Developing World Healthcare Blog

Update Post January 2015

This month’s post discusses interesting developments related to certain previous posts. See the original posts for background information.

August 2014: India, the FDA and Why You Should Care

According to several press reports, leaders of Indian pharmaceutical trade groups Pharmaceutical Export Promotion Council (Pharmexcil) and India Pharmaceutical Alliance (IPA) have publicly complained about the FDA’s inspection process, and inspectors themselves. Pharmexcil claims that the FDA has stopped providing advance notice of inspections to their counterparts at India’s Ministry of Health & Family Welfare (MoH&FW.) In response to a query from hublot replica watches, an FDA spokesman stated that there has not been a change in this policy.  Interestingly, the MoH&FW has been quiet throughout this tempest.

The trade group’s membership is not universal in this “blame the regulator” mindset as evidenced by this passage from an interview of G V Prasad, CEO of Dr Reddy’s, in the 9/24/14 issue of The Economic Times:

“You mentioned that Indian companies have to climb up the quality curve. What should they be doing, especially in relation to manufacturing practices?

This is about mindset, the jugaad attitude... But you can’t compromise on certain things. And this is a problem. Because if you go out, the roads are chaotic, government services are terrible, public transport is abysmal. From cheap michael kors handbags there, you come and you say you want excellence once you step into the organisation. You want very high quality. This is a bit challenging for employees, when they are being taught to make do all the time and you suddenly say we are not going to make do, and we are going to do the best possible way, the right way.”

Links to the relevant articles:


September 2014: Why People in the Klang Value Love This Picture

UG Healthcare, a Malaysia-based manufacturer of medical examination gloves, listed on the SGX on December 8. The company has two factories in Seremban, Malaysia, that have the capacity to produce up to nike outlet 1.3 billion gloves annually. The company sells its gloves in over 50 countries including the US, Europe, China, Japan, and South Korea. The stock listed at S$0.215 and now trades at S$0.255.

Halyard Healthcare (spun off from Kimberly-Clark in October) closed its manufacturing plant in Thailand (capacity: 4 billion gloves), and outsourced production to an un-named moncler outlet third party. Industry leader Top Glove recently announced a new “multi-national” client, which would suggest that they have the business.


October 2014: Developing World Healthcare and the Globalization of Pharmacy

Walgreens and Alliance Boots (now Walgreens Boots Alliance) have completed their merger. Stefano Pessina, who has global ambitions, is the interim CEO and the company’s largest shareholder. The choice of permanent CEO could be telling, but the company’s strategy of expanding globally won’t change.

Interestingly, Li Ka-shing’s recently announced restructuring of Cheung Kong Limited and Hutchison Whampoa Limited has been well received on the HKEx. Hutchison owns 75% of AS Watson Group, the replica watches leading pharmacy chain in Asia.  Hutchison shares have rallied and now trade at an EV/EBITDA multiple of 12x trailing EBITDA. Mr. Li hopes to list Watson’s, but receiving a premium over the implied valuation in an IPO could be difficult. Note that comparable EV/EBITDA multiples for large chains are 11-14x: CVS Health (CVS) trades at 11.7x, Walgreens Boots Alliance (WBA) trades at 14.0x, and Rite-Aid (RAD) at 10.9x. An outright sale could be the most profitable course of action: industry acquisition multiples have been 10-13x trailing EBITDA.


November 2014: China’s Pharmaceutical Distributors: Waiting for Real Healthcare Reform

According to the December issue of Pharma China, the China Food & Drug Administration (CFDA) will publish a list of drugs permitted for internet sales. breitling replica watches Industry analysts expect the list to include oral drugs for chronic conditions; new drugs that haven’t participated in the China’s tender process; drugs “involving privacy;” and generic drugs with high “price/efficacy” advantages. Reuters and news replica Watches uk outlets report that CFDA should make an announcement in January or February. This move would create an alternative to the country’s hospital-based pharmacies that account for 70% of the market. Guangzhou Baiyunshan (one of the leading distributors) is raising US$1.6 billion for various corporate purposes, including development of an rolex submariner replica watches online pharmacy in conjunction with Alibaba Health. Yunfeng (Alibaba founder Jack Ma’s private equity fund) is a modest investor in the offering. Numerous companies intend to participate in this market.

We will address this subject in more detail in a future post. 

Disclosure: The author and clients of our firm own shares of Dr Reddy’s Laboratories.