It is no surprise that noted investor Mark Mobius finds emerging markets especially BRIC very appealing when it comes to investing. But India really seems to have caught his fancy. In fact, he is of the view that India's shares may outpace other emerging markets as the country's economy strengthens. What stands in India's favour is the fact that unlike companies in the US and Europe, most Indian companies have healthy balance sheets and strong cash flows. He believes that the government has done a good job in managing the economy through the current global crisis. However, these BRIC nations could face volatility in the short term although they are expected to do well in the long term.
In India especially, stockmarkets have considerably run up in the last one year. Although the indices are not in bubble territory yet, valuations of many companies appear stretched. Investors will have to be all the more vigilant while making their stock picks. While good managements and strong business prospects are certainly the most important criteria, giving due importance to valuations is also necessary. As Warren Buffett has said, "Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid."
Big Pharma's race for generics intensifies
Given that there is intense competition and brutal pricing pressure in the global generics market, acquiring scale has assumed paramount importance. Little wonder then that when any generics company comes up for sale, the existing ones make a beeline to acquire the company on the block. But now the race for acquiring generic companies is no longer restricted to other generic players alone. Big Pharma (namely the world's biggest innovator companies) has also joined the fray. Take the case of the German generics company Ratiopharm for instance. This company is being put on the block by the Merckle family to repay debt.
Thus, while global generics companies Teva and Actavis have evinced interest in buying this company, the global pharma company which is also said to have entered the bidding process is none other than the world's largest pharma company Pfizer. The latter is said to have bid as much as US$ 4.08 bn for Ratiopharm. As reported on Bloomberg, in the event that Pfizer is successful, the company's generics business would touch US$ 11 bn. This would be close on the heels of Teva, which is the world's largest generics company with revenues of US$ 13.9 bn.
Just a few years back, global innovator companies looked down upon generics companies as they made cheaper versions of their branded drugs and considerably dented the former's revenues and profits. But these innovators also had to confront the reality that their research pipelines were drying up, many of their blockbusters were on the verge of losing patents and governments across the world were increasingly favouring generics. So Big Pharma has entered the generics arena, either through acquisitions or partnerships, to capitalise on opportunities especially in the branded generics market. Indeed, the action in the global generics space is beginning to hot up.