Pharma...New Playground For The Smarts!!!

By the way all this talk about Pharma thingie I am going to put below is from an Investment point of view, traders need not even waste there time with this post!

Another sector that has been buzzing with activity is the Pharma Sector! I have not delved into individual pharma companies but have tried to gather all the buzz I could find from different newspapers and sites (yups a bit of copy/paste at work here). A due diligence ought to be done by you before entering this sector. There are plenty of companies in this field and not all of them can be THE BEST BARGAINS! Remember a rising tide lifts all boats even the leaking ones, therefore its always better to do your homework first and then think of going out and investing.

A brief intro to the pharma industry in India;

The pharma industry generally grows at about 1.5-1.6 times the Gross Domestic Product growth.

Globally, India ranks third in terms of manufacturing pharma products by volume

The Indian pharmaceutical industry is expected to grow at a rate of 9.9 % till 2010 and after that 9.5 % till 2015.

In 2007-08, India exported drugs worth US$7.2 billion in to the US and Europe followed by Central and Eastern Europe, Africa and Latin America.

The Indian vaccine market which was worth US$665 million in 2007-08 is growing at a rate of more than 20%.

The retail pharmaceutical market in India is expected to cross US$ 12-13 billion by 2012.

The Indian drug and pharmaceuticals segment received foreign direct investment to the tune of US$ 1.43 billion from April 2000 to December 2008

And now some news from all over the place;

· Baring Private Equity Partners is in discussions with a few mid-sized privately held pharma companies which could see the PE firm investing up to $150 million (over Rs 675 crore) in the next few months, a Baring executive said.

· "We are planning to set up zones for pharma products at international cargo terminals. These new zones will ensure appropriate storage condition, testing facility and custom clearances," Azad told reporters at the opening ceremony of the zonal FDA Bhavan here. At present, annual production of pharmaceutical products in the country is worth Rs 90,000 crore and out of which exports account for about Rs 39,000 crore, he said.

· Japan has veered round to considering India’s demand to open up its over $100-billion pharmaceutical market to Indian generic, or off-patent , drug producers after four years of dogged resistance, a government official involved in the talks said.

· Indian drug companies have reduced their cumulative foreign currency convertible bond (FCCB) burden by over 60 per cent. This has helped the companies improve their financial health and look for further fund-raising for expansions.

· Indian generics dominate global ranking. Global multinational drug companies’ need to outsource manufacturing to low-cost destinations like India has turned out to be a boon for leading drug companies in India such as Ranbaxy, Cipla, Dr Reddy’s Laboratories and Aurobindo. Thanks to such deals, these drug companies are now well poised to post growth in excess of 20 per cent every year for the next five to 10 years, say industry analysts.

· With drugs worth $80 billion going off patent within three years in the US, there is a huge potential for investing in India's bustling pharma sector given its capacity to produce affordable medicines. The year 2008 witnessed $20 billion of drugs going off-patent and it was $14 billion in 2009. About $35 billion drugs will go off-patent this year and $52 billion in 2011

I confess all this talk gets too cumbersome to read and follow, we should rather be seeing action with charts…Will try and put a few charts later. A very nice analysis and a writeup on one of the pharma companies can be read HERE!