Growing at a rate of 8-9 per cent per year, the pharmaceutical industry in India is pegged to reach $48 billion by 2007, according to a CII study and telecommunication and networking technology is believed to provide the necessary boost that the already booming pharmaceutical industry of India needs. You can read more on this interesting topic at : http://sify.com/finance/fullstory.php?id=14533281.

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The Organisation of Pharmaceutical Producers of India (OPPI), the apex industry body of MNC pharma companies, feels that the Centre’s move to expand the drug price control net coupled with its failure to honour incremental innovation would hinder long-term pharma investments in India. Accordingly, it feels several member companies may review proposed investments in India.

The Centre recently announced its intention to bring all 354 medicines on the National Lists of Essential Medicines under price control. A move which peeved the pharma industry, comprising MNCs and domestic companies alike, especially since price restrictions now apply to only 74 drugs. In parallel, the patent on Novartis’s cancer drug Glivec was denied in India on grounds of incremental innovation in a recent Madras High Court ruling. The ruling is significant as the patent denial to Novartis would apply to every drug patent application linked to incremental innovation in India.

In the backdrop of these developments, OPPI vice-president and Pfizer India managing director Kewal Handa said: “Research investments by MNC pharma firms in India may be the first to be hit. But other areas like sourcing of APIs (active pharmaceutical ingredient) and contract manufacturing from Indian companies may also be eventually reviewed.”
The OPPI member firms include global biggies like Pfizer, Eli Lilly, GlaxoSmithKline, Bristol-Myers Squibb, Sanofi Aventis, AstraZeneca Pharma, Novartis and Novo Nordisk.

In this light Mr Handa declined to identify the pharma MNCs likely to review their India gameplans. It may be mentioned that Novartis chairman & CEO Daniel Vasella had recently said the company would switch hundreds of millions of dollars in planned investments from India in coming years after Glivec was denied patent in India.

“Expanding the net of drug price control and failure to honour intellectual property rights (IPR) on incremental innovation is giving a negative connotation. This will dampen the positive outlook which India commanded in front of the global pharma biggies,” Mr Handa added.

The OPPI feels South Korea and Singapore can overtake India as the next possible destination for pharma R&D. “China could also emerge as a much bigger player for API sourcing. Eventually, these moves may make India uncompetitive in the global arena,” said Mr Handa.

The OPPI and its member firms have been making representation to the government on the issue. “Pharma investors check two things — the IPR regime and pricing attraction of the market. India is likely to loose its attractiveness on both counts. Medicine prices in India are already the lowest in the world,” a senior executive of an MNC pharma company said.

The industry is ready to work jointly with the government on the public-private-partnership route to expand access of medicines in the rural region and to poor patients.

“This can justify the government to not go any further with their plans to increase price control,” said Mr Handa.
Industry analysts feel the central government’s take on IPR and incremental innovations will hinder the huge R&D efforts of domestic pharma firms. “As per estimates, only 30% of new drugs coming in the global market are new chemical entities (NCEs). The rest are based on incremental innovations where Indian firms have an advantage,” said a top executive of an Indian drug company.

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The Domestic textile industry, barely keeping its head above water on low growth, is making fierce moves to target the Chinese textile market.

Chinese textile companies, taking advantage of strong market packages, low labor cost and raw material prices, have made steady progress in developing cutting-edge technology and broadened the technology gap between Korean and Japanese companies.

Although South Korea،¯s technical advances in widely used products are at the same level with Japan, Korea،¯s technology in the high-value added textile sector is just above average.

،°Japan has advantage over industrial materials and is able to supply carbon textile to Boeing. South Korea lags behind other countries in applying advanced technology to very fine materials of specific use,،± said Moon Gi-young, an innovative strategy team manager at the Korea Federation of Textile Industry.

Korea invested $1.54 billion in the Chinese textile market, concluding 2,372 deals until the end of 2006. However, it is only one third of Japan،¯s investment volume.

Although there aren،¯t sufficient reports on Japan،¯s investment value in China،¯s textile industry, over $5 billion out of $10.2 billion of Japan،¯s cumulative investment value in the overseas textile sector has been invested in China.

Japan-based textile makers, Teijin Ltd. and Toray Industries Inc., had advanced into China،¯s textile market in the early 1990s, paving a new business path for foreign companies.

South Korea and Japan showed a wide technological gap in developing Aramid, a super textile.

Although Korea،¯s Kolon Industries Co. started manufacturing Heracron, an aramid textile, in 2006, it still lags behind other companies since the U.S. and Japan have already developed the same product more than a decade ago.

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After the abolition of quota regime, Asia has become a hub of textile trade as major exporting countries of the region instead of importing yarn from Pakistan as the developed nations did, have invested heavily in their spinning industries to produce yarn.

Pakistani spinners were caught on the wrong foot as they invested heavily in spinning during the last eight years while their market in countries like Japan, the US, European Union and Hong Kong weakened after the textile trade was made quota-free at the start of 2005. They are in trouble now because they have failed to judge the change in the world’s textile trade.

Most of the textile trade is now concentrated in Asia with low-cost countries China, India, Bangladesh and Vietnam and even Cambodia rapidly capturing the value-added textile markets vacated by developed nations due to high cost of production. China, India and Bangladesh having a solid value-added textile base have invested heavily in the spinning sector to cater to the increasing yarn needs of their value-added textiles.

Thus, Pakistan gradually lost the yarn market as the Asian manufacturers that replaced the manufacturers from developed countries produced their own yarn. Pakistan, in the meantime, invested more in its spinning and fabric industry during the last one decade and completely neglected the value-added sector.

Of the $4 billion investment made in the textile sector from June 1999 to October 2006, more than 50 per cent went to spinning, 25 per cent to fabric and a major chunk of the remaining to dyeing and finishing. Only nominal investment was made in the knitting or garments’ sectors.

The much-touted Textile Vision 2005 was declared highly successful by both the industry and the government as the envisaged investment in textiles was achieved. However, they failed to realise that the investment in textiles was in the wrong sectors.

The vision envisaged higher investment in the knitwear and garments’ sectors, which did not actually the case. Textile experts have cautioned that the spinning and weaving industries of the country would not be able to survive until the yarn and fabric are consumed locally to produce value-added products for exports. They said the spinners could not obtain the same quantum of orders that they used to obtain from the importers in the developed countries. The developed countries had mostly opted out of yarn production that is the lowest value textile product.

The developing countries in Asia, they added, had the same cost structure as that of Pakistan. In fact, Bangladesh has a disadvantage as it has to import cotton to produce yarn, even then its yarn industry is flourishing as total yarn produced is consumed locally.

Textile exports from China have more than doubled from $55 billion in 2005 to $130 billion, but it is also consuming mostly its own spun yarn. Pakistani yarn exports to China have increased substantially in recent years, but the gap created by absence of orders from the developed countries has not been filled.

The yarn rates are also under pressure as China, Bangladesh and Indonesia are low-cost yarn producers and they do not pay the price that the local spinners used to get from developed economies.

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