life-saving essential drugs at reasonable prices. The very mention of bringing reasonability in prices means that the government presumes that prevailing prices are not reasonable. This view has also been supported by the SC order directing the government to bring essential drugs under price control. Therefore, the government’s effort is oriented towards making prices of essential drugs reasonable and affordable.
Price control continues to be an important function of the department of chemicals and petrochemicals. The National Pharmaceutical Pricing Authority (NPPA) has been effectively performing its role in controlling prices of specified drugs. The government is working towards strengthening NPPA and creating awareness among consumers. The performance of NPPA in the last three years has been much more effective than its performance since its inception. In the last three years, NPPA has fixed 41% of bulk drug prices, 49.5% of total formulation prices, 70% scheduled formulation pack prices and overall all prices reduced for 52.5% of the scheduled formulation packs. Further suo moto detection of violation of DPCO 1995 has started; total violations detected is 59% of suo moto analysis done and of which 55% relates to overcharging and 45% sale without price approval. As a result, the pharmaceutical industry has voluntarily agreed to reduce prices of 886 formulation packs. Further, the government has reduced the annual price increase from 20% to 10% a year.
Growing competition in the domestic as well as export market is putting pressure on prices. Also, there is an urgent need to step up R&D expenditure for long-term sustainability and to maintain an edge at the global level. Many pharma players are putting a much greater focus on drug discovery and several new drugs are in various stages of clinical trials. The government would like to fully support the efforts of industry in this regard.
Adequate availability of trained manpower is important for the industry. For the purpose, in addition to the National Institute of Pharmaceutical Education and Research (NIPER) at Mohali, the government has decided to establish six more NIPERs at Hyderabad, Ahmedabad, Kolkata, Hajipur, Guwahati and Raebarelli. Out of this, four NIPERs have been started during the current year at Ahmedabad, Hyderabad, Kolkata and Hajipur.
The strength of India in terms of generics is now well recognised — we have to further strengthen it. We have to build our strength in drug discovery and drug development — this will sustain the growth of industry in the long run and enable India to emerge as a global leader in the pharma sector. It will help tackle health challenges of the country and of the other developing countries where improving access to medicines is a big challenge. We are sure that the industry would be able to turn challenges into opportunities and accelerate its pace in attaining global leadership role very soon. The government would continue to act as a facilitator and catalyst to the industry in attaining this position.

Learning gets easier with lessons just a click away
Purva Bhatia AHMEDABAD
The economic times, 8th jan

WANT to attend a professional college, but just don’t have the time for it. Or the logistics don’t make sense. Just another one of the solutions that the virtual world has: Online education. All you need to do is some research to find a good online course that meets your aspirations, as well as your pocket.
With fee ranging from Rs 250 per hour to an average annual subscription of Rs 4,000, online education is certainly as booming business. Websites for school students have a registered database of over 8,000 students, which is expected to double in coming years with lower internet rates.
e-MBA has gained popularity. Among working professionals, several other courses are catching student’s attention. CA firms have been the latest entrants in using e-learning to train (and re-train) employees for new challenges. Need for constant upgradation, vast distances and cost cutting measures have encouraged companies to choose the online multimedia courses for continuous learning directly to the desktops of employees.
For instance, Bombay Chartered Accountants Society (BCAS) is launching a website www.elbcas.com which will provide content on the essential international accounting standards for professionals in finance, tax and accountancy. “The course, with duration of 35-40 hours, will be available for Rs 3,500 for members and Rs 4,500 for nonmembers,” says Shariq Contractor, chairman of the society.
The group expects CA firms to take up the courses for their employees. “Out of 8,000 members in the society, 2,000 have already registered. We are expecting corporates to take up the courses for upgrading their employees’ skills. However, that will take some time,” says Ashwin Merchant, marketing consultant for elbcas.com.
While professional online courses have still a long way to go, school students are spoilt for choices when it comes to e-classes. Indiatimes.com, Educomp, 24X7 Guru.com, Extramarks.com, TutorVista the list is quite long. Most websites for school students offer online assessment tests. A couple of them like Educomp and TutorVista make a tutor available online according for the convenience of the students.
Educomp Solutions, which is a listed company, has an employee base of over 2,970 professionals and a database of 5,000 registered students. The fee goes up to Rs 250 per hour depending upon the subject and class level.
Bangalore-based TutorVista, after serving the US market, will now be offering its services in India. The cost of 10 sessions per month for students studying in classes 6-8 is Rs 499 per subject and for classes 9 and 10 it is Rs 999. The subjects covered are mathematics, English, physics, chemistry and biology. The site allows students to speak to their teachers using voice over Internet protocol technology, with headsets and microphones.
24X7 Guru.com has over 10,000 registered students from classes 3 to 10. As for the initiatives to reach out to more people, there is a lot the company has to share. “We recently partnered with Tata Sky’s ActveTM Learning, to provide a quiz-based educational service covering Maths, GK and Science for children in the age group of 7-11 years. The NASA campaign has been received very well. There has been a 70% increase in number of users with the competition on,” according to Viraf Kalyaniwala, head of operations. With more than 30 programmes on the offer, Indiatimes.com is most popular among students preparing for competitive exams. The company recently tied up with Vidya Alankar, a prestigious institute for GATE preparations in Mumbai. India currently has 25 million Internet users, which is expected to grow to grow to 100 million this year according to Internet and Online Association of India.

Lifestyle Gives New High to GUJARAT PHARMA
Shramana Ganguly Mehta & Vishal Dutta
AHMEDABAD
The economic times, 5th jan

AS URBAN India pops-in the magic pill to be on its feet every single minute of a day, those churning them out are beaming. With the phenomenal rise and detection of lifestyle-induced health ailments across the urban populace over a decade, pharma players in Gujarat have lost no time to get on to the bandwagon of lifestyle drugs. Dubbed as the diabetic capital of the world, the state has not only churned out pills for diabetes, but also has been attending to obesity, hypertension, cholesterol and even acidity problems of urban Indian populace. According to head of CRISIL research Manoj Mohta, the Indian lifestyle drug segment stands at Rs 8,000 crore (as on March 31, 2007) comprising drugs attending to cardiac (35%), gastro (37%), anti-depressant (15%) and central nervous system (13%) problems. Industry sources point out that Gujarat’s share stands close to 50%.
“In the last three-four years, the segment has seen a growth of 15-20% and is expected to grow at 12-14% in next fourfive years,” Mr Mohta told ET. He pointed out owing to health ailments triggered by lifestyle, the segment will continue to grow in future. “With urban India taking to hectic lifestyle and shifting from manufacturing to service sector and getting hooked on to irregular eating habits, lifestyle diseases are expected to grow. Further, higher margins are expected to bring in more players foray into the segment,” he added.
Take the Rs 1,800-crore Cadila Healthcare, for instance. The largest pharmaceutical and formulation company in Gujarat, has slowly moved to cater to the lifestyle disease and drug segment. The company has created a separate division - Consumer Products Division (CPD) - to tap the growing health and wellness segment in the country. The drugs for anti-cholesterol, anti-diabetes, anti-obesity and anti-depressants for contribute around 21% to the company’s total sales.
It’s product range comprising Sugar Free Gold - a sweetener with a market share of over 70%, Sugar Free Natura - a zero calorie sucralose-based sugar substitute, Sugar Free D’lite - a low calorie healthy drink and Nutralite - a premium cholesterol-free table spread are for those who despite being diabetic find sugar irresistible, are obese and also have cholesterol problems. CRISIL advisor Sunil Parekh points out, “Considering the attitude of people to preempt the diseases that manifest because of their lifestyles, this category of drugs has become a rage. They allow one to lead a good life - where one can have teaspoon full of sugar, drink, and make merry - even as he could be suffering from ailments manifested by the lifestyle.”
Yet another Gujarat-based player, the Rs 1,300-crore Torrent Pharmaceuticals Ltd’s, lifestyle drugs to treat cardio-vascular ailments is reportedly to be a leader in the segment. This apart, the company has already go onto the bandwagon of lifestyle drugs to tap the huge market. Even a SME player like Hindustan Biosynth Ltd (HindBio) has not kept off this booming and promising segment. Managing director of HindBio K S Chhabra, asserts that his is a lifestyle herbal drug company and that his company is expecting to register a double-digit growth rates in years to come. HindBio has herbal drugs for lifestyle diseases like hyper acidity, cough and cold remedies, sleep promoters and other general wellness products. Mr Chhabra said, “Lifestyle diseases are enhanced due to the change in living conditions and are not genetic in nature.

Blogs provide window to world of pharma
Vishal Dutta AHMEDABAD
The economic times, 5th jan

PHARMA blogs are playing an important role in shaping the future of the pharmaceutical industry in India. Many Indian online financial portal and investment firms as well as research harma a ions have provided a blogging platform for the harma industry to keep itself updated with the development in the harma world through open and uncensored discussion.
Take this: The harma blog from moneycontrol.com blog has a range of topics for discussion for the investors, harma experts and intellectual property attorney. Another blog analyses all Indian harma cos and serves up some potent potions. The topic on which the discussions are posted by the bloggers are harma a, biogenerics, combination drugs, patents, HIV, harma industry as well as on individual harma companies like Sun Pharma, Lupin, GSK, Ranbaxy, Roche, DRL etc.
One of the bloggers asks the bloggers to check out the news on sweeping changes in the US patent laws. Thus informing the harma bloggers about the changes taking place in the US. In one of his latest post on the blog, he informs the bloggers that “MNC drugmakers are stretching to any extent to grow their toplines. According to news reports, Glaxo and Astra Zeneca are being probed by the UK’s Serious Fraud Office for possible breaches of the UN’s oil-for-food programme in Iraq.”
Similarly, the Chennai based — The Venture Intelligence service — launched in mid-2002, and a leading source of information and networking services to the private equity and venture capital ecosystem in India has its own blog that provide open discussion platform for the bloggers. Its site is — http://www.ventureintelligence.in. Further, there are issues like ‘do Indian
harma cos suffer from overseas shopping addiction?’
Blogs like — www.indianeconomy.org, www.thoughtsofanordinaryman.com etc. are in the front-line in the discussion on harma sector amd and track its day-to-day development on the patent, drugs, stocks, international harma scenario.

ALU ALU is the new buzzword in pharma industry. The industry has hit upon an innovative packaging technique that not only keeps the products dry for a longer time, but also increased the shelf life of the product. An alu alu blister is a composite material made out of Nylon, Aluminum and PVC. Nylon is on the top, aluminum is in the middle and PVC is at the bottom. All the three material are compressed to form a blister.
The packaging results in longer expiry date of the product and also prevents adulteration of the medicines. A major chunk of the alu-alu blister packaging is imported from Korea and China as there is only one player in India. Nearly, 60% of the supplies come from Korea, 35% from China and around 5% from India. In India, only Hindalco produces the alu-alu blister packaging. Korean products are preferred as the Chinese products have high incidence of rejection. The unique character of this packaging is that it protects the drug from high degree of moisture, increases the shelve life of the drug, prevents duplication, avoid market rejection of drugs, protects from light. Chairman of RS Foils, Madhav Kajriwal told ET that the demand for alu alu blister gained ground amongst the Gujarat’s pharma industry. He said that two more new forms of pharma packaging would be introduced shortly in Gujarat by various players. They are tropical foil and child foil, which are similar to alu-alu blister but much higher in quality. The alu alu material was researched and developed by Alcon (Aluminum Company of America). Already 50% of the pharma companies based in Uttarakhand and Baddi are using the new packaging. In Gujarat, Torrent Pharma, Cadila Pharma and Intas are the major users. Cadila Pharmaceutical has 10-12 products, while Torrent Pharma has 37 products packed in alu-alu blisters. As per Torrent Pharma spokesperson, an alu-alu packaging is almost 4 times costlier than the conventional ones. Cadila Pharmaceuticals GM manufacture AJ Thakkar says that in the long run, there is an indirect benefit for the company.

It’s quite patent for domestic pharma cos
Three years into the patent regime, domestic pharma cos have strengthened their hold in the Rs 35,000-crore Indian market
Khomba Singh NEW DELHI
The economic times,3rd jan
CONTRARY to Indian pharma companies’ fear that global pharma majors will dominate the Indian market in the postpatent era by launching patented products, domestic pharma companies have strengthened their hold in the Rs 35,000crore Indian drug market three years into the patent regime.
In fact, global major Glaxo-SmithKline, which was No. 1 in India in 2005 when India became trade-related aspects of intellectual property rights (TRIPS) compliant, has slipped to the third position at the end of the 12-month ended November 2007 with 4.85% market share. World’s largest company Pfizer corners only 2.53% (9th position) of the Indian market.
However, industry experts feel that three years are too short a period to analyse the impact of the patent regime and draw any conclusions. Says Indian Pharmaceutical Alliance secretary general D G Shah, “The actual impact will be seen after 7-10 years when global companies would launch a basket of patented drugs. Some of them have recently set up subsidiaries in India and planning to launch patented products in the market. Generic products would continue to be the major source of revenue for Indian companies for the next 15-20 years.”
At the moment, Cipla (5.15%) and Ranbaxy Laboratories (4.92%) are ranked number one and two in market share and this growth among Indian companies can be attributed to organic growth. They have not done any major acquisitions unlike companies abroad which largely grow on the strength of mergers and acquisitions.
Says Cipla MD Amar Lulla, “The actual impact will be seen in India when global companies launch products in which they enjoy a monopoly. ‘’ According to him, Indian companies’ growth was driven by product launches and also due to the economic growth which has made medication affordable.” India’s largest company by sales Ranbaxy Laboratories has 18 brands in top 300 brands of the Industry, with 9 brands featuring amongst the top-100 league.
Though product launches have been the main force behind the growth, it was the shares of existing products that grew significantly in November. Of the 10.3% growth witnessed in November-2007, existing products account for about 5.3% while the new product range is about 4.0%. Chronic therapy categories was the high growth thereupatic category, growing by 18.5% while acute therapies grew by 7.5%, a company source said.
A report by McKinsey & Company indicates that in absolute growth, the India domestic market will have the third largest incremental sales opportunity in the world, adding close to $14 billion and taking the market size to $20 billion by 2015. An industry source partly attributed the rise of the Indian Industry to the growing realisation among Indian companies that it is fundamental to be market leader on home ground before it can become a global major.

Vadodara SSI units give facelift to offices
Move Aimed To Attract Overseas Clients
Kalpesh Damor VADODARA The economic times, 8th january

IN A move aimed at increasing exports and attracting domestic dealers, small-scale industry (SSI) units in Vadodara are busy giving a corporate look to their offices and units. Over a dozen of SSI units in Markarpura and other industrial estate are giving facelift to their offices and manufacturing units to attract dealers and overseas clients. New and existing units of many multinational companies such as Bombardier, ABB and Thermax Ltd have given a major push to outsourcing business of small and medium engineering units in Vadodara. Now, in order to further expand their overseas clients SSI units in Vadodara are spending substantial amount for sprucing up their office infrastructure. “Depending upon their turnover, these units spend around Rs 5 lakh to Rs 25 lakh for sprucing up office infrastructure to give a corporate look to their offices. Units are using float glass, modern floorings and other accessories to make their offices swanky,” said Nilesh Shukla, vicepresident, Vadodara Chamber of Commerce and Industries (VCCI).
Smaller companies having their own dealership networks are increasingly spending money after office infrastructure. A few of them include names like Matrix Telecom, Cosmos and Vasu Pharma. “There are around 40 to 50 such units that have either made swanky offices or are in the process of doing so,” he added. With more and more companies approaching SSI units to outsource various products, these companies want to project themselves as emerging corporate companies. The basic idea is to build their image as a unit implementing corporate practices. This also helps these units to attract more dealers and overseas clients, said another industry player. It may be mentioned here that small units in Vadodara are going all around to have their share in the overseas market. In a move aimed at attracting international clients more and more engineering units in the city are also gearing up to meet global standards by applying for ISO certification.

Lincoln to launch India’s first drug for Tinnitus
Vishal Dutta AHMEDABAD
22nd jan The economic times.

IF BELLS don’t stop ringing in your ears or a strange buzz continues to disturb you, it’s probably Tinnitus and the only option is removal of cochlea (inner ear organ). And the result, permanent loss of hearing.
Gujarat-based Lincoln Pharmaceuticals plans to introduce a drug Caroverine which, the company claims, is an antidote for the disease.
Lincoln Pharma has entered in a joint venture with a Switzerland-based company PHAFAG AG for marketing Caroverine. Phafag AG is the only company in the world that has exclusive patent rights on the drug and no other company produces this drug. Lincoln will be the first Indian company to introduce in the Indian market. The drug Coreverin is a ear drop for the treatment of Tinnitus.
Medical experts say, Tinnitus is a very common in India and it has increased over a period of time due to changing lifestyle in urban cities. Dr Sanjay Agrawal, medical advisor to Lincoln Pharma, says that the patients between the age group of 40 and 70 years complain of this problem.
Lincoln Pharma’s MD Mahendra Patel, told ET: “Initially, we will import the finished products and market it in the India”. At a later stage, the company would import only the bulk drug and produce formulation at its own plants. Lincoln has marketing rights for the product in the country and had also signed technology transfer with PHAFAG AG.
“There are also secondary effects of tinnitus disease, as it affects the vital organs,” adds Dr Agrawal. Other complication can develop due to tinnitus are like Cardiac, pulmonary disease etc. He further said that there is social implication of this disease as the patient is tagged mentally retarded. Patel further says that apart from treatment of tinnitus, Coroverine drug can also be use for the treatment for abdominal pain relief and many other uses. He is hopeful that the company would be able to garner another Rs 20 crore from this product. The company registered 23% and 106% jump in its sales and net profit respectively for the third quarter ended on 31 st December 2007. While for the nine months ended on 31st December 2007, the sales of the company stood at Rs 61.07 crore and net profit was Rs 6.76 crore.

Prolong Pharma inks pact with Zydus Cadila
Our Bureau AHMEDABAD
The Economic Times, 25th January 2008

US-BASED Prolong Pharmaceuticals Inc, an R&D oriented major, has entered into a collaboration with Ahmedabad-based Zydus Cadila, for development of therapeutic protein - PEG-EPO for severe anaemia treatment.
As per the agreement, both companies will utilise Prolong’s PEGylation technology to make PEG-EPO. This would increase productivity in the drug development of this next generation therapeutic protein by leveraging the combined strengths of both companies. The joint development will help in optimized drug candidate with improved therapeutic properties. YES Bank was the strategic advisor to Prolong for the transaction. Severe Anaemia, is a condition where the haemoglobin (Hb) level or number of circulating red blood cells (RBCs) is significantly reduced. This is common in chronic renal failure (CRF), cancer patients undergoing chemotherapy, some chronic inflammatory diseases, heart failure, surgical settings and critically ill patients. The first generation drug, EPO, did wonders to the treatment of this condition. PEGylation is the only FDA-approved protein delivery technology that transforms proteins into superior drug products, by attaching a polyethylene glycol (“PEG”) polymer to a therapeutic protein. PEG-EPO promises to be a third generation drug. Zydus Cadila will leverage its expertise in carrying out a focused drug development programme and marketing it in mutually agreed upon territories globally. The collaborative programme will bring an edge to Zydus’ global biologics strategy with the introduction of an improved biologic product.

RANBAXY, LUPIN & DRL IN RACE FOR ROMANIAN DRUG CO
The Economic Times, 30th Jan 2008
Indian drug makers Ranbaxy Laboratories, Dr Reddy’s Laboratories (DRL) and Lupin are learnt to be in the fray to acquire 53% stake in Romania’s leading pharmaceutical company Antibiotice, reports Khomba Singh from New Delhi. The state-owned company, which is being privatised, is to be auctioned in March with a reserve price of $200 million (Rs 800 crore). Ranbaxy CEO & MD Malvinder Singh said: “We cannot comment on acquisition conjectures. However, in the generics pharmaceuticals space, we believe there is more opportunity for acquisitions in the emerging markets because we see more sustainability and earnings growth from this region. We will consider target companies based on the value and the synergies that can be unlocked from such a deal that can ultimately enhance the shareholders’ value.”

Pharma cos form cluster to beat competition
Vishal Dutta & Papiya Pattanayak SURENDRANAGAR
The Economic Times, 23rd Feb 2008

UNITED we stand, divided we cant do business! Gujarat’s entrepreneurial spirit has come up with yet another innovative model to battle outside influences on the local industry— this time in pharma sector.
Three small-scale pharma firms have come up with an innovative plan to survive the drastically changed business environment, where job work is down to a trickle and most of the other companies in their sector have migrated to new hubs in north.
Call it innovation or the need of the hour — the ambitious cluster approach has managed to bring together erstwhile competitors under one roof for a joint exercise in marketing, capacity building and brand expansion of their pharma products. J H Sanghvi, director, Que Pharma told ET, “We are planning to set up a single marketing company and initially three of the pharma companies from Surendranagar would join it.”
Individual companies will continue to have their drug brand name but these brands will be marketed by the new common entity. Conflict of interest would be minimised by dropping competing drug brands wherever possible.
Esquire Drug House, Que Pharma and Prayas Pharmaceuticals are hoping that the collective common front will not only help them reduce administration and marketing costs, it would let them enter new markets. “It is not possible for an individual to enter export market due to the huge marketing and other costs involved. A single product registration in the UK might cost up to Rs 15 lakh. A cluster company would help us tap both the semi-regulated and the regulated export markets,” says Vinod Mehta, proprietor of the Prayas Pharmaceuticals
Similarly Mugatlal Shah, director of Esquire Drug House believes that the cluster approach will help them take benefits of government grants.
Each of the three companies would continue to hold there own distinguish identity, the formation of a single marketing company would be their joint face for the pharma world.
This new approach might change the fortunes of the entire region that was once a flourishing pharma hub. Until a few years ago, Surendranagar’s pharma industry was a major job work center for the biggest brands in India. All the major companies like Zydus, Alembic, JB Chemicals, Intas, Torrent Pharma, Piramal et al outsourced a product or a process to the local pharma companies.
The situation changed with the advent of the MRP-based excise duty. The local pharma industry also witnessed a huge exodus of manufacturing units to the excise free zone of the Northern Indian states of Himachal Pradesh and Uttrakhand. The imposition of Schedule M further affected the smaller units at Surendranagar. Sales went down by 40% and while overheads increased by 100% over the past few years. “Now, the job work for major pharma companies has moved to excise free zone, leaving the industry here, in doldrums”, says Mr Sanghvi. The new model might just bring a turnabout!

State plans big in biotech
The economic times,1st January Our Bureau AHMEDABAD

GUJARAT pharma had a mixed fare during 2007. While the state identified its potential of becoming a global pharmaceutical hub in view of the upcoming special economic zones, many small scale pharma units have suffered because of the tax concessions given to a few hill states. However, big companies in the sector like Zydus Cadila, Dishman Pharma, Cadila Pharma, JB Chemicals and Jubilant have already expanded to the hills and set up their own export-based manufacturing units. The state also came up with its biotech policy with an aim to make the state a biotech hub. The Gujarat State Biotechnology Mission (GSBTM) believes the number of biotech companies has shot up by 50% in the past three years.

Textile SPV to help rupee-hit sector
Niranjan Bharati NEW DELHI
The Economic Times, 25th Feb 2008

THE government would soon form a special purpose vehicle (SPV) to give boost to the textile industry, which has been hit hard due to appreciating value of rupee versus the US greenback. The proposed SPV will have participation from all the eleven export promotion councils (EPCs) and would be entrusted with the task of tying up with large buying agents overseas. It would get annual budgetary allocation from the government.
The SPV would also have the responsibility of bringing foreign direct investment (FDI) in the country by inviting manufacturers of textile machinery to set up their base in the country. The SPV will have independent decision making powers and would also set up retail outlets globally including at major international airports like London, Paris, New York and Toronto.
The proposal mandates the incorporation of a holding company, a SPV, of all the export promotion councils in textiles and clothing towards the objectives of the scheme. The 11 councils which would form the SPV include Apparel Export Promotion Council (AEPC) Cotton Textile Export Promotion Council(TEXPROCIL), Synthetic Rayon Textile Export Promotion Council ( SRTEPC), Powerloom Development Export Promotion Council(PDEXCIL), Indian Silk Export Promotion Export Promotion Council (ISEPC), Jute Manufacture Development Council (JMDC) and Wool and Woollen Export Promotion Council (WEPC) among others.
“The role of holding company would include need assessment, mobilisation of resources, assisting the enterprises in designing and launching the brands in selected markets, forging linkages with key stake holders and other hand holding support,” a senior official in the textile ministry said.
An integrated textile promotion would be carried out in prospective markets identified on the basis of in-depth product-country potential analysis. The SPV would analyse world trade data for identification of top potential markets and products and pinpoint specific items and markets for stepping up India’s export of textile and clothing articles. In all there would be 33 item groups which the SPV would promote.
Individual companies would also be allowed to take advantage of this generic promotion effort by stepping up their own brand promotion efforts in tandem. This is expected to create a favourable climate for attracting FDI in textiles and clothing sector.
The SPV would organise International Textile Exposition twice every year, one each in New Delhi and Mumbai showing the entire range of Indian products. The member companies would also be allowed to export goods for holding or participating in exhibitions abroad, sell the products in the permitted shops set up abroad or in the showrooms of their distributors or agents. they would also be allowed to set up show-rooms and retail outlets at the international airports.
The funds under the budget allocation shall be placed at the disposal of the holding company by the ministry of textile after the approval of the annual action plan. The government would have the right to audit the expenditure of the proposed SPV.
There will be two government nominees on the board of holding company. The board of directors of holding company will comprise all the chairmen of EPCs and the post of president of the board will be rotational for two years by taking nomineess from AEPC, TEXPROCIL and SRTEPC. The office of the holding company shall be in Apparel House, Gurgaon. The secretary general, AEPC shall be the managing director of the holding company.
The holding company shall also raise finances from the contribution of EPCs and EPC members in addition to the government grant per annum.

State’s SEZ policy to give pharma industry a leg up
Vishal Dutta AHMEDABAD
The economic times, 5th jan

FORESIGHT of Gujarat government and entrepreneurship of state pharma majors. The two are set to complement each other at the most talk-about enclaves — special economic zones.
State government’s SEZ policy that came in 2004 much before the Centre’s own, is set to give the export-oriented pharma industry in Gujarat, a much-needed support.
Dishman Pharma, Zydus Cadila, JB Chemicals, Cadila Pharmaceuticals Ltd are among nine majors who have planned pharma SEZs at various locations in Gujarat.
While Dishman is coming up with Pharma SEZ for API and intermediaries, Zydus is setting up SEZ for formulation units. Recently, Tripex Overseas Ltd has announced that it would set up a SEZ unit near Valsad (South-Gujarat) with an investment of Rs 200 crore. Other players are J B Chemicals, Cadila Pharmaceuticals
Says JR Vyas, managing director of Dishman Pharmaceuticals Ltd, whose company recently received a go ahead for the pharma SEZ: “Owing to weakening dollar and the increasing input cost, the pharma industry is bleeding on the export front.”
Gujarat’s pharma industry lays a significant thrust on exports — Rs 5,000 crore out of the total production of Rs 12,000 crore to 14,000 crore. It is estimated that Gujarat’s exports are growing at the rate of 20-25%. With pharma SEZs getting operational, export would get a further push.
“If the company has to immunise its export revenue from the appreciating rupee, it has to cut down on its cost. Pharma SEZs can play a major role in safeguarding the interests of the pharma company’s export revenue,” added Mr Vyas.
“By moving to pharma SEZ, it would be one of the major corrective measure that a company can take for its exports,” adds Vyas. Obviously, the movement would be for those companies who are planning to set up its new pharma units for exports.
As per the experts, the movement of the pharma companies towards the SEZs would increase looking at the appreciating rupee. The SEZs would also lure others pharma companies operating outside the state, especially with Goldman Sachs, PWC, and others predicting further rupee appreciation in 2008.
Will there be a competition among the SEZs? Mr Vyas says no. Each pharma SEZ has its own distinct feature and each of them caters to different clientele.
In Gujarat, Zydus Cadila has already completed 85% of its booking at the Pharmez. Of the total 110 hectares, the Phase 1 of Pharmez is spread over 48.8 hectares. Companies like Fischer Scientific, Famycare Ltd, Zydus Hospira and Zydus BSV and Oxygen Bioresearch Pvt Ltd, Intas Pharmaceuticals and Torrent Pharma have already been allotted land and the construction is likely to get underway with necessary approvals in place.
While the overall national export growth rate stands at 35-40%. The industry has more than 3,000 registered manufacturers, a strong backbone of small & medium-scale enterprises, capital investments in excess of $5 billion and an annual turnover of more than $2.55 billion.

DRUG PRICES TO GET LESS PAINFUL
Pro-rata Pricing To Give Cos No Chance For Mischief
Gireesh Chandra Prasad NEW DELHI
The ET 21st January,2008

CONSUMERS would soon see thousands of cheaper pharmaceutical brands coming their way. The government is all set to change the way it fixes medicine prices, which gives companies the freedom to overcharge consumers after tweaking a brand’s package size and potency.
The government’s reworked plan aims to introduce what it calls pro-rata pricing, which stipulates that once the price of a strip of ten 100 mg tablets is fixed, a corresponding rate will apply to all other strengths and packs even if no price is fixed for them. Currently, the National Pharmaceutical Pricing Authority (NPPA) fixes prices of a specific quantity of medicine of a particular strength, say a strip of ten 5 mg painkiller tablets or 10 mg of a muscle-relaxant cream. But companies are quick to change the package size and charge a higher price.
The result is that a 5 mg pack maybe costlier than a 10 mg pack. NPPA’s hands are tied as the price fixed does not apply to that particular formulation pack. Due to lack of regional offices, it takes a few months for the New Delhi-headquartered NPPA to discover the new formulation pack in the market and fix a price. By then, manufacturers would have already made a killing. Now, NPPA hopes to soon end this practice by introducing pro-rata pricing.
Going by the magnitude of overpricing that NPPA has seen in the first nine months of this fiscal, the move is likely to lower prices of several thousands of formulation packs, which are dodging price controls. Between April and December 2007, NPPA scrutinised 3,603 brands in the market and found overcharging in over 87% of them.
Violations range from either charging more than the government-fixed price or selling sans a price approved by NPPA. The regulator has raised recovery demands in many of these cases.
However, in cases where companies change the pack size, NPPA can do little. The scrutiny of the 3,603 packs account for about 27% of the 12,000-odd packs, which are under government price control. Rampant overcharging in this sample indicates that this is just the tip of the iceberg.

Pharma industry seeks more incentives to R&D in budget
Wednesday, January 23, 2008 08:00 IST
Joseph Alexander, New Delhi

With the domestic industry finding it tough to compete with the R&D spending by multinational companies and country still lagging far behind in the new drug discovery activities, the industry has moved the Department of Science and Technology to suggest more tax incentives for the research-based firms.

Many of the pharmaceutical captains have taken up the issue of sops to the research with the DST so that it could make suitable recommendations ahead of the forthcoming budget, it is learnt. The industry is asking for all R&D expenses, including cost of regulatory approvals, to be made tax-deductible.

Industry has been demanding for doubling the tax exemptions permitted for small research-based companies and also sought the current tax exemption on R&D spending to continue until 2017. The Chemicals ministry has reportedly forwarded its recommendation on the latter to the Finance Minister.

During the pre-budget talks with Finance Minister P Chidambaram, the industry leaders including Wockhardt chairman Habil Khorakiwala, Ranbaxy managing director Malvinder Singh and Nicholas Piramal director Swati Piramal also insisted on tax benefits to the research for stabilizing the domestic industry in the face of sharp competition at the global level, it is learnt.

Besides, they have also asked for cut in personal tax rates in order to achieve better growth rate in the gross domestic product and reduction in the excise duty on manufacturing from the present 16 per cent to 14 per cent.

DST sources said the department would accommodate the demands of the industry on more sops to the research-based companies in its recommendations to the Finance Minister. A department official said the Science and Technology Minister also was in favour of giving more incentives to the industry to boost sagging research activities in the country as a whole, including the pharmaceutical sector.

EVER walked away with a huge discount on the maximum retail price (MRP) of a computer or a television, only to be told later that you still paid more than the market rates? Such pricing illusions have come to an end in the electronics hardware market, thanks to a new rule implemented by the Centre.
The government has changed the way excise duty is levied from January 25. Now the tax will be paid not on the assessable value declared by the manufacturer, but the MRP printed on the pack. This is aimed at tackling excise evasion and make pricing transparent to the consumer.
“It will definitely make MRPs logical and protect customer interests,” said Jayant Gundewar, chief strategy officer of WeP Peripherals Ltd, which makes printers, power supply systems and other peripherals. “All good brands do follow a strict MRP regime and hence it will not affect them. It will weed out bad practices like overpricing,” he said. The new system penalises a manufacturer who sticks an MRP much higher than the actual price. It also benefits the one who sticks the price the product is supposed to sell at. The government announces that abatement rate, declaring how much of the MRP will be exempt from excise duty.
This is typically to take care of costs incurred after leaving the factory and trader margins etc.
For example, assume a product is made at a cost of Rs 8,000, sold for Rs 10,000 but carries an MRP of 15,000. If it attracts a 16% levy, the duty under the earlier regime would have been Rs 1,280 and the duty under the new regime would be Rs 2,400. But then the MRP here is inflated.
If the MRP is revised to the actual selling price and an abatement of, say, 25% is effected, the new levy would be calculated on Rs 7,500. In this case, the duty would be Rs 1,200, lower than before. But if the abatement is lower, this rate could be higher. In the recent policy move, the government has fixed the abatement rate at 25% for printers, ink cartridges, modems, keyboards, mouse, monitors, 24% for set-top boxes, and 22.5% for personal computers.
The Manufacturers’ Association of Indian IT (MAIT), the apex body of the Indian IT hardware industry, said the abatement rate was lower than its expectation. Vinnie Mehta, executive director, MAIT, said, “We expected the abatement rate to be at least 40% but it is about half of that. The JFM (January-February-March) quarter is a peak quarter for us, with this change we will lose 10-15 days of it.”
Paresh Khadye, logistics manager at Taiwan-headquartered ASUS India, said consumer prices could go up under the new tax norm.

Up to 7,000 pharma brands set to get cheap
Gireesh Chandra Prasad NEW DELHI , The Economic Times, 4th Feb 08

PRICES of over 7,000 pharmaceutical brands classified as ‘essential medicines’ are likely to see a sharp fall after this budget. These medicines belong to 27 different therapeutic classes.
The finance ministry is considering removal of the 16% excise duty on these medicines. Excise is imposed on 57.5% of the maximum retail price (MRP) printed on these medicine packs. That would mean a reduction of around 10% on the retail price.
This could be the first time the government reduces the duty on the production of a medicine category. Some of these drugs are under price control and the drug price regulator would down their MRP once the decision is announced in the forthcoming budget.
The pharmaceutical industry has already agreed to pass on the benefit of the excise relief to consumers.
The move is in line with the ruling coalition’s promise of “taking all steps to ensure availability of life-savings drugs at reasonable prices”, in what is billed as the UPA government’s final fullfledged budget. For this, the ministry has to tackle a technical issue—reduce excise on the raw materials too in order to avoid an ‘inverted duty structure’ where the duty on raw materials exceeds that on the finished product.
The planned excise relief is in addition to a possible Customs duty cut on many of the medicines in the essential drugs list, which have imported versions.
Incidentally, the finance ministry has been progressively reducing the Customs duty on cancer medicines in the last few budgets, but this time, the thinking is to address duty reduction not only on cancer drugs, but on all medicines that are classified ‘essential’. These are critical drugs that are popularly referred to as ‘lifesaving drugs’ although there is no such official classification.
Some medicines attract a 10% Customs duty while others attract 5% and some others zero.
There are 354 medicines that are classified as ‘essential’ as per the health ministry’s list, which translates to over 7,000 formulation packs of specified strengths or brands in the market. Of the 354, about 40 molecules are price-controlled by the government, the prices of which may be revised the National Pharmaceutical Pricing Authority (NPPA) once the government decides to remove the duty.

It is extremely important to distinguish between SELLING and MARKETING. SELLING is SELL what you have; show your goods to various customers and whoever wants it, buys it. If you succeed to satisfy customer, above his expectation, he buys your product again. Otherwise, someone else WILL SELL. MARKETING is study what customer wants; add values to the wants, so the customer NEEDS the product. Because, you satisfy the NEEDS, customer BUYS again and again. You are able to establish YOUR BRAND.

For this, we must study BUYING BEHAVIOR, because, “the most important thing is to forecast where costumers are moving, and, to be in front of them.” ( Philip Kotler).

Cultural, social, personal and psychological factors are responsible for influencing purchase decision.

Culture, Subculture and social class primarily are responsible for buying behavior, where members of a particular subculture/caste or a social class share common values like dress, speech patterns, occupations, residential preferences, education etc. Social class will help choices in consumer durables or preferences for products of matching the status.

Social factors like family, friends, neighbor, co workers, relatives etc. primary group and religions, professional/trade etc. secondary groups influence a person to new behaviors, attitudes etc.

Personal factors like age, stage in life cycle, occupation and economic level, personality etc. are also influential.

Physiological factors like motivation, beliefs and attitudes etc. will also help take buying decision.

A marketer must identify who makes the buying decision, the types of buying decisions and the steps of the buying process.

Initiator, influencer, decider, buyer and user are 5 important roles, may be five separately or all in one or more than one.

Brand differences High Involvement Low Involvement
Significant Complex Buying Behavior Variety seeking buying behavior
Few Dissonance – reducing buying behavior Habitual Buying Behavior
Complex Buying Behavior means when a customer really chooses between various brands. He develops beliefs, attitudes and thoughtful choice is made.

In dissonance reducing buying the customer sees little differences between Brands, and the purchase is expensive, infrequent or risky. The customer gathers information before buying and will not hesitate to pay Higher Price, if quality differences are observed.

When the customer involvement is LOW and brand differences ABSENT, customer goes to HABITUAL BUYING. Instead of normal, sequence of belief-attitude-behavior, customer buys passively, influenced by repeat Ads/sales effort and availability of the product.

Variety-seeking buying behavior comes from low involvement but significant brand differences, forcing the customers to switch brands, more for variety than due to dissatisfaction.

Problem Recognition Information Evaluation Purchase Post Purchase
(Need) Search of Decision Behavior
Alternatives

Problem Recognition or a need is triggered by an internal (hunger, thirst) or external (Ads, others) stimulus.

Information search starts by the stimulus and is obtained from personal, (family, friends etc.), Commercial (Ads, packaging, Displays), Public (Mass media) or Experiential (Handling, using the product) sources.

From the gathered information from the available alternatives, customer forms a judgment on conscious and rational basis, i.e. whether the product will satisfy the need, whether he will get benefits for short-period or whether the product offers bundle of attributes for long term.

First, the negative influence of others attitudes and the buyer’s own motivation to heed others’ opinion.
Second, unanticipated situational factors like the customer’s decision to modify, postpone or avoid purchase heavily influence the perceived risk (money, product benefits, satisfaction etc.)

Also a purchase intention is influenced by brand, dealer/vendor, quantity, timing and payment method.

Buyer’s satisfaction comes from expectations met by product performance. If more Performance is lesser than expectation, dissatisfaction prevents Next purchase; when it is as per expectation, satisfaction generates revenue for the marketer. When performance exceeds the expectations, the customer is DELIGHTED, a BRAND is established. Post purchase services like follow up, invite customer comments, educating proper usage etc. generate positive attitudes and help establish the BRAND.