There is no official announcement yet. Concerned department has proposal to PMO like many other exciting proposals…
Last two days , the news is being flashed in ET Now/ CNBC TV and several CEO/MD of API makers are being invited to comment on this notification…
Today morning , I was listening to The MD of Granules who while welcoming the decision… Said they want more concessions going forward to become competitive to chinese player’s…
Two such suggestions have been given to Govt to consider govt land availability at a cheaper rate…allow some existing players to expand capacities in their existing facilities to avail the incentives… though they may still have the option of going for a green field projects at "proposed Bulk drug park’ …also heavy Capex required for latest technolgy for which Govt should consider some kind of concessions…
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Quite an interesting interview from Bernstein. The crux of it is that larger players (Cipla, Lupin, DRL, Sun) have built a complex generic product basket, specially in injectables and respiratories. Cipla and Lupin have spent a lot of R&D money in the past five years which should lead to product launches. Cipla has conventionally been a market leader in respiratory within India, Lupin seems to have built a strong portfolio now. DRL has a few key launches in the near term. Sun for Bernstein is a turnaround play.
Bernstein believes that these complex generics will provide more reliable cashflows instead of one time large revenues. Lets see if what they are saying plays out.
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Trump’s executive order may have very limited effect on some Indian Pharma companies says HDFC securities … name of the Indian Pharma companies likely to get affected…
Discl: I am overweight in pharma and I continue to add in decline… I may be biased …
Interesting and informative press conference earlier today. Plan seems to be on the right track.
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Some insightful tweets on Pharma Industry trends
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With regards to Trump’s executive order, Indian drug manufacturers may stand to benefit in terms of increased market access on the formulation side,
Though the enforcement of the orders before the November 3 election looks difficult because of legal hurdles and various caveats, if they go through…
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Pharma company executives, upset by Trump executive order, refuse for a meeting with Trump Administration at White house!
USA based PE fund Advent International buys controlling stake in API manufacturer RA Chem Pharma promoted by Bangalore based Microlab for a Sum of Rs1300 Crore !
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I came across two Interesting articles on API industry in India…A must read if you are interested in API stocks…I liked both articles very much though there may be some repetition. You must read both articles fully to get the right perspective…
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A Bitter Pill- Pharmaceuticals- India lost the competitive edge in manufacturing APIs-the building blocks of medicine-to China over the past two decades. Regaining it will be a challenge.
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How India API Manufacturing stacks Vs China, addressing challenges. (When you are opening the link, it may ask for log in…no need to log in… Just scroll down to read the article…)
I quote one of the paragraph in the first article which reads:
“Back in 2014 itself, the Narendra Modi-led NDA government had declared that it wanted to make Indian industry competitive in the area. In fact, 2015 was declared the year of the API with then Union minister Ananth Kumar saying the issue was a matter of national health security. Imports of APIs, though, continued to rise steadily. In 2019-20, it was worth Rs 24,900 crore, up from Rs 19,300 crore the previous year. Plans and initiatives to spur domestic manufacture have advanced at a slow pace till now”
My take from the articles-After 5 years now at least , we have woken up and declared a 7000 crore PLI scheme… “Atma Nirbhar” Which is too late, too little, a good begining though…but a long way to go in terms of Govt policy support / Political will if we want to snatch away the API leadership position from China…which is possible given our chemistry skills…
https://doctorunite.com/passthrough/microcommunity/70312/post/1508/c4a816b1f6e1061243e466d0a2333b6e
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Few blockbuster drugs losing exclusivity …
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Reference to my post above on API making in India, the “Atma Nirbhar” push now getting extended from API to Agro-chem Sector as per TV news in “ET now” which would include even financing the Agro-chem Sector @ subsidized interest rates which is internationally competitive and many more incentives being planned.
Coming back to our Pharma API, hope the report submitted by KPMG/ CII to Govt of India is fully implemented in its totality- All elements of cost competitiveness is being looked in to in line with China (the extract of the KPMG / CII report is indicated in TWO articles link given in my post). Currently , Govt support to indian API makers may be just one tenth of what China is doing for its API industry…
Ol else it is just like old wine in new bottle…Earlier, our Indian pharma companies were importing API’s from China, now most of indian API makers would import Key starting Raw material from China…
Govt need to fully support indian API makers for backward integration to make the industry cost competitive or else most of our API makers balance sheet may remain stretched with strained FCF barring a few…
The Govt needs to appreciate the chemistry skills and knowledge of companies line Granules, Laurus and provide them all assistance to build economies of scale so that they can earn huge forex for the country…
Discl: Invested in API stocks…may be biased…it is not a buy/ sell recommendation.
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I have been reading about Wuxi biologics (CDMO for biologics). They are expecting ~32% growth on revenues in the next couple of years and have grown at >50% CAGR over the last 3 years. Does anyone have insights into CDMO players like Wuxi or Samsung biologics?
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You might check Syngene in India.
My question is more specific to pure biologics players, Syngene is not a pure biologic platform. Valuations are very much different because of really high margins and strong growth in pure biologics (EV/sales of >30x for Wuxi, EV/sales of >50x for Samsung).
Syngene has focus on Biologics and Jonathan Hunt mentions it during quarterly concalls. Infact, they did mention that Wuxi is what they would like to be like. They have developed good capacity for biological manufacturing.
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Business as usual ?
I came across a couple of articles on our export import data with China. ( Links given below)
While our exports to China during April-July was 7.30 Billion Dollars (up by 31% YoY), Imports during this period were at 16.8 Billion Dollars (Down by 24% YoY)…
Is China is trying to make us happy by exporting more from India in spite of the fact that we have banned imports of many goods from China ???
And what I find from the graph, our imports from China shows a rising trend from April to July.
While I don’t have the break up of the imports, but it is anybody’s guess that majority could be some API’s which our Generic pharma players need and Key starting Raw material for API needed by most of our API makers, given the fact that we put an import ban on lot of chinese goods such as plastic toys, furnitures , some electronic goods and many more such products which were considered non-essential and made in india goods were available
While both countries continue to engage in mutual discussion to ease the Tension arising out of the Ladakh clash and as a citizen, we definitely want the relations to improve…China had responded positively on narratives from our PM- Modi on the independence day …
As an investor, we may have to take a cautious approach on pharma Sector…in which most of us have invested heavily…
China knows well that we have started working on “Atma Nirbhar” and the recent PLI scheme for API and they know we still have a long way to go for Atma Nirbhar …there may be a possibility that China may play a trick by reducing API price and increasing price of key raw material for API (on which we are heavily dependent on china) so that it becomes attractive for indian Generic players to source API from China …
On the other hand China recently imported a record quantity of food grains- highest in two decades (Corn, wheat, Soyabin ) from USA and made Trump happy…Trump appreciated and seems to have told that he personally liked the Chinese premier…
Both countries decided to double the flights between USA and China…
when the relation between two countries improve which may not happen before USA election, but we can not rule out USA sourcing API from china in such a scenario…
I may be wrong in my assessment … Appreciate your views …
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