Highlight of the February 1998 Issue of PHARMACEUTICAL INNOVATOR

The beleaguered Core Healthcare has put its formulation plant and its captive power plant for sale to raise cash for working capital and to pay back outstanding loans. The sales will fetch around Rs 100 crore.

The total amount owed by the company, which manufactures IV fluids and disposable syringes is Rs 850 crore. A financial assistance package put together by ICICI and other financial institutions will give the company an 18-month moratorium on repayment of principal and a reduced rate of interest.

020202 Complaint Lodged with European Commission Indian Subsidies

Three members of the European Union Spain, Austria and Italy have registered a complaint with the European Commission against a number of Indian companies (Ranbaxy, Kopran, Torrent, Lupin, Vitara and Orchid) claiming that they availed of subsidised exports of broad spectrum antibiotics amoxycillin trihydrate, ampicillin trihydrate and cephalexin. These countries want the European Union to impose a countervailing duty on these imports into the European Union in accordance with the European Commission regulations.

These countries are alleging that Indian exporters are provided a refund of import duty on imported raw materials used to manufacture exported goods through passbook schemes. These countries claim that the passbook scheme provides for 'fictitious import duty refund,' and that it resulted in upto 31.5 per cent subsidy in 1996.

020203 Ayurvedic Manufacturers Claim Unfair Treatment

The Ayurvedic Drug Manufacturers' Association has alleged that the Rs 2300-crore herbal drug industry has been given a bad deal by the government. It has alleged that despite its existence over 100 years the industry is still unrecognised and has asked the government to carry out a comprehensive survey in the country about availability, demand and consumption.

The government had banned export of several ayurvedic drugs which contained ingredients of certain herbs in 1996. Of the 53 herbs in the banned list, about 17 herbs are widely used in the Ayurvedic drug industry. The association has claimed that the Indian herbal drug industry is growing at the rate of 15 per cent per annum.

020204 Ranbaxy Places Shares to Retire Debt

The promoter of Ranbaxy Laboratories has placed 15 lakh shares through J M Financial Consultancy Services worth about Rs 100 crore to retire costly debt incurred while exercising warrant rights at Rs 400 a share in 1993. This is a part of the 35 lakh shares worth about Rs 230 crore that the promoter intends to offload. The current price range of Rs 680 to Rs 700 is considered good by the market in view of market conditions. Of the total equity of Rs 49.8 crore, Indian institutions hold 10 per cent, foreign institutions hold 11 per cent and the public hold 42 per cent of the equity of the company.

020205 IDMA, OPPI for Alternative to Drug Prices Control

The Department of Drugs and Pharmaceuticals along with the Organisation of Pharmaceutical Producers of India (OPPI) and Indian Drug Manufacturers Association (IDMA) is studying an alternative model of price control vis-a-vis Drug Price Control Order (DPCO) which is prevalent now.

The alternative model involves a cess of one per cent on formulations which the government may want to buy as part of its various health programmes, and allowing the industry freedom to fix prices of products where there are more than three sources for a bulk drug (including imports), and more than five formulators of the product exist in the domestic market. The proposal being worked out wants the government to apply price control to medicines required in the national health programme and that the DPCO should aim more at price regulation than control.

020206 Nicholas Piramal to Sell Stake in Global

Nicholas Piramal intends to sell its majority stake in Global Bulk Drugs, a subsidiary formed by spinning off its bulk drug business. The bulk drug business was in turn acquired through a take-over of Sumithra Pharmaceuticals and Chemicals by the company two year ago. Though the business seemed attractive at that time, today it is plagued by excess capacities and dumping by Chinese manufacturers. The search is on for a foreign equity partner to set up a stand alone bulk drugs company.

020207 Cipla Denies Take-over by Bristol-Myers

Cipla has denied rumours of a take-over by the US-based Bristol-Myers Squibb. The company has denied even a minority equity participation by the US giant. The US corporation is believed to be exploring ways to access the Indian market.

020208 Rhone-Poulenc Rorer to Transfer Brands to Rhone Poulenc India

Rhone-Poulenc Rorer (India) (RPRI) with majority participation (51 per cent) by Rhone- Poulenc Rorer of the UK may become a shell company with the transfer of its brands and staff to Rhone Poulenc (India). All major brands of RPRI will go to Rhone Poulenc (India).

020209 Intas Receives Approval from Australian Body

Intas Pharmaceutical, based in Ahmedabad, has received approval from the Australian Therapeutic Association for its manufacturing plant near Ahmedabad for oral solids and small volume parenterals for human and veterinary use. This will give it access to the Pharmaceutical Inspection Convention (PIC) countries like Canada, besides Australia.

The Plant has an annual capacity of 1,350 million tablets, 350 million hard gelatine capsules, 36 million ampoules, and 20 million vials. The company expects to treble its exports which stands at Rs 15 crore.

020210 Novartis Bids for Alembic's Althrocin

Talks are on for what may be the largest brand sale in the Indian pharmaceutical industry if Novartis' bid for Alembic's Althrocin comes through. Alembic's main brand, Althrocin, has sales of Rs 70 crore ,and a 0.7 per cent share of the pharmaceutical formulation market.

Althrocin is an erythromycin brand and buying it will elevate Novartis to the fifth position in this category from the tenth position in which it stands now. If the deal goes through, it will eclipse the deal made by SmithKline for purchase of Crocin from Duphar Interfran (for Rs 42.5 crore), as the price is put at around Rs 130 crore.

020211 Nicholas Divesting stake in Non-core Businesses

Nicholas Piramal intends to divest its stake in two of its non-core businesses, glass and bulk drugs, to finance future take-overs. Around Rs 255 crore will come in through sale of 40 per cent holding in the glass subsidiary (Gujarat Glass). The sale of its majority stake to two foreign partners in Global Bulk Drugs will result in more cash coming in. The funds will be invested to receive a return of 25 per cent on capital, failing which it will be distributed as dividends to shareholders.

020212 Boots to Introduce Retail Chain Shops in India

Reportedly, Boots may introduce its chain of retail chemist shops in India on the lines of similar shops run by it in the U.K. Boots-Piramal may be the promoter of this chain of stores, which may be a unique concept in the country. These shops will sell both prescription and over-the-counter products.

020213 Merger of Glaxo with SmithKline Fails

The world's largest pharmaceutical company and the world's second largest company in terms of market capitalisation is not to be a reality with the move to merge SmithKline Beecham with Glaxo Wellcome coming a cropper.

Talks which were in an advanced stage was scuttled because of a disagreement over the composition of the board of directors (Glaxo's three to SmithKline's two in proportion to both companies' equity participation). it is believed that Glaxo is in a position to initiate a hostile bid on SmithKline, but the possibility seems remote.

Earlier to the merger talks with Glaxo, SmithKline had identified American Home Products as its partner for merger. But with Glaxo's interest SmithKline dropped its merger talks with American Home Products.

The merger would also have created India's largest pharmaceutical company with a market share of 8.4 per cent. The merger would have involved four Indian companies: Glaxo India, Burroughs Wellcome, SmithKline Pharma and SmithKline Consumer Products with total sales of Rs 1,500 crore, ahead of Ranbaxy. The merger would have had good synergy with little product overlap.

Meanwhile Glaxo has reported a dip in sales from UK Pound 2.964 billion to UK Pound 2.686 billion because of the loss of patent of its Zantac brand. But the company intends to recover in 1999 from sales of respiratory, anti-viral and central nervous system drugs.

020214 Wockhardt Buys Tata Stake in Merind, Tata Pharma

Wockhardt has bought Tata group's 50 per cent holding in Merind for Rs 47 crore at Rs 260 a share. Wockhardt will also get Merind's 74 per cent stake in Tata Pharma and will have to buy the remaining 26 per cent from Lakme by the end of March for Rs 3.4 crore. The company will also acquire public holding at the same price.

This is a culmination of the Tata group's intention of getting out of the pharmaceutical business. The take-over will result in Wockhardt overtaking many multinationals in turnover and market share. The synergy is good as Merind's strength in vitamins, steroids and neuro-psychiatric drugs will help Wockhardt increase its therapeutic share from 29 per cent to 42 per cent, as there is no product overlap. Wockhardt's strengths are in: analgesics, anti-inflammatories, antisepsis, respiratory, cardiology, paediatrics and parenteral fields. Wockhardt will get Merind's plant at Bhandup and Patalganga. Wockhardt's total market share will stand at 2.3 per cent.

020215 Wockhardt Buys British Company

The Ireland-based subsidiary of Wockhardt has bought Wallis Laboratories, a British pharmaceutical company, in an Indian company's first acquisition in Britain. Wallis has sales of $ 18 million, and its product range include: formulations of analgesics, cold remedies, products for dentures and stomach ailments.

There is very little product overlap and bulk drugs may be acquired from Wockhardt's facilities in India. Wockhardt's exports by the end of June 1998 is expected to be Rs 80 crore of which Rs 35 crore will be contributed by exports to Europe.

020216 Mergers in Pharmaceutical Industry Will Continue Analysts

Even after the failure of the Glaxo-SmithKline merger, analysts are of the opinion that mergers and acquisitions will continue in the pharmaceutical industry. Among likely merger candidates are US-based Merck & Co and American Home Products, Bristol-Myers, Pfizer, Warner-Lambert, Schering and Eli Lily, all companies with high earnings growth.

020217 Hoechst Launches Anti-epileptic Drug

Hoechst has launched a new anti-epilepsy drug in the Indian market called Frisium. This is used in the treatment of chronic therapy-resistant epilepsy.