Financial Daily from THE HINDU group of publications
Monday, Nov 08, 2004
Industry & Economy - Pharmaceuticals
Pharma companies swing to the Samba beat
New Delhi , Nov. 7
DOMESTIC pharmaceutical companies are drumming up the beat in the Latin American markets. Ranbaxy Laboratories, Nicholas Piramal, Zydus Cadila, IPCA Laboratories, Ind-Swift Laboratories and a host of others are expanding their operations in this geography in a big way.
While Nicholas Piramal India Ltd (NPIL) is open to "various options" such as acquisitions, distribution alliances and even setting up subsidiaries there, Ranbaxy has established a regional office in Rio De Janeiro, Brazil, to oversee its Latin American operations. It is setting up a manufacturing unit in Brazil, and is present in Peru, Mexico and Venezuela.
Others such as Ind-Swift and Zydus Cadila plan to export into the markets while IPCA, Glenmark and Strides Arcolab have a direct presence in the region.
Mr Ajay Piramal, Chairman and Managing Director, NPIL, said, "Yes, we are actively looking at the Latin American markets." Elaborating on this decision, Mr Vijay Shah, Chief Operating Officer, said, "These markets have been largely untapped. There is a huge potential especially for generics."
Currently, dominating the Latin American market are branded drugs imported from the US and other developed countries.
The total size of the Latin American market is estimated to be at over $30 billion with countries such as Mexico, Brazil, Venezuela, Peru and Columbia accounting for a major portion. Against the per capita pharma consumption of $3 in India, the figures in Latin American countries such as Argentina, Brazil and Chile stand at $115, $50 and $53 respectively.
Besides this, the region does not have enough manufacturing facilities. "Hence the Delhi-based Ranbaxy and Bangalore-headquartered Strides Arcolab have decided to set up manufacturing bases there," said an industry analyst.
Currently, generic companies present in Latin America include US-based Ivax Corporation, Lab Kimiceg of Venezuela and Lab Silanes of Mexico.
Due to the dominance of branded drugs, access to medicine among the population is limited. Also, the regulatory environment in the region is conducive to the entry of generic products. Another reason why Indian companies are showing increasing interest is the stabilisation of the currency.
According to Mr Alok Gupta, Country Head, Life Sciences and Biotechnology, Yes Bank Ltd, "The volatility of the Brazilian currency during the last few years was a deterrent to pharma companies wishing to make investments. But now, with it stabilising, there is renewed interest."
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