Generic drug maker Ranbaxy Laboratories Ltd pleaded guilty on Monday (20th May 2013) to felony charges related to drug safety and will pay $500 million in
civil and criminal fines under the settlement agreement with the U.S. Department of Justice.
The settlement is it’s largest-ever with a generic drug maker over drug safety, according to the U.S. government. It includes $150 million in payments for a
criminal fine and forfeiture and $350 million in payments for civil claims.In 2008, the FDA banned the company from selling about 30 drugs in the United States
after it found manufacturing deficiencies at facilities in India. In 2009, the FDA had accused the company of falsifying data and test results in drug applications
and halted reviews of drugs made at a plant in northern India.
Ranbaxy USA pleaded guilty to three felony counts related to the manufacture of drugs at two Indian locations that did not meet safety standards and to four
counts of making material false statements.
In the civil settlement, Ranbaxy has agreed to pay $350 million to resolve allegations that drugs from the two Indian plants did not meet specifications and those
false claims were submitted to U.S. government healthcare programs between April 1, 2003 and September 16, 2010.
This is not the first time for the company. In November 2012 it recalled some generic Lipitor, known as atorvastatin, in the United States after certain batches
were found to contain glass particles. It has since resumed manufacturing the widely used cholesterol lowering medicine.
Indian drug makers, who had built their billion dollar fortunes by exporting generic drugs to the US market, may find it difficult to secure new contracts as the
Ranbaxy episode raises questions about the quality and safety standards of the drugs manufactured from India.
The US generic market size is estimated at $90 billion, out of which Indian drug makers have approximately a share of around 6%. It is one of the biggest
pharmamarkets for Indian generic drug makers, but the recent revelation of fraud at Ranbaxy Pharma by ex-employee Dinesh Thakur may end up inflicting
collateral damage on other Indian companies who are vigorously defending their quality standards.
Though warning letters and settlements are not an uncommon in the US market, what drug makers worry is that the Ranbaxy example puts the entire Indian
industry under the bracket of "dirty" manufacturers, and the branded drug industry will use this as a stick to tar generic makers from India.
As such Indian companies have been under tight scrutiny since the Ranbaxy scandal broke out in 2008. They have seen the number of inspections by USFDA
has substantially gone up, and there have also been surprise visits by them.
The publicity surrounding Ranbaxy’s settlement will likely reinforce US consumers’ mistrust of generic medicine. Though around 75% of prescription
medicines sold in the US are generics, the US government has struggled to enforce quality control measures over generic drug companies operating abroad,
after several high-profile cases, including Ranbaxy’s recall of its Lipitor generic last November, stirred public outrage.
Also, it is in an industry where attracting scientific talent is of utmost importance. Companies with a tarnished reputation cannot even dream of getting the
right people. The Ranbaxy episode has also had an adverse impact on the Indian pharmaceutical industry's plans to expand its global presence.
There are other questions that need answers as well. One, why have Indian authorities woken up to the issue only now? The matter had been simmering for
several years. If Ranbaxy was cutting procedures and falsifying data for the heavily regulated US market, how do we know it wasn't doing so in India too? It is
an open secret that the sector is loosely regulated in India, though it must be said that it's not an easy task - the number of drug companies in the country runs
into several thousands. It is only now that the health ministry has asked the Drug Controller General of India (DGCI) to examine all the dossiers and drug
applications on the basis of which approvals had been granted to Ranbaxy in the past.
Second, did the Singh family sell a lemon to Daiichi Sankyo in 2008? Was the Japanese company aware of the rot? Did the Singh brothers make full disclosures?
The buyer doesn't think so. "Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information
concerning the United States Department of Justice and FDA investigations. Daiichi Sankyo is currently pursuing its available legal remedies and cannot
comment further on the subject at this time," Daiichi Sankyo said in a statement posted on its website. Malvinder Singh, the elder of the brothers, insists that
the FDA charges were all in the public domain, Daiichi Sankyo's due diligence took place over months, and all allegations of impropriety are wrong. In fact, he
says that he just wanted a partnership with Daiichi Sankyo but the Japanese company wanted more and more of Ranbaxy as it carried out the due diligence.
That's how talks moved from selling a minority stake to a full sell-out.
Notwithstanding the number of issues,the Ranbaxy affair is indeed one of the darkest chapters of India's business history. The company has admitted it
fudged data so that it could launch its products in the United States. It is worse than Ramalinga Raju cooking up the books of Satyam because here medicine
is involved - something people consume; young and old, rich and poor, for their well-being.
For several years now, patent-holding pharmaceutical companies have been running a campaign against those who produce inexpensive generic medicine in
countries such as India and China; this gives their campaign a tremendous shot in the arm. They need not say a word now. The entire Indian generics
industry is now under a ring of suspicion. In fact, India is yet to realize the full impact of this development. It will now have to fight doubly hard in world
The white metal's performance so far has been uninspiring. Silver prices ended April down $4.14 an ounce, or 14.6%, at $24.42 an ounce, marking
the third consecutive month of declines. The metal was little changed in March, trimmed by just $0.10. In February, silver shed $2.92. In January, it
gained a modest $1.12.However, silver continues to lead precious metals, with a gain of 24 percent so far this year, outstripping gold's increase of 11
per cent, and retains allure for inflation-wary investors.
The silver story is expected to be underlined by a continued preference in Asia for the physical metal and rising demand for exchange-traded funds.
The outflow from silver-backed exchange-traded funds is also likely to be coming to an end, and the possibility of rising demand from those funds
will further bolster silver prices in years to come. In India, if farmers get good crops, certainly demand would rise from rural households. The
monsoon has so far been normal, which bodes well for rural earnings. Rural areas make up about 60 per cent of its silver consumption.
Silver prices have held at more than $32 since mid-May, and we expect silver to move higher in the second half of the year and reach $40.20,
supported by low interest rates in the US, a sovereign debt crisis in the euro zone and inflation concerns in major emerging economies like China and
It is the process of concealing illicit sources of money. Money
laundering often occurs in three steps: first, cash is
introduced into the financial system by some means
("placement"); the second involves carrying out complex
financial transactions in order to camouflage the illegal
source ("layering"); and, the final step entails acquiring
wealth generated from the transactions of the illicit funds
Emerging Country- South Korea
South Korea officially the Republic of Korea is a sovereign state located in the southern part of the Korean Peninsula. Its neighbors are
China to the west, Japan to the east, and North Korea to the north. South Korea lies in the North Temperate Zone with a
predominantly mountainous terrain. It covers a total area of 99,392 km2 (38,375 sq mi) and has a population of 50 million.
South Korea is ranked 8th out of 41 countries in the Asia–Pacific region.It is Asia's fourth largest economy and the world's 15th
(nominal) or 12th (purchasing power parity) largest economy.
The economy is export-driven, with production focusing on electronics, automobiles, ships, machinery, petrochemicals and robotics.
The country is expected to grow faster this year than 2012's pace of 2 %. The South Korean economy was predicted to expand 2.6 %
in 2013 before jumping to 3.6 % in 2014. The economy would show modest improvement in 2013 from last year's slowdown, and
would pace its growth in 2014 owing to the gradual recovery of the global economy that would help boost both exports and domestic
In the first quarter of 2013, the GDP accelerated 0.9 % qoq, its fastest pace in two years, and boosted by exports and construction
investments. GDP was up by 1.5 % yoy, the same rate as in the fourth quarter of the previous year.In South Korea, the year-on-year
inflation rate slowed to 1.2 % from 1.3 % recorded in March due to falling oil and vegetable prices. Inflation stayed comfortably below
the Central Bank of Korea's target range of 2.5-3.5 %, leaving room for further monetary easing to spur growth. Consumer price
inflation was estimated at 1.8 % in 2013 and 2.6 % in 2014, while the jobless rate was forecast to stay at a low level of 3.3 % in 2013
and 3.2 % in 2014.
In April of 2013, South Korea recorded a trade surplus of 2.6 billion USD, down from 3.3 billion USD recorded in March, as exports
dropped by 2.4 % over the previous month. Year-on- year, exports rose for the second month in a row. Exports gained 0.4 % year on
year to $46.29 billion. Exports, which account for around half of the South Korean economy, are expected to increase 6.4 % this year
before advancing 8.4 % next year. Imports declined 0.5 % from a year earlier to $43.72 billion. Although inbound shipments of
petroleum products and gas saw gains, imports of raw materials on the whole shrank 10.1% due to weaker demand for crude oil and
coal. While inbound shipments of capital goods posted a slight decline, imports of consumer goods showed positive growth.
The FDI actually arriving here amounted to 10.38 billion dollars in 2012, up 57.8 % from a year before. FDI from Greater China
region, including Chinese mainland, Taiwan, Hong Kong, Singapore and Malaysia, surged 106.6 % on- year to 4.01 billion dollars in
2012. Investment from Japan soared 98.4 % to 4.54 billion dollars amid a stronger yen against the U.S. dollar, with those from the
United States jumping 54.9 % to 3.67 billion dollars.
The bilateral trade between South Korea and India last year stood at $19 billion, while South Korean investments into India were at
$3 billion and Indian investments to South Korea stood at $1 billion. The Comprehensive Economic Partnership Agreement (CEPA),
operationalized on 1st January 2010, triggered a 70% surge in bilateral trade that crossed $20.5 billion in 2011. India and South
Korea aim to double their annual trade to $40 billion by 2015, and ease visa norms to promote more business contacts.
Vital Economic Statistics of South
GDP (nominal) $1.156 trillion (2012)
GDP growth rate 1.73%
Currency South Korean Won
Credit Rating A+( S&P), Aa3
Fiscal Deficit 1.8% of GDP (2012)
South Korea has a
Apple Tax Issue: Time for Some Reform?
The Senate Permanent Subcommittee released a report last week that held up Apple
Inc. as an example of the legal tax avoidance made possible by the U.S. tax code.
According to John McCain, Apple has over $100 billion, more than two-thirds of its
total profits, stashed away in an offshore account.
Apple uses five companies located in Ireland to carry out its tax strategy, according to
the Congressional report. While all five companies were incorporated in Ireland, only
two of them also have tax residency in that country. That means the other three aren't
legally required to pay taxes in Ireland because they aren't managed or controlled in
that country, in Apple's view.The report says Apple capitalizes on a difference
between U.S. and Irish rules regarding tax residency. In Ireland, a company must be
managed and controlled in the country to be a tax resident. Under U.S. law, a company
is a tax resident of the country in which it was established. Therefore, the Apple
companies aren't tax residents of Ireland or the U.S., since they weren't incorporated
in the U.S., in Apple's view. The company avoids paying the 35 percent federal tax rate
on profits made overseas by just not bringing those profits back to the U.S., a practice
it shares with other multinationals.
Many Democrats complain that the government is missing out on billions of dollars
because companies are stashing profits abroad & avoiding taxes. Republicans want to
cut the corporate tax rate of 35 percent and ease the tax burden on money that U.S.
companies make abroad. They say the move would encourage companies to invest at
home and thus spur the economy and job market. The U.S. tax code contains
provisions designed to force companies that sell their products overseas to pay U.S.
taxes on the profits from those sales. But certain loopholes allow companies to legally
bypass those provisions. Now, Lawmakers are hoping that the spotlight on such a
high-profile company could be the catalyst for Congress to take action to close
loopholes or reform the law.
Gold (10 gm) Silver (1 Kg)
Crude Oil ($/barrel) Dollar/INR
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