Intellectual Thoughts by Sanjay Panda: 2011

India: emerging in Specialty Chemicals

India has slowly becoming a significant player in the international chemicals market. As India's edge in speciality chemicals is more and more visible, it is not just multinationals that are ramping up their sourcing plans from India; even home-grown firms are creating new capacity, increasing productivity and going in for acquisitions. MNC’s like BASF, Clariant, Lanxess, Chemtura etc are already invested significant amount and in the process of investing additional capital to expand their business.

India is expected to drive growth in the $650 billion global speciality chemicals market. India's speciality chemicals industry is expected to grow at a CAGR of 15% - almost double the growth of the global industry. Exports of speciality chemicals from India are poised to grow from $4 billion in 2007 to $13 billion in 2013, representing a CAGR of 22%.

The largest exporter of chemicals in the world is still Europe with $955 billion The EU still accounts for 90% of total chemical exports. They are the world leaders not just in production, but also the largest exporters. The second largest is the USA with $180 billion. India exported just $24 billion which is quite insignificant at this moment.

India has improved from its export figure of $22 billion two years ago, but China had clocked chemical exports worth $88 billion. Japan had $78 billion worth of exports. Though India's growth is good as compared to the past, even fantastic, it is rather small if one compares to China.

FDI in Indian retail

Decision to allow 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail should easily count as one of the boldest economic reform measures initiated by the government. At this moment all the poltical parties are opposing the idea in the pretext of that this move would destroy domestic small retail businesses and result in more job losses. They think fears of wiping out small retail shops and kirana ( mom and pop)stores.  But comfort should come from the many conditions that have been attached to the entry of foreign capital into the sector. Retail multinational, keen on entering India with a 51 per cent equity, will be required to procure at least a third of their raw materials from small Indian companies, allocate a minimum of 50 per cent of their investments to create backend infrastructure and operate only in towns or cities with population of more than one million. These are tough conditions and should be able to address fears of job losses with the advent of big retail multinationals.

On the positive side, the entry of big retail should result in a marked improvement in the efficiency of the retail chain. Large multinational retail firms will bring not only their capital but also more advanced technologies and processes that will bring down transaction costs and improve the retail delivery system. It is also expected that the presence of big retail chains and competition will have an impact on inflation. 

The share of organised retail in the total retail business in the country, estimated at around Rs 25 lakh crore, is still very low, at only seven per cent. China’s share of only the top 100 retail groups in its total retail business is over 11 per cent. Clearly, India has much to catch up on, and the decision to allow FDI in the retail sector should help start the process.


Roche R&D chief affirms $10B peak potential for HDL drug

Who says the mega-blockbuster is dead? Certainly not , as per, Roche research chief Jean-Jacques Garaud, who believes that despite the troubled history of CETP inhibitors.Roche’s HDL drug “dalcetrapib” has the potential to earn upwards of $10 billion a year. And Garaud shrugged off the prospects of Merck's rival HDL drug "anacetrapib", which has done even better in the clinic at boosting levels of "good" cholesterol.
Even though their (anacetrapib's) HDL elevation is higher, that might not be the best marker for potential activity,. "What is important is how much cholesterol we pull from the blood. We think ours is better than any other drug , he said.
But even more importantly than the positive data on HDL levels, Roche's investigators recently were able to reassure observers that in mid-stage studies the drug appeared safe, with no spike in blood pressure.
Merck, of course, may not be ready to take a back seat to dalcetrapib. In a Phase II trial their drug was linked to a whopping 138% rise in good cholesterol and a 40% drop in LDL levels.  That's a much better result than the 31% boost in HDL levels seen in a mid-stage study for dalcetrapib. Vontobel  estimated potential sales of $5 billion a year whereas. UBS projected peak sales at $6.8 billion.


Ranbaxy may sale Generic rights of Lipitor if the approval gets delayed

Ranbaxy may sell rights to make a generic version of Pfizer’s Lipitor, the world’s best-selling medicine, should it fail to win timely U.S. approval for the cholesterol pill, said Credit Suisse. 

A legal settlement with Pfizer gave Ranbaxy six months’ exclusivity to market generic Lipitor in the U.S.    Delays in USFDA  approval may prevent Ranbaxy from selling its copies as planned from Nov. 2011.   Lipitor is the highest-selling drug of all time, generating $10.7 billion last year. The most likely outcome will involve Ranbaxy paying a hefty fine to the FDA, which would subsequently clear the path for Lipitor approval.The company and most industry experts remain confident a resolution will be reached in time for Ranbaxy to launch on Nov. 30. 
If the Nov. 30 deadline isn’t met, Ranbaxy may postpone the release of its copycat Lipitor, said  the Credit Suisse report .  This would also delay the timeline for other generic manufacturers wanting to sell their own copies, as Ranbaxy’s 180-day exclusivity period does not start until it begins commercial marketing.   This  delay may  benefit Watson Pharmaceuticals which negotiated with Pfizer to begin selling a so-called authorized generic by Nov. 30. Alternatively, Ranbaxy may waive exclusivity in exchange for payment from a rival generic-drug maker, Credit Suisse said.

Drug R&D spending fell in 2010, and heading lower

The global drug industry cut its research spending for the first time ever in 2010 and the pace of decline looks set to quicken this year. Expenditure on discovering and developing new medicines  estimated to be  $68 billion  in 2010, down nearly 3 percent on the $70 billion spent in both 2008 and 2009, according to Thomson Reuters. 

Since 2000,  investment by drug companies   for NCE  is almost  80 percent of the industry's total R&D  spend  which has increased by more 50 percent ,  but output of  NCE has actually gone down. Last year ,  21  NCE were launched on the global market against 26 in 2009.
 Between 2008 and 2010 there were 55 terminations of projects that had already reached the final Phase III stage of clinical testing, more than double the level of 2005-07, reflecting the growing difficulty of developing new drugs that are better than existing ones.

India looses one rank in world competitiveness

India slipped one rank, to 32nd position in overall competitiveness among 59 nations, according to the ‘World Competitiveness Rankings’
The recovery of financial markets pushed the US and Hong Kong to first two  places, followed by last year’s topper, Singapore, which fell to third spot. In 2010, the US and Hong Kong ranked second and third, respectively.  Sweden jumped to fourth, from sixth and Germany came sixth
China,  slipped one rank, to 19th and Japan went up one rank to 26th slot .  Though India’s ranking is below the midway mark, it still did better than Indonesia (37) Philippines (41), Brazil (44) and Russia (49).

Glenmark in licensing deal with Sanofi

Glenmark Pharmaceuticals signed a  licensing agreement   with Sanofi  where the prior company is  expected to receive  USD 613 million  in addition to  royalties on sales  for the   molecule - GBR500 which is  used  for treatment of Crohn's disease .

 Under the deal, Sanofi will have exclusive marketing rights for North America, Europe, Japan, Argentina, China and Uruguay  while   both the companies would co-market in Russia, Brazil, Australia and New Zealand. 
Glenmark will retain exclusive marketing rights in India and other countries in the rest of the world.

Solvay to Acquire Rhodia

Solvay has agreed to acquire Rhodia for €3.4 billion in cash and  expects to close the deal in late August 2011 subject to antitrust approval both  in Europe and the U.S. The merged entity will retain Solvay’s name.

The merged company will have combined sales of more than  €12 billion/year.  Solvay posted sales of €7.1 billion and Rhodia posted sales of €5.23 billion in 2010. About 40% of combined sales will be in emerging markets.  Solvay expects transaction should create synergies leading to annualized cost savings of €250 million within three years.

About 90% of the combined company's sales will be generated by businesses in which it has a top-three position worldwide. In Solvay's case, these businesses include specialty polymers, soda ash, and hydrogen peroxide. For Rhodia these include silica, rare earths, surfactants, acetate and nylon-6,6 engineering plastics.