Monsoons likely to be Critical Factor for the Indian Monetary Policy

The  farm sector accounts for 14 percent of India's nearly $2 trillion economy, with two-thirds of its 1.2 billion population living in rural areas.  Half of India's farmland still lacks access to irrigation & depends on the vagaries of the monsoons.  

Poor rains generally hit summer crops such as rice, soybean, corn and cotton, raising food prices and pressuring economic growth that has nearly halved to below 5 percent in the past two years.  Rains are vital to rejuvenate  the  economy which is  battling its longest economic slowdown since the 1980s and to cool inflation that has averaged nearly 10-11 per cent for the past two years.

The Met Department has predicted  that the  rains will be 95 per cent normal this year and it is likely to revise its estimate later  in end June  according to the movement of the rainfall. If  official rain forecasts come true  then inflation  likely  to fall  below 8 per cent .

The likely fall in inflation, coupled with stability in the rupee and a slight pick up in growth    may lead RBI to be more balanced in its monetary policy making. The RBI has been repeatedly saying it will balance out concerns between the sagging growth and inflation even though it considers reining in the prices as a key objective. The RBI has raised its key rates three times  since  last September but took some growth-oriented measures like the decision to lower the SLR, which is likely to release an additional Rs 40,000 crore  ( $6.5B) for lending.

India's Factory output falls to the lowest level in over 2 years

India’s industrial production dropped an annual 1.9% in February as manufacturing contracted 3.7%, the sharpest drop in 28 months, while exports tumbled 3.2% in March, recording its second straight month of contraction. 

Rating agency Fitch affirmed India’s sovereign rating at “BBB-” with a stable outlook and it  expects the country’s economic growth to accelerate from 4.7% in FY14 to 5.5% this fiscal and 6% next year. Earlier this week, the International Monetary Fund had forecast India’s GDP growth to accelerate from 4.6% in FY14 to 5.4% in FY15 and further to 6.4% in FY16. 

In Q3 of FY14, the trade deficit stood at $28.6 billion against $29.9 billion. The reduction in trade deficit in Q3 suggests further improvement in the (current account deficit)  for  Q4.  If services exports, remittances and investment income remain broadly unchanged in Q4, CAD for fiscal 2014 could fall below 2% of GDP — for the first time since fiscal 2008-09. Exports for all of FY14 stood at $312 billion against the targeted $325 billion but higher than $300 billion in FY13, a growth of 4%. 

Importantly, given the prolonged slump in domestic demand, exports of goods and services as a share of GDP was projected to rise from 22% in FY11 and 24% in FY13 to 24.9% in FY14, as per advance GDP estimate released a few weeks ago. Imports, however, were projected to account for 28.8% of GDP in FY14, down from 30.7% in the previous year. 

As for industrial output, electricity generation grew at its fastest since September last year at 11.5% in February and mining posted a 1.4% expansion. These were, however, not enough to offset a 3.7% contraction in manufacturing, stoked by a demand collapse as the industrial production slumped from 0.8% growth in January. In six of the 11 months to February, industrial production witnessed contraction.

FMC Corporation Announces Separation into Two Independent Public Companies

FMC Corporation Announces Separation into Two Independent Public Companies

New FMC will be comprised of FMC Agricultural Solutions and FMC Health and Nutrition segments FMC Minerals will be comprised of the current FMC Minerals segment, which includes the Alkali Chemicals and Lithium businesses PHILADELPHIA, March 10, 2014 /PRNewswire/ -- FMC Corporation (NYSE: FMC) today announced plans to separate into two independent public companies, "New FMC," which will be comprised of FMC's Agricultural Solutions and Health and Nutrition segments and "FMC Minerals," which will be comprised of FMC's current Minerals segment.  The company expects the separation, which remains subject to final board approval and other customary conditions, will take the form of a tax-free distribution of shares to existing FMC shareholders.  FMC Corporation expects to complete the separation in early 2015, and each company is expected to be listed on the New York Stock Exchange.  Pierre Brondeau, FMC Corporation president, CEO and chairman, said: "FMC has proactively managed its portfolio during the last four years as part of Vision 2015, including a realignment of our reporting segments early last year.  Our decision to separate into two independent companies is a natural progression of our strategy. We believe that creating two companies, each with its own publicly-listed equity, will enable the management of each company to pursue its own strategy. This will give each company greater focus on the success factors that are most important to its business and allow the adoption of a capital structure that is appropriate to its business profile. "The creation of two independent companies will deliver meaningful benefits to each of the businesses, the communities in which we operate and all of our stakeholders. Our customers will continue to have collaborative relationships with financially strong organizations that are focused on meeting their needs, and our employees will have new career opportunities."   New FMC New FMC, comprised of FMC Agricultural Solutions and FMC Health and Nutrition segments, will be a technology-based and customer-driven company with deep application expertise. Based on the midpoint of the company's February 2014 outlook, combined revenue and earnings for the Agricultural Solutions and Health and Nutrition segments are expected to be approximately $3.35 billion, up 16 percent over 2013, and $815 million, up 15 percent over 2013, respectively.  New FMC is expected to maintain a strong balance sheet and financial policies consistent with FMC Corporation's current credit rating.  FMC Agricultural Solutions is a science-based business, serving growers worldwide. Growers look to FMC Agricultural Solutions for innovative crop-protection products developed from science-based innovation, field development, applications expertise and toxicology that, on a crop-by-crop, region-by-region basis, enhance quality and yield. FMC Health and Nutrition develops products from natural sources that provide texture, stability and natural color solutions for food applications, while also producing binders, coatings and high-purity, high-concentration omega-3 for pharmaceutical and nutraceutical applications. Customers rely on FMC Health and Nutrition for its technical excellence, innovative products and collaborative R&D approach. FMC Minerals FMC Minerals will be comprised of the current FMC Minerals segment, which includes the Alkali Chemicals and Lithium businesses. Based on the midpoint of the company's February 2014 outlook, revenue and earnings for the FMC Minerals segment are expected to be approximately $1.0 billion, up 7 percent over 2013, and $153 million, up 19 percent over 2013, respectively. FMC Minerals is expected to generate strong cash flow and have the financial flexibility to pursue select investment opportunities. FMC Minerals will maintain FMC Corporation's disciplined approach to capital deployment and will continue to focus on sustainable, safe and ethical extraction of minerals, process efficiencies, and manufacturing and customer service excellence. Both the Alkali Chemicals and Lithium businesses are structurally-advantaged minerals businesses, with cost-advantaged operations. Both businesses compete in attractive markets.  The Alkali Chemicals business is the largest global producer of natural soda ash, using low-cost technologies to extract trona ore to produce soda ash and related products used in the glass, chemical processing and detergent industries. The Lithium business is the only brine-to-metals producer with a broad global product portfolio, selling into the energy storage, pharmaceuticals, polymers and industrial markets. Underlying market demand for lithium remains strong, driven by growth in energy storage from electric vehicle adoption and other applications. Bank of America Merrill Lynch and Goldman Sachs are acting as financial advisors to FMC Corporation on the proposed transaction and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to the company. source : FMC site

Indian Chemical Industry to grow by 11-12%

The Indian chemicals industry, which earned revenues in the range of US$155-bn to US$160-bn in 2013, is likely to grow at a rate of 11-12% in the next two to three years. Though commodity and bulk chemicals are likely to experience slow growth, owing to reduced industrial output, the specialty chemicals segment should show faster growth.

Sectors such as personal care ingredients & additives,  active pharmaceutical ingredients (APIs), paints & coatings, and construction & water chemicals are some segments likely to perform well. "Even in 2013, these sectors showed good growth and companies in this segment have been investing and expanding.

The specialty chemicals sector is characterized by requirements for high-value products, expanding customer base, and addition of new participants at various levels of the value chain. Overall, the market is likely to grow at a Compound Annual Growth Rate (CAGR) of 13-14%. The sector forms about 15-16% of the total chemical industry, with dyes & pigments, leather chemicals, construction chemicals and personal care ingredients, being important constituents. In terms of production value, the specialty chemicals sector forms about 18-20% of the total chemical production in India. Though increasing regulatory requirements and raw material price fluctuations  have posed challenges for chemical manufacturers, exports have been increasing at a rate of 8-9%. 

CW

India commissions first major SBR plant

The commissioning of  Indian Synthetic Rubber Ltd. (ISRL, a JV of IOCL, TSRC, Marubeni) plant to manufacture  Styrene Butadiene  Rubber ( SBR)  is a significant milestone for  Indian  synthetic rubber industry. It will have the capacity to make up to 120-ktpa of the synthetic rubber. Till date India used to be  a 100% importer of SBR despite of huge demand of SBR.

SBR is the world’s oldest synthetic elastomer and also the most important, although demand for natural rubber is twice as much. The automotive sector is the largest end-use of SBR – accounting for 65-70% of global demand, mainly for tyre and tread. The first commercial processes for SBR produced emulsions (e-SBR), but later developments in solution polymerization have led to the development of s-SBR grades with superior mechanical properties, particularly tensile strength, low rolling resistance and handling, in tire applications.

Next  India will have its first butyl rubber plant. Polybutadiene rubber capacity is also being expanded.

USFDA increases inspections of drug facilities in India

USFDA  is increasing its inspections of facilities of drug makers in India, the second largest provider of finished dose products to the US, to ensure compliance of approved manufacturing norms. The US health regulator, which has been cracking the whip against many Indian pharmaceutical firms, including Ranbaxy, Wockhardt, is also recruiting and training additional drugs investigators in India. 

USFDA's presence in India is being increased to 19 from 12 American staff based in-country, including 10 dedicated specifically to medical products. Other staff include foods and devices inspectors, and policy analysts. 

In order to meet requirements of the new Food and Drug Administration Safety and Innovation Act (FDASIA) - Generic Drug User Fee Amendments (GDUFA), the US health regulator is stepping up the inspections. Under the FDASIA, the USFDA is required to achieve the same inspectional schedule for foreign facilities as domestic manufacturers, and to clear the backlog of applications by the end of the first five-year user fee authorisation period. 

India, as the second largest provider of finished dose products to the US with almost 10

per cent of that market.

Economies are faltering

A slowing down in growth rate, A record high current-account deficit. A weakening currency.  A spike in inflation.  A fall in the stock market, An increase in  job losses (right sizing or is it down sizing ) in  all most all the sectors. This is  a  phenomena happening in India”s  current economic scenario.  The economy is  worsening  day by day.

 

The same recipe that is creating India’s worst economic crisis in decades is now afflicting  few other  economies as well.   Indonesia  Consumer prices jumped 8.6 percent last month, the current-account deficit had hit  4.4 percent of Indonesian GDP.  Thailand  GDP contracted 0.3 percent in the second quarter compared with the first three months of the year. That’s the second quarterly contraction in a row for Thailand, which  confirms that Thailand is now   falling into recession.

 

A fierce selloff in many  economies ( Emerging /RDE) currencies shows no sign of abating as the expected withdrawal of US monetary stimulus prompts investors to shun markets seen as riskier because of funding deficits, slowing economies and  rising inflation. A decline in the Fed's bond purchases will push government debt yields higher, which should raise the attractiveness of the dollar and dollar-denominated assets. In many of these economies,  it has been hammered by doubts over the efficacy of policy actions to stem the rout.

In India, the rupee's sell-off threatens to drive Asia's third-largest economy towards a full-blown crisis. While the Indian government and central bank have unveiled measures ( though not enough) to support the rupee, investors are unimpressed. Bolder structural reforms, including greater fuel price liberalization, land acquisition reforms, and higher foreign investment limits in  retail, insurance,  and  few other industry are crucial to regain investor confidence and shore up the rupee else we are slowly approaching the early 1990’s.

 

The new Drug Pricing. Battle Escalates !

Several pharma  companies  & Industry bodies like Indian Drug Manufacturers Association, Confederation of Indian Pharmaceutical Industry (CIPI)  already moved  to Court  and  few more expected join, to challenge the government's new drug pricing order that asked them to slash prices of 348 medicines and also  replace stocks in the market with those carrying reduced prices within 45 days of new price notification. 

The DCPO had ordered  earlier for reduction of prices of some medicines within 45 days of issuance of the  notification and that the decreased prices be made effective on drugs already in market.The deadline for  implementation of the notification ended on July 29.

Earlier  Indian Pharmaceutical Alliance,  estimated that with the application of the new price fixation methodology on a completely new set of medicines may see the Rs 100,000-crore industry losing about Rs 2,500 crore in revenues in the near term. Market intelligence firm AIOCD-AWACS estimates that the new price control system may hit the domestic revenues of majors Ranbaxy and Cipla by 6.2 and 5.8 per cent, respectively. 

 
Prices of 348 medicines, including life saving drugs are set to be cheaper by up to 80 per cent as the new Drug Price Control Order has come into effect.

As India pushes for compulsory drug licences,others looking for the new twists

The fight over drug patents in India is quickly spreading to  other areas  as other countries are looking at new twists on the model for getting their hands on cheaper drugs.

BDR Pharmaceuticals  has asked the Indian patent office to give it a compulsory license for a generic version of  BMS’s  cancer drug Sprycel (Dasatinib). Earlier Indian Supreme Court upheld the country’s first compulsory license granted last year to Natco Pharma to make a generic version of Bayer's kidney cancer drug Nexvar. It justified the decision to override the patent on prices. Natco began selling Nexavar for $170 a month, compared with Bayer's $5,000/month.

Others companies have also seen patents breached in recent months. Pfizer suffered the loss of IP protections on its cancer drug Sutent ( Challengers : Cipla & Natco ) and Roche's patent coverage on the hepatitis C treatment Pegasys been revoked.(Challengers : Sankalp Rehabilitation Trust)  Novartis  is still fighting for patent protection on its blood cancer treatment Gleevec (Challengers : Several Indian drug companies, Government of India)   and the Indian government has moved toward compulsory licenses on Roche's Herceptin.

Proponents of the aggressive attacks on patents say it is the only way for poor people in emerging countries to have a chance of getting the same lifesaving treatments that others in the world enjoy. It is an argument that has traveled well. 

China granted itself compulsory licensing rights last year but has yet to exercise them. Now a lobbying group is pushing Greece to adopt a compulsory license law, but not so Greek companies could make generics. The idea is that once the patents are neutralized, Greece could import cheap generics from other countries, like India.

Under India’s patent rules, compulsory licences can be issued when an inventor company fails to supply products at an affordable price. In such instances, other companies can go to court to get a licence to make the same products.

Reacting to  the such developments some U.S. Congress members said if India is going to continue to play loose with patent protections, maybe the U.S. needs to rethink an exemption for India on import duties that comes up for renewal in July.

Mylan to buy injectable drugs unit of Strides for $1.6 billion

Strides Arcolab Limited today announced that it has entered into a definitive agreement for the sale of its specialties subsidiary, Agila Specialties Private Limited, to US-based Mylan Inc  thus  ending  months of speculation regarding its sale, with reports suggesting Pfizer and Japan's Otsuka Holdings as other potential buyers.

Under the terms of the agreement, Strides and its subsidiary will receive an aggregate sum of $1.6 billion in cash on closing and a potential additional milestone payment of $ 250 M subject to the satisfaction of certain conditions by Strides.


This  deal will help Mylan, one of the world's largest generic drugmakers, to double its injectable drugs portfolio in combined  to more than 700 marketed injectables products and a global pipeline of more than 350 injectables products pending approval.

Media reports

Indian Regulator sets deadline for drug launches

Pharmaceutical companies will have to launch drugs within six months of getting approval from the drug regulator, failing which they could lose the manufacturing license.   According to the Indian Drugs and Cosmetics Act, for any new drug, pharmaceutical firms should file a periodic safety update report (PSUR) every six months, for the first two years and  once in a year for the subsequent two years.  This enables authorities to monitor the safety and efficacy of a new drug in a post-marketing scenario for four years, after which it no longer remains a new drug.

“It has been decided in public interest that in case an applicant/manufacturer fails to launch the product for marketing in the country within a period of six months from obtaining the permission or license, the permission/licence will be treated as cancelled,” said the DCGI