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Friday, July 28, 2017

Torrent close to buying women healthcare portfolio of Swiss pharma major Novartis

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AHMEDABAD | Mumbai: Ahmedabad-based drug maker Torrent Pharmaceuticals is close to finalising a deal to acquire domestic women healthcare portfolio of Swiss pharmaceutical major Novartis in the country, people close to the development said.

“The total valuation of the deal would be around Rs 300 crore,” a person with knowledge of the matter told ET. “Novartis women healthcare portfolio had a turnover of about Rs 70 crore in India and the deal could be concluded within next eight weeks,” the person said.

Another person having knowledge about the deal said the two firms have already signed a business transfer agreement (BTA). Email queries sent to Torrent and Novartis didn’t elicit any response as of press time Friday.

Coming around three years after Torrent acquired branded domestic formulations business of Elder Pharmaceutical in India and Nepal for Rs 2,004 crore, the deal could help the company become the largest player in the women healthcare segment, industry trackers say.

“With this acquisition, if Torrent manages to turn around the women healthcaovartis) like it did re business (of Novartis) like it did for Elder Pharma, then the company could become number one player in women healthcare space wit hin next couple of years,” said one of the persons quoted earlier, pointing out that Torrent is already the second largest player in the segment. “The (Novartis) portfolio was the only gap considering Torrent’s hormones and after Elder Pharma acquisition,” he said.

Torrent already has hormones and calcium preparation products like Shelcal. Novartis has other necessary women healthcare related products such as anti-DUB (dysfunctional uterine bleeding), which deals with abnormal bleeding in women.As per the industry trackers, it’s a huge market as nearly 50% of women above 45 years and nearly 20% of adolescents face DUB issue.

No investment banker is involved in the deal and the companies are going ahead with it directly. The two firms already had working relations as Torrent manufactures patented insulin in Ahmedabad for Novartis, said sources.

In 2014, PE firm ChrysCapital had made investment of around $40 million in Torrent. Around the same time, Torrent acquired Elder Pharma’s domestic business, and in July last year, it bought an active pharmaceutical ingredient (API) facility of Hyderabad-based Glochem Industries for an undisclosed amount.

Shares of Torrent Pharma closed 1.78% down at Rs 1,455.50 on Friday, while shares of Novartis India gained 2.5% to close at Rs 712.35.

Mergers and acquisitions in pharma have been on a rise in 2016.According to a report by Ernst & Young, 51 deals worth Rs 4.6 billion were concluded in 2016 in the pharma sector. Industry trackers predicted that 2017 could also see several deals as many larger players are consolidating their positions and many others are looking to hive off their non-core business.

Indian Drugmakers Face Squeeze In US Healthcare Market

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Mumbai: India’s small and medium-sized generic drugmakers say the threat of tougher rules and higher barriers for outsiders in the U.S. healthcare market will force many to find a niche or focus their expansion efforts on other countries.

India supplies nearly a third of medicines sold in the United States, the world’s largest healthcare market. Cut-price generics sold by India’s small- and medium-sized drugmakers have been critical in bringing down prices there.

A more protectionist stance by President Donald Trump, with the prospect of import tariffs and the U.S. boosting local drug manufacturing, mean the operating environment for smaller generic players will get worse, executives at Indian companies said.

“If the challenges keep increasing, competition will reduce, and this could actually increase prices there,” said D.G. Shah, secretary general of the Indian Pharmaceutical Association, which represents 20 large Indian drugmakers.

J. Jayaseelan, who owns Nuray Chemicals, a maker of drug ingredients, said many Indian firms are reconsidering, or putting on hold, U.S. expansion plans.

Ajanta Pharma is one such firm. The mid-sized generics drug maker said it had no plans to scale up its U.S. business and would invest more in Asia and Africa instead.

“It’s not a major market for us right now … you’ve got to look at the risk-reward ratio,” said Rajeev Agarwal, general manager of finance at Ajanta.

The risks comes as U.S. revenue growth for these firms is falling. U.S. revenues for Indian drugmakers rose 15 percent in 2016, half the average annual growth rate of 33 percent between 2011 and 2015, ratings agency ICRA said. It expects the growth rate to fall further this year.

Consolidation among U.S. drugs distributors and a federal investigation into drug pricing have also reduced the pricing power of drugsmakers.

The U.S. drugs regulator, the Food and Drug Administration, has also banned dozens of Indian drug factories from supplying the U.S. market following inspections that found inadequate quality-control practices. Companies have invested significant sums to raise their quality standards.

Firms that want to focus on the United States will have to increase investment in higher-margin niche therapies, or products requiring specialised manufacturing, said Mitanshu Shah, senior vice president of finance at Alembic Pharmaceuticals.

“Smaller companies with a few regular products and no long-term vision for the United States won’t last,” Shah said.

Even with a vision, the U.S. market is just getting tougher for companies to operate in, said Vijay Ramanavarapu, the head of the U.S. business of drugmaker Granules India.

“You have to fight twice as hard today,” Ramanavarapu said. “It will be harder for new entrants to enter the U.S. market unless they are able to find niche areas.”

Sun Pharma says US FDA to lift import alert on Mohali drug plant

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Mumbai: India’s largest drug maker Sun Pharmaceutical Industries Ltd on Tuesday said the US Food and Drug Administration (FDA) has decided to lift an import alert on its manufacturing plant at Mohali in Punjab.

The US FDA had imposed the import alert in 2013 for violation of good manufacturing practices.

“This proposed action (by US FDA) will clear the path for Sun Pharma to supply approved products from the Mohali facility to the US market, subject to normal US FDA regulatory requirements. It illustrates Sun Pharma’s commitment to work closely with the US FDA and strive for 100% cGMP (current good manufacturing practices) compliance at its manufacturing facilities, “ the company said in a stock exchange filing.

The Mohali plant came into the Sun Pharma fold when it acquired Ranbaxy Laboratories Ltd in 2015.

Shares of Sun Pharma jumped at the announcement, closing 3.4% higher at Rs707 on the BSE, while benchmark Sensex index closed up 1.6% at 29421.82 points.

The US drug regulator will also remove the facility from the status of Official Action Indicated (OAI), Sun Pharma said.

According to details on US FDA’s website, an OAI status is given to a plant when regulatory or administrative sanctions are indicated for the objectionable conditions observed at the facility. If the violations do not justify further regulatory action, then a plant is given status of Voluntary Action Indicated (VAI).

“This is clearly a positive development but not significant. It will allow Sun Pharma to launch products manufactured at Mohali for which the company has US approval. I think most of these product opportunities would have been commoditized by now, hence we do not expect any earnings surprises,” Vishal Manchanda, research analyst at Nirmal Bang Securities, said.

Ranbaxy’s units at Dewas in Madhya Pradesh, Paonta Sahib in Himachal Pradesh and Toansa in Punjab are also under US FDA’s import alert.

Sun Pharma’s plant at Halol in Gujarat was also issued a warning letter by the US FDA in December 2015.

“Mohali facility clearance will help Sun Pharma to expand capacity, de-risk future filings and realise manufacturing synergies from Ranbaxy acquisition. It is a sentimental positive and could imply faster than anticipated re-inspection or clearance of Halol facility. However, we don’t see a material upgrade to earnings estimates,” said an analyst, who did not wish to be named citing company policy.

Cancer drug prices slashed up to 86 per cent in a year: NPPA

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NEW DELHI: Drug pricing regulator NPPA has slashed price of cancer drugs by up to 86 per cent since March last year providing relief to lakhs of patients.

There has been “a significant price reduction in cancer drug prices since March 2016”, the National Pharmaceutical Pricing Authority (NPPA) said in a tweet.

The drugs include Iressa of AstraZeneca Pharma IndiaBSE 0.42 % whose price has been bought down from Rs 29,259 to Rs 3,977, a reduction of 86 per cent and Dr Reddy’s laboratoriesBSE 0.13 %’ Grafeel – the of which price has been slashed by 41 per cent, it said.

The reduction is in the price range of 86 per cent to 13 per cent, NPPA said.

The other pharma players the prices whose cancer medicines have been reduced are Natco PharmaBSE -0.08 % and Emcure pharmaceuticals among others, it added.

In the diabetes segment also, there has been reduction in prices of the drugs, the regulator said.

“Significant price reduction in some major diabetic drugs since March, 2016,” NPPA said.

The prices have been reduced in the range of 42 per cent to 10 per cent, it added.

While prices of Glypride of Sun PharmaBSE -0.84 % Laboratories Ltd were reduced by 42 per cent, from Rs 91 earlier to Rs 53 after the revision, the drugs of other players have also witnessed reduction in the prices.

The other drugs whose prices were reduced include Dr Reddy’s laboratories Glimy, Obimet of Abott India, Cetapin of Sanofi India and Lupin’s Gluconorm, it added.

Set up in 1997, NPPA has been entrusted with the task of fixation/revision of prices of pharma products, enforcement of provisions of DPCO and monitoring of prices of controlled and decontrolled drugs.

How the NPPA has transformed itself into a watchdog with teeth under Bhupindra Singh

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MUMBAI:Over the space of a month, the National Pharmaceutical Pricing Authority (NPPA) has transformed itself into a watchdog with teeth, and it’s putting the bite on Big Pharma.

First came the crackdown on stent pricing, targeting what it said was runaway pricing in the Rs 3,600-crore market. Prices were slashed by 80-85%, hitting multinationals such as AbbottBSE 1.01 % and Boston Scientific along with homegrown companies like Translumina Therapeutics.

Then came an even bigger crackdown — the regulator said 634 drugs were suspected to be priced higher than the ceiling fixed for them under the Drug Price Control Order (DPCO). That affected companies across the board — Sun PharmaBSE 1.44 %, CiplaBSE 0.08 %, LupinBSE 0.70 %, AstraZenecaBSE 0.48 %, GlaxoSmithkline and PfizerBSE -0.87 % among others.

The man leading the charge is NPPA Chairman Bhupindra Singh, 57, who took charge at the beginning of last year.

“My job is just to set up realistic targets, prepare a plan of action and Team NPPA does the rest,” Singh told ET. “They know that I am there to take responsibility and accountability for all missed goals.”

Opinions about Singh are sharply divided, as expected, between “overzealous and overstepping” and activists who say he makes for a refreshing change after being “used to supine bureaucracy”. Still, some government officials are uncomfortable, questioning the impact of such harsh audits on the investment climate.

Following a whistleblower’s email on February 27, Singh and his 10-member NPPA team are now looking into allegations of price collusion in various brands of anti-diabetic drug vildagliptin. The drug is made by companies such as NovartisBSE -0.21 %, Abbott, Emcure and USV Pharma. The companies involved in the NPPA actions have denied any wrongdoing.

The soft-spoken Singh, an Indian Administrative Services officer belonging to the Uttar Pradesh cadre, has been busy firing off notifications after he took over, even using social media to spread the word — he’s got 800 followers on Twitter. Also, significantly, hospitals are now coming under NPPA scrutiny.

“Hospitals need to redefine their role as a ‘healthcare provider’ or a ‘distributor/dealer of stents, other devices/drugs or both,” he said in a tweet late last month. This seemed to be aimed at hospitals complaining about the stent price cuts.

The NPPA sent show-cause notices after complaints about stent prices to hospitals such as Max in New Delhi, Lilavati in Mumbai and Metro in Hyderabad. “Total 24 complaints of overcharging on stents, nine hospitals issued show-cause notices, copy of bills awaited in other cases,” Singh tweeted on March 2. Last week, a hotline was set up for patients and whistleblowers wanting to phone in complaints about shortage of stents because of the recent order.

The NPPA’s crusade comes a few months after the Niti Aayog said the pricing regulator needed to be scrapped, a move that faced criticism. That proposal now seems to have gone on the backburner. More importantly, the once-disregarded regulator gained endorsements from Prime Minister Narendra Modi during the current election campaigns.

Singh said all the allegations against him can be refuted with facts, that the stent price cap was imposed after detailed deliberations with industry.

Indian drugmakers are concerned that the NPPA isn’t toeing the line of the department of pharmaceuticals (DoP), which the regulator comes under.

“The problems have cropped up because of imaginative and arbitrary implementation of the pricing policy and unbridled turf war between the government (DoP) and the regulator (NPPA),” wrote DG Shah of Indian Pharmaceutical Alliance lobby group to Niti Aayog Vice-Chairman Arvind Panagariya on February 28. “This has resulted in unwarranted price fixation, open defiance of the government’s corrective orders by the regulator, and frustrating litigations for the industry. It has reached a stage where the industry wonders if the country has arule of law.”

This sentiment was echoed by a lawyer who represents many large pharma clients, arguing that the regulator was imposing a one-size-fits-all approach.

“I don’t think the secretary, DoP, and NPPA chairman see eye to eye,” he said. “Stents were brought under the National List of Essential Medicines (NLEM). The NLEM committee recognised that there are different kinds of stents like drug eluting, BVS (bioabsorbable vascular stents) and wanted that they be categorised and priced differently. Under the Drug Price Control Order (DPCO), there is no room for nuance, so the regulator used para 19 and put everything under it. As a result, stents like BVS, landed price of which is about Rs 2 lakh, are not available. This is bizarre.”

Paragraph 19 of the DPCO allows tBhuindrahe NPPA to set the price of any drug “in extraordinary circumstances, if it considers necessary so to do in public interest”.

AdvaMed, a lobby group for global stent manufacturers, concurred. “The singular focus on controlling ceiling price of stents, without attempting to address the larger picture and correct inefficiencies in the healthcare ecosystem will not achieve its stated benefit, in the long run,

But Singh has strong support in the opposite camp.

“He has taken a very strong step. Very few people take such steps and this should happen more often,” said Birendra Sangwan, a lawyer who’s moved court to curb stent prices.

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