Dr Reddy's crossed Rs.4000 mark on BSE with 86% income from exports, new launches

Dr Reddy's Laboratories (DRL), the second largest pharmaceutical company in India after Sun Pharmaceutical Industries, is surging ahead with strong domestic sales as well as exports to overseas markets with clear focus on research and development, expansion, alliances and new products. After good financial performance in the first quarter ended June 2015 as well as for full year 2014-15, DRL scrip moved up strongly and touched its yearly high level at Rs.4084.95 with full market capitalization of over Rs.68,550 crore on the BSE. With 25.5 per cent equity holding with promoters and 37.8 per cent by foreign institutional investors, DRL share of Rs.5 each is crossed milestone of Rs.4000 on July 31, 2015.

Considering the changing healthcare scenario, DRL has changed its corporate brand identity recently with new logo which is an expression of empathy and dynamism. The new logo keeps patients at the center of everything that DRL does. The objective of the re-branding exercise is to derive a unifying, patient-centric approach, to meet new and daunting challenges that patients are facing.

DRL has posted satisfactory financial performance during the first quarter ended June 2015. Its consolidated net profit went up by 13.7 per cent to Rs.626 crore from Rs.550 crore in the corresponding period of last year. EBITDA improved by 12 per cent to Rs.990 crore. Its consolidated net sales increased by 6.8 per cent to Rs.3,758 crore from Rs.3,518 crore. EPS improved to Rs.36.71 from Rs.32.34 in the last period.

Merck net profit dips by 66% to $688 million in Q2

Merck has received major setback during the second quarter ended June 2015 due to acquisitions, divestitures and foreign exchange. Its net profit declined sharply by 66 per cent to $687 million from $2,004 million in the corresponding period of last year. Its sales also declined by 11 per cent to $9,785 million from $10,934 million on account of lower sales in cardiovascular and hepatitis C portfolios. With lower profit, its EPS declined to $0.24 from $0.68 in the last period. R&D expenditure increased slightly to $1,670 million from $1,664 million.

Kenneth C Frazier, chairman and chief executive officer, said, “We're investing resources to grow our strongest brands and to support the most promising assets in our pipeline, while at the same time lowering our cost base and delivering operation leverage. We have made significant progress this quarter in two of our most important assets, the Keytruda and hepatitis C programmes, and will be fully prepared to take advantage of these potentially breakthrough opportunities. We are witnessing the introduction of breakthrough therapies for some of the most difficult-to-treat diseases.”

Its pharmaceutical sales declined by 6 per cent to $8,564 million from $9,098 million and that of animal health by 4 per cent to $840 million from $872 million. The company divested its consumer care business. The sales of cardiovascular portfolio of Zetia and Vytorin in US declined due to loss of exclusivity and that of Remicade, a treatment for inflammatory diseases, due to loss of exclusivity in Europe. Zetia sales declined $635 million from $717 million and that of Vytorin went down to $320 million from $417 million. Remicade sales declined to $455 million from $607 million.

Novartis receives NPPA notice imposing Rs 300-cr penalty for overcharging

The National Pharmaceutical Pricing Authority (NPPA) has slapped a Rs 300-crore fine on Swiss multinational Novartis for overcharging consumers on sale of Voveran, its best-selling painkiller medicine, according to a Business Standard report.

Voveran is based on diclofenac, a component that is under the government's direct price control, adds the report. According to IMS Health annual data, Voveran, with annual sales of about Rs 225 crore, was among the top 10 brands in the domestic drug retail market as of April this year

Merck to acquire Sigma-Aldrich for $17 billion

Merck KGaA, a leading company in the pharmaceutical, chemical and life science sectors, has set to acquire Sigma-Aldrich for $17 billion (€13.1 billion) and establishing one of the leading players in the $130 billion global life science industry.

Merck will acquire all of the outstanding shares of Sigma-Aldrich for $140 per share in cash. The agreed price represents a 37 per cent premium to the latest closing price of $102.37 on September 19, 2014, and a 36 per cent premium to the one-month average closing price. The transaction is expected to be immediately accretive to Merck’s EPS pre and EBITDA margin. Merck expects to achieve annual synergies of approximately €260 million (approximately $340 million), which should be fully realized within three years after closing.

Guggenheim Securities and J.P. Morgan are acting as financial advisers to Merck. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal adviser to Merck. Morgan Stanley & Co. LLC is acting as financial adviser to Sigma-Aldrich and Sidley Austin LLP is acting as legal adviser.

Telormedix's lead product Vesimune gets European patent

Telormedix, a clinical stage biopharmaceutical company focussed on TLR7 agonists in the treatment of cancer and infectious diseases, has been granted the European Patent No. 2393474 entitled "Pharmaceutical compositions comprising imidazoquinolin (amines) and derivatives thereof suitable for local administration" by the European Patent Office.

The European patent, which will expire in 2030, broadly covers Telormedix’s lead product Vesimune (TMX-101) and its use for the treatment of bladder cancer. Further patents for Telormedix’s Vesimune have also recently been granted in China and Australia.

,Vesimune is Telormedix’s lead product, a TLR-7 agonist currently has successfully completed a phase II trial in CIS (carcinoma in situ) of the bladder. The product is a unique sterile liquid formulation of a marketed immune modulatory compound, designed on innovative technology principles to carrier drug delivery systems in order to increase solubility, bio-adhesiveness and stability. These properties mean that the product can be used in therapeutic settings that the original product could not.

CPhI panel to analyse new industry

CPhI Worldwide, organised by UBM Live, has announced its full line up of confirmed expert industry panel members for 2014, building on the huge success of the CPhI annual report launched at CPhI Worldwide in October 2013.









This year’s panel sees the return of 10 thought leaders with the addition of three new members, covering the entire pharmaceutical supply chain from R&D through to finished products, regulatory requirements and economic implications. Additionally, this year panel members are utilising their market insights and analysis year round in the CPhI Pharma Insights series, which cover individual topics and developments across the industry- including the released R&D, manufacturing and Turkey reports, with a United States report due out imminently.

FDI - India

India’s attempt to regulate increasing inflow of foreign direct investments into the pharmaceutical sector does not seem to yield the desired result as yet. Although government allows 100 per cent FDI in pharma sector through automatic approval route in new projects and investments in the existing companies only through the Foreign Investment Promotion Board approval, there has been a steady rise in the number of acquisitions of large Indian pharmaceutical companies over the last ten years.

The first major acquisition in pharma sector was in 2008 when the Japanese giant, Daiichi Sankyo, took control of India’s largest pharma company, Ranbaxy Labs for $4.6 billion. Another major acquisition was of Shantha Biotechnics by the French pharma company Sanofi-Aventis. And the most recent FDI investment was for acquiring Indian generic drugs company, Agila Specialties, by the US based MNC Mylan Inc for a sum of Rs. 5,168 crore.


The government had cleared this deal a couple of months ago. Now, Sanofi is understood to be planning to acquire a medium size company, Elder Pharmaceuticals. FDI in the pharma sector has more than doubled to $1.07 billion during April-August period of this year as against an FDI of  $487 million during April-August 2012, as per the latest data of the Department of Industrial Policy and Promotion. Over 96 per cent of the total FDI in the sector between April 2012 and April 2013 has come into brownfield pharma projects. The situation is scary as MNCs already control 35 per cent of the domestic pharmaceutical business.

Application and Pharma industry condition

Detecting metal contamination plays an important role in final quality check for food safety or process safety. Though the basic technology remains same, today metal detection technology has risen to newer heights in meeting the challenges. It is of prime importance that the right metal detector is selected based on right application and industry conditions.

The role of metal detection and validation for quality checks has now gained prominence than at any other time. Especially the highly regulated pharmaceutical sector which has the responsibility of manufacturing lifesaving drugs needs to be vigilant with its production and packing lines to ensure quality, contamination free and safe drugs.

At present the metal detectors manufacturers for pharmaceutical industry are developing equipment with most advanced features embedded in them such as, ultra high sensitivity to all metals, ease of setting, validation stamping, on-line production data validation and comprehensive service and application support all available in them.

Metal contamination gets generated accidentally during various stages of automated process of the manufacturing. While identifying and eliminating metal is important , equally important is to identify the source of the contamination. Though it would be practically impossible to install metal detector at each and every stage of manufacturing, it should be considered a must for in-process identification of the source of such metal contamination.

Pharmaceuticals - Cost of Capital

Several studies have attempted to estimate the pharmaceutical industry’s cost of capital, as a critical input in estimates of the cost and profitability of R&D. The cost of capital determines the interest cost on R&D funds invested and the discounted present value of life-time revenue flows. Using standard finance models such as the capital asset pricing model (CAPM), the conclusion is generally that the pharmaceutical industry is of average risk, with a beta approximately equal to one, a nominal cost of capital of roughly 15 percent or 10 percent in real terms in 1990 Although the industry is often perceived as highly risky because the success of any individual drug candidate is highly uncertain, such risks are readily diversifiable.

The point out the sequential nature of investment in R&D amplifies risk. Investing in R&D is equivalent to investing in compound lotteries and compound call options. Both beta and the opportunity cost of capital are higher for early stage R&D projects than for later stages. By implication, the average cost of capital is higher for small companies, that have several early-stage projects but no final products, than for large companies that have a diversified portfolio of products at various stages of the life cycle of development and commercialization.

Fine Chemicals – Global Market

When the early chemical industry was evolved from natural dyes and explosives into modern pharmaceutical products. However, by the end of the 19th century, the commercial production of branded pharmaceuticals flourished in Europe (especially in Germany, as many of the active pharmaceutical ingredients were produced in this country).

Fine chemicals are generally produced on a large scale, which can be measured in thousands of tonn’s per year for certain food additives and drug intermediates. Fine chemicals manufacturing is typically carried out in batch processes, with synthesis being followed by separation and purification steps.

Pharmaceuticals has always been the largest market for the fine chemicals industry. Moreover, it is likely that pharmaceutical intermediates will account for over two-thirds of the fine chemicals market. Although the number of fine chemicals companies involved in the manufacture of high potency APIs  has historically been limited, the segment has attracted more companies recently.

Production capacities across market verticals such as Agrochemicals, Polyvinyl Chloride, Polyethylene, Polypropylene, Polystyrene, Caustic Soda, Soda Ash, among others, wherever available. The reader also stands to gain a macro level understanding of the scenario prevalent in regional markets.

Regional markets briefly abstracted, and summarized include the US, Canada, Japan, Finland, France, Germany, Russia, Spain, the Netherlands, UK, Asia, China, India, South Korea, Argentina, Brazil, and Mexico among others. The report offers a compilation of all recent mergers, acquisitions and strategic corporate developments in addition to an included indexed, easy-to-refer, fact-finder directory listing the addresses, and contact details of 2250 companies worldwide.