The Pumba Gazette (january Edition)

THE EDITORIAL Dear all,

CONTENTS It gives us immense pleasure to bring you the 1st edition of our monthly published newsletter “THE PUMBA GAZETTE”. This edition we bring to you an exclusive interview with Ms. Aarushi Sukhdev (Manager-BD Advanced Markets) Lupin India. She comments on current USFDA Regulation and its impact on the Indian Pharmaceutical industry. We also bring to you a 12 part series on various noteworthy CSR initiatives. This series reflects Corporate India’s commitment to be strong, united and progressive Nation. The series titled “Back to Society”, focuses on various ongoing CSR projects. With the current New Year bash and the increased consumption of alcohol, our students have undertaken a project -Exploring the niche market of hangover pills. The IT-Pharma analysis is a report which tells us about the recent changing market values of pharma companies as compared to IT companies. Also, a section based on PUMBA and the year gone by is included in this issue. THE PUMBA GAZETTE is committed to maintain the QUALITY and CONSISTENCY of articles & ensures that we offer you more in the forthcoming editions.

Your Feedback & Suggestions are welcome at [email protected] Wish you a HAPPY READING…!

Sincerely Yours, THE PUMBA GAZETTE Team

(The detailed project reports shall be provided on enquiry. Kindly send in your enquiries at [email protected] )

•Cover story -Exploring the unexplored niche market of hangover pills. •Articles/Analysis - Effect of recession on Pharma Industry and IT –Pharma analysis •Back to Society

-TAAL Initiative by EMCURE and NMP+ •Industry Speaks

-Candid talk with Ms. Aarushi Sukhdev of LUPIN •PUMBA News -MBA-BT: An Introduction -Events at PUMBA

“AN UNEXPLORED NICHE MARKET” Every year December arrives and brings along with it the party season. Partying, today for the youth is synonymous with drinking alcohol. The next day, however is a day of hangovers for almost 40% of the people. Reports suggest that there has been a 60% increase in the alcohol consumption amongst the Indians within the age group of 25-30 years in the year 20072008. Understanding the increasing need of the hangover pills, a survey was carried out in Pune city, which aimed at gauging the awareness of hangover pills, among the chemists and people between the age group 21 to 30 years. Of the total chemists surveyed, only 12% stocked hangover pills. However another 10% of the chemists surveyed used to stock these pills in the past, but due to lack of demand for these pills they do not stock these pills any more. Majority of the remaining chemists were aware of the hangover pills but did not stock the pills. The awareness among people was found to be only 25%. Another issue that was noted during the survey was the apprehension among people to directly ask for the hangover pills There is a large untapped market for such pills, and the key to tap this would be creating awareness amongst people, which would ultimately lead to a better demand. APPROCHES Possible approaches to this problem as discussed by the team are through the medium of promotion of the pills. 1. Promotion through distribution of free samples, targeted in the specific period of Christmas to New year. 2. Any possible tie-ups with alcohol companies leading to a dual promotion of the alcohol brand and the hangover pill could be beneficial to both companies. 3. Event promotions to high end customers, and indirect promotion by increasing awareness amongst women.

Compiled by: Vasudha Shashank, Rohit Shinde, Babhuti Fotedar, Kunal Borase, Amol Dhore. MBA- BT Sem II . Mentor: Nachiket Kale, MBA-BT Sem IV .

To make the most of this untapped market, any company that undertakes aggressive awareness and marketing drive , might be able to capture a large market and establish dominance in this segment

RECESSION HITS HERE TOO... India's biotechnology industry is confident of excellent augmentation in the coming years despite global meltdown. India is emerging as a potential destination for biotechnological research and development for companies, worldwide. The industry is also grappling with global meltdown, as it has paved way for a lot of joint ventures and collaboration among foreign and domestic biotech companies in the current fiscal year. The collaborations are being looked upon as means to bring down the cost of developing products, to make the entire process quite affordable. The scenario on one hand looks favourable for the Indian biotech firms, however the industry should focus on acquiring biotechnology units in foreign countries like the US, where the valuations of most of the foreign biotech companies have receded due to global meltdown. Global meltdown will also benefit the Indian firms as it may attract key talent from the foreign companies. However, funding in biotech companies may be affected…causing a decline in the growth of this sector. The global meltdown may affect flow of funds to the biotechnology sector, but from the Indian context, it could create partnering opportunities with global companies, as per the analysis given by Ernst and Young. Compared to 2007 when $29 billion funding was available for bio-technology worldwide, 2008 could turn out to be a challenging year for funding, said Mr. Palnitkar, consultant for the Genome Valley. But this is the time for Indian companies to change their mindset and opt for risk and reward model to benefit in the long run and look for profitable acquisitions in the U.S. and Europe. Like wise, the life science industry too is affected in many ways and that in turn has effected the budget proposals of 2009. There is an apprehension that the Government may cut down the R&D expenditure. The ones mainly affected would be the companies, who have heavily invested in R&D and that too for companies outside India, who will now have to face increased cost pressure

Unlike the global pharmaceutical industry, the Asian Pharma industry has faced no direct effect of economy crisis but it will have some impact on the niche and upcoming biotechnology sector, which is heavily dependent on financing and venture capital or government support. However, the biotechnology industry may have a hard time ahead, as these companies will likely face a problem in raising capital. Also, the valuation of these companies might drop when they look for being acquired by big Pharma companies. The US dollar and Euro have appreciated vis-à-vis the rupee by approx 20-25 per cent in the past 4 months. This is forcing scientists to either postpone their purchases or compromise on instrument specifications to fit their purchases within budget; which is majorly affecting the scientific instrument industry.

Also, the inflation and rise in fuel prices has increased business expenditure on travel and supply chain across the board, for all industry. This is resulting in increased pressures on margins for the scientific instrument industry. The Indian clinical research organisations (CROs), however, do not see any near-term impact of recession, as large Pharma customers such as AstraZeneca and Glaxo continue to delegate more work to India, where these trials could be conducted at onefifth of the cost incurred in the US. According to a joint study done by research firm KPMG and the Confederation of Indian Industry (CII),the $200million Indian clinical research outsourcing market will reach up to $600 million by 2010.Ajit Mahadevan, partner- Health sciences practice, Ernst & Young India, said “Credit restrictions will prompt global biotech companies to see greater favour in outsourcing clinical trials to India.” While the meltdown, promises to strengthen large Pharma players, the outlook is far from positive for small biotech players The crisis is set to change the balance between the Pharma and biotech companies, with the Pharma companies on one hand all set to acquire biotech firms and the biotech firms on other hand struggling with capital raising, licensing deals and funding operation.. By: Prachi Waral, MBA-BT Sem II.

MOVING AVERAGE

ANALYSING TRENDS (Comparison between Pharma and IT companies) Beta is a measure of a stock's volatility in relation to the market. The Beta function compares changes in a field to changes in a benchmark index over a given period of time. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but provide a potential for higher returns; low-beta stocks pose less risk but also lower returns .If Beta value for company X is 0.90 and company Y is 1.10 this implies that X is 10% less and Y is 10% more volatile than the index. The Beta values of major Pharma and IT companies over a period of last four months (Sept 2008 –Dec 2008) are as follows-: Pharma Companies

Beta Value*

SUN PHARMA

0.260

IT Companies

Beta Value*

TCS

0.9507

NOVARTIS

0.120

INFOSYS

0.649

RANBAXY

0.709

WIPRO TECH.

1.0157

GSK

0.239

HCL

1.067

Dr. REDDY’S

0.316

PATNI

0.7589

PIRAMAL HEALTHCARE

0.461

TECH MAHINDRA

1.369

L&T

1.0891

CIPLA

0.587

IPCA Labs

0.439

LUPIN

0.635

PFIZER

0.288

SATYAM

1.001

MPHASIS

0.8342

NIIT TECH

0.678

*The closing stock prices of each of the 10 Pharma and IT companies were collected from www.bseindia.com and the Beta values were calculated by PUMBA Gazette team. As seen from the table the beta value of Novartis is 0.12 which implies that Novartis is 88% less volatile than the stock market. It is observed that the Beta values of the above major Pharma Companies is less than 1 and for most of the above major IT companies, it is more than 1. Thus, we can infer from the above data that the Pharma sector is less sensitive to the market fluctuations than the IT sector.

*15 days Moving average calculated for the period of 1st Sept. to 31st Dec. 08. Moving averages are used to emphasize the direction of a trend and to smooth out price and volume fluctuations, or "noise", that can confuse interpretation. The collected data, for stock values of Ranbaxy & Tech Mahindra, has shown maximum change in the stock prices amongst observed Pharma companies & IT companies respectively, for the period of 1st Sept. to 31st Dec. 08. Novartis and Infosys showed the minimum, while Ranbaxy and Tech Mahindra showed the maximum percentage change in the Pharma and IT sector respectively. The graphs of their moving average show that in the period of last four months of global meltdown, Pharma companies like Novartis and Ranbaxy showed relatively stable trend as compared to IT companies like Infosys and Tech Mahindra( the black bolded para is not beein included in the main draft, please do include this as well ). Compiled by: Dhruva Deshpande,Vandita Javali, Nidhi Nirmal, Soumya Gupta, Animesh Sarkar, Tejaswini Lunkad, Ankita Barve, Kiran Dond, Birendra Choubey, Vijendra Agarwa .MBA-BT Sem II Mentor: Shilpa Bhide (A.C.A., M.Com, SET, LLB, DCM, M.Phil) , Faculty PUMBA.

INDUSTRY SPEAKS: Ms. Aarushi Sukhdev , an alumnus of PUMBA (MBA-BT batch 2005) , is currently working with Lupin India, as Manager-Business Developments for advanced markets. Her job entails regular interaction with the advanced markets and the regulatory bodies. Our editors had a candid talk with her regarding the USFDA regulation and its impact on the Indian Pharma industry. 1) Recently the major Indian Pharma manufacturers like Ranbaxy, Lupin etc. are under USFDA scanner. What according to you are the reasons for the same? Regulators from mature markets typically inspect every site that manufactures bulk drugs and formulations for their markets once in 2-3 years. This is to ensure that these sites are fully compliant with regulations, which keep getting tighter all the time. Hence few inspections pass off without inspectional observations. Companies typically get to know the view of the inspectors immediately post the inspection. Only when the observations are quite serious in nature and the FDA is not satisfied with the company's replies, then it is forced to act. The action, which could take 4-10 weeks to be formalized post the inspection, could be in terms of warning letter, delaying new product approvals and banning of drugs manufactured in the unit. As far as Lupin is concerned, the FDA inspection passed on reasonably well with 15 inspectional observations of which it addressed 8 right away and is also addressing the others. The inspection is a routine one, similar to the earlier ones done in 2003 (with 9 inspectional observations) and 2006 (0 observations). The outcome of this inspection neither affected the supply of drugs nor any approvals for this site were kept pending by the USFDA. 2) Do you think there is an upsurge in such incidences in 2008? Like I said above, inspections do take place regularly to ensure that the manufacturers comply with the regulations all the time. 3) Is it so that only the Indian companies are being targeted? (Laughs.).Well, many people are under the notion that it’s only the Indian Pharma companies that are under the limelight, but as such that is not the case. Barr labs faced product suspension and recall in 1993 and had to reimburse inspection costs, and Able labs recalled all its drugs in 2005 following an inspection and filed for bankruptcy. Also Schering Plough, Wyeth and Abbott have paid fines to the FDA for violating GMP guidelines. Infact, recently a Chinese producer Changzhou SP , found supplying contaminated Heparin in the US, was asked to stop production from its plant, following an FDA inspection in Feb 2008. USFDA has a certain set of rules and regulation which are applicable to all the companies supplying their drugs to the US markets and not only to the Indian Pharma companies. 4) There are multiple competitors and stringent regulation in US market. But still all the companies are aggressively looking forward to entering the US market,

why is it so? US market accounts for 45% of total Pharma market in the world and this percentage is the biggest temptation for all the Pharma companies worldwide. This itself answers why the companies are looking on to enter the US market. But, recent reports have shown that growth in the US market is slowing and as a result of this, the Pharma companies are also exploring the other markets. 5) Which are the unexplored markets in that case? Certain European markets, Brazil, Japan and Russia are offering new growth opportunities. The developing countries have growing populations leading to increased healthcare needs and less of competition, which attracts pharmaceutical companies. Lupin has made certain acquisitions in Japan and other countries. These regional companies come with local expertise and we believe this would be a win-win situation for both of the companies. 6) Could you tell us something about the “180 day exclusivity period”? Well…when the first generic company files a Paragraph IV certification to a patent which is listed in the Orange Book, it becomes the first filer. As per the Hatch Waxman Amendments, this company is awarded 180 days of market exclusivity upon a successful patent challenge. This acts as a reward for the generic manufacturer who is willing to risk liability in court and the cost of patent court litigation. 7) What are the strategies used by drug makers to avoid these litigation costs? Any new drug, when it enters the market gets 5-year “NCE” exclusivity by USFDA. Thus there can’t be any generic entry during this period; the earliest we can file a Para IV th certification is on the (NCE-1) date. However, with increasing competition, even on this date there are a large number of filers present, leading to a shared exclusivity. Thus, many of them opt for a patent challenge settlement to protect the interests of both the parties. However, these settlements are also scrutinized by the FTC to ensure that they are not anti-competitive in nature.Also many a times the innovator company gives an authorized generic to a generic company. 8) Well, lastly do you think these recent inspections are going to affect the Indian Pharma Industry? No.If we look at the long-term prospects of the Pharma Industry, we are growing at a very healthy rate. Such an event might create uneasiness for a short period, but as long as companies adhere to GMP’s, random instances like these would not hamper the Indian Pharma Industry.

7

BACK TO SOCIETY-SERIES 1 “TAAL” INTIATIVE OF EMCURE AND NMP+ India has entered a critical period in the fight against HIV/AIDS. Spread of the virus appears to be stable or diminishing in some parts of the country, while growing at modest rates in others. In terms of numbers, approximately six million people are suffering from AIDS in India and 17,300 in Pune itself . According to other estimates, 40 million people are HIV positive and 25 million people have died from AIDS (As per the

Benefits to the Company "TAAL" has helped

in

proving EMCURE

and

NMP+

as

socially

responsible brands. EMCURE directly provides drugs to TAAL without entertaining any retailers or distributors, thereby cutting out the cost involved in supply chain and marketing activities. This proves the company's contribution to the society at large and the market prudence.

data available from NMP+). There are many Government initiated Anti Retroviral Therapy (ART) centres, where free drugs are administered but with a lot of inconvenience. The number of patients who visit these centres are 300 per day and the centres are open for only 5 hours a day.

THE PUMBA GAZETTE team met some of the patients registered at TAAL and Govt ART centers and compared the two initiatives on the basis of following parameters:

The registration process is cumbersome and requires a lot of time. The

Availability of drugs, Anonymity/Confidentiality, Accessibility, Cost and

patients are not assured of confidentiality. The second line ART drugs is

Personalised Counselling.

not available as of today, though efforts are being made by the Govt to make them available by 2010. Parameters

TAAL

GOVT ART

This is the reason why many companies in India are coming up with CSR activity for AIDS. One such successful initiative is “TAAL”, a joint effort by EMCURE and NMP+. This activity aims at the middle class and

Availability

upper middle class patients. This initiative shows that the company

1 Availability of First Yes

recognizes HIV not specific to social strata.

Line ART Drugs 2.Availability of Second Yes

Motivation for TAAL

Line ART Drugs

Benefits to the society

3.Availability

In our society AIDS is not only treated as a disease, but also as a stigma

Opportunistic Drugs

and the patients are castrated from the society like criminals. TAAL has

of No**

Yes

No*

Yes

Confidentiality

Yes

Yes***

Accessibility

Yes

Yes

Cost

Subsided

Free

Counselling

Personalised

General

an entirely different approach towards these patients and deals with them with a lot of care and support ,which they actually need. Personal counselling is done and patients are motivated to lead a normal life. Only 15-20 people visit the pharmacy everyday, hence personal attention to every individual is possible. The drugs are provided at subsidised rates and 60% lesser than the MRP. Till date about 600 patients have registered with TAAL, and 300 -400in remaining 5 centres which have been recently opened up. The NMP+ referral system works in 35 districts of Maharashtra and reaches out to 28000 people. And most

*Available only in Chennai and Mumbai. ** They are available at market price. ***Registration process is cumbersome so maintaining confidentiality is difficult.

importantly, confidentiality is strictly maintained in context of a patient’s medical information.

Compiled by: Ameya Budukh, Nivedita Singh, Birendra Choubey. MBA- BT Sem II. Mentor: Danesh Irani. MBA- BT Sem IV.

8

MBA-BT: AN INTRODUCTION ABOUT PUMBA: Founded in 1971, The Department of Management Sciences (PUMBA), University of Pune has been a centre of learning and development for students from various walks of life. It has been an undying rooting mechanism for budding managers and entrepreneurs all over India. The department has been constantly metamorphosing itself to be at the forefront of the evolutionary academic entity on one side and a skilled human resource provider to the corporate world on the other. MBA-BIOTECHNOLOGY: MBA Biotechnology is one of the new disciplines in management, encompassing management and biotechnology. The need of such a course was realized with the growing potential of biotechnology as a sector in Indian and international markets. Biotechnology is being acclaimed as the new frontier for knowledge development at national as well as international levels. Biotechnology being a knowledge intensive industry, it is forecasted that India will have a competitive advantage and opportunity, as seen in the case of the information technology industry. To ensure that this opportunity is fully utilized and developed for national economic benefit, there is a vital need for well-trained manpower, both technological and managerial. Also managerial manpower, with biotechnology specialization, will be needed to play an entrepreneurial role and to manage effective and efficient commercial utilization of the biotechnological research outcomes. The biotechnology focused manager should also monitor the socio-economic and ethical issues so that the technology is harnessed and applied for a holistic betterment of mankind on the whole. Realizing this crucial need The Department of Management Sciences, University of Pune has taken

OUR INSPIRATION:

a path-breaking initiative, to help catalyze and direct this technology revolution, and launched a two year fulltime MBA programme in Biotechnology, from the academic year 2002-03’.

MAJOR RECRUITERS:

YEAR 2008 HR RENDEZVOUS HR Rendezvous, 08’, held on the 18th of October,08’ was organized by the Seminar Cell, PUMBA wherein case studies, regarding problems faced by Human resource managers, were enacted in front of a panel of experts. The panel consisted of eminent human resource managers of various companies, who give their valuable insights and solutions to the problems depicted in each play. The esteemed guests and panelists present were Mr. Augustus Mallier, Director HR, Mercedes Benz India Ltd.; Mr. Jitendra Paturkar, Asst. General Manager-HR, Ubics; Ms. Suma Nambiar, Manager-HR, Maersk Global Centre India Pvt. Ltd.; Prof. V.K.Bhide; Mr. Bhushan Apalgatti, Director HR-NVINDIA; Mr. G.S.Uppal, Executive Director, HR & Admin. Volkswagen India Pvt. Ltd.; Mr. Rajendra Sabnis, General Manager-Corporate HR & Admin, Poonawalla Group; Mr. N. Barethiya, Head HR, Hindustan Coca Cola Beverages Ltd. The HR Rendezvous,08’ , organized in the PUMBA auditorium, was initiated with the lightening of the lamp by the esteemed guests. Prelunch, the first play depicted an employee working in a company, who had manipulated his curriculum vitae in order to secure his job. The second case was about how an HR manager should deal with cases wherein there are efficient employees whose performance is affected due to some serious health issues faced by them. The post lunch session started with a panel discussion on HRE’s role in developing high performance competitive leaders. This was followed by the third case, about gender inequality at the work place and also the resistance by men to women occupying senior positions in the organization.

SEMINAR BY MR. SUDHIR KANT, PRESIDENT, MILLIPORE (INDIA) PVT. LTD.

Mr. Sudhir Kant, President,Millipore India

Mr. Sudhir Kant, a chemical Engineer and MBA in marketing, has a successful corporate career spanning two decades in key positions. With U.S. Multinational, Millipore, he is currently heading the Indian Operations as President for Millipore (India), based at Peenya, Bangalore. Sir graced the students of MBA Biotechnology with his valuable advice and insights about the roles of a manager in the biotechnology industry. He educated us about the important stepping stones and limiting aspects of the life of a manager in a biotech based company, with the help of a very animated and interactive semina VODAFONE PUNE INTERNATIONAL MARATHON (AIDS CHARITY RUN),08’7th December, 2008 was indeed a memorable day for PUMBA. The 4.5km AIDS rally, which began from Alka Bridge and ended at the Nehru Stadium, was flagged off by Priyanka Chopra. The guests present for the event included Mr. Suresh Kalmadi, the Sports Minister, Anjali Bhagwat, Vijender Singh, Dhanraj Pillay, Priyanka Chopra & Rahul Bose. More than 10,000 runners from all walks of life took to the streets of Pune. The PUMBA team won awards for the “Largest Group”, “Best Creative Attire” and “Best Slogans”. Winning 3 awards at the Vodafone Pune International Marathon (AIDS Charity Run) was not an easy task. The PUMBAites had put in a lot of hard work, right from designing T-shirts with the PUMBA tagline to writing creative slogans to preparing placards and posters. Some of the slogans were ‘Think Twice, Be Wise, coz later you won’t have a Choice’, ‘Zindagi Ek safar hai suhana, AIDS pakar ise na gavana’, ‘Dilon dilon mein nara hai, AIDS ko hatana hai’.