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Two Indian-Americans to serve on US nuclear trade committee
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India’s domestic market for IT set to grow three times faster
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| 03. INVESTMENT UPDATES |
| GM India to invest $300mn |
| The Times of India: February 15, 2011 |
| GM India will launch six new vehicles over the next two years in India. The investment for this will be to the tune of $300 million. GM has invested over $1 billion in India till date. "We will be launching a compact vehicle, a sedan, new Captiva model and three light commercial vehicles. One of these would be an SUV-type van, another a multi-utility vehicle and a pick-up van," said P Balendran, vice-president of corporate affairs at GM India. He was speaking on the sidelines of the launch of LPG variant of Chevrolet Beat. The Chennai ex-showroom price of the vehicle is Rs 4.11 lakh. |
| Pharma sector injects fresh life into M&A space |
| The Times of India: February 15, 2011 |
When Ajay Piramal, promoter and chairman of Piramal Healthcare, struck a deal with US-based pharma biggie Abbott Inc for selling assets of the domestic formulation unit at over 9 times its sales, little did he know it will set a benchmark.From being a marginal contributor to the M&A space, the pharma sector has shifted gears and attracts revenue multiples of 9 to 10 times as recent deals have proved.
A strong and growing domestic market, a robust pipeline of generic drugs (cheaper versions of patented drugs) and an ability to service developed markets abroad have suddenly made Indian pharma companies most sought-after in the M&A space.
Little wonder that the buzz is growing around possible takeover of companies with strong generic capabilities. There have been talks of an European suitor serenading south-based generics player Aurobindo Pharma, while speculation on generic major Cipla refuses to die.There are also talks of other such deals like Dr Reddy's, Cadila, Torrent and Divi's Labs being on the radar of MNCs such as Merck, Pfizer and GlaxoSmithKline (GSK). Rumours of Dr Reddy's being acquired by GSK started doing the rounds just after Ranbaxy was snapped up by Daiichi while rumours about Cipla surface almost every month. They have all been denied by the respective companies.
Till the late 1990s, pharma MNCs were indifferent to the domestic pharma market. Even in the last decade, the focus shifted to leveraging India as a low-cost destination, with MNCs mainly contracting production from domestic players. Now there has been a distinct shift in strategy- from giving out manufacturing contracts to owning them. Says Jefferies India MD Probir Rao: "There is heightened interest in emerging markets as Big Pharma has realized that developed markets and in-patent products will not be able to sustain growth in the medium term, which will come only from emerging markets and generics including bio-generics. The strategy of companies such as GSK, Pfizer, Sanofi and Abbott is evidence of this trend."
Big Pharma is making a beeline for domestic companies, mainly because of the strong and consistent growth recorded in the nearly $12-billion market. The pharma market has witnessed a strong double-digit growth ranging 13.5 to 17% over the last four years, with 2008 being the lone year with a relative low 10%. So a control of the highly fragmented domestic market- even a 2-3% market share, which could take a generation to build-is attractive for MNCs, which are facing sluggish sales in their home markets. Take the example of Abbott, which paid a huge premium (for acquiring Piramal Healthcare) to gain leadership, and is now an undisputed leader with a 7% share in the domestic retail market.
And the market is only set to grow and double by 2015. Higher spending on healthcare, increasing middle class incomes, and rising penetration in rural areas will help spur growth in the domestic market. This is also the reason why increasingly global pharma player are looking at the inorganic route to build a presence. Piramal says: "Companies across the globe are excited about the growth opportunity in India and the potential to scale up Indian business models in other emerging markets. The motivation behind the acquisitions is growth and not cost optimization. Hence, they are looking for companies with strong brands and processes." Propelled by our core value - Knowledge, Action and Care - we had built distinctive capabilities and robust governance in our branded formulations business. Abbott clearly understood this and hence the premium. I firmly believe that well-run businesses will create higher value."As for valuations, analysts say there are no conventional norms. Promoters are asking for higher and higher valuations, and some of them have even realized their aspirations. In fact, they are only getting better with each deal, with a substantial upward trend in the purchase prices -the Ranbaxy-Daiichi transaction was done at 4 times sales, the $783 million Sanofi-Shantha acquisition at 8 times sales, while Abbott bought Piramal at 9 times sales. "The pharma market has set new benchmarks for other sectors as well (in valuations)", says Sujay Shetty, India pharma leader, PwC, adding "scarcity of rich assets - great franchise coupled with good governance, and need to lead in the market has driven valuations to massive levels."
Says Sanjiv Kaul, ChryCapital MD and an old pharma hand: "I expect to see more traction in the India centric- M&A activity thanks to heightened interest and hunger for growth by MNCs".India is also one of the most competitive generic pharma industries globally which makes it an attractive sourcing destination for any pharma company looking to build global leadership in the generics space. |
| US based SailPoint sets engineering centre in Pune |
| Business Standard: February 17, 2011 |
US based Identity management software provider SailPoint has set up an engineering and support centre in Pune with the investment of Rs 4.5 crore.Aimed at supporting the company’s growing global customer base, the centre will team with SailPoint’s US-based engineering team to deliver next-generation identity management solutions.
"The Pune centre will help us take advantage of the rapidly increasing market adoption of identity governance to continue providing world-class support to our growing global customer base. Opening this centre is an important step for us as we continue our growth trajectory in 2011. Pune is an ideal location for our new engineering centre because the city provides a strong infrastructure, excellent educational institutions and a rich talent pool of skilled software engineers with deep experience in the identity management market," said Mark McClain, CEO and co-founder of SailPoint."
The company has plans to start marketing and sales activities by the end of 2012. It has focused customers in the sectors like banking, health care and IT. Identity management software, such as the solution provided by SailPoint, enables organisations to centralise the control over this access to take a proactive approach to risk management and compliance."We are excited to bring the SailPoint culture and vision for identity governance to our team here in India," said Ninad Panse, vice president and managing director, SailPoint India.He added, "Our team is looking forward to contributing to the award-winning product innovation and customer service that has set SailPoint apart from competitors in the identity governance market."
SailPoint’s identity governance software, IdentityIQ, helps companies reduce the risk associated with user access to critical applications and data. SailPoint IdentityIQ allows organisations to put in place strong controls over user access to ensure compliance with policies and regulations and to automate processes for adding, changing, and removing access privileges in an efficient and compliant manner.According to the company, today’s Global 1000 organisations have thousands of users that access over hundreds of IT systems and applications in various locations.Managing "who has access to what" can be a very daunting task, but one that is necessary with the emergence of government and industry regulations such as Sarbanes- Oxley (SOX), Payment Card Industry (PCI) security standards, and Basel II banking regulations. |
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