Sunday, September 30, 2012

Oracle’s Ellison Says Server, Database to Challenge SAP

 
Oracle Corp. (ORCL) Chief Executive Officer Larry Ellison unveiled a high-end server with more memory and an updated flagship database to compete against SAP AG (SAP) in meeting businesses’ growing information needs.
Oracle will also sell computing power and storage, applications software, and its database as a cloud service businesses can rent instead of buying outright, Ellison said in an address to open the company’s OpenWorld conference at the Moscone Center in San Francisco.
 
“You can access all of these services across the network,” said Ellison. “It makes sense for Oracle to be in all three tiers of cloud services.”
Oracle, the world’s largest supplier of database software, is jockeying with SAP, the top business applications maker, as well as Salesforce.com Inc. (CRM) and Workday Inc. (WDAY), for the edge in cloud computing for businesses. Its revamped 12c database, the first new version in five years, will let customers move their computing jobs from data centers to the Internet, Ellison said.
The company’s addition to its Exadata line of servers, called the X3, will be able to house as much as 22 terabytes of flash computer memory and four terabytes of DRAM in a single server rack to greatly speed up business reports. That’s four times as much flash storage per rack than a previous version of Exadata, Ellison said.

‘Ideally Positioned’

“If you thought the old Exadatas were fast, you ain’t seen nothing yet,” said Ellison, wearing a suit and black turtleneck and standing before eight giant screens bearing his slides.
He said Oracle is “ideally positioned” to deliver many components of hardware and software -- including its database, application-connecting middleware and computer systems -- as a cloud computing service delivered entirely through the Internet, or with some equipment sitting in customers’ data centers.
“Oracle should be in this business,” said Rick Sherlund, an analyst at Nomura Holdings Inc., who recommends buying the shares. “Oracle has to reposition for the cloud.”
Ellison has said the 12c database will let Oracle serve multiple companies’ data-processing needs from the same information storehouse and will arrive by early next year. The company’s Exadata and Exalogic systems, plus its database, Java development tools and social media-analysis software, can be delivered to businesses as a service Oracle manages over the Internet, co-president Mark Hurd said in an interview last week.

Growing Data

Hurd, along with other Oracle executives including Ellison, will be speaking at the OpenWorld conference this week, which runs through Oct. 4.
International Business Machines Corp. (IBM), Microsoft Corp. (MSFT) and VMware Inc. (VMW) are also vying to supply more of the platform software that can help companies move to cloud computing. SAP’s High Performance Analytical Appliance uses hardware from IBM, Hewlett-Packard Co. (HPQ) and others to store data in computer memory for faster analysis.
SAP and Oracle are battling to sell products that can load more of a program’s data in memory to let businesses gain an edge by drawing insights from growing volumes of data, said Bill Hostmann, an analyst at consultancy Gartner Inc.
“People’s ability to make decisions is still based on pretty small sets of data,” said Hostmann, who has advised Oracle on its new products. “That’s what’s really driving the market.”

Cloud Shift

Oracle, based in Redwood City, California, is depending on new products and a shift to cloud services to help reverse a slowdown in growth and a stock price that has underperformed those of its rivals. Sales declined 2.3 percent in the fiscal first quarter ended August, dragged down by a drop in the hardware business acquired from Sun Microsystems in 2010.
New software license sales, a measure of freshly signed business -- tapered to 5 percent growth in the quarter, from more than 16 percent a year ago.
The new Exadata servers -- which pack computing power, storage capacity and high-speed networking into a single chassis to speed performance of Oracle’s database -- can set the company apart from competitors, Hurd said last week.
“SAP has an in-memory machine that’s a little smaller than what we offer,” Ellison said.
SAP has positioned machines running its HANA in-memory computing software as a potential replacement for Oracle databases. The machines are “a real-time platform” for analyzing data and offer a different proposition to Oracle’s, which let companies “do the same things they’ve been doing for years, only faster,” SAP spokesman Jim Dever said in an e-mail on Sept. 28.
Shares of Oracle closed Sept. 28 up less than one percent at $31.46. The shares have gained 23 percent this year, compared with gains of 35 percent for SAP and a 51 percent climb for shares of Salesforce.com.
(Source: Bloomberg)

Macro malpractice: Stephen Roach

 
The wrong medicine is being applied to America’s economy. Having misdiagnosed the ailment, policymakers have prescribed untested experimental medicine with potentially grave side effects.
The patient is the American consumer – the world’s biggest by far, but now in the throes of the worst funk since the Great Depression. Recent data on consumer spending in the United States have been terrible. Growth in inflation-adjusted US personal consumption expenditure has just been revised down to 1.5% in the second quarter of 2012, and appears to be on track for a similarly anemic increase in the third quarter.
Worse, these numbers are just the latest in what has now been a four-and-a-half-year-old trend. From the first quarter of 2008 through the second quarter of 2012, annualized growth in real consumption spending has averaged a mere 0.7% – all the more extraordinary when compared with the pre-crisis trend of 3.6% in the decade ending in 2007.
The disease is a protracted balance-sheet recession that has turned a generation of America’s consumers into zombies – the economic walking dead. Think Japan, and its corporate zombies of the 1990’s. Just as they wrote the script for the first of Japan’s lost decades, their counterparts are now doing the same for the US economy.
Two bubbles – property and credit – enabled a decade of excessive consumption. Since their collapse in 2007, US households have understandably become fixated on repairing the damage. That means paying down debt and rebuilding savings, leaving consumer demand mired in protracted weakness.
Yet the treatment prescribed for this malady has compounded the problem. Steeped in denial, the Federal Reserve is treating the disease as a cyclical problem – deploying the full force of monetary accommodation to compensate for what it believes to be a temporary shortfall in aggregate demand.
The convoluted logic behind this strategy is quite disturbing – not only for the US, but also for the global economy. There is nothing cyclical about the lasting aftershocks of a balance-sheet recession that have now been evident for nearly five years. Indeed, balance-sheet repair has barely begun for US households. The personal-saving rate stood at just 3.7% in August 2012 – up from the 1.5% low of 2005, but half the 7.5% average recorded in the last three decades of the twentieth century.
Moreover, the debt overhang remains massive. The overall level of household indebtedness stood at 113% of disposable personal income in mid-2012 – down 21 percentage points from its pre-crisis peak of 134% in 2007, but still well above the 1970-1999 norm of around 75%. In other words, Americans have much farther to go on the road to balance-sheet repair – which hardly suggests a temporary, or cyclical, shortfall in consumer demand.
Moreover, the Fed’s approach is severely compromised by the so-called zero bound on interest rates. Having run out of basis points to cut from interest rates, the Fed has turned to the quantity dimension of the credit cycle – injecting massive doses of liquidity into the collapsed veins of zombie consumers.
To rationalize the efficacy of this approach, the Fed has rewritten the script on the transmission mechanism of discretionary monetary policy. Unlike the days of yore, when cutting the price of credit could boost borrowing, “quantitative easing” purportedly works by stimulating asset and credit markets. The wealth effects generated by frothy financial markets are then presumed to rejuvenate long-dormant “animal spirits” and get consumers spending again, irrespective of lingering balance-sheet strains.
There is more: Once the demand problem is cured, according to this argument, companies will start hiring again. And then, presto – an unconventional fix magically satisfies the Fed’s long-neglected mandate to fight unemployment.
But the Fed’s policy gambit has taken the US down the wrong road. Indeed, the Fed has doubled down on an approach aimed at recreating the madness of an asset- and credit-dependent consumption model – precisely the mistake that pushed the US economy toward the abyss in 2003-2006.
Just as two previous rounds of quantitative easing failed to accelerate US households’ balance-sheet repair, there is little reason to believe that “QE3” will do the trick. Quantitative easing is a blunt instrument, at best, and operates through highly circuitous – and thus dubious – channels. Significantly, it does next to nothing to alleviate the twin problems of excess leverage and inadequate saving. Policies aimed directly at debt forgiveness and enhanced saving incentives – contentious, to be sure – would at least address zombie consumers’ balance-sheet problems.
Moreover, the side effects of quantitative easing are significant. Many worry about an upsurge in inflation, though, given the outsize slack in the global economy – and the likelihood that it will persist for years to come – that is not high on my watch list.
Far more disconcerting is the willingness of major central banks – not just the Fed, but also the European Central Bank, the Bank of England, and the Bank of Japan – to inject massive amounts of excess liquidity into asset markets – excesses that cannot be absorbed by sluggish real economies. That puts central banks in the destabilizing position of abdicating control over financial markets. For a world beset by seemingly endemic financial instability, this could prove to be the most destructive development of all.
The developing world is up in arms over the major central banks’ reckless tactics. Emerging economies’ leaders fear spillover effects in commodity markets and distortions of exchange rates and capital flows that may compromise their own focus on financial stability. While it is difficult to track the cross-border flows fueled by quantitative easing in the so-called advanced world, these fears are far from groundless. Liquidity injections into a zero-interest-rate developed world send return-starved investors scrambling for growth opportunities elsewhere.
As the global economy has gone from crisis to crisis in recent years, the cure has become part of the disease. In an era of zero interest rates and quantitative easing, macroeconomic policy has become unhinged from a tough post-crisis reality. Untested medicine is being used to treat the wrong ailment – and the chronically ill patient continues to be neglected.

Saturday, September 29, 2012

QUARTERLY PERFORMANCE OF MODEL PORTFOLIOS


The quarterly performance of model portfolios is as follows:

BLUE CHIP MODEL PORTFOLIO
 (Equity Diversified Portfolio)
  3m 6m 1 yr
NAV chg 8.13% 7.75% 17.22%
Benchmark chg 8.05% 8.67% 15.38%
Port outperf. 0.08% -0.92% 1.84%
       
HI-GROWTH MODEL PORTFOLIO
(Midcap & Small Cap Portfolio)
  3m 6m  
NAV chg 15.98% 16.25%  
Benchmark chg 6.64% 4.94%  
Port outperf. 9.34% 11.31%  

Thursday, September 27, 2012

Arvind Lifestyle pays Rs 55 crore to retail 3 global brands

 
Arvind Lifestyle Brands, a subsidiary of Arvind Ltd, one of the largest players in the apparel brands and retail space, has announced the acquisition of the business operations of British fashion retailers Debenhams and Next and American lifestyle brand Nautica in India from Plant Retail.
Announcing the acquisition, Mr Sanjay Lalbhai, Chairman & Managing Director of Arvind Ltd, said, “These acquisitions will accelerate our growth and contribute to our vision of achieving sales of Rs 5,000 crore over the next five years,”
This acquisition assumes importance as the company enters into the department store segment and also the globally fast growing apparel specialty retail segment.
"American sportswear lifestyle brand Nautica makes us the dominant player in the sportswear segment. With this move, we have taken a big step towards strengthening our position in the Indian fashion industry. We have a strong menswear portfolio, which will get further strengthened with Nautica. Debenhams and Next will substantially strengthen our position in Womenswear & Kidswear segment," he said.
The company plans to achieve Rs 500 crore revenue over the next five years from the current Rs 70 crore by investing Rs 150 crore into these three brands,” said J. Suresh, Managing Director & CEO, Arvind Lifestyle Brands Ltd.
Acquisition of Debenhams signals the entry of Arvind into the bridge to luxury department store segment. Arvind plans to increase the current number of Debenhams stores in India from two to eight in the next three years.
Arvind will enter into apparel specialty retail through Next. The company plans to increase to increase the number of Next stores from three to 12 in the next three years.
The licensing arrangement with Nautica will strengthen Arvind’s already strong position in high potential sportswear segment of the market. The company plans to set up additional 30 Nautica stores taking the tally to 41 free standing Nautica stores and 71 shop in shops in the next three years.
(Source: Business Line)

As e-commerce expands, jobs grow at a fast click

 
Even as the Indian e-commerce industry is growing at 35 per cent annually, job opportunities are witnessing a huge growth.
According to global recruitment and consulting firm Randstad, hiring is likely to increase by 30 per cent in the next two years.
Recruiters also believe that though India has been late to enter e-commerce, it is catching up fast with global players such as Amazon.com, Walmart.com and eBay.
“We see demand coming in both from Indian online start-ups and e-commerce multinationals entering India, as well as their back-office operations supporting global business. Companies are looking for people in functions such as IT, search engine marketing, analytics, back-office, marketing, online merchandising, content writers and even stylists, photographers and fashion designers,” said E. Balaji, CEO, Randstad.

Across categories

While travel portals dominated the e-commerce industry a year ago, e-tailers such as Flipkart, Myntra.com, Fashionandyou, Jabong.com and Yebhi.com are busy increasing their employee strength as they chalk out aggressive expansion plans.
Fashion portal Myntra.com has increased its headcount almost five times to 1,100 this year from a mere 200 employees last year. Fashionandyou has 1,500 employees at present and plans to add around 300-400 in the next 12 months. Flipkart's employee strength went up more than three times to 5,000 from just 1,500 last year. “This year, we plan to hire another 500. We will be focusing on a good mix of mid- and entry-level positions. However, we will be very selective in hiring some strategic senior-level management positions as well,” said Pooja Gupta, Vice-President (Human Resource), Myntra.
Technology, buying and merchandising and cataloguing are all key functions that are growing, but the biggest growth areas will be customer service and delivery. These functions are directly affected by volumes and contribute directly to customer experience, online businesses say.

Talent, pay

“Typical fresher packages are around Rs 2-3.5 lakh per annum for roles like customer service representatives. For other management and technical roles, the starting package would be anywhere between Rs 8 lakh and Rs 14 lakh per annum,” Randstad’s Balaji aid.
Manish Tayade, founder of Mumbai-based recruitment firm Reliable Manpower Services (RMS), said most businesses are going to top engineering, design and management schools on the first day of campus hiring.
“Besides technology quotient on data structures, algorithms, logical and creative thinking and problem solving capacity, recruiters also look for passion for sales, ability to convince people virtually, vision and knowledge of the market,” Tayade said.
With regard to HR, Myntra’s Gupta said the lack of ready talent is a major challenge as the industry is relatively new. She also stressed that despite this, attrition is very low.
(Source: Business Line)

India’s vaccine market may touch $871 m by 2016

 
India’s vaccine production sector is likely to expand dramatically to an estimated size of $871 million by 2016, says a report.
In 2011, it was estimated to be $350 million.
The report said it anticipates a sizeable shift in the industry landscape, as the most promising future growth opportunities for the production and sale of vaccines come from emerging economies such as India and China.
Concerns regarding the emergence of bio-terrorism and Severe Acute Respiratory Syndrome (SARS), in addition to the search for cancer vaccines, are the drivers for the fast expansion of the India’s vaccine production sector, said the new report from pharmaceutical industry experts GBI Research.
The second most populous country in the world has emerged as a major vaccine producer in recent years, focusing efforts on geographical regions where vaccines are not funded by the UN or charitable organisations, it said.
As a result, exports constituted 65 per cent of the Indian vaccines market last year, GBI Research said.
Global vaccines market expanded significantly during 2005-2011, with major pharmaceutical players such as GlaxoSmithKline, Sanofi, Merck and Pfizer posting notable profits and the US recording the largest share in the world, it noted.
In January 2008, the Indian Government cancelled the licences of three vaccine-producing units — the Central Research Institute, the Bacillus Calmette-Gun Vaccine Laboratory and the Pasteur Institute of India — on account of non-compliance with Good Manufacturing Practices.
But in April 2011, India’s Ministry of Health and Family Welfare had launched a National Vaccine Policy, stressing upon the future significance of the vaccine industry, the GBI Research said in a statement.
(Source: Business Line)

Dishman Pharma to launch 60 generic APIs in two years

 
 
Betting big on generic active pharmaceutical ingredients (APIs), city-based contract research and manufacturing services (CRAMS) player Dishman Pharmaceuticals and Chemicals plans to launch 60 generic APIs within the next two years.
"We have taken a two way approach in APIs, from being just a CRAMS player, we have now become a CRAMS and API player. We are planning to launch 60 generic APIs by the end of 2013-14 financial year. Of this, at least 30 APIs will be launched during the current financial year, while the remaining will be launched during FY14", explained J R Vyas, chairman and managing director of Dishman Pharma.
He added that the company has already filed 20 drug master files (DMFs), and another 20 DMFs are in the pipeline.

A DMF is a document prepared by a pharmaceutical manufacturer containing information on an API or a finished drug, and is submitted by the manufacturer to appropriate regulatory authority in the intended market.
Dishman currently exports APIs to countries in Europe and Latin America apart from the US and Japan.
The company has a 60-member strong team of scientists working on generic APIs.
With more and more drugs going off patent, and their generic variants coming into the market, demand for APIs that go into making these formulations is set to rise.
Dishman has recently entered into a license agreement with Liverpool-based firm RedX Pharma to use patented technology to process rosuvastatin, a class of prescription drugs that help lower cholesterol and risk of heart attacks.
Dishman already supplies several statins to different clients across the globe.
Vyas said that RedX uses enzymes technology to process statins, and this would help them reduce cost of production, and in turn boost the CRAMS portfolio.
Dishman already has a product portfolio of bulk APIs in the antiseptic, anaesthetic, laxative, anti-diabetic, anti-fungal, diuretic, analgesic, anti-ulcer segments.
(Source: Business Standard)

Reva re-engineers itself but, will it sell?

 
Reva’s NXR is a significant improvement over its predecessor. Now, it needs the right kind of push — like country-wide charging infrastructure — to make it a viable alternative.
Gone is the quaint, fragile-looking machine, gingerly weaving its way in between lumbering SUVs and smoke-belching buses. The NXR, which is the next generation Reva — India’s indigenously-produced, all-electric car brand — is scheduled to hit the roads sometime around October this year and comes across, more or less, as just another small car.
It’s much more than that, of course. The next-gen baby of Chetan Maini, Reva’s founder and current chief technology officer, has features that allow solar charging of its lithium ion batteries, is more efficient and powerful than the existing model, has two more seats and is capable of delivering a range of 100 km per charge. It also has 10 on-board computers and a host of electronics to run the car, although Maini declined to be specific about those for now, saying it was too close to the launch.

THE FUTURE OF MOBILITY
Mahindra Reva has developed a set of technologies that will be seen for the first time in its new car, NXR
Car2Home
  • It allows you to use your car’s energy to power your home, in case of emergencies
  • The on-board computer smartly and safely regulates the power to your home for several hours
Quick2Car
  • Q2C is used for public charging stations that charge the car for a range of 25 km in just 15 minutes and give a full charge in 70 minutes
  • Quick charging station connected to the car first does a pre-check and fetches vital information like percentage of charge available, km of range available and units consumed from the car to show on the display board
Sun2Car
  • Through ‘Sun to Car’, the car can get charged directly by solar energy
  • A 10-sq mt solar panel can provide sufficient energy to power the car for 15,000 km in a year
  • This system can be installed at home or office. Once installed, your car can run free of cost for life

Apparently, the battery of the car is powerful enough to power a house with a TV, two fans and two lights for a day when there is a power failure. Plus, its operating and maintenance costs are exceedingly low. The car has already received positive reviews at several motor shows, including the ones at Frankfurt and Delhi.
COST OF OWNERSHIP: PETROL VS ELECTRIC CAR
FeaturesPetrol car (Maruti Alto)
(On-road Bangalore)
Mahindra REVAi Classic
Purchase priceRs 3.51 lakhRs 4.87 lakh
Cost of petrol/
Cost of charging
Rs 76/litre6 hours/9 units (avg Rs 4/unit)
Mileage15-16 km/litre80 km/charge
Service costRs 1,500/5,000 kmRs 1,000/annum
Seating Capacity5 adults4 (2 adults & 2 children)
Speed range0-140 km/hr80 km/hr
Auto transmissionNot availableStandard feature

A new brand
This time around, Maini has delivered the Reva from the stables of Anand Mahindra — hence the new name, Mahindra Reva. Mahindra bought a 55 per cent stake in the company last year and, thanks to a recent Rs 100-crore investment by the Mahindra group, the company has built a new manufacturing plant with a capacity of 30,000 units per annum at Bommasandra, near Bangalore, which is 35 per cent fuelled by solar energy.
According to Maini, after the acquisition, the Mahindra group has contributed significantly in terms of enhancing the R&D budget, an efficient supply chain and car finance systems. Mahindra has also provided an efficient testing and validation system, and expertise in building the new manufacturing plant. Equally important is the fact that the number of dealerships has gone up from two to 15. It will be increased to 50 by March 2013. The company is looking at opening showrooms for electric cars in Mumbai, Pune, Kerala and Rajasthan in a phased manner.
The car was the largest-selling model in the world until two years ago, when Nissan entered the fray with the Leaf. Yet, being one of the largest sellers of electric cars in the world, while impressive-sounding, doesn’t amount to much. In the past 11 years, only 4,600 Revas have been hawked, of which 3,000 are in India. This is the basic dilemma facing Reva’s founder Maini, who, after seven years of toil, first launched the Reva on May 11, 2001.
“We, at Reva, had some great technology and IP with an experience of running some 200 million kms world-wide,” says Maini. “The platform was ready for us and we needed lot of money and a strong distribution network to make it big on the world stage. This has been put in by the Mahindra Group, and we now have a strong distribution network and wherewithal to penetrate the market in a big way,” adds Maini.
Waiting for a green light
But the question is, whether India, never mind the world, is ready for electric vehicles in the first place.
The electric vehicles (passenger cars) industry, globally, is estimated to be a tiny 100,000 units by the end of 2012. Currently, Nissan leads the market with the electric Leaf in Japan, the US and Europe, with about 40,000 units sold by the end of 2012. Nissan is ramping up the capacity to about 100,000 units by adding two new manufacturing sites in the US and the UK .
China’s adoption of electric vehicles is way ahead of other countries, with an estimated 100 million currently on the roads, and around 30 million produced annually, the majority of them being two-wheelers. This has been possible, thanks to strict municipal laws in certain provinces that have banned pollution-spewing ones. However, the market for electric cars is still in its infancy, so, it’s unclear what the future holds for Reva in India. India doesn’t even register on the electric car map, producing a few hundred thousand electric two-wheelers a year at best. Here, infrastructure, such as charging stations is completely absent, impeding the growth of the industry.
There’s hope, though. In December 2010, the Ministry of New and Renewable Energy announced a 20 per cent subsidy on electric cars. Subsequently, the-then Finance Minister Pranab Mukherjee announced the setting up of a national mission on hybrid and electric vehicles in his Budget for 2011-12. Very recently, the National Council on Electrical Mobility has recommended to the government that a Rs 23,000-crore programme be launched to promote the electric vehicle industry that includes two-wheelers and hybrid vehicles. At the Society of Indian Automobile Manufacturers annual conference, Minister of Heavy Industries & Public Enterprises Praful Patel announced that the Prime Minister would soon launch the national programme.
Electric man
This is good news for Maini, who has been a crusader for electric vehicles for a long time.
He first launched his company in 1994. Armed with a bachelor’s degree in mechanical engineering from the University of Michigan, with a focus on solar electric vehicles, and a master’s in mechanical engineering from Stanford University, where he focused on hybrid electric vehicles, Maini’s future in the electric auto world was a foregone conclusion. At Michigan, he was one of the leaders of the solar car team that won the GM Sun Race in the US and was placed in the top three at the World Solar Challenge in Australia in 1990. Racing 3,000 kilometres across Australia without burning a drop of petrol inspired Maini to focus on creating affordable zero-emission mobility solutions through advanced technologies.
This makes Maini not your average CEO. He is someone who can talk technology with the best of the fraternity, having registered patents in energy management systems for electric vehicles, presented technical and keynote papers on electric vehicles globally and published papers in several international journals. He also has relevant industry experience, having worked for General Motors as well as Amerigon, where he was responsible for all electric vehicle programmes and where the REVA project was initiated .
The future
Maini feels that about 10 per cent of the total car market in India would comprise electric cars by 2020. The total car market is expected to be in the range of at least six-seven million vehicles by then. He is confident of selling at least 6,000 cars per annum, starting from next year.
“We will initially focus on the domestic market for six to nine months. Later, we will start exporting the new model, NXR, to European countries. We will utilise the full capacity of the plant in three years’ time,” Maini says.
Abdul Majeed, partner, PricewaterhouseCoopers, a research firm, thinks that reaching the 6,000 units sales target set by the company would depend a lot on the cost of the car, infrastructure and how fast the consumer changes his perception about the electric car. “The cost of the car would be a major deterrent for the customer to buy the car. The Indian car buyer is very cost-conscious and he will not shell out over Rs 5 lakh to purchase the car. Added to this, there is no proper infrastructure like charging stations to charge the car on the go.”
Nevertheless, the electric vehicle market in India is estimated to reach six-seven million vehicles by 2020 and if Reva, despite its current anaemic sales, succeeds with the NXR, it is assured of being a dominant player in the market by then.
(Source: Business Standard)

The booming business in biosimilars

 
While conventional generics are expected to face competition and pricing pressures in most developed markets, Indian pharmaceutical companies have already started gearing up for the next big thing — biosimilars. These are generic versions of biological medicines that depend on the same mechanism of action, and are used for the same therapeutic indication, as the innovator product.
Various drug makers, such as Dr Reddy’s Laboratories, Cipla, Lupin and Wockhardt, are all set with their plans to cash in on the opportunity. However, experts suggest that to take advantage of it, these companies need commitment, along with a well-charted strategic plan, investment and technical synergy because biosimilars is a long-term game, with many hurdles on the way.
The opportunity
The biosimilars industry, globally, has been growing stupendously. According to market estimates, the global market for such drugs is seen at around $30 billion and at a compound annual growth rate of over 50 per cent during 2010-15. This growth is driven by two key events: Upcoming patent expiries of leading biologics and a financial crisis coupled with increasing health care costs that has required systems in almost all developed countries to look for low-cost alternatives.
THE NEW WAVE
Diseases such as cancer and diabetes will be key areas for biosimilars
Core therapy areas for biologics (MAT 12/2010)
Market ($ billion)
Insulin15.9
Anti-TNF15.8
Oncology (MAb)12.5
EPO7.6
Multiple sclerosis7.3
CFS-G5.0
Blood coagulation3.1
Ocular antineovascular2.0
Antiviral (no-HIV)1.5
Others16.5
Source: IMS Health

While contribution of innovative biologics is continuously increasing, compared to the total pharmaceutical branded sales, a number of top-selling biologic brands such as Herceptin, Enbrel, Humalog, MabThera, Remicade and Aranesp are expected to go off-patent over the next five years. This will open up a wealth of opportunities for companies developing biosimilars.
“After several years in the slow lane, important changes are driving new momentum in the market for biosimilars, paving the way for their accelerated growth over the next decade and beyond,” a recent report by IMS Health says.
According to Biocon General Manager - Business Strategy & Program Management Paul Vazhayil Thomas, biosimilars are also an important part of harnessing the growth potential of the emerging markets. “After its history of success with developing and manufacturing small molecule generics for the emerging and developed markets, it’s natural for Indian companies to look to biosimilars as an avenue for future growth,” says Thomas. Biocon is one of the leading players in biotechnology and an early Indian entrant into the sector. The company is building a state-of-the-art facility in Malaysia to supply insulin for the global market.
Experts also say that the burgeoning aging population and diseases like cancer, diabetes and rheumatoid arthritis will spearhead this new wave of biosimilars.
The India action
Recognising the opportunity, India has already taken its first step forward to tap the emerging opportunity in the biosimilars’ space. While almost all major Indian drug makers have outlined plans, identified products and set aside investment budgets to develop a robust product pipeline, some have even started rolling them into the market. For instance, Dr Reddy’s Laboratories has already launched a few of its significant biosimilars in emerging markets. The current biosimilars portfolio of Dr Reddy’s Laboratories constitutes of filgrastim, peg-filgrastim, rituximab and darbepeotin alfa, which have commercial presence in 13 emerging countries. “Soon, I expect to see Dr Reddy’s biosimilars entering developed markets,” Chairman K Anji Reddy says.
On the other hand, companies like Cipla are making huge investments in India and outside to acquire manufacturing facilities and potential product pipelines in the biosimilar segment. The company has not only acquired facilities in India and China to develop biosimilars, more recently, it has also rejigged some of its investments in China to divert more funds towards biosimilars.
Similarly, Wockhardt and Lupin have made their foray into the niche segment. While Wockhardt is among the early entrants and has developed insulin and analogues, Lupin is now on its way and plans to soon launch its first of two biosimilar drugs for oncology in India by the end of this year. The company currently has a total of 10 proteins in different stages of development.
The Department of Biotechnology, along with the drug regulator, has also got into action and had recently floated draft guidelines for biosimilar drugs. The proposed norms outline specific requirements for pre-marketing and post-marketing data, apart from guidelines for pre-clinical and clinical trials for biosimilars. The move is aimed at upgrading and maintaining the quality of biosimilar products that are manufactured in India.
Hurdles
However, experts point out that various challenges remain. “For new entrants, biosimilars pose very different challenges to those presented by small molecule generics, with more demanding requirements in terms of clinical development, market access, manufacturing and sales and marketing capabilities,” the IMS report says.
According to Thomas, though biosimilars hold the potential of providing higher margin and higher growth revenue streams than traditional small molecule generics, achieving regulatory and market success will require diligence and very strong technical skills. Agrees Praful Bohra, senior analyst, Nirmal Bang Securities. “Though a lucrative opportunity, it is not easy to be successful in this venture. A company would not only need huge investments but also dedicated manufacturing facility and technical expertise to make a mark and the payback period is still long,” sayd Bohra.
Developing a biosimilar requires significant investment, sophisticated technologies and clinical trial expertise. Unlike conventional generics, where companies have to prove bioequivalence of their drug as compared to the original one, in the case of biosimilars, pharmaceutical companies have to conduct clinical trials to get approval.
According to the IMS report, the average development cost for biosimilars ranges from $100-250 million if plant development cost is included.
(Source: Business Standard)

Bharti Walmart finds real estate costs a challenge for retail business foray

 
Bharti Walmart, the joint venture between Bharti Enterprises and Walmart Stores Inc, views limited availability of real estate space coupled with high real estate costs as one of the major challenges before its Indian retail foray, said a top official.

This is in the backdrop of government's restrictions on foreign direct investment (FDI) into multi-brand retail sector wherein the MNC retailers are allowed to open stores only in those cities with a minimum of 10 lakh of population.

Bharti Walmart also sees bad supply chain environment in big cities as another key challenge before its retail foray in view of restrictions on inter-state movement of goods, which could be addressed only through early introduction of goods and service tax (GST).

Talking reporters in Hyderabad on Wednesday after launching Bharti Walmart's wholesale store, 3rd in AP and 18th in India, Raj Jain, Walmart India president and Bharti Walmart MD & CEO, said the joint venture partners hope to firm up their strategy for retail foray in 4-6 weeks.

Jain said the strategy includes working out equity structure for the retail joint venture among the partners who currently hold equal stakes in the wholesale venture. The partners hope to roll out their first Indian retail store in 12-18 months, he said, adding that it was little early for them to announce the retail investments as the policy was very new.

"The largest challenge has to do with real estate in large cities where FDI has been opened up. Unfortunately, the availability and cost of real estate in India is very high and we are a low price retailer. If we pay too much of rentals, we cannot offer great prices to our customers," said Jain.

Jain has urged the government to look at urgently implementing and ensuring consensus on goods and services tax (GST), which would allow free inter-state movement of goods. The third key challenge before the MNC retailers was to train and provide meaningful employment to local population, he said.

While saying that restricting the MNC retailers to cities with 10 lakh of population coupled with few states would affect their business prospects, Jain said there is still a huge market available in India for the global retailers in the states that welcomed FDI. He said the government wanted Bharti Walmart to make a fresh application with the FIPB for a separate company for their retail foray.

On the government's move to allow FDI in retail sector only in those states that had welcomed it, Jain said it was a calibrated and cautious approach in the backdrop of concerns expressed by certain political parties and other constituents. "The government is asking us modern retailers, both foreign and Indian, to demonstrate that we can make a meaningful difference to the life of consumers, farmers and small manufacturers. That is good challenge and we are ready to accept the challenge. Once we demonstrate that it has positive impact on everybody and no negative impact on the small shop owners, I think the governments in other states will open up."

Citing the example of Andhra Pradesh where Bharti Walmart claims to have brought in a lot of benefit through three wholesale stores and commitment for huge investments in retail stores as well, he hoped the adjourning states would also embrace the FDI investments into multi-brand retail sector.

On the wholesale stores, Jain said Bharti Walmart plans to open two more stores in AP and five in the country this year and 10 stores a year over the next two years across the country. Upbeat over the business prospects in AP, Bharti Walmart has launched its private label products for about 400 items, expecting a healthy revenue contribution from private label business.
(Source: Economic Times)
 
 

Tata Sons' Infiniti Retail buys Woolworths Wholesale India for Rs 200 crore

 
Infiniti Retail Ltd, a wholly-owned subsidiary of Tata Sons, today said it is acquiring Australian retailer Woolworths' wholesale arm in India for Australian dollar (AUD) 35 million (about Rs 200 crore).

The acquisition comes in the wake of the Australian firm deciding to exit the specialty consumer electronics category and divest the business in Australia and New Zealand as well, apart from India.

Post the completion of the transaction, Infiniti Retail, which operates the Croma retail chain will merge Woolworths Wholesale (India) Pvt Ltd with itself.

"Over the last six years we have had an excellent relationship with them and when they were exiting the business we were only happy to take over," Infiniti Retail Ltd Managing Director & CEO Ajit Joshi said.

Woolworths Ltd had entered into a relationship with the Tatas in 2005 under which it provided wholesale support to Infiniti Retail's Croma chain of electronic goods and durables stores in India.

When asked about the valuation of the deal, he said: "This will be AUD 35 million. Tata Sons has invested Rs 220 crore for this acquisition. The remaining portion of the funding will be used for our expansion."

With the latest funding, Tata Sons' investment in Infiniti retail has gone up to Rs 700 crore from Rs 480 crore earlier, he added.

As part of the acquisition, which is expected to be completed with a week's time, Joshi said 93 employees of Woolworths Wholesale (India) will be on the rolls of Infiniti Retail.

"What we gain from the acquisition is that we will be getting trained people for sourcing. They were running seven warehouses for supplying to our Chroma stores, which will now be run by us," he said, adding there would not be any retrenchment of employees.

Commenting on the development, Woolworths Wholesale India Pvt Ltd Indian Chairman Ramnik Narsey said: "Both parties entered into this venture with the intention of merging the wholesale and retail businesses once FDI regulations were relaxed."

He added, "However, with our decision to exit the consumer electronics specialty store sector in Australia and New Zealand, we have now decided to sell the wholesale business in India to Infiniti."

Infiniti Retail runs a chain of stores selling consumer electronics and durables across India under the Chroma brand. it has a total of 85 stores at present.
(Source: Economic Times)

Global sales of computers, smartphones and tablets are surging: Study

Global sales of so-called smart connected devices - computers, smartphones and tablets, rose sharply in the past quarter, driven by smartphones and tablets, a survey showed on Wednesday.

The IDC report said shipment reached 267.3 million units in the second quarter, a 27.4 per cent increase year-over-year and a 2.8 per cent rise from the prior quarter.

On a revenue basis, the total was $131.5 billion worldwide, up 16 per cent from a year ago but down 2.7 per cent from the past quarter.

IDC projects a growth rate of 14 per cent for the devices through 2016. Smartphones already represent over 59 per cent of the category and will grow to 63 per cent in four years.

Tablets will rise from around a 10 per cent share this year to 13 per cent by 2016, reducing PC share from 31 per cent to 24 per cent, IDC said.

"The recent shipment data clearly demonstrates that we have fully entered into the multi-device era, where individuals are buying and using multiple devices per person, most often with different combinations of operating systems," said IDC's Bob O'Donnell.

"The implications of this development on application developers, device makers, Web service providers, businesses, and even individuals is profound."

IDC says the worldwide total unit shipments for smart connected devices will reach nearly 1.2 billion in 2012, and top two billion units in 2016.
(Source: Economic Tumes)

Unilever takes HUL strategies like small packs, cheaper variants to developed markets

 
During a 2009 India visit, Paul Polman, CEO of Anglo-Dutch consumer goods major Unilever, couldn't conceal his delight with the Indian subsidiary's strategy of offering brands with multiple price and packaging options, helping consumers trade down or up depending on the state of the economy.

"If we had that (such options) in the United States, there is no reason why we would be hit in a recession. We have seen that we tend to do well in markets that have a wide portfolio of brands in a category. So, we are trying to do the same in other markets," Polman had said.

Three years on, the UnileverBSE 1.73 % CEO's words are ringing true in developed markets. The home & personal care and foods giant is now dipping into the sales strategies being deployed by outposts in developing and emerging (D&E) markets, such as India's Hindustan Unilever LtdBSE 1.73 % (HUL), to appeal to recession-ravaged consumers in the US and Europe.

These include selling smaller pack sizes, affordable variants of best-selling brands for the developed world's bottom of the pyramid consumer, and single-serve sachet variants.
Unilever takes HUL strategies like small packs, cheaper variants to developed markets
Company officials say consumers in developed markets plagued by unemployment and shrinking disposable income are displaying similar habits of thrift as those in developing markets.

The maker of brands such as Axe, Dove, Knorr and Lipton is selling small packs of its brands in markets such as Spain, Greece and the US. In Spain, for instance, Unilever sells Surf detergent in packs offering five washes, and offers mashed potatoes and mayonnaise in small packages in Greece. It has also launched a low-cost brand for tea and olive oil for the euro markets.

Confirming the move, a Unilever spokesperson said: "We have 'reverse-engineered' products from D&E markets - where we have big, long-established businesses - starting with a price point that people can afford and then working our way backwards along the supply and manufacturing chain to make sure that we can make it a profitable business model. We know that this works as a way of meeting the needs and aspirations of consumers who struggle to make ends meet - be that through low-price sachets of shampoos or basic bouillons."

Across Europe, Unilever has noted that the recession drives more consumers to packed lunches and home-baking. The company has now introduced new baking products like Stork baking liquid as an option to the more expensive butter as well as in packs that can be re-used as lunch boxes.

The spokesperson also points out that Unilever runs marketing campaigns on mayonnaise that seek to inspire people to make the most of their leftovers. "Groups of consumers see value differently. The 'cash strapped' are really about spending the least out of pocket as possible; whilst 'smart shoppers' might be looking for the best price per portion; and 'bargain hunters' the best possible promotional deal," explains the spokesperson.
 
One way Unilever is trying to meet consumer needs is by positioning specific brands as value-for-money alternatives. Example: the spreads portfolio has 'I can't Believe it's not Butter' in the United Kingdom, Homa in Germany and Delma in Poland. Unilever is also rolling out Saga, a strong value-for-money tea brand in central European markets.

The consumer goods giant has also dramatically increased the number of products that retailers can choose to sell at euro 1 or £1. In tea, for instance, there's PG Tips One-Cup and in dressings there's a 450-mg jar of Hellmann's Salad Mayonnaise.

Within the Knorr Bouillon range, Unilever has launched Knorr Economica with an entry-level stock cube that's priced some 60% lower than the normal line. Another strategy involves offering more at an affordable price: like ice-creams in mega packs, large jars of mayo, and PG Tips in '240 Tea Bag' formats.

Much of what Unilever is replicating in the developed world has originated in India. For instance, HUL had launched a sachet blitz across such power brands as Close-Up, Pepsodent, Sunsilk, Ponds, Vaseline, Brooke Bond Taj Mahal and Bru to increase product penetration at the bottom of the pyramid.
Unilever takes HUL strategies like small packs, cheaper variants to developed markets

However, a relatively smaller player, CavinKare from the South, had a huge role to play in ushering the sachet revolution as a strategy for low-unit pricing to drive sales at the low end.

Unilever is now busy taking such lessons from D&E markets - which contribute roughly 53% to the global turnover - to a developed world that's teeming with bargain hunters and value seekers.

Innovations that add value, particularly at the lower end of the price spectrum, are being shipped to developed markets.

What we have been able to do better as a business is take some of the techniques we use in one part of the world and apply them where they are appropriate elsewhere," adds the Unilever spokesperson.

Kannan Sitaram, operating partner at India Equity Partners, a New York-based private equity firm, says with Unilever adopting value-for-money strategies in the developed world, the bottom of the pyramid term has now got a new dimension.

"Bottom of the pyramid does not mean poor consumers; it includes those who want a particular value at a price, across categories."
(Source: Economic Times)

Mobius Bullish on China Coal as Valuations Rise From Lows

 
Chinese coal stocks are rebounding from their cheapest levels on record as investors including Mark Mobius bet that demand for the fuel will recover as winter approaches and inventories are trimmed.
The CSI 300 Energy Index, which gets 75 percent of its value from coal producers, has dropped 15 percent in the past six months, as prices of the fuel sank to the lowest level since October 2009. That’s more than the 8 percent slump in the wider CSI 300 Index. Shares of the four biggest coal miners may gain an average 25 percent over the next year, according to data compiled by Bloomberg.
 
These companies are not only mining but also producing power and the demand for power is insatiable in China and everywhere else in the world,” said Mobius. The Hong Kong-based executive chairman of the Templeton Emerging Markets Group, which manages about $40 billion in assets, said he’s “bullish” on coal companies.
Energy stocks trade at 11.2 times estimated earnings, after touching 10.2 times on Aug. 31, the lowest level since at least 2007, based on weekly data compiled by Bloomberg. Coal prices have stabilized and may recover in the fourth quarter, according to China International Capital Corp., the top-ranked brokerage for China research by Asiamoney magazine, and UOB Kay-Hian Ltd.
Coal demand has weakened as China’s economic growth moderated, hitting 7.6 percent in the three months ended June, the slowest pace since 2009 and a sixth quarterly deceleration. Gross domestic product may cool to 7.4 percent this quarter before rebounding to 7.7 percent in the fourth quarter and 7.9 percent in the first period of 2013, according to the median estimates in a Bloomberg News survey.

Falling Prices

Ten consecutive months of contraction in manufacturing, as measured by a purchasing managers survey released by HSBC Holdings Plc and Markit Economics, has also eroded downstream demand for the fuel and helped drive the average benchmark price for China’s power-station coal to as low as 627.5 yuan ($99.20) per ton, according to weekly data from the China Coal (601898) Transport & Distribution Association.
Prices, which were last at 630 yuan per ton on Sept. 23, may be poised for a seasonal rebound. Chinese thermal-coal prices have gained in September and October in each of the past three years. They fell in 2008 amid the global financial crisis.
“Demand for thermal coal would certainly increase as winter nears, and it would be a good signal for the industry,” Wang Cheng, a Shenzhen-based analyst at Ping An Securities Co., said Sept. 5 in a telephone interview.

‘Meaningful Recovery’

Coal prices may stage “a meaningful recovery” late this quarter or in the fourth quarter as the economy stabilizes and after companies cut output, according to Cai Hongyu, an analyst at CICC. Prices may rise 3 percent in the fourth quarter to 650 yuan as utilities increase stockpiling amid a drop in supplies, Helen Lau, UOB’s Hong Kong-based analyst, said in an e-mailed note Sept. 20.
China Shenhua Energy Co. (601088), the nation’s biggest producer of the fuel, added as much as 2.3 percent to 23.03 yuan in Shanghai trading today. The stock has dropped 10 percent over the past six months and reached the lowest level in more than two years this month.
The company’s net income is forecast to climb 3.4 percent in 2012 to 47.2 billion yuan, and may rise 5.6 percent to 49.9 billion yuan in 2013, according to data compiled by Bloomberg.
Shenhua Energy is looking to buy more coal-fired power plants in developed areas and is speeding construction of some projects including extending the capacity of its Heidaigou and Ha’er Wusu mines, Company Secretary Huang Qing said on Sept. 11 in Hong Kong. The company is able to run its mines profitably even as coal prices fall, and expects prices to rebound to about 650 yuan a ton in the fourth quarter, Huang said.

Opportunity to Expand

“They will be growing and they are expanding overseas as well,” said Templeton’s Mobius, whose funds currently hold shares of Shenhua, Yanzhou Coal Mining Co. (600188) and China Coal Energy Co. “The slowdown that we’ve seen in global markets means there’s an opportunity for these companies to buy mines at low cost.”
All 26 analysts tracking Shenhua’s Shanghai-traded A-shares have the equivalent of a buy rating on the company and an average 12-month share-price forecast of 28.12 yuan, up 25 percent from yesterday’s close, according to data compiled by Bloomberg.

Datong, Yanzhou Coal

China Coal, the second largest, and Datong Coal Industry Co. may gain 21 percent, and 14 percent, respectively, according to the analyst forecasts. Yanzhou Coal shares are forecast to surge 38 percent, the data show. The stocks each gained at least 1 percent today.
A rebound may be limited as the economy struggles to recover from the slowest expansion in three years and the government encourages alternative energy use to cut pollution.
Hydroelectric generation climbed 48 percent to 94.4 billion kilowatt-hours in August, following a record number of typhoons in China. Thermal output slid 6.3 percent during that month, according to the China Electricity Council.
“It wouldn’t be good to invest in the coal industry in the coming six months,” He Wei, an analyst focusing on the coal industry at Bocom International Holdings Co., said in a Sept. 6 telephone interview. “The unexpected slowdown of the economy has led to severe problems of overcapacity, while demand is decreasing.”
Those concerns may already be reflected in share prices. Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., sold shares of coal companies earlier this year and is now optimistic on the industry in the next three months.
“The destocking cycle is shorter than other industries, and the performance would bolster its growth,” Wu, whose company oversees $280 million of assets, said in a Sept. 12 telephone interview. “The price of coal will increase and the share prices will rise.”
(Source: Bloomberg)