Intellectual Thoughts by Sanjay Panda: April 2007

India's space mission

The flawless 11th flight of the Polar Satellite Launch Vehicle (PSLV-C8) of the Indian Space Research Organisation (Isro) is more significant than all its previous missions, though each one so far has marked a step forward in the country’s space capability. For one, the PSLV-C8 is the first purely commercial flight that has successfully put an Italian 352-kg astronomical satellite, called AGILE, into space orbit on a contract won against stiff global competition. In fact, Isro had to modify the standard configuration of the PSLV to meet the requirements of the low-weight AGILE, which, additionally, had to be placed in a low inclination orbit. For this, Isro had for the first time to do without the six solid propellant strap-on motors of the first stage and reduce the propellant in the fourth stage by 400 kg, compared to the previous PSLV flight.

Despite these design modifications, Isro has managed to recover the bulk of the PSLV cost, reckoned at around Rs 65 crore, by charging the Italian space agency a competitive price of $ 29,000 per kg. Indeed, the AGILE, too, is unique in certain respects. It is said to be the only European mission entirely devoted to high-energy astrophysics studies. Besides, it is the first satellite powered by commercially available, space-qualified rechargeable lithium-ion batteries.

As such, the country will now be viewed as a price-competitive contestant in the global satellite launch market, estimated at between $1.5 billion and $2 billion. Even if India manages to corner just 2 per cent of this market, as Isro hopes to do, it will mean substantial business in a wholly new sphere, and make Sriharikota the country’s first commercial spaceport. Considering the impeccable record of the PSLV—all its operational flights so far have been successful—and the deft design modifications to suit the customer’s needs, more orders are bound to be on their way for commercial space launches. In fact, since its first flight in 1994, the PSLV has accomplished several feats. These include launching eight Indian remote sensing satellites, an amateur radio satellite HAMSAT, a recoverable space capsule SRE-1, and six small satellites for foreign customers.
Amongst its most notable achievements is the launch of India’s exclusive meteorological satellite Kalpana-1 into geosynchronous transfer orbit. While undertaking a wholly commercial mission this time, Isro has also managed to use the spare capacity of the PSLV-C8 (which can carry a 1-tonne payload) for catapulting into space an advanced avionics module (AAM), weighing 185 kg, to test advanced launch vehicle avionics systems like mission computers, navigation and telemetry systems. Isro has so far been using mission computers developed in the 1990s. However, state-of-the-art navigational systems and computer aids have now become vital since it is the PSLV which is proposed to be used to launch India’s first spacecraft mission to the moon (Chandrayaan-1).

So great achievement & congrats to all the concerned personnel in ISRO

Pfizer Earnings Fall on Drop in Norvasc, Zoloft Sales

Pfizer Inc.'s first-quarter profit fell 18 percent and the drugmaker cut its 2007 forecast, as competition from cheaper drugs hurt two of its best-selling products, Norvasc for blood pressure and Zoloft for depression.Net income for Pfizer, the world's largest drugmaker, declined to $3.4 billion, or 48 cents a share, from $4.1 billion, or 56 cents, a year earlier.Revenue this year will be $1.2 billion less than Pfizer projected after an adverse court ruling accelerated generic competition to Norvasc, and sales of the inhaled insulin treatment Exubera missed targets, the company said. Zoloft also faces generic rivals. Pfizer has said it is cutting 10 percent of its workforce by 2008 to offset the lost revenue.

The impact of generic Norvasc, coupled with increased promotional spending around Exubera, are contributing to a greater decline.Pfizer shares fell 10 cents to $26.97 at 4:02 p.m. in New York Stock Exchange composite trading. The stock has risen 8.1 percent in the past 12 months. The shares have lagged behind the 14-member Standard & Poor's 500 Pharmaceutical Index, which has increased 20 percent in the past 12 months.

Revenue rose 6 percent to $12.5 billion on higher drug prices and an 8 percent raise in sales of its top-selling drug, the Lipitor cholesterol pill, the company said today. Profit excluding certain costs was 68 cents a share, beating the average estimate of 17 analysts surveyed by Bloomberg.

U.S. regulators today also favorably reviewed Pfizer's experimental HIV/AIDS drug maraviroc, according to documents posted on the Food and Drug Administration Web site. The agency staff report said maraviroc was effective and caused no unusual deaths A panel of advisers will recommend April 24 whether the FDA should allow the drug to be marketed.
Net income this year will fall to $1.30 to $1.41 a share from $2.66, before Pfizer sold its consumer unit, the company said. Excluding certain costs, profit will be $2.08 to $2.15 a share, lower than the $2.16 average estimate of 24 analysts surveyed by Bloomberg. Pfizer's January forecast was for $2.18 to $2.25.
The drugmaker will close two U.S. plants and five research centers in the U.S., Japan and France.
Lipitor sales rose 8 percent to $3.4 billion, beating the $3.1 billion estimated by J.P. Morgan & Co. analyst Chris Shibutani in New York.Prescriptions for Lipitor, which makes up about 40 percent of Pfizer's profit, have declined after cheaper, generic versions of a similar pill, Merck & Co.'s Zocor, became available last June and newer drugs, including Merck and Schering-Plough Corp.'s Vytorin and Zetia, have been gaining popularity.

Pfizer increased sales by raising the price 4 percent to 6 percent and offering fewer discounts, said Ian Read, Pfizer vice president of worldwide pharmaceuticals.Lipitor itself may lose patent protection as early as 2010 in the U.S. Pfizer is appealing a decision by a Canadian court to throw out its Lipitor patent. Lipitor had $800 million to $900 million in 2006 sales in Canada.
Sales of the two-year-old pain medicine Lyrica more than doubled to $395 million and sales of the smoking-cessation drug Chantix, approved in the U।S. in May, were $162 million.


Who pays for low rupee volatility?

The recent high volatility in the rupee market is likely to continue in the months to come. This is an outcome of the RBI running into its limits of sterilised intervention. As the cost of sterilisation rises, the pressure on the RBI to step away from purchasing dollars and pushing more liquidity into the system will grow. As the latest RBI bulletin shows, the biggest event on the monetary policy front in February was not the public announcements made by RBI officials. It was the currency trading done behind the scenes. The RBI purchased dollars worth $11.9 billion, thus pumping liquidity into the economy. In other words, the monetary tightening is largely lip service to the cause of fighting inflation. While firms and households will find their interest burden and credit contraction painful, it is unlikely that the rate hikes will do much to quell inflation unless the behind-the-scenes story of dollar purchases also aligns itself to the same effect.

Why should ordinary people pay the cost for exchange rate stability? Firms and exporters, who have foreign currency exposures and who would suffer if the exchange rate moves, should be encouraged to hedge their own risk। A vibrant currency futures market will help. The emergence of such a market in Dubai shows that the demand for such hedging instruments is strong. To provide low exchange rate volatility as a public good to them, paid for by the entire economy at high cost, is bad policy. Moreover, it is unsustainable, because firms and households who end up bearing the cost of ‘hedging’ on behalf of exporters are not going to endlessly accept this as a happy equilibrium state. Then argument is being made that the higher volatility in the rupee should be countered by greater capital controls which would reduce RBI intervention, its sterilisation measures included. To solve the challenges to monetary policy posed by the ‘impossible trinity’ through capital account restrictions will be a setback to reforms. India should be moving forward and developing financial markets that its globalising economy needs. It should not solve these problems by trying to go back to the past.hey will protest.


BASF sells Wibarco to Hansa Chemie

BASF has agreed to sell its Chemische Fabrik Wibarco subsidiary, which had been part of its Performance Chemicals division, to Hansa Chemie International, a Swiss-based holding company with stakes in a number of chemicals companies in Germany, Switzerland and the Netherlands। Terms were not disclosed. Once regulatory approval is granted, the deal should be completed in July.
Wibarco is based at Ibbenb├╝ren, northern Germany, and employs about 80 people, who will all transfer। It mainly produces linear alkylbenzene (LAB), a starting material for linear alkylbenzene sulphonate (LAS), an ingredient in most modern detergents.

BASF explained that it regarded Wibarco as non-strategic, because LAB is not fully integrated into its Verbund concept, although it remains a strong player in detergents and cleaners. Hansa, by contrast, will be able to integrate Ibbenb├╝ren into its surfactants value chain. It will add a new sulphation plant to the 37-year-old LAB facility at the site.

Dow Chemical May Become Takeover Target

Dow Chemical co, may become a takeover target even though Chief Executive Officer Andrew Liveris said he isn't interested in selling the largest U.S. chemical maker. Liveris fired executives Pedro Reinhard and Romeo Kreinberg yesterday for holding unauthorized talks with possible private- equity bidders. Shares of Dow jumped 2 percent yesterday, giving the company a market value of $44.1 billion. Shareholders may be open to a buyout. Dow had gained 8.5 percent in the 12 months before April 8, when the possibility of a buyout was reported in Britain's Sunday Express newspaper, trailing the 16 percent gain for the Standard & Poor's 500 Chemicals Index.
The shares trade at 10.8 times annual earnings, the lowest in the 13-member index, compared with 17 times for DuPont Co. and 37 times for Monsanto Co. Dow's profit excluding items, $3.82 a share last year, may drop to $2 to $3 a share by 2010. Sales totaled $49.1 billion last year.
U.S. buyout firms, including Kohlberg Kravis Roberts & Co., were joining with Middle East investors to prepare a takeover bid of at least $50 billion, according to the Sunday Express. Liveris, dismissed the report at the time, saying Dow had held no merger talks, and the board issued a statement saying it backed the CEO's strategy. The shares rose 4.9 percent nonetheless. The cost of five-year credit-default swaps on Dow debt more than tripled since February on investor expectations of heightened risk. Contracts on $10 million of Dow debt increased $1,000 today to $55,500, close to a two-year high, according to CMA Datavsion. Investors use credit-default swaps as an alternative to bonds to speculate on corporate indebtedness.

Kreinberg, yesterday denied the company's accusations that he held unauthorized talks with banks and foreign governments about a planned takeover, calling the claims unfounded and unsubstantiated.'' Reinhard, 61, was Dow's chief financial officer for 10 years. He said the two men were getting legal advice and declined to comment further.Dow spokesman Chris Huntley, responding to Kreinberg's comment, said, ``We have the information from a highly reliable source that would know what was going on, and who we have absolute confidence in.'' He reiterated Liveris's comments that the company has had no talks to be acquired.

A group of private-equity firms may offer to buy parts of the company, the Financial Times reported on Jan. 19. The stock surged 5.6 percent on March 15 on speculation Dow would combine assets with India's Reliance Industries Ltd. The Times of India said on Feb. 26 that Reliance may bid for Dow.

Dow may attract Middle East bidders that want to diversify away from oil and natural gas, Butler Wick's Batcheller said. The Express reported that at least half the financing for the KKR bid would come from investors in Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman.

The company's ratio of net debt to capital is 28 percent, a level that adds to its takeover appeal। Even if Dow isn't sold, the company may use the cash to expand production of faster-growing specialty chemicals.Other analysts said a takeover of Dow is unlikely. Goldman Sachs Group analyst Robert Koort said the premium a hostile bidder would need to pay for Dow wouldn't justify the returns, given that chemical profits are in a cyclical decline.