X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Pharma MNCs: Patent protection or growth? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • May 6, 2000

    Pharma MNCs: Patent protection or growth?

    What has been hampering the valuation of multinational pharmaceutical stock valuations so far is the absence of topline and bottomline growth. This is partly due to the slowdown in overall formulation market to 9.2% against 15–16% growth last year. Another key reason for the slowdown in MNC growth numbers is the fact that almost 55% to 60% of revenues accrue from products under the Drug Price Control Order (DPCO)

    One way out for the MNCs could be the introduction of new products into India. For instance the product portfolio of Glaxo India is quite different from its international’s parent’s portfolio. While the parent is a leader in the anti–asthma segment with a 31% share in the global market, its Indian subsidiary gets less than 5% of its revenues from respiratory drugs. Similarly while anti–bacterial drugs contribute around 10% to the parent’s turnover, in India it amounts to a fourth of the company’s turnover.

    Therapeutic Areas Glaxo Plc Glaxo India
    Respiratory 29% 2%
    Viral Infections 19%  
    CNS Disorders 16%  
    Bacterial infections 10% 26%
    Gastrointestinal 8% 7%
    Oncology (Anti–cancer) 6%  
    Dermatological 3% 18%
    Cardiovasculars 3%  
    Anaesthesia 1%  
    Others 5%  
    Vitamins/Minerals   18%
    Anti–TB   2%
    Anti–allergics   3%
    Expectations, Nasal congestions   7%

    % represents approximate contribution to FY99 turnover

    One reason that has been advanced for the difference in product portfolio is the difference in disease profiles between a tropical region and the temperal region. However, India is a very big market for viral infections (which include AIDS) and respiratory diseases, treatment for which contributed almost 48% to Glaxo Wellcome’s turnover. Similarly, the lack of purchasing power has been touted as another reason for the reluctance on the part of the MNCs to introduce their top of the line products. However if one sees the growth numbers of companies highly dependant on antibiotics vis-à-vis those which are relatively less dependant it is evident that the latter have done much better of late

    The reluctance for the introduction of new products by MNCs seems to stem from an apprehension that their products would be copied and they would rather wait for the patent law to be in place. How long would investors have to wait for growth prospects in MNCs to improve only the government (which can relax the DPCO) or the international parents of these companies (who can introduce new products) can tell?

     

     

    Equitymaster requests your view! Post a comment on "Pharma MNCs: Patent protection or growth?". Click here!

      
     

    More Views on News

    Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

    Aug 14, 2017

    A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

    Lupin: Bigger Challenges or Bigger Margin of Safety? (Quarterly Results Update - Detailed)

    Aug 14, 2017

    GST impact coupled with price erosion in US leads to lower profits for the quarter.

    Dr Reddy's: US Pressure Continues to Haunt (Quarterly Results Update - Detailed)

    Aug 8, 2017

    Profits plunge due to higher raw material costs.

    The Power of 5 Minutes (The 5 Minute Wrapup)

    Jun 16, 2017

    Here's what you can expect from The 5 Minute Wrapup in the coming months and years.

    Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter (Quarterly Results Update - Detailed)

    Jun 23, 2017

    Net Profit lower due to exceptional items in the previous year.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE HEALTHCARE


    Aug 17, 2017 (Close)

    S&P BSE HEALTHCARE 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS