New drug policy will hurt Pharma sector- Debate is still on..

Prices of various leading drug brands will come down by up to 80 per cent thanks to the newly-approved National Pharmaceutical Pricing Policy but at the same time it will hurt investment sentiments in the country's pharmaceutical sector, according to industry bodies.

According to the Indian Pharmaceutical Alliance (IPA) and Organisation of the Pharmaceutical Producers of India (OPPI), the new drug policy would also adversely impact profitability of Indian pharmaceutical companies.

"A preliminary working shows that prices of many leading brands will be slashed by 50 per cent to 80 per cent. This will reduce industry profit by half to Rs 4,000 crore on domestic sale of Rs 67,500 crore," IPA Secretary General D G Shah said.

This will hurt investment climate in the country and may also deter companies from investing or expanding production capacity of National List of Essential Medicines (NLEM) medicines, he added.

Expressing similar views, OPPI Director General Tapan J Ray said it will have an "immediate and significant adverse financial impact on the industry".

Ray, however, said the market-based pricing is "directionally prudent" for the country in the longer term.

"It will help improving both affordability and availability of medicines. Such a policy along with the government initiative to make essential medicines available free of cost through public hospitals and health centres will benefit all sections of the society, giving a boost to overall consumption of medicines in our country," Ray added.

The drug policy, which has been cleared by the Cabinet on November 22, will bring 348 essential drugs under price control.

At present, the government through the National Pharmaceutical Pricing Authority (NPPA) controls prices of 74 bulk drugs and their formulations.

According to the approved policy, prices of medicines will be capped by taking simple average of all brands which have more than one per cent of market share instead of input costs.

Meanwhile, non-profit organisation Jan Swasthya Abhiyaan (JSA), which has been demanding that ceiling prices of drugs must be calculated on the basis of actual manufacturing costs, said the policy would lead to only "tokenish reduction" in the prices of essential drugs.

"This decision would more or less legitimise the current exorbitantly high prices of essential medicines; there will be only tokenish reduction in their prices," JSA Joint Convener Amit Sengupta said.

This view was countered by Lupin Ltd Group President Shakti Chakraborty, who said the government's decision to adopt market-based mechanism instead of cost-based mechanism is a win-win situation for both the patients and industry.

"It is a good thing that the government has chosen to adopt a market-based mechanism as against a cost-based mechanism, thus protecting industry interest to a large extent as also ensuring that drugs reach patients in a cost-effective manner," Chakraborty said.

Commenting on the policy, Deloitte Director, Strategy & Operations, Anjan Sen said the impact of the new policy will vary for different stakeholders.

"Now there is clarity on which way this will go. Accordingly, companies can modify their strategies and focus on appropriate areas to minimise the impact," he said.

He added that it may not be easy in the short term, but with well thought out strategies large part of the impact can be negated in the medium to long term.

Source: Financial Express

Pharma exports to touch $ 25 bn by 2014-15

 

Amid global economic concerns, the pharma exports are expected to reach $ 25 billion by 2014-15, a senior government official said today.

India is one of the top five generic drugs exporters, and maintains a positive trade balance, meeting over 90 per cent of the country's requirements, said Rajeev Kher, Additional Secretary, Department of Commerce, Ministry of Commerce and Industry, at a convention here.

The country's pharma sector is growing at a 17 per cent CAGR for the past four years and has already touched $ 17 billion till October this year.

"Indian pharma exports are headed for a very healthy growth in generic and API exports and efforts are on to improve the foothold of traditional medicine exports," Kher said.

"Pharma exports by the end of 2014-15 are expected to reach $ 25 billion. The Indian pharma industry is also covering a lot of ground in bio pharmaceuticals at a rapid pace," he said.

Kher said that generic market segment is increasing worldwide faster than branded drug segment. "The market size of drugs losing patent protection was $ 270 billion in 2011 and is expected to go to $ 430 billion by 2016."

He further said the domestic industry is gearing up in a big way, with more and more people likely to be covered by various health benefit policies.

About improving the competitiveness, Kher said, "Industry is expected to take advantage of opportunities like contract research and contract manufacturing, and opening up of generic market opportunities in countries such as Japan, Spain, China, CIS etc."

The challenges before the Indian Pharma industry include EU's new directive on falsified medicines, USFDA's increased cost of operations and China's non-tariff barriers, he said, adding that to mitigate them, the government will carry forward Brand India Pharma campaign, launched recently.

Source: ET (21.11.12)

FDI in multi-brand retail can strengthen supply chain

Discussing strengthening of supply chain logistic

India is the world’s largest producer of fruits and vegetables, has the largest area under wheat, rice and cotton and is the second-largest producer of rice and wheat. That is the good news. But, at the other end of the spectrum, India loses about Rs 50,000 crore annually on account of frail post-harvest infrastructure.

A major scoop of these farm losses can be traced to a feeble supply chain system that includes storage, transportation and distribution. Inadequate warehouses and cold storages and poor road and rail transportation are some of the red flags in the Indian logistics landscape.

Different studies have indicated that the logistics industry in India is valued at about 13-14 per cent of the gross domestic product (GDP), while in developed nations, especially in the US, it ranges between seven to eight per cent of their GDPs. This is a clear indication that Indian consumers are forced to pay avoidable costs for more logistics expenses and post-harvest losses.

Infrastructure development
The Government’s initiative to allow 51 per cent foreign direct investment (FDI) in multi-brand retail has been a subject for debate for quite some time now. The Government appears to be confident of drumming up enough support to counter the opposition’s move to block it in the ensuing winter session of Parliament that begins next week. A minimum investment of $100 million and a mandatory 50 per cent capital reinvestment in back-end operations have been proposed.

Experts indicate that this could beef up the existing logistics infrastructure to a significant extent, which could translate into better prices for farmers and consumers. However, there is one rider. Retailers feel that unless there is a seamless implementation of this programme across states, a robust supply chain architecture cannot be built. If some states chose not to open up FDI in their retail sectors, there would be a break in the chain.

Organised food retailing in India still accounts for less than two per cent of the total food market, according to a recent study by Nabard. Estimates indicate that the size of this segment is Rs 19,400 crore, as against the total food market of Rs 12,45,000 crore. By 2020, this segment is estimated to grow to Rs 62,000 crore, the study points out. Indeed, direct procurement by retailers in the new format is seen to deliver better deals, both for the farmers and producers, especially due to improvements in supply chain operations.

In a paper presented during a recent Confederation of Indian Industries (CII) seminar, Sunitha Raju from the Indian Institute of Foreign Trade, points out that direct procurement format resulted in an increase in farmers’ net income by eight per cent, while consumers paid six per cent less and transportation wastage fell by seven per cent. This could further improve if supply chain logistics is strengthened.

Warehousing issues
Inadequate warehousing is one of the biggest bottlenecks in the entire supply chain structure. Statistics show that at 108 million tonnes (MT), the present agriculture warehousing capacity is short of the requirement by about 25 MT. A major portion of this is with Food Corporation of India (32 MT), Central Warehousing Corporation (10 MT) and State Warehousing Corporation (21.30 MT). The fact that the Government needs to further incentivise this sector to attract private players is indicated by the fact that in the last ten years hardly 35 million tonnes capacity has been created by the private sector.
In this context, the Andhra Pradesh Government has taken an initiative to bring out a separate agri-warehousing policy. “The new policy is part of the State Government’s initiative to have an additional 50 lakh million tonnes of warehousing capacity in the next three to four years through public-private participation. We expect to finalise it in the next one or two months,” I.Y.R Krishna Rao, Special Chief Secretary (Agriculture Marketing), said.

CII estimates that the shortfall in warehousing capacity for the next five years is expected to be about 40 million tonnes at current rate of production. However, the Government is targeting to create about 35 million tonnes of new capacity in the next five years, involving an investment of Rs 14,390 crore. The shortfall is even more acute for cold storage facilities. There are an estimated 5,400 cold storages with a total capacity of about 25 million tonnes. Nearly 80 per cent of this is used for potatoes. Further, these are available in only nine per cent of the markets. It is estimated that to expand cold chain facilities to handle 40 per cent of the food and vegetables in the next five to six years would require an investment of a whopping Rs 55,000 crore.

Higher costs & wastage
Another bottleneck is that the quality of warehousing operations is poor, leading to more costs and wastages. A study by Delloite puts warehousing costs at 20-25 per cent of the total logistics costs,while 80 per cent of the warehouses are traditional with sizes of less than 10,000 sq ft. Apart from the farm sector, the Indian life sciences segment too is smarting under inadequate logistics backing, especially in regard to reefer transportation.

A study by Deutsche Post DHL and the Organisation of Pharmaceutical Producers of India last year had revealed that the time taken for a hypothetical one-way trip covering 300 km in India was between 24 to 36 hours. But the same in China would take less than 18 hours and in EU between 8 to 10 hours. While trucks in India log an average of 200 kms a day, those in China and Japan cover 600 kms and 800 kms, respectively. Thus, while the FDI in retail is expected to see some more debate in the ensuing Parliament session, its positive impact on supply chain logistics cannot be ignored.


Source:

Business Line : Today's Paper / LOGISTICS : FDI in multi-brand retail can strengthen supply chain

Research Report on ‘Indian Immunization Programme’ released on Children’s Day

Crucial issues in immunization coverage across India and the way forward

are highlighted in the study

New Delhi, 14th November 2012:  Commemorating Children’s Day, Imprimis Research and Advocacy, a specialist wing of Imprimis PR, has released ‘Indian Immunization Programme – A Literature Review’ (http://www.imprimispr.com/indian-immunization-programme-nov2012.pdf) to highlight the key challenges affecting universal vaccination for kids in the country and provide a plan of action for improvement in the future.  

The report provides insights into the vast literature pertaining to vaccination under one cover, presenting a fresh perspective on the Indian immunization programme. The report shares the lessons, challenges and solutions to reach the desired goal of the Universal Immunization Programme.

Providing the need for such a report, Mr Aman Gupta, CEO, Imprimis PR Pvt Ltd, said: “Vaccines are a crucial and economically the most viable instrument for any country to manage its disease burden. All-inclusive immunization is a basic step towards a healthy nation. This study breaks new ground in identifying strategic action plans to increase the immunization coverage in India.”

Imprimis Research and Advocacy develops focused analytical methods to provide business/market intelligence knowledge across various industry sectors. Besides expertise in the healthcare sector as well as strategic research and advocacy consultancy, it also bring to the table product-focused communication approach for other sectors that it specializes in -- be it Retail, Healthcare and Pharma, Education or Information and Communications Technology.

Underlining the capabilities of research services, Ms Neha Jindal, Research Lead, Imprimis Research and Advocacy, said: “Research Advocacy is a systematic search for an answer to a given question. With our PAN-India wide network and unique research techniques, we have the ability to comprehend issues and design customized research solutions.”

Report Highlights- Main strategies to increase immunization coverage:

• Improving access of large populations in rural areas and socially-weaker sections in urban areas
• Educating people about benefits of immunization in preventing illness, disability and death
• Increasing awareness about available immunization services in both urban and rural areas
• Expanding vaccine delivery system and cold chain equipments such as voltage stabilizers and vaccine carriers
• Developing transportation, supply chain logistics, service delivery data and records for reporting mechanism
• Drafting state-specific action and micro plans identifying objective, strategy, expected output and budget for the activity -- to facilitate achievements of state-level immunization coverage parity in India.

For further information, please contact:

Neha Jindal: njindal@imprimispr.com