Intellectual Thoughts by Sanjay Panda: 2014

Govt of India caps prices of 52 more 'essential' drugs

In order to   further tighten   the  prices of essential medicines, the government of India  has brought 52 new drugs under its price control mechanism including some commonly used painkillers, antibiotics and few for  treatment of cancer , cardiovascular and skin diseases. 

These  additional  52 drugs join a list of nearly  earlier 400 essential medicines that have so far been placed under price control in India.  Now  more than 450 drug formulation packs are  under the price control mechanism of the National Pharmaceutical Pricing Authority (NPPA), which entails the regulator fixing ceiling and retail prices for such medicines.

"The NPPA has fixed/revised the prices in respect of 52 formulation packs both ceiling and retail price packs under DPCO, 2013," the drug pricing regulator said.

The bulk drug formulations that have been added to the controlled list include those containing Paracetamol, Glucose, Amoxycilline, Diazepam, Codeine Phosphate, Ciprofloxacin, Losartan, Diclofenac,  Atoravastatin  &   Rosurvastatin.

Earlier in September 2014, NPPA had capped the prices of 43 formulation packs including drugs such as antibiotic Ciprofloxacin, BCG vaccine and anti-diabetic Metformin.

In July 2014  also, NPPA had reduced the prices of some of the key medicines and had fixed the price of 108 non-scheduled formulation packs of 50 anti-diabetes and cardiac medicines.

Dengue drug can give Sanofi Multi Billion $ biz

As India deals with increasing number of dengue fever, pharma major  Sanofi  announced that the world's first vaccine against the mosquito-borne viral disease may be available by the second half of 2015.  Sanofi  will file for registration of its vaccine candidate and subject to regulatory approval the world's first dengue vaccine could be available by the late  H1 or early H2  of 2015.

According to the company’s release, analyses had shown a 95.5 per cent protection against severe dengue and an 80.3 per cent reduction in the risk of hospitalisation during the study.
Dengue, a mosquito-borne viral disease, has been estimated to be a billion-dollar burden every year in India, with no specific treatment.  It is a health priority in many countries of Asia & Latin America.  According to WHO, dengue threatens over 2.5 billion people worldwide, including an estimated 500,000 who are hospitalised every year from the disease. Between 2 and 3 of every 100 people who contract dengue end up dying from it.
WHO estimates up to 100 million infections yearly, of which about 6M cases are from India alone.  However a large study published in 2013, for  2010, an estimated third of all dengue infections were in India, and the situation has worsened since. According to Health Ministry data, the number of dengue cases jumped 500 per cent from 12,561 in 2008 to 75,808 in 2013. Both the disease and deaths are, however, suspected to be under-reported, and some experts feel the incidence of dengue in India could be up to 300 times higher.

With no specific treatment available, the management of dengue has been largely preventive, through anti-mosquito activities, or symptomatic, where doctors treat patients for the symptoms. A vaccine, according to the WHO, “would, therefore, represent a major advance in the control of the disease”.

While India itself would be a big opportunity for Sanofi on the vaccine, the opportunities elsewhere are also handsome. Brazil, Australia and Southeast Asian countries are also hugely affected by the disease thus opening up a Multi Billion opportunity for Sanofi.

Cheap Oil, how low it can go???

Since June, Oil prices  has dropped from about $115 for a barrel to $80 or so, a reduction of more than  a quarter and its  being forecasted the prices will likely to fall further as there is no anticipated huge increase  in demand  for the next few quarters.

If prices settle at today’s level, the bill for oil consumers will be about $1 trillion a year lower. That would be a shot in the arm for a stagnating world economy. It would also have big political consequences.  For some governments it would be a rare opportunity & for others a threat.  Countries like India, Indonesia  and few others  find the low prices  reason enough to fast-forward oil sector reforms and decontrol retail prices specially Diesel, by far the most used petroleum product.

If speculators truly are the major cause of the price decline, then it increases the chance of a faster recovery in oil prices.  The other reasons could be the result of unexpected and maybe short-lived developments. War torn Libya somehow pumping 40% more oil.  Saudi Arab’s decision to boost output to protect its market share and hurt American shale producers and see off new developments in the Arctic.

The prices may rebound once U.S. shale producers start decreasing production. Its believed that 33% of U.S. oil production becomes uneconomical at $80 a barrel. In fact, according to analyst at $80 a barrel, oil production would rise only 5%, and at $ 70 production growth will  halt entirely.  Almost similar is the case for Canada’s  sand oil.

Saudi Arabia, which derives 80% of its government revenue from oil and dominates the cartel's actions, needs $95-per barrel oil to remain solvent. Venezuela @ $120, Iran @$140 though  the  production cost  of oil  which could be much lower say  $5 - $30 or so.   These countries aggressive foreign policy, investment decisions, extravagant spending schemes etc are  based on such numbers.  So they will try to somehow push the prices up for their own survival. So cheaper oil is welcome, but it is not trouble-free.

Platform Specialty Products Signs Definitive Agreement to Acquire Arysta for Approximately $3.51 Billion

Platform Specialty Products Corporation (NYSE:PAH) ("Platform"), a global specialty chemicals company, announced  that it has entered into a definitive agreement to acquire Arysta LifeScience Limited ("Arysta"), backed by the Permira funds for approximately $3.51 billion, subject to regulatory approval.

Arysta has reported net sales of $1.5 billion for the full year 2013 and regions such as Latin America, Africa, Central and Eastern Europe, China and South Asia represented over 65% of Arysta's sales in 2013. 

Arysta's President and Chief Executive Officer, Wayne Hewett, is expected to join Platform's senior leadership team as its President and to lead Platform's three agrochemical businesses i,e  Chemtura AgroSolutions ("CAS"), Agriphar, and Arysta.
The transaction, which is expected to close in the first quarter of 2015, is expected to be funded through a combination of cash on hand,  debt, and equity. The acquisition will not have any impact on Platform's status as a U.S.-domiciled company.

FMC Corporation Announces Agreement to Acquire Cheminova for $1.8 Billion

  • Cheminova a Denmark-headquartered multinational crop protection company.
  • Broadens market access in key geographic regions.
  • Expands position in existing crop segments and accelerates access to additional crops.
  • Provides new technology applications, including research and formulation expertise.
  • Enhances portfolio with complementary products and technologies
  • Accretive to adjusted earnings in the first full year.
  • Modifies previously announced separation process  ( Alkali + Lithium to be listed as a separate entity as FMC Minerals) with new plan to divest Alkali Chemicals only.  proceeds used to reduce acquisition-related debt.

source: FMC website

Environment ministry use bureaucratic loophole to ease ban

The Union environment ministry has, using a bureaucratic loophole, lifted a ban on expansion and setting up of factories in eight critically polluted industrial  belts. The moratorium was imposed based on the performance of the clusters on a Comprehensive Environmental Pollution Index (CEPI) developed by the Central Pollution Control Board and introduced by the United Progressive Alliance (UPA) government in 2009. It measures industrial belts on a scale of zero to 100.  A reading above 70 is termed “critically polluted”and a moratorium imposed on expansion. After imposing a round of moratoriums on many industrial belts, the UPA government continued to review improvements undertaken to reduce pollution. Industrial belts that improved with time were periodically taken out of the banned list.

But eight of these showed worsening trends: Ghaziabad (Uttar Pradesh), Panipat (Haryana),
Singrauli (Uttar Pradesh and Madhya Pradesh), Vapi (Gujarat), Indore, (Madhya Pradesh),
Jharsuguda (Odisha), Ludhiana (Punjab) and Patancheru-Ballaram (Andhra Pradesh). InSeptember 2013 the government noted, “The CEPI scores indicate (for the eight clusters) thateven after a period of two-and-a-half years of implementation of action plans, there is noimprovement in the environmental quality.” The moratorium on these eight industrial clusters remained.

With pressure building within the UPA to ease the moratorium, the environment ministry asked the Central Pollution Control Board to review the index itself and come up with another formulation within four months. Now, the NDA government has cited a delay in the review of the index to allow new factories and expansion in the polluted industrial zones on merit, practically doing away with the moratorium.

The government order of June 10 reads, “The report with respect to the entire CEPI concept i.e. taking into account all constituents as originally formulated in 2009, is yet to be received from CPCB. It is felt that re-assessment of CEPI  taking into account all its constituents as originally formulated in 2009 are a must before taking a view on re-imposition of moratorium in any centrally polluted area.”It adds, “It has, therefore, been decided to keep in abeyance until further orders…to the extentnit related to the re-imposition of moratorium in eight centrally polluted areas till CPCB reassessesthe CEPI taking into account all constituents of index as originally envisaged in 2009,” the order further stated.

Till the CEPI index is reviewed, the ministry will consider environment clearance of all the projects in these areas. The environment ministry has asked the CPCB to prepare a report on CEPI index within a year instead now which would permit the government to clear expansion and new industrial activity in these zones till the revised index is decided.

Source- Business  Standard