Other income increased sharply from Rs 7.98 crore to 16.65 crore. It seems that the sharp increase in Betamethasone prices by the Government of India in January this year has been compensated by the increase in the cost of other drugs. The company is a major manufacturer of bulk drugs and formulations of Betamethasone. This drug is still under price control. The prices of Betamethasone Velerate were recently increased by 17.89 per cent to Rs 224 per gram and Betamethasone Phosphate by 11.5 per cent to Rs 185 per gram. The company is a major manufacturer of anti-ulcerants and vitamins for which there is little growth in the domestic market.

The company had revamped its marketing system in the beginning of the year and divided its field force of 1,350 sales representative into seven groups. The different groups were also supported by 400 experts. The forming of a separate division is based on different therapy areas like gastroenterology, dermatology, respiratory, paediatrics & neurology, gynaecology & surgery, intensive care and cardiovascular & diabetics. This was to enable focussed approach in each therapeutic class.

This approach has not converted into any substantial gains in first quarterly turnover of the company but is likely to be reflected by the end of current year. The company continued to enjoy market leadership in pharmaceutical industry and has 21 drugs listed in the top 300 drugs of ORG list.

Patent expiring drugs
Seven drugs will be going off-patent this calender year and that will open the floodgate of fortunes for Indian companies. The cumulative sales of these drugs in the US is around $7.5 billion. The size of this export opportunity is more than double the total size of the domestic drugs and pharmaceuticals industry. Even if domestic manufacturers export these new drugs at a fraction of the cost they can make a windfall gains.

Indian companies' cost of manufacturing is one of the lowest in the world. It is for this reason that these companies have better chances of securing a large pie of the lucrative US market. Almost all the seven drugs or their equivalents are already being manufactured in India either by the original patent holder or their licencees. Take for instance `Vasotec', a $1.2-billion drug used for hypertension and patented by Merck. The same drug is manufactured by Sun Pharma and Torrent which sell their brands for Rs 23 and Rs 20 respectively for a strip of 10 tablets.

`Procardia' is a $1.195-billion drug used for hypertension and is patented by Pfizer. This drug is manufactured by Unique Pharma and is sold for Rs 13 a strip. `Neurontin' is a $800-million drug used for anti-epilepsy and is patented by Warner Lambardt. This drug is manufactured in India by Unichem Laboratories and is sold for Rs 251. `Ivomec' is a $705-million drug patented by Merck for river-blindness and made in India by FDC. This drug is sold for Rs 120. `Humulin' is a $850 million drug for diabetes no 1 and patented by Eli Lilly. This drug is available in India for Rs 209.

`Glucophage' is another drug for diabetes worth $1.150 billion and patented by Bristol-Myers Squibb. This drug is available at a price of Rs 7.50. And the last `Augmentin' is an antibiotic patented by Smithkline Pharma and accounts for largest value of $1.6 billion. This drug is supplied by SmithKline Beechem for Rs 206.

Drug companies have to formulate different strategies for the US market and the domestic market. Pricing in the US market should depend on the current price and expected level of decline and competition. In the domestic market, some medicines may be rated expensive. According to Shil Vijay, a leading pharmacist, most customers have a mind-block for affordable price range of around Rs 30-40 per strip. After this, they consider them expensive.

Clearly, we can see that in the above drugs, some are affordable and some are expensive. Expensive drugs has a higher risk of entering new entrants when the patent is expired. That will severely affect the sales of current manufacturers.

Equity markets
The Indian stock markets seem to have finally heeded to the pleas of various fund managers and market analysts that they should not blindly follow the movements of the NASDAQ. However, this heedfulness could not have come at a worse time.

While the Nasdaq Composite has looked up in the last two trading sessions, the Indian markets have shed considerable value. Even as it did not make much sense for Indian tech stocks (leave alone all of them) to ape the movements of the Nasdaq, Tuesday's downslide too seems inexplicable. Total outstanding long positions had fallen considerably during the last week, and so much so that these had a considerable impact on the contango rates in the carry forward market. In fact, some of the scrips experienced backwardation (undha badla) due to the huge build-up in short positions. Despite this and the fact that it was the first day of the settlement cycle on the BSE, the markets took a severe beating.

Meanwhile, SEBI's decision to relax daily price movements from 8 per cent to 12 per cent seems to have added to the volatility on the bourses. Even as the relaxation of price limits was basically meant to provide an exit route to investors, it has gone a long way in aiding the large number of ``punters'' or day traders in the Indian markets. While the added liquidity would be welcome, day traders would without a doubt cherish the additional volatility as well.

-- With contributions from Dhruv Rathi and Mobis Philipose