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Pharma & Healthcare: Sugar-coated pill

health-and-fitness Updated: Dec 13, 2008 20:44 IST
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Smita Goswami, 46, has been a diabetic for many years and pops some 18 pills every day to stay alive. Battered by high inflation in recent times, the Mumbai housewife has had to cut back her expenses on many counts — all so that she has enough money for her medicines that cost about Rs 1,500 a month.

“I can’t compromise on the quantity or quality of my medicines, so I have to let go of other things,” says Goswami, who has cut down on milk and stopped going to the movies.

Goswami shows exactly why the pharmaceutical and healthcare industries are typically immune to any downturn in the business cycle.

In fact, Glenmark Pharmaceuticals, which posted a net profit growth of 56 per cent in the July-September quarter, has recruited around 700 new employees in the last four months and a new vice president less than a month ago.

“There are so many new people coming in all the time that welcome parties have become redundant,” says 37-year-old Anuj Reddy, the new vice president.

At Wockhardt Ltd, too, there is plenty of cheer. The company opened its 16th hospital in Nashik last month and another one is on the cards. “Healthcare is so integral to life that economic upturns and downturns don’t make a difference,” says Wockhardt Hospital CEO Vishal Bali. Of course, patients do take longer to go for non-emergency surgeries, but even here, “the number has not gone down,” says Bali.

In India, there is an additional reason for optimism. The recession in the US and other developed countries is expected to force many patients in those countries switch to low-cost, generic drugs — a business where Indian manufacturers score, points out Smitesh Shah, Vice Chairman, Pharmaceuticals Export Promotion Council.

The US Food and Drugs Administration has been approving an increasing number of generic drugs produced by Indian pharma companies over the last few months. In October, 16 generic drugs given the green signal as opposed to 12 drugs in September and eight in August (source:

There is also money to be made from increased outsourcing of medical research to India. Bangalore-based Biocon plans to invest Rs 100 crore through next year to enhance its Research and Development (R&D) and keep pace with increased orders from companies in the West, says Kiran Mazumdar Shaw, its chairman and managing director. This year, the company will spend Rs 60 crore on R&D.

“We have seen an increase in research activities coming to our company… as there has been a pressure on big pharma companies, mainly from the Western world, to cut expenditure on R&D,” says Shaw.

Pharma exporters have also benefited from a weakening rupee, which has depreciated nearly 25 per cent this year. But rising raw material costs are offsetting those gains, says S Radhakrishnan, company secretary at Cipla.

There are concerns over lack of liquidity, too, especially for those planning to set up new factories or scale up exports, because it is becoming increasingly difficult to find lenders both at home and abroad. “Our only concern is liquidity. Banks don’t have the sums to lend us for our business,” complains Radhakrishnan.