The free-falling rupee is manna for some, and for others, a manic hunt for operating capital. Export oriented companies are hopeful of better returns but whether this will be eroded by higher input costs is another matter.
The market slow down has already forced pharma companies to pledge their shares to banks in lieu of loans to meet working capital needs. Elder Pharma (which has reportedly pledged over 95 per cent of its shares), Orchid Chemicals & Pharmaceuticals (over 80 per cent), and Wockhardt (87 per cent) are some of the companies who could be in dire straits if the currency falls even more drastically. given this reality, it is no wonder that Elder Pharma is reportedly close to selling its domestic formualtions business to Sanofi, which would settle its debts as well as allow a focus on the lucrative OTC market.
Companies which have high debts in foreign currencies, like Glenmark Pharmaceuticals which has $100 million in foreign long term un-hedged debts, could be hit but in this company’s case the repayment duration of three-four years is still manageable. Aurobindo Pharma with forex loans of around $600 million is also vulnerable while Jubilant Lifesciences, Shasun Pharma and Ranbaxy Laboratories too have significant forex loans on their balance sheets.
But on the whole the pharma industry seems quite confident of riding out these swings, as our Management cover story, ‘Rupee’s fall from grace: A blessing in disguise?’ finds out. Conditions also seem right for a consolidation drive among Indian pharma companies. The buzz is that Ahmedabad-based Cadila Health and Torrent Pharma are considering a merger but whether anything comes of these talks, is another matter. Promoters of quite a few Indian pharma companies have been looking to exit the sector but many a deal in the past few years has unravelled due to high valuations. The current scenario could be a dose of reality so that companies emerge stronger after this current storm.
With September 29 marking World Heart Day, the other major cover story in this issue, ‘Rethinking statins’, is an in depth analysis of the statins market and alternatives in the research and clinical pipeline. With heart disease causing 1 in 4 deaths among adults aged 25-69 years in India, there is no doubt that we need to tackle this risk on an urgent basis.
But besides new molecules, there is also a strong case to use existing medicines more effectively and this is where Indian companies like Dr Reddy Laboratories (DRL) seem best positioned. The results of the first study of a polypill for cardiovascular disease which were released in early September, are a testament to the late Dr Anji Reddy’s vision to provide an affordable, convenient treatment to heart disease patients in India and globally.
The proportion of participants on the polypill — a fixed dose combination (FDC) of aspirin, cholesterol-lowering and blood pressure-lowering drugs — who were taking medications regularly was a third higher than in the group receiving usual care. The polypill group also had lower blood pressure and cholesterol measurements. It is a no-brainer: better adherence leads to better clinical outcomes and this study has proved once again that while all FDCs may not be good, a rational FDC like DRL’s polypill can definitely help reduce the rising incidence of heart disease in India.
Viveka Roychowdhury
Editor
