Intellectual Thoughts by Sanjay Panda

another wave of M & A in Pharma

So far three deals that topping $150 billion in value have been announced in the global pharma industry this year. Merck & Co. acquired Schering Plough for $41 billion and Roche announced $47 billion plans to buy an additional 44 per cent in Genentech, and earlier in January, Pfizer had announced the $68 billion purchase of Wyeth. Aimed at cutting costs and bolstering research pipelines, the mergers are reminiscent of the last round of dealmaking in the late 1990s. And at that time it had roiled some Indian subsidiaries.

In 1998, Germany’s Hoechst Marion Roussel merged with France’s Rhone Poulenc to form Aventis. In 2000, US’s Abbott acquired Knoll from Germany’s BASF. In the restructuring that followed, one Indian arm of each “combined” firm was sold. The Indian arms had little in common with their parent firm with decades-old products that had long fallen off the parent’s radar. It was clearly difficult to extrapolate synergies seen from a global merger. The Indian pharma market also figured low in Big Pharma’s priorities at that time but India has recently emerged as an important market. Every MNC knows they need an India piece. Some, such as Merck, that exited in the 1980s are back with a new focus. This time around, there may be no such sell-offs.


World economy to shrink below zero: IMF chief

The world economy is likely to shrink to "below zero" this year, in what many are now referring to as the "Great Recession". "The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," IMF Managing Director Dominique Strauss-Kahn told African political and financial leaders in the Tanzanian capital.

"Continued de-leveraging by world financial institutions, combined with a collapse in consumer and business confidence is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled" Strauss-Kahn added.

As advanced countries focus on problems in their own economies, Strauss-Kahn called on the international community not to forget Africa, where regional growth is expected to slow sharply to 3 percent this year, half the rate of the past five years.

Strauss-Kahn warned the projection for 3 percent "may be too optimistic".

"Even though the crisis has been slow in reaching Africa's shores, we all know it is coming and its impact will be severe," he said. "We must ensure that the voices of the poor are heard. We must ensure that Africa is not left out," he added.

He said the crisis threatens to unravel Africa's economic and social success over the last decade and that millions of people will be thrown back into poverty.

"This is not only about protecting economic growth and household incomes - it is also about containing the threat of civil unrest, perhaps even war. It is about people and their futures," he added.

He said the combined impact of economic and financials shocks on Africa's growth will be severe. Financial flows are becoming more scarce, trade financing even scarcer and more expensive and foreign investment in Africa's stock and bond markets has fallen, he added.

"As growth around the world has almost come to a halt, demand for Africa's products is plunging. Tourism revenue is likely to decline as consumers around the world are tightening their belts," Strauss-Kahn said.