Wednesday, October 20, 2010

THE “UN”COMMONWEALTH GAMES 2010 : Dated 21-10-2010

THE “UN”COMMONWEALTH GAMES 2010

Finally after the intervention of the Prime Minister with his crack team we made it possible at the last minute to salvage the reputation of the country in just concluded Commonwealth games in Delhi which had seen brought much of the disrepute to India on the run up to the games. We have indeed made a grand show with opening, during the entire games of 11 days as well as the closing and the world media is praising us. But is it not so discomforting that India can’t execute successful games (some say that it’s the first time a 3rd world country has hosted such games, so what, but if we were awfully adequate for the preparations then what was the need to pay 1 Lakh US$ to every participating nation as facilitation fee for getting the honours to New Delhi to organize the 2010 games?) it need the intervention of no less than the Prime Minister and all the ministries coordinating, then ably aided by media, event and IT infrastructure, people in Delhi, the Security and intelligence system, Home ministry, the enterprising people of Delhi and finally the players themselves who braved all odds and were present in full strength to make commonwealth a grand success for India. Consider that sponsors deserted last minute(even PSU companies, as the ministry had directed them), some big names too from countries like New Zealand, England, Canada, etc, had dropped their names from participating, tourists were dumping India due to dengue & security threat, unprepared ness of the games village till the last minute, threat of heavy rains and water logging due to water release in the Yamuna river by Haryana, add to that threats from various terrorist organizations who were out to disrupt the games. Day and night last minute patchwork was done to smoothen every roads, paintings, plumbing, other maintenance works, Commercial vehicles were not allowed during those days to restrict traffic jams, poor people and urchins or beggars evicted from many posh areas just to showcase the right type of growing India to the tourists, policemen at every signals and crossings and not to forget that we were aided by no rains during the games, relative peaceful handling of the Ayodhya verdict with extra caution by the govt of India and media and the sane elements in both the communities pre and post verdict, so on and so forth. So against the odds loaded heavily against us, we managed to avert the crisis, After all we are good in crisis management and are used to last minute preparations and staging shows. That is good. But how far will this event be called a successful, only time will tell.

For the moment Indian sportsmen are basking in glory and state after state have announced the prizes for their heroes, doling out various cash awards, housing plots or jobs in their respective states, but will all the things the players will ultimately receive; only time will tell. Also the people of India have now rejoiced and sang with them in tandem with the success of the team and finally we are seeing a glimmer of hope of other sports getting attention and not only cricket. But public memory, being short lived, how far the players can expect more support from the common public, only time will tell. In the lack of the sporting culture in the country, till now these sportsmen or women owe their medals to their own hard work and inherent talent. In the absence of the professional leadership of respective sports bodies, each player is left to fend for himself. Besides given the level of economic development, the leisure culture, of which sports is an integral part, has yet to strike the firm roots in our country unlike in developed countries where youngsters are encouraged to take up sports both as a pastime and as professional career. Our youths, aside from cricket, find the pursuit of excellence in various disciplines of sports economically hazardous. Coaching Institutes funded by sporting associations, where young talent can be spotted early to nurture them are non existent and the already existing sports administrators, mostly run by politicians since many years, treat young talent most shabbily- one of our women gold medalist cried out the foul that the doubles won by her is not even acknowledged by the badminton federation. Forget that, our sports minister MS Gill every now and then is confused with the name of the winners and in the hurry to take photo shots along with the ace wrestler Sushil Kumar recently ignored the coach! This leads us to the conclusion whether attention to sports bodies and the sports infrastructure, equipments, coaches etc, all will lead to the overall gain for the sports getting a lift or gain it will be back to square one with same old system.

By the way, have we achieved any thing significant in sports then? Competition? Commonwealth games are nowhere near Olympics and even can be said to be of less important than the Asian Games as you are not facing China. We have got 101 medals – 38 gold, 27 silver and 36 bronze medals tally, thanks to our excellent performance in Shooting, wrestling, archery, badminton or table tennis, etc, not in field and track events as we have only a few in them. In hockey we did raise hopes due to swell in public support in quarter and semi final matches but it all got evaporated once the Australians routed us in the finals. We jumped two places from Melbourne Games four years ago to relegate England to third place and emerge 2nd best after Australia- Saina Nehwal’s golden the last day coming up strongly after one set down, just made it possible. Infrastructure, oh , yes a few equipments and stadiums, but considering the depth of corruption in leading to the preparation and humongous cost escalation due to rampant corruption, it is doubtful whether many equipment or the stadiums or the roads, bridges, games village, will last long. One brush of heavy rains will be enough to test the tenacity of infrastructure.

And why do you miss that initially it was thought to develop the sport village and handover to the infrastructure to universities, but instead we have made 1150 flats from EMAAR-MGF, who will sell these high-end flats from 2 to 6 crores-apiece. And this EMAAR-MGF is struggling to succeed in the IPO market in India and it has already failed in three attempts to the market! And with the cost of refurbishing the Jawaharlal Nehru stadium at a whopping Rs160 crores and at one third of this cost you can get a new stadium! Initially cost estimated was 2000 crores and it has turned out to Rs 22,000 crores! Some have put the figure to even Rs 35,000 crore if we consider some infrastructure which was build just for the sake of the games. And even if we cannot add all the cost of getting better city, which in any case has to be done, but many of the costs were especially for games! At Rs 77000 crores expenditure we could have got 77 crore people who are below the poverty line people, made their life more comfortable, or increase our healthcare facilities or sanitation in villages or water supply to the hinterland? And what have we done, spent Rs 77000 crores in posh Delhi on our taxpayers money, and the quality work cannot be guaranteed to expect a 30 year life out of these. And after the games Delhi sees the same traffic police, no commandoes at all the signals, traffic again haphazard, the plants which were planted just before the games day, same rehari walas again coming up around main markets, even Connaught Place, dust flying all over again, etc, etc.

Some prominent opinion makers say that the Commonwealth should not be held in the first place as it smacks of Imperialism by a power who once ruled half the world. This can be ignored in the sense that we have inherited many good things too out of the English rule, principal being the English language, unarguably the most spoken language in the world along with Spanish, the backbone of our IT prowess is because of this language together with the maths and analytical skills of India, we got the sense of History, and hence the Indian-ness, the Indian railways infrastructure, which is still more than half we are still using even after many years since the British left us . Not all traditions are bad if it is not harming.

Till the games were not over, we were asked to keep restraint and the media too was asked to keep quite and stop doing negative publicity and concentrate on successful completion of games. Now the games are over, the PM , Sonia Gandhi have made their intention very clear that they want the truth of all the wrong-doings done by the Organising Committee from top down to come before the public soon. IT, ED, CBI, CVC, CAG, GoM have stepped in and many PIL s are expected to come up against the organizing committe, fixing responsibility in irregularities in tenders, work measurement, expenses, Excessive billings, hugely inflated equipments costs, foreign exchange violations, rental costs, maintenance costs, arbitrary contract, shoddy workmanship, incomplete work, huge cost overruns and awry schedules In each case responsibility needs to be fixed and exemplary punishment meted out to whosoever strong he or she may be and the truth come out in the open in public on exactly who and to what extent they are guilty, so that in future this sort of defame should not stare us on our face again in future. We have to ensure that in future such games are really Commonwealth games and not UN Commonwealth, bringing wealth to only a handful of politicians, babus and businessmen and for rest of the people it is COMMON POVERTY Games.

Tuesday, October 12, 2010

A BRIEF NOTE ON PHARMACEUTICALS INDUSTRY IN INDIA : Dated 12/10/2010

India's pharmaceutical industry is now the third largest in the world in terms of volume and stands 14th in terms of value. India has a strong US $ 22 billion pharmaceutical industry, grossing in about US $ 10 billion from exports and growing at over 15%. According to an Ernst & Young and industry body study, the domestic pharma market is estimated to touch US$ 20 billion by 2015. Further, a RNCOS report titled 'Booming Pharma Sector in India' projects the industry to continue growing at a CAGR of around 13 % during 2010-11 to 2012-13. A series of buyouts by foreign heavyweights, which started with takeover of Ranbaxy by Daiichi Sankyo in 2008 for US$ 5.45 billion, followed by Delhi-based Dabur Pharma bought by German’s Fresenius Kabi, then Shantha Biotech by France’s Sanofi Aventis and most recently Piramal Healthcare (domestic formulation business) being taken over by Abbott Laboratories for US$ 3.7 billion has also resulted in foreign MNCs taking three slots among the country’s top-five drug makers. This shows the growing interest and the presence in the Indian market in a big way by the MNCs-something they used to command in the 70s. Their market share has grown to about 25% from 15% in just two years. Indian generics companies are an attractive target for overseas multinationals, which are faced with loss of revenues due to the expiry of patents worth $70 billion by 2013 and a squeeze on margins. Overseas drug firms are aggressively ramping up business in emerging markets, which are projected to drive the $837 billion global pharma industry in the years ahead. Emerging markets are estimated to grow at more than 15% a year, compared with 4-6% growth for developed markets. Among those seen as potential targets for global drug companies are the Ahmedabad-based Torrent Pharma, Cadila Healthcare, Mankind Pharma, Dr. Reddy’s Laboratories and Elder Pharma. India’s drug retail market grew 19.6% in the first six months of the year, headed by new leader American company Abbott Laboratories, as foreign drug makers strengthen their dominance among the top 10 brands sold in the country. According to market research firm ORG IMS, by June end, Abbott held a market share of 7% followed by domestic heavy weight Cipla that controlled 5.3% of the market, Ranbaxy Laboratories, now owned by Japan’s Daiichi Sankyo, having a market share of 4.83% is ranked third, followed by UK’s GlaxoSmithKline that controls 4.28% of the market. Ahmedabad-based Zydus Cadila is fifth with a 3.8% market share. Road Ahead According to a report by PricewaterhouseCoopers (PwC) in April 2010, India will join the league of top 10 global pharmaceuticals markets in terms of sales by 2020 with the total value reaching US$ 50 billion. According to the All India Organisation of Chemists and Druggists (AIOCD), the pharmaceuticals industry in India will grow by over 100 per cent over the next two years.

Technological StrengthsThe following form the basis of the technological strengths of the Indian pharmaceutical industry: -

1. Self-reliance : Displayed by the production of 70% of bulk drugs and almost the entire requirement of formulations within the country

2. Low cost of production: Due to low cost of production and availability of quality manpower our domestic production costs are almost 50% less compared to developed countries and in some cases as low as 90%. Not surprisingly, one-fourth of the world's generics come from India. This has ensured easy availability of life-saving medicines particularly where affordability has been an issue especially in third world countries.

3. We have excellent and world-class national laboratories specialising in process development and development of cost effective technologies.

4. Innovative Scientific manpower

5. An excellent centre for clinical trials in view of the diversity in population-making India a lucrative destination for clinical trials for global giants.

6. Low R&D costs: Indian pharma industry possesses excellent chemistry & process reengineering skills. This adds to the competitive advantage of the Indian companies and helps them to develop processes, which are cost effective. India is emerging as the most favoured destinations for collaborative R&D bioinformatics, contract research and manufacturing and clinical research as a result of growing compliance with internationally harmonized standards such as Good Laboratory Practices (GLP), current Good Manufacturing Practices (cGMP ) and Good Clinical Practices ( GCP)

7. After India became a signatory to the WTO and TRIPS agreements it was obliged to introduce product patent on pharmaceuticals with effect from 1st January, 2005. Our patent law has now been made TRIPS compliant by fulfilling various commitments under the TRIPS agreement. This has brought a new challenge to the Indian pharmaceutical industry as it would no longer be able to freely continue with the production of generics of the new patented molecules without licence/payment of royalty to the innovator company. With this, it is now imperative for the Indian industry to accelerate its efforts in R&D in this sector.The present level of spend on R&D (about 5%of turnover ) is much lower as compared to most of the developed countries (15 to 20%)

Other aspects:

The penetration of modern medicine is still less than 30 % in India. To put things in perspective, per capita expenditure on health care in India is US$ 93, while the same for countries like Brazil is US$ 453 and Malaysia US$ 189. The growth of middle class in the country has resulted in fast changing lifestyles in urban and to some extent rural centers. This opens a huge market for lifestyle drugs, which has a very low contribution in the Indian markets but growing rapidly owing to increasing middle class population and rapid urbanization.

Further, the industry now produces bulk drugs belonging to all major therapeutic groups. It ranks 13th in terms of export value of bulk actives and dosage forms. Indian exports are destined to more than 200 countries around the globe including highly regulated markets of US, Canada, European Union, Japan and Australia.

Indian drugs manufacturers will continue to seize larger market share of generic drugs in the overseas market particularly those of US and Europe and emerging continent of Africa with NPPA in place (fixing drugs prices). Further, with migrations into a new regime of product patent, the fortunes of domestic pharma industry will undergo a change in the long term and would bring with it new innovative drugs. Though this will increase profitability of MNC pharma companies, it will force domestic players to focus on research and development, besides moving towards consolidation of small players who may not be able to cope up with the challenging environment.

Apart from the generic opportunity in the product patent age, there are also other avenues to fuel business in the pharma industry. The first and foremost chance and challenge is to take the pharma business to those geographies where Indian presence is not well represented. Indian firms can take advantage of its low cost to score over others to grab a huge market size of African countries in generic drugs market also. This will be so because Africa in future will provide huge opportunity to Indian drugs manufacturers’ particularly following withdrawal of the patent suit filed by 39 global pharma companies against the South African government which allowed the sale of cheaper branded generic drugs.

It is true that we have a strong generic industry. But over time, some of the major generics companies that in the past were simply hostile to intellectual property (IP) are rapidly changing. Generics is a growing opportunity in some countries like US where there is a large market and billions of dollars of products that will go generic in next five years.

On the other hand, the scope for Indian generics companies to supply other developing countries is becoming limited because of the growing adoption of patents in the countries, especially in Asia. There are a very few countries in Asia today that do not have product patents. Also registration is rapidly becoming necessary to market the drugs in every country, be it CIS or even African countries.

It is really testing time for Indian Pharma Industry. Opportunities are huge for the capable ones as the country is attracting a lot of foreign capital and India is being considered as an emerging manufacturing base, and knowledge based sector like pharma is among the forefront and we are still favorites in comparison with China and may continue to do so in near future. But this is also a time when men will be separated from boys. Survival of the fittest.

A BRIEF NOTE ON LOGISTICS INDUSTRY IN INDIA : Dated 12/10/2010

Logistics is usually misinterpreted as only transportation of goods, which is far from truth as transportation is just a subject of logistics. Logistics is a knowledge-based industry that requires procurement, transport, inventory control and distribution of goods. The cost of logistics of a company is estimated to be around 2 % of its total sales. With effective and efficient logistics 20 % of this cost can be saved. Logistics and Supply Chain Management (SCM) have always been an integral part of any business for timely and cost-effective decision making. Logistics can safely be said to be the management of the flow of goods, information and other resources from the point of origin to the point of final consumption by the customer. Just imagine there is a supplier situated at Baddi, Himachal Pradesh, which manufactures shampoos for The Taj Mahal Hotel, Mumbai. The raw materials need to be picked up from nearby supplier by tempo or if some raw material need to be imported from a manufacturer situated outside the country, say China, then it would involve another set of logistics- Collection from the overseas factory to nearby port, customs clearing, Import, again customs clearing in India and Transportation to factory at Baddi. The raw materials after the manufacturing process needs to be packaged and stored, then it will be transported either by road or train or air or a combination of these to reach Mumbai and then before reaching the hotel, needs to be cleared by Octroi authorities at entry point of Mumbai. Now the goods are ready to be delivered to the hotel which would ultimately reach the customers of the hotel who are staying there. Thus, Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, clearing, and occasionally security. Logistics is a channel of the supply chain which adds the value to the goods by making them available at the right place and at the right time to the right consumer.

Under relentless pressure to reduce costs and increase sales around the world, firms are outsourcing operations to subcontractors who can do them better and more cheaply, and moving more of their production and services to lower-cost countries. Globalization requires greatly increased co-ordination of transport by road, rail, sea, air and now also by an entirely new route to market: the internet. This makes logistics vastly more complex. The job of ensuring that all these things work together is known as Supply-Chain management (SCM). SCM is an evolution of logistics. Logistics tends to be tactical; supply-chain management is strategic. SCM can include anything from buying raw materials to managing suppliers, warehousing, operating transport fleets, taking orders, collecting payments, repairing products and even answering the telephone at call-canters.

Logistics is increasingly becoming a strategic source of competitive advantage with the increase in global production sharing, shortening of product life cycles and intensification of global competition. In this highly competitive business environment, the quality of logistics has assumed greater significance influencing firms’ decisions such as which country to locate in, which suppliers to buy from or which consumer markets to enter. Essentially, high logistics costs coupled with low levels of service are a barriers to trade and foreign direct investment (FDI) and thus to economic growth. World today has realized the need to make Logistics more efficient as resources are getting more and more scarcer and dearer day by day. Logistics and SCM are now getting the attention they deserved and momentum is on to make this sector environment friendly. Massive investments are being made worldwide with some of the best known investment gurus putting their bet on this industry which is directly linked to the growth of any economy. India is no exception and it is estimated that being a developing economy we may be spending as high as up to 13% of our GDP in Logistics itself! Indian economy is now worth more than US$ 1.25 Trillions and as a consequent Logistics industry in India is worth more than US$100 billion. There is a scope for huge savings in terms of cutting down this cost by bringing in more efficiency in this sector by adopting some of the best practices. Also very few organized players are in this industry to which acts as an impediment in this direction. The logistics sector is considered the weak link of the Indian economic story. At present, there are few professionally founded logistics players. Most companies are run like family businesses, unlike in other service sectors where professionals have taken the venture funding route to fund businesses. There is a big demand for high quality, time definite supply chain solutions and there are customers — manufacturing companies and organized retailers — willing to pay a premium for services, such as cold chain, warehousing and trucking. Robust growth of Indian economy and the rise in domestic consumption and trade have driven the cargo/freight volumes in the country. The government’s increasingly laying importance on the infrastructure development has also helped in getting the goods and services and communication to all parts of the country.

Companies are also outsourcing supply-chain services, commonly called 3PL. Yet SCM is not just about wringing costs out of a business. It can also be used to increase revenue and boost profits without necessarily lowering costs. Indeed, some companies have re-engineered their supply chains to gain a huge competitive advantage. The market leaders have supply chains that are more responsive to customer demand. Things like transport, purchasing and warehousing used to be considered merely part of the cost of doing business, and were often managed as separate entities. Now they are coming together as a strategic item on the chief executive's agenda. Most firms have been organizing their logistics to make themselves leaner. Many now carry little or no inventory to save money. In the present era of tough competition market wars are shifting from media to the retailer's shelf and even directly to the customers. Coke, Pepsi, Hyundai, Maruti, HLL, Godrej, TATA, Bajaj, etc, derive immense strength from their well-established distribution networks. In fact India is becoming the auto hub of the world and big logistic companies and even Govt. of India and Indian railways are especially targeting the auto industry (along with the manufacturing industry and commodities and food grains) to get more involved in the effective use of resources by entering into Public-Private partnerships so that there is overall savings to all the parties involved. Logistics is the only department of a company that is in direct contact with the customers. So, the customer perceives the delivery channels as the representatives of the company and it becomes the prime responsibility of the channel members to deliver the services that keep the customers satisfied.