January 2008

Business news

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Pfizer considers outsourcing manufacturing to India, China

US-based pharmaceutical giant, Pfizer, is looking to cut costs by outsourcing as much as 30 per cent of its manufacturing to facilities in Asia, particularly in India and China.

Pfizer now outsources about 15% of its manufacturing capabilities. The company aims to double that figure, as part of cost-cutting measures. The drug major while announcing the plan also said it would expand its research and development investments in China, India, Japan and South Korea.

The company, which has major operations in New Jersey, announced earlier this year it would save USD 2 bn by cutting its global work force by 10%, or about 10,000 jobs. The company also believes that Asia was key to the company because the region's pharmaceutical market would grow to USD 200 bn by 2017.

Pfizer, which spent USD 7.6 bn on research and development last year, currently has 80 research studies under way in Asia. The outsourcing plans follow Pfizer's announcement at the beginning of the year that it would close manufacturing sites in Brooklyn, New York and Omaha, Nebraska and sell a third manufacturing site in Feucht, Germany. 

MindTree to venture into medical electronics

FIT and R&D services provider MindTree Consulting, which announced a major organisational restructuring recently, plans to expand its business line to tap new markets especially medical electronics, avionics and defense.

The R&D services, so far addressed industries like data networks, cellular networks, voice networks, telecom solutions, computing and storage systems, consumer appliances and industry systems.

The company, whose topline was INR 590.35 crore last fiscal, derives close to 75% of its revenue from the IT services with the balance coming from the R&D services. In the IT services, the company specialises in domains such as capital markets, manufacturing, financial services and travel and transportation. 

MindTree is targeting USD 1 billion in revenue. Given an annual growth rate of 38 per cent, the target may be reached by 2014. The company is also keen on acquisitions. MindTree, which was listed on the BSE and NSE earlier this year, has a revenue target of $178 million to $180 million for the current fiscal, a growth of 36 per cent at the higher end. About 41.48 per cent of its shares are held by a clutch of financial institutions and VC firms. 

IBM eyes USD 2 bn pharma, health services market

IBM is targeting multi-billion dollar health business opportunities in India. The company has plans to tap opportunities worth USD 1 billion each in the Indian pharmaceuticals and health service segments over the next 3-4 years.

It is looking at providing a range of IT solutions for patient record management and creating a vault of information for doctors, patients, nurses and insurers as well. In India, the integration of health information and data security itself constitutes almost 50% of the business opportunity in health services. This will also mean providing integration of small clinics with larger hospitals. The company is also working on a separate track for developing markets like India where there is a lack of proper networking in the health set up. For this, IBM is working on a mobile technology to enable wireless connectivity through personal digital assistants (PDAs) and laptops for all hospital personnel.

They are also developing censors, where it will be possible to trace any error while administering dosages to patients. In US alone, about USD 3-4 billion is lost due to errors in administering health care. On the pharmaceuticals front, about 30-40% of the billion-dollar opportunity lies in the clinical trials and contract research space, he said. Another 30% of the pie can be attributed to supply chain management issues. These include developing specific software to track packages and detect spurious drugs.


AIG, J P Morgan to invest INR 400 cr in Narayana Hrudayalaya

Global financial institutions American International Group (AIG) and J P Morgan are reportedly to invest a total of INR 400 crore in Bangalore based Narayana Hrudayalaya for a 25% stake in this cardiac hospital chain, valuing it at INR 1,600 crore. 

Incidentally, Narayana Hrudayalaya is looking to expand to around six other Indian cities after establishing in Bangalore and Kolkata. The chain specialises in cardiology and paediatric care and is among the world's largest in the segment. The hospital also offers treatments in the area of paediatrics, neurology, gastroenterology and with the help of ISRO, Narayana Hrudayalaya has played a pioneering role in telemedicine. 

According to industry information, Narayana Hrudayalaya is set to expand with the onset of Phase 2, which will sprawl over 100 acres. The structure will accommodate 780 beds, 30 operating rooms to perform 75 heart surgeries every day.  It will also accommodate a teaching institute for cardiologists, cardiac surgeons, cardiac anaesthetists, nurses, health technicians and healthcare specialists. Once completed, the project 'Health City', will have 5,000 beds with specialty hospitals for every disease. 

Red Hat enters healthcare sector

Red Hat Software Services, provider of Linux and open source technologies, is foraying into the Indian healthcare sector. Red Hat plans to facilitate the sharing of patients' data and history within various hospitals to promote better healthcare services. 

They have joined hands with a number of government and private hospitals in Maharashtra. Most of these hospitals are in the early stages of digitisation of patients records and medical history. In collaboration with HP, they plan to make this data available to every hospital connected through our platform. 

Banks, financial institutions and companies in the insurance sector have adopted open source technologies for quite some time now. The government establishments, telecom sector and institutes in healthcare are yet to adapt to this kind of work culture. They are catering to hospitals in Maharashtra during the initial phase followed by hospitals in other states. The programme would provide various case histories and it would work as a knowledge and information platform for all the hospitals. 

Apollo Hospitals plans to invest INR 600 cr in tier II cities

Apollo Hospitals plans a massive INR 600-crore expansion plan to make its presence felt in tier II cities, with about 10 hospitals.

The company would come up with 150 to 200 bed capacity hospitals in tier II cities across the length and breadth of the country and is under the process of identifying locations for the proposed hospitals. The management would invest INR 50-60 crore in each of its hospitals.

Apollo had appointed a US-based consultant company specialising in healthcare projects for drafting the nitty-gritty of its plans. The funding would be a mix of equity and debt. However, the ratio is still being worked out. 

BT considering expanding health business in middle east

A world-class IT services organisation, having made successful delivery of large-scale contracts for the National Health Service (NHS) in the UK, British Telecommunications plc (BT) is now accelerating its investment in the Middle East and Africa (MEA) in recognition of the fact that this is one of the fastest growing ICT markets in the world.

Under this programme, BT is delivering three contracts worth more than USD 4 billion, comprising N3, a broadband network with more than 20,000 secure connections between hospitals and doctors throughout England; the Spine, one of the world's biggest transactional databases and messaging systems containing more than 50 million records; and in greater London it is delivering a large-scale upgrade to the IT across all care settings in 74 health trusts to enable the creation of an integrated care record for more than 7.5 million patients.

Internationally BT is also delivering a contract to improve the exchange of information between hospitals, outpatient clinics and general practitioners with consortia representing three of the least developed regions of Hungary.

Pharma companies to scale up Romania operations
With Romania recently becoming a member of the European Union, it has become a gateway for Indian drug makers to over 30 markets in the region. Having a subsidiary in Romania will help Indian companies to expedite the distribution process rather than importing from India.

Ranbaxy Laboratories which acquired Terapia for USD 321 million last year is shifting the production of some of the drugs from India to its Terapia facility and plans to make the country a hub for its European markets.

The Gurgaon-based company is also investing USD 10 million in Terapia. For the quarter ended September, 2007 Romania posted a revenue of USD 23 million, which is about one-third of the company's total European sales of USD 73 million.

Three Indian companies, Shreya Lifesciences, Lupin and Dr Reddy's Laboratories are reportedly in a race to acquire LaborMed, a Romania based generic manufacturer. In a bid to encourage domestic manufacturing, the local government has proposed to cap prices of drugs imported in the country at the lowest price of the similar brand in key 12 European markets.

Wockhardt to consolidate global operations; push to healthcare biz

With three acquisitions undertaken in little over a year across Europe and the US, Wockhardt Ltd is in the process of consolidating its global pharmaceutical operations. It had acquired five companies in Europe, the last being France's Negma Laboratories in May, and is now in the process of implementing the integration process, which includes “enhancement of product usage”, reduction of some manpower and further investments.

Bain and Company, the consultant for the integration of operations in Europe, has completed the task say sources from Wockhardt.

Products will be rationalised across different operations in Europe. The first phase of this has been completed and the second phase will be completed in the first six months of 2008. Meanwhile, Wockhardt will also invest

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