Sanofi Drug Hits New Hurdle With Indian Knockoffs

Sanofi-Aventis SA's "Acomplia" the weight- loss pill, linked to suicide, is becoming popular in generic form from India which may end the product's chances of ever reaching the U.S., where it has been delayed by regulators.

Cipla Ltd. and Ranbaxy Laboratories Ltd. are among six drugmakers exploiting a loophole in India patent laws, selling copies of the medicine under names like Slimona and Defat. The pills are sold without prescription for as little as 12 cents. Sanofi had predicted Acomplia would generate $3 billion a year. Sanofi's earnings have dropped for four straight quarters. The drugmaker is losing patent protection on older medicines such as the sleep pill Ambien. Sanofi withdrew its U.S. marketing application for Acomplia on June 29 after the FDA raised safety concerns.

Under Indian intellectual property law, pharmaceutical companies can use a process called reverse engineering to make drugs patented before 1995. The patent on Acomplia, which regulates hunger impulses, dates to 1994. Sanofi received approval to sell Acomplia in India in May, the same month as the generic-drug makers.

The Indian regulator approved rimonabant, or generic Acomplia, requiring patients get a prescription and medical advice on its risks. Those include depression and anxiety --side effects that were serious enough to prompt an FDA panel of advisers to reject the pill.

India is growing obese. Almost a third of women and more than a fifth of men living in urban areas are considered overweight, according to a government survey last year.

Obesity can lead to high blood pressure and diabetes, to which South Asians have a genetic predisposition. Indian men are three to four times more likely than East Asian, African American, Hispanic or Caucasian men to develop insulin resistance that leads to diabetes, according to a study last year in the Proceedings of the National Academy of Sciences.

Torrent Pharmaceuticals Ltd. started selling its version, Rimoslim, two months ago and aims to sell 100 million rupees' worth within 12 months. Rimoslim is an extremely affordable therapy for the masses.

Bloomberg

Are India Inc`s global M&A's worth it?

Most of the big-ticket acquisitions made by Indian companies were through the leveraged buy-outs (LBO’s) route funded partly by private equity funds, financial institutions and, of course, through internal resources. It has to be borne in mind that for takeovers by India Inc worth several billion dollars, the outflow of dollars has been minimal. At the same time, the charge of the private equity funds and others on the profitability and assets of the merged or acquired company will be substantial, which has to be paid through the future profits or cash flow of the company.

The pertinent question is whether our corporations have overstretched themselves. First, we feel that India Inc is now in an unprecedented trajectory of growth, where it focuses on both domestic and global markets somewhat in a similar manner. The concept of a dominant leader in the domestic market will soon undergo a change thanks to a gradual reduction of the tariff wall. Sooner or later, imports are going to be cheaper than what they are now. That would mean that corporations, to stay in the race, should be competitive both domestically and internationally. The effort of India Inc to go global is not only symbolic of its strength and reach but also a calibrated policy to shore up its competitiveness by achieving economies of scale and scope.

Secondly, in many areas, especially in the knowledge-driven industry, we have to consolidate ourselves. Our IT majors are reckoned everywhere. Yet, their size and scope are small compared to Microsoft, Dell or IBM. The result is that many-a-time, we have to be content with the status of a vendor or sub-contractor to large American and European corporations. That stage should change and in certain areas, we can emerge as global players and prove our worth in executing high-end projects. M&As are the preferred route to achieve that position.

Thirdly, a paradigm shift is taking place in the image of India, which has been considered mainly as a supplier of goods and services, including software services. We have to emerge as a strong manufacturing hub, capable of producing high quality and price competitive manufactured goods. Slowly, we are making progress towards that. We are reckoned as a major player in steel, foundry, auto components and so on, thanks to some of the LBOs carried out in recent months.

That list has to expand and can be accomplished through the M&A route rather than by setting up greenfield projects in an alien land.

The flip side of the spectrum is what happens when there is a global recession? We cannot become a global player and also insulate ourselves from its fallouts. It is a cyclical reality. Fortunately, now India have enough foreign exchange reserves to bail us out in case of a global slowdown.

BS