X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 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: Wait and see! - 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?  

Pharma: Wait and see!

Dec 13, 2004

The new patent regime is closing in the Indian pharmaceutical sector in few days from now. From January 2005, it will become applicable and Indian manufacturers will not be able to bring out generic version of patented drugs. Despite the ongoing debate concerning the implications of the patent regime, we believe that such a regime is here to stay. But it may be a refined one. The salient aspects of the 3rd amendment of the patents act are:

  1. It will help India to progress into product patent regime in field of technology.

  2. It will remove the EMR (exclusive marketing rights) provisions from the 2nd patent amendment act.

  3. It will make provisions regarding ‘Compulsory Licensing’ in case of national medical emergency.

  4. It will bring in provisions regarding the extension of patent.

While these are important features, which will ensure an effective patent act in the country, there are political issues, which might hamper the smooth transition. While several section of the government is against the extension of patent clause, we believe that other issues like compulsory licensing will become clearer after the bill is passed in the parliament.

As far as implications on the domestic pharma companies are concerned, investors need to understand that a majority of the branded drugs sold in India are outside the purview of product patents. So, the Indian manufacturers will continue to sell these drugs. Here companies like Cipla, Ranbaxy, Nicholas Piramal and Cadila will take the lead, as they have a strong brand portfolio. But at the same time, the impact on the domestic companies will be more apparent beyond 2007, as new product introduction by these companies might slow down in light of the new product patent law. However, there are some domestic companies, which have started strengthening their domestic field force to keep an option of partnering with MNC companies that do not have a presence in India. Companies like Nicholas Piramal and Cadila Healthcare are well into this process.

In the new regime, MNC pharma companies are likely to benefit the most. These companies will have advantage of their strong drug pipeline of the parent majors in the long run. We do not expect MNC pharmaceutical companies to register immediate gains post 2005. Some companies are planning to immediately launch new products while some have adopted a wait and watch strategy. According to us, companies like Glaxo, Pfizer and Aventis are likely to benefit the most in this scenario. This is also because of their strong marketing network.

This apart, Indian companies will also have opportunities in contract manufacturing, contract research and co-marketing. Further, R&D initiatives undertaken by Indian pharma companies could see the launch of innovative drugs by these companies. Moreover, the potential of the global generics market, given the fact that majority of the block buster drugs are expected to go off patent in the next few years, is also a good opportunity for domestic pharma companies.


Equitymaster requests your view! Post a comment on "Pharma: Wait and see!". Click here!

  

More Views on News

Aster DM Healthcare (IPO)

Feb 10, 2018

Should you subscribe to the IPO of Aster DM Healthcare Ltd?

Dr Reddy's: Milestone Payment Drives Sales (Quarterly Results Update - Detailed)

Feb 9, 2018

US business was hit by pricing pressure although there was growth sequentially led by new product launches.

Lupin: US market Declines Due to Higher Base Effect of FY17 (Quarterly Results Update - Detailed)

Feb 9, 2018

Price erosion in generic US drugs continues but seems to be bottoming out.

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.

More Views on News

Most Popular

3 Indian Stocks with Amazon-Like Potential(Profit Hunter)

Apr 10, 2019

We have identified 3 stocks with huge wealth building potential which meet our 'Click of a Button' criteria.

This Company is Making a Big Comeback and You Can Now Profit from Its Example(The 5 Minute Wrapup)

Apr 10, 2019

How Dell got its mojo back.

This is Why the Stock of Jubilant FoodWorks Went Up 1,160%(The 5 Minute Wrapup)

Apr 12, 2019

This critical business strategy has enabled companies to scale their operations faster.

Pocketing Massive Gains with HDFC And HDFC Bank(Profit Hunter)

Apr 12, 2019

Here's how one could have generated gains of Rs 59,250 in 10 days by trading HDFC and HDFC Bank with a capital of Rs 4 lakh.

A Simple 3-Point Investing Manifesto for You the Indian Investor(The 5 Minute Wrapup)

Apr 11, 2019

A must have checklist for every investor in the Indian stock market.

More

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE HEALTHCARE


Apr 22, 2019 (Close)

S&P BSE HEALTHCARE 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS