Cover Story Indian Pharmain a spot Outlook Sugar Stats Indian Investors like to play it safe Emerging Country Zambia In Focus Fading Facebook?

1. Investeurs Chronicle
February 2014, Volume: 88

2. Cover
Story
The US Food and Drug Administration’s (USFDA) ban on import of active pharmaceutical ingredients from Ranbaxy’s plant at Toansa in Punjab – in addition
to three other of its earlier blacklisted manufacturing sites — has implications for more than just the beleaguered company.
The fourth Indian plant of the company to suffer such a setback from the US regulator, Toansa is the major supplier of low-cost active pharmaceutical
ingredient, or API, a key raw material for some Ranbaxy products marketed in the US. Maintaining both volumes and margins in a market accounting for more
than a third of consolidated global sales will now is difficult, if not impossible. The unique selling proposition of Indian exporters of generics - and the US
market is the world's biggest - is their cost advantage. To lose it even temporarily is to be severely hampered. Ranbaxy is not the only Indian pharmaceutical
company to face such developments as the FDA has tightened up its own act. All those affected have only one course ahead of them: satisfy the FDA, the global
leader in pharmaceutical regulation whose actions are carefully monitored by other regulators around the world, so as to regain unhindered access to the
world's most lucrative pharmaceutical market. Regulatory action has not been limited just to Ranbaxy either; we have read about a similar situation at
Wockhardt and to a lesser degree at other firms. The USFDA has identified “significant violations of current good manufacturing practice (cGMP) regulations”
at two facilities belonging to Wockhardt, apart from issuing warning letters to a host of other firms such as Dr Reddy’s, Lupin, Sun Pharma and Aurobindo
Pharma. An objective evaluation of the observations made by regulators at other companies' facilities indicates that symptoms aren't very different from
those at Ranbaxy and Wockhardt.
This brings us to the fundamental question: Is the drug supply in India really safe? Why is it that these egregious violations have all been detected by foreign
regulators? "Experts" have argued that these are merely "documentation related" violations; they have no bearing on the quality of the product.
When we say that we have different standards compared to the West, are we saying that we accept people lying about or backdating test results? How about
substituting lower-quality ingredients to save a few hundred rupees? Is that acceptable by our standards? Or is that merely a "documentation" problem? It
makes a good talking point to say that the western pharma industry is out to malign the industry in India, but given all the data, this argument is wearing thin.
More importantly, we are beginning to lose credibility.
Indian Pharmain a spot

3. Cover
Story
Impact on Exports
The Drug Controller General of India and other authorities must work closely with the pharma industry to evolve systems for enforcement of compliance with
global cGMP standards. At stake is India’s $15 billion-a-year pharma exports, over a quarter of which goes to the US. The industry may well say that irrespective
of the USFDA inspections revealing significant deviations from the cGMP standards, there is no evidence to suggest that the exported drugs are of substandard
quality. In fact, what the USFDA calls “adulterated” drugs includes any medicine not manufactured under conditions confirming to its cGMP regulations — it
does not necessarily mean the product is inadequate. Ranbaxy continues to export to other regulated markets and the fact that many of its finished
pharmaceutical products are listed under the World Health Organisation’s Prequalification of Medicines Programme supports such a claim.
But there is little to be had in pushing such a line of argument. The truth is that if a company hopes to export to the US, it has no option but to meet the latter’s
regulatory requirements, howsoever stringent they may be.
The cure is not a band-aid approach that addresses one issue at a time, but to fundamentally rethink what it means to put your brand on a product that people
rely on when they are sick, when they are most vulnerable. We need a fundamental change in our approach to quality. We need to think in terms of "risk" to our
supply chain of medicines and how we mitigate these "risks" in a continuous fashion. It will take a long time to undo the ills of the past, but this approach will
give us lasting results, unlike the solutions we have focused on thus far. Hopefully then, we can say with confidence that we really stand behind every pill, every
injection and every prescription that we fill for patients.

4. Sugar prices fell in 2013 for a third successive year, undermined by a third successive season of production exceeding consumption, and the prospect of a fourth.
Prices fell by 13% and were bearish through 2013. The fall in prices was despite a weaker rupee and an increase in import duty from 10% to 15%. The other
factors were lower overseas prices and distress sale by Maharashtra and Karnataka mills to pay arrears to farmers.
New Year (2014) has failed to bring any cheer for the sugar industry. Sugar prices are still on a downslide despite government's measures to save the financially
crunched sector. Government recently announced a bailout package for the sugar industry. As per the recommendations of the PM-appointed informal group of
ministers, a 12% interest subsidy on Rs 6,600 Cr. loan was given, for paying off cane arrears.
The industry is struggling with low sugar prices and high sugar cane costs. Sugar mills are waiting for some clearance on the raw sugar export assistance by the
government and there is also a demand to hike import duty from 15% to 40%.We expect that until there is some export movement, sugar prices would not see
any correction.
Stats
Outlook-Sugar
Gloss
Cost Audit
Cost audit: Represents the
verification of cost accounts and
check on the adherence to cost
accounting plan. Cost Audit
ascertain the accuracy of cost
accounting records to ensure that
they are in conformity with Cost
Accounting principles, plans,
procedures and objective

5. Emerging Country- Zambia
Zambia officially the Republic of Zambia, is a landlocked country in Southern Africa. The neighboring countries are the
Democratic Republic of the Congo to the north, Tanzania to the north-east, Malawi to the east, Mozambique, Zimbabwe,
Botswana and Namibia to the south, and Angola to the west. The capital city is Lusaka, located in the south-central part of
the country.
Surrounded by eight countries, Zambia is strategically positioned to act as a hub for trade and investment in Africa.
Zambia has a vast endowment of metals, gemstones, industrial minerals and potential energy resources including coal,
hydrocarbons, and more recently, uranium. Zambia is one of the world’s largest producers of copper and cobalt. Zambia
is the world’s third-largest emeralds producer and seventh-largest copper producer (and the largest in Africa)
GDP growth in Zambia was at 4.8% in 2013 from 7.2 percent in 2012 largely due to lower agricultural production.
According to the EIU, Zambia’s economic growth trajectory is expected to continue at a robust annual rate @7% over the
period 2013 to 2016. The growth will be led by increasing investments in mining, agriculture, power and construction.
The annual rate of inflation, as measured by the all items Consumer Price Index (CPI) for December 2013 was recorded at
7.1 percent compared to the 7.0 percent recorded in November 2013. This means that on average, prices increased by 7.1
percent between December 2012 and December 2013.
Zambia recorded a trade deficit valued at K 327 Million in November 2013 from a trade surplus of K 43 Million recorded
in October 2013. Since January 2013, the country has recorded the first trade deficit. Zambia recorded its last trade deficit
of K275 Million in May 2009. Zambia’s major export products in November 2013 were from the intermediate goods
category (mainly comprising copper cathodes and sections of refined copper) accounting for 83.3 percent. Other exports
were from the Consumer goods, Raw materials and Capital goods categories which collectively accounted for 16.7
percent of total exports in November 2013.
Net foreign direct investment (FDI) in Zambia is projected to increase in 2013 and 2014, after record-high pledges - an
estimated $10.142bn - were received during 2012. The majority of the pledges were directed to the mining sector, and to
a lesser extent the manufacturing and energy sectors. India’s exports to Zambia are at US$132.27 million (2007-08), US$
107.43 million (2008-09), US$ 88.34 (2009-2010) and India’s imports from Zambia are at US$74.84 million (2007-08),
US$ 208.40 million (2008-09) and US$102.67 (2009-10). India’s export items include drug and pharmaceuticals,
machinery and instruments, transport equipment, cotton yarn and fabrics, plastic, rubber, chemicals, and electronic
goods. India’s imports from Zambia include non-ferrous metals, ores (copper and cobalt), semi-precious stones and raw
cotton.
Vital Economic Statistics of Zambia
Economy
Particulars Details
GDP (nominal) $20.517 billion
(2012)
GDP growth
rate
4.8% (2013)
Currency Zambian kwacha
(ZMW)
Credit Rating B+ (S&P)
B (Fitch)
B1 ( Moody’s)
Fiscal Surplus 8.5% of GDP (2013)
Current
account deficit
5.3% of GDP (2013)

6. In FocusForex
Fading Facebook?
The company created in a Harvard dorm room in 2004 has established itself as a
phenomenon, securing its place in the world of the technology giants. It has grown
to 1.23 billion active users worldwide.
Yet in some ways, Facebook could be the victim of its own success.
As it celebrates its 10th anniversary, Facebook is now facing challenges in keeping
its original base of young users as new social networks vie to be the coolest on the
Internet. Secondly, its initial core base of teens and university students has
expanded, and Facebook is now widely used by people in all age groups.
Facebook's demographics appear to be shifting as adults, even seniors, use the
network to catch up with long-lost friends and stay connected to family and
colleagues.
An iStrategy Labs study of US Facebook users found a 25 per cent drop in the
number of users in the 13-17 age groups, along with an 80 per cent jump in the
number of users over 55.
However, some analysts point out that Facebook's appeal to grownups is a big part
of maturation, and represents the key to generating revenue and profit.
Advertisers place promotional content on Facebook for one reason only - to
generate sales and since the vast majority of purchases made online come from
users of ages 25 and above. One study suggests it is as high as 85 per cent. With
these figures in mind, the decline in users ages 13-24 becomes almost irrelevant.
Facebook stands at crossroads between staying cool and fading or graduating to
the next level of maturity.
Data from 20th
January 2014 to 31st
January 2014
Sensex Nifty
21,205
.05
20,513
.85
6303.9
5
6089.5
0
Gold (10 gm) Silver (1 Kg)
29324
29262
45110
43338
Crude Oil ($/barrel) Dollar/INR
106.48
106.40
61.63
62.48

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Team Chronicle
Akanksha Srivastava akanksha@investeurs.com
Nidhi Gogia nidhi@investeurs.com
Harpreet Kaur harpreet@investeurs.com
Disclaimer: Investeurs Chronicles is prepared by Research & Analysis Team of Investeurs Consulting Private Limited to provide the recipient with relevant information pertaining to the world economy. The
information contained in the document is based on the releases made by various newspaper & publications; hence, we are not responsible for any inaccuracies in the information provided.
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