Biofuels, Indian pharma & more... - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Biofuels, Indian pharma & more...

Feb 26, 2008

  • Biofuels have been attracting considerable interest of late given the rising crude oil prices and heightened concern about the environment. Besides achieving greater energy security, countries are also looking to reduce the use of fossil fuels to lower greenhouse gas emissions and consequently improve air quality. At present, biofuels are being produced from food crops such as sugarcane and maize to produce ethanol and from vegetable oils such as rapeseed, soybeans, palms and others. To put things into perspective, IMF states that the global production of biofuels amounted to 45 bn litres in 2006, representing slightly more than 1% of global road transport fuels. Among the largest biofuel producers, the US used 20% of its maize production for biofuel, EU used 68% of its vegetable oil production and Brazil used 50% of its sugarcane for biodiesel production.

    Besides reducing emissions, biofuels are also touted to improve engine performance without having to go in for engine modification (to a certain extent). Having said that, the increased use of food crops for production of biofuels have contributed to the surge in food prices namely, maize, wheat and soybeans amongst others and prices are not expected to ease in the near term atleast. Besides this, the increased use of biofuels has yet to have any major impact on oil prices, which continue to scale new heights. Meanwhile, poorer income nations around the world continue to flinch from the impact of escalating food prices.

    Indian companies have also unveiled plans of stepping up biodiesel production by resorting to jatropha cultivation in wastelands across India. What is prompting this step is the eagerness to reduce the dependence on coal and petroleum given the rising prices of the latter and the increased demand for energy in the country. Various energy companies are entering into joint ventures to provide a fillip to their biodiesel ventures. However, how successful are these plans going forward remains to be seen.


  • While the introduction of the product patent law in India has been touted as a boon for the MNC pharma companies to launch patented products in the country, there has not been much activity on this front since 2005. One main reason for the same could be the various issues that these MNCs have with respect to the product patent law such as definition of patentability, scope of compulsory licensing, data protection issues and the like.

    At the same time, once patented drugs do get launched in the country, pricing of these drugs will be the key factor to watch out for. It must be noted that the government is likely to subject patented drugs of MNCs to price negotiation, while those of the domestic companies could be exempted. The rationale behind this move seems to be the fact that for MNC companies, India is just one of their many global markets to recoup R&D costs, while domestic companies are likely to receive differential treatment to promote indigenous research. That said, the price negotiation will have to be transparent and the chemicals ministry will have to see if such a differentiated approach would be consistent with India's international obligations.

    In this regard, practices adopted by some other countries particularly Canada, France, Australia and some of the Asian countries and their experience in this regard need to be studied at the time of framing the guidelines. However, it is likely that the negotiation may not be based on the cost of production, but may be on the premium the product commands in any other markets, applied to the price of a similar medicine in India. This premium would be the difference between the product's price in its lowest priced market abroad and that of its closest therapeutic equivalent there.

Equitymaster requests your view! Post a comment on "Biofuels, Indian pharma & more...". Click here!

  

More Views on News

I Found My Guru. Have You Found Yours? (Fast Profits Daily)

Feb 24, 2021

In this video, I'll tell you about the need to find a guru early in your career and how I found mine.

It's the Beginning of a New Bull Phase in Smallcaps (Profit Hunter)

Feb 24, 2021

Last time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.

Why Senior Citizens Need To Choose Their Tax-Saving Avenues Thoughtfully (Outside View)

Feb 24, 2021

Senior citizens while exploring tax-saving avenues, must keep in mind these top three priorities: capital protection; regular income; and managing healthcare and retirement-related expenses well.

The Hidden Tesla in My Great Indian Wealth Project (Profit Hunter)

Feb 23, 2021

An Indian company founded three decades ago in a garage caught my attention...

Make Trading Profits All Day Long (Fast Profits Daily)

Feb 23, 2021

In this video, I'll show you how to how to profitably trade stocks, commodities, and currencies on the same day.

More Views on News

Most Popular

Intraday Trading for a Living (Fast Profits Daily)

Feb 15, 2021

In this video, I'll cover your queries on intraday trading and also share my view on how to decide stop losses and target prices.

Penny Stock Master Series: The Quest for 10X Profits in 10 Years (Profit Hunter)

Feb 12, 2021

This is first of the three part master series. In these editorials, I'll show you how to earn 10X returns from a penny stock portfolio over 10 years.

Top 5 Stocks Mutual Funds Bought and Sold in January 2021 (Sector Info)

Feb 16, 2021

A look at what India's top equity mutual funds bought and sold in January 2021.

I Would Recommend this Small-cap Stock Over Tesla (Profit Hunter)

Feb 16, 2021

Do you enjoy reading Tesla and Bitcoin stories? Here's a not so famous small-cap stock to profit from the rise of EVs.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Feb 24, 2021 (Close)

MARKET STATS