THE TIMES OF INDIA, NEW DELHITUESDAY, OCTOBER 4, 201126 TIMES BUSINESS

SPREADING TENTACLES: Paul Walsh-headed Diageo has won abid to acquire Ethiopias last-remaining state brewery for$225 million

EXECUTIVE DIGEST

Mumbai: Faced with lossesonce its blockbusters start los-ing patents, Big Pharma is nowdevising strategies to counterthe impact. Recent deals bypharma biggie Pfizer with domestic generic firm Dr Red-dys and globally with Watsonand Sanofi in France have been struck to stem revenueerosion as the worlds largestselling drug, Lipitor, loses pat-ent protection in US in Novem-ber this year.

Other pharma biggies mayadopt a similar strategy astheir blockbuster drugs (over$1 billion in sales) go off-patent,even as it opens up significant

opportunities for domestic ge-nerics to enter into such deals.

Recently, Pfizer inkedthree agreements to ensurethat it has a steady flow of rev-enue even after it loses its pat-ent on cholesterol drug Lipi-tor, which netted annual salesof over $11 billion globally.While Pfizer settled a patentinfringement suit with DrReddys over launch of a ge-neric version of the blockbus-ter drug in the US, it alsosigned an agreement withWatson Pharmaceuticals tosell an authorized generic inthe US for five years. Underthe agreement, Pfizer will pro-vide Lipitor to Watson to sellwithout the brand label in re-

turn for a share of the sales. Analysts expect that Pfiz-

er may enter into more deals,possibly with domestic com-panies like Aurobindo and Lu-pin for generic versions of thedrug, in an attempt to offsetthe impending revenue loss.Says Sujay Shetty, partnerPwC India: Big Pharma willfight tooth and nail to trapwhatever little revenue it can,and not surrender the hugemarket share it once had(through market exclusivity)to a generic competitor.

Faced with an impendingpatent cliff (drugs losing patentprotection), Big Pharma hasnot been able to discover newblockbusters which will miti-

gate revenue loss. Now, with themost-watched case, Lipitor, los-ing patent, pharma biggies likePfizer will adopt a multi-pronged strategy to ensurethey have a steady flow of fu-ture income, says Ranjit Kapa-dia, senior VP, Centrum, add-ing that more such deals are onthe cards.

Lipitors patent expires inNovember in the US this year,and nine companies (globaland domestic) have sought ap-proval from the Food and DrugAdministration to launch theirgeneric versions. Under anagreement with Pfizer, Ran-baxy has the right to sell the ge-neric (atorvastatin), for 180-days once the patent expires.

Major Players Look For Deals To Curb Revenue Losses As Blockbuster Drugs Go Off Patent

Desi cos to gain as Big Pharma goes genericRupali Mukherjee TNN

Drug Patent Year of One-yr holder expiry revenue

($bn)*

Lipitor Pfizer 2011 12.1

Diovan Novartis 2012 6.0

Plavix BMS, Sanofi 2011 4.8

Zyprexa Eli Lilly 2011 4.8

Seroquel AstraZeneca 2011 4.7

Singulair Merck 2012 4.5

Actos Takeda 2011 3.9**

Symbicort AstraZeneca 2012 3.7

Lexapro Forest Labs 2011 3.4**

Lovenox Sanofi 2012 3.1

* Estimates for a year prior to the expiry of patent | ** for 2008-09 | Source: PwC report

Big Biz BoosterNew Delhi : India witnessedthe highest growth in domes-tic air passenger traffic thisAugust registering almost a20% rise, even though thegrowth in international traf-fic slowed down worldwide.

India, which recorded ademand growth of 19.7% inAugust, was described as thetop performer among domes-tic markets, latest figuresanalysed by the global air-lines body, International AirTransport Association (IA-TA), showed.

India and Brazil, whichfollowed in the domesticgrowth, together represented3% of worldwide air travel, itsaid. In the international seg-ment, passenger demand wasup 4.5% over August 2010, butthis represented a significantslowing from the 6% recordedin July. Noting that the rate ofdecline in freight markets ac-celerated, the IATA said the3.8% contraction in freightmarkets in August was morethan double the pace of Julys1.8% decline.

Comparison of August toJuly data clearly indicatedthe slowdown, showing thatthe total passenger marketfell by 1.6% in August com-pared to July. International

markets declined by 1.8%,while already weak domesticmarkets shrank by 1%.

The industry has shiftedgears downward. The pace ofgrowth in passenger marketshas dipped and the freightbusiness is now shrinking ata faster pace. With businessand consumer confidencecontinuing to slump globally,there is not a lot of optimismfor improved conditions anytime soon, IATA directorgeneral and CEO Tony Tylersaid. Asia-Pacific carriers re-ported 5.3% demand growthwhich was slightly betterthan the year-to-date growthof 4.4%, it said. AGENCIES

Air traffic rises20% in India,slows globally

BUCKING THE TREND

New Delhi: GAIL has onceagain set the cat among thepigeons by offering to buythe Asian DevelopmentBanks entire 5.2% stake inPetronet LNG Ltd, a privatecompany promoted bystate-run oil companies forimporting gas in ships.

It has written to petro-leum secretary G C Chatur-vedi, who is the companysex-officio chairman, thatthe stake can be equallysplit among the three otherstate-run promoters of Pe-tronet if they too wanted ashare of the pie. GAIL,

ONGC, BPCL and IOC have12.5% stake each in Petro-net. French major Gaz deFrance holds 10%. The sha-reholders agreement givesall five of them the firstright of refusal in case theADB sells its stake.

In case GAIL or the oth-er state-run promoters pickup ADBs stake, Petronetwill become a public sectorcompany and will come un-der the governments vari-ous oversight agenciessuch as parliamentary pan-els besides vigilance andaudit authorities.

Petronet was set up withthe aim of importing LNG

(liquefied natural gas). Itwas registered as a privatecompany to enable it to takedecisions quickly withoutgovernment red tape anessential requirement ingas trade. The petroleumsecretary was nominatedas ex-officio chairman toassure gas suppliers and in-vestors of the govern-ments guarantee towardspayments.

Dust had risen over theADB stake earlier in April2008 when the bank sent let-ters to the state-run promo-ters asking whether theywere interested in pickingup its stake.

GAIL offers to buy ADBs5.2% stake in Petronet

TIMES NEWS NETWORK

New Delhi: The governmentis considering opening fullyits single-brand retail sectorto foreign direct invest-ments, the industry secreta-ry said on Monday, a possibleboon to the governments re-form programme which hasappeared on the backburner.

India currently allows51% foreign direct invest-ment (FDI) in single-brandretail and 100% in wholesaleoperations. The governmenthas considered allowing for-eign firms such as global re-tail giant Wal-Mart to investin supermarkets, but lack ofpolitical consensus and con-cerns of the small-shop own-ers have so far prevented the move.

In the absence of super-market reform, Prime Minis-ter Manmohan Singhs gov-ernment may free up thesingle brand sector to send apositive signal about thecountrys investment cli-mate. It is under considera-tion, RP Singh told Reutersby phone, but declined to pro-vide a time frame.

A slew of corruptionscandals in the Congress par-ty-led coalition have sparkedhuge street protests, rattledinvestors and stymied policymaking in recent months,smothering hopes thatSinghs government wouldpress ahead with a reformagenda.

Key economic policy

changes, from tax reform tolifting investment caps in thebanking and insurance sec-tors, are seen as crucial tomaintaining the momentumof one of the worlds fastestgrowing economies. The in-dustry secretary had lastweek dismissed the talk thatsupermarket reform was onthe backburner, saying thatit was moving very fast al-though fears of job losses inthe unorganized retail need-ed to be addressed.

Foreign retailers such asWal-Mart, Carrefour SA,Tesco Plc and Metro AG seeIndias 1.2 billion populationas one of the worlds lastlargely untapped markets.The move is seen by many ingovernment as crucial totame high food prices, but theplan has not yet been ap-proved by the cabinet, withjob-loss concerns ahead ofstate elections next year anda general election in 2014slowing policy.

Currently, up to 40% of In-dias harvests rot because ofinadequate cold storage andsupply bottlenecks, a situa-tion some economists say for-eign money in supermarketswill help resolve. A commit-tee of top civil servants, ofwhich RP Singh was a mem-ber, in July agreed to recom-mend to the cabinet allowingforeign firms to take a 51%stake in multi-brand retailoperations. REUTERS

Govt mulls 100%foreign investment

in single-brand retail

New Delhi: Samsung on Monday said it will con-tinue with its multi-platform strategy in smart-phones as the company launches phones acrossandroid, windows phone and its own Bada oper-ating system.

The Korean major, that has a 24% marketshare in the Indian mobile phone market, said itwill launch at least 3-4 new phones monthly. In-dia is a fast-growing mobile market and we willcontinue to strengthen our portfolio across pricepoints, Ranjit Yadav, country head for Sam-sungs Mobile and IT business, said.

He said the new products would be on all plat-forms. Even though we are investing in Bada op-erating system, Samsung will not restrict itself toany one particular platform. We want to givechoice to customers and thus will continue to of-fer phones on android and windows phone oper-ating systems.

The company introduced three new phones Omnia W (Rs 19,990), Wave III (Rs 19600) and Gal-axy Y (Rs 7830) on different operating systems.

Yadav said smart phones were the fastest-growing category in mobile phones and theirshare was rising rapidly. TNN

Samsung to retainmulti-platform

strategy for phonesLondon: Oil prices slid on Mon-day as tumbling global equitiesand fresh fears of a Greek de-fault sparked concern over theenergy demand outlook, withthe market also hit by the strongdollar. New Yorks main con-tract, West Texas Intermediate(WTI) for delivery in November,dipped 47 cents to $78.73 a barrel.

Brent North Sea crude forNovember was down 34 cents to$102.42 in London midday trade.Asian and European equitiesslumped and the euro hit aneight-month dollar low on Mon-day over renewed fears of aGreek sovereign default and itsimpact on the struggling globaleconomy. Athens admitted overthe weekend that it would notmeet a target for reducing itsmassive deficit, heaping freshpressure on the eurozone debtcrisis and sparking a run for thesafe-haven US dollar. AGENCIES

Crude slips onGreece default

concerns

The Greek governmentsaid it passed a newbudget backed by its in-

ternational creditors, includ-ing larger deficits than previ-ously forecast, as the countrymoves closer to securing an 8 billion-euro ($10.7 bil-lion) aid payout needed toavoid default.

PM George PapandreousCabinet also passed 6.6 bil-lion euros of austerity mea-sures last night to cut the 2012deficit to 6.8% of gross do-mestic product, missing the6.5% goal previously set withthe EU, International Mone-tary Fund and European Cen-tral Bank, known as the troi-ka. Finance MinisterEvangelos Venizelos had pre-viously said Greece wouldmiss the targets and the troi-ka accepted the new budget.

The new deficit numbersshould not derail Greecescurrent negotiations withthe troika, Geoffrey Yu, a

currency strategist at UBSAG in London, wrote in a noteto clients. Greece pledged toundertake additional spend-ing cuts in order to secure thenext aid tranche. We remainof the view that Greece willultimately receive its currentbailout tranche.

Greek bonds fell beforeEuropean FMs gathered onMonday to consider enhance-ments to the regions rescuefund. Papandreou adoptedthe austerity measures un-der pressure from the troikaas the countrys three-year re-cession sapped the revenueneeded to close the fiscal gap.

Euro region financechiefs will meet again on Oc-tober 13 to decide whether theausterity push is enough towin the sixth bailout pay-ment. Important decisionswhich need to be taken on aEuropean level depend firstand foremost on us, Papan-dreou said. BLOOMBERG

Greece pledges6.6bn in austerity

R-Power eyes Rs 2000crore green money fromTilaiya: Reliance Power ex-pects to earn Rs 2,000 crore bytrading carbon credits fromits Tilaiya ultra-mega powerproject during the first 10years of plants operations.

The project, proposed tobe built in Jharkhand, is ex-pected to generate over 21 mil-lion carbon credits duringthe initial 10 years. These canbe traded under the Clean De-velopment Mechanism re-gime and are valued at overRs 2,000 crore. The projectwill supply power to 18 bulkconsumers in 10 states. TNN

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