Indo Japan Trade & Investment Bulletin


Published on

Highlights of this Indo japan Trade & Investment Bulletine:
Reserve Bank of India and Bank of Japan conclude Currency Swap Agreement, HCL Targets China and Japan for Expansion, Otsuka Pharma and Mitsui Join Hands to Exploit Opportunities in Indian Market, Kotak Mahindra Capital and Sumitomo Mitsui Banking Partner to Tap India-Japan M&A Deals, Hitachi and Panasonic Make India Base for Africa, Middle East and Emerging Markets, Nabtesco Automotive Corporation of Japan forms Joint Venture with UNO Minda, SDS Biotech of Japan Acquires Controlling Stake in Sree Ramcides,Dentsu in Expansion Mode in India, Mitsui PE Acquires Stake in Guardian Lifecare to have a Bigger Pie of the Indian, Pharmaceutical Market

Published in: Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Indo Japan Trade & Investment Bulletin

  1. 1. Indo-Japan Trade & InvestmentBulletinDecember IssueJapan Desk, Corporate Professionals 2012
  2. 2. INDEXIndo-Japan Trade & Investment Highlights  Reserve Bank OF India and Bank of Japan conclude Currency Swap Agreement  HCL Targets China and Japan for Expansion  Otsuka Pharma and Mitsui Join Hands to Exploit Opportunities in Indian Market  Kotak Mahindra Capital and Sumitomo Mitsui Banking Partner to Tap India-Japan M&A Deals  Hitachi and Panasonic Make India Base for Africa, Middle East and Emerging Markets  Nabtesco Automotive Corporation of Japan forms Joint Venture with UNO Minda  SDS Biotech of Japan Acquires Controlling Stake in Sree Ramcides  Dentsu in Expansion Mode in India  Mitsui PE Acquires Stake in Guardian Lifecare to have a Bigger Pie of the Indian Pharmaceutical MarketKnowledge Center  Pharmaceuticals: The New Investment Magnet
  3. 3. Indo-Japan Trade & Investment HighlightsReserve Bank OF India and Bank of Japan conclude Currency Swap Agreement Reserve Bank of India (RBI) and Bank of Japan (BOJ) have agreed to bilateral currency swap agreement against US Dollar for US$ 15 billion valid for next 3 years. The swap agreement aims at helping Central Banks to swap local currencies for US Dollar to tap eachother’s foreign exchange reserves. The swap agreement will also help the central banks to dealwith short-term liquidity difficulties and in supplementing the existing international financialarrangements as well as strengthen the mutual cooperation between India and Japan.HCL Targets China and Japan for ExpansionIndian IT Company HCL Technologies sees major growth opportunities in the large East Asianmarkets Japan and China that have largely remained untapped by Indian IT companies. Thetraditional drivers of growth of Indian IT companies have been US and Europe. However, HCLsenses huge opportunities in the non-traditional markets in East Asia that the company believeswould help it enter the next wave of growth. HCL has continued to register consistent growthdespite the global slowdown in IT services market and the company believes that the Japan andChina may very well be the next growth drivers Indian IT major has been searching for.Otsuka Pharma and Mitsui Join Hands to Exploit Opportunities in Indian MarketGujarat based Claris Lifesciences has entered into a Joint Venture with Otsuka PharmaceuticalFactory Ltd. and Mitsui & Co Ltd. to tap opportunities in infusion business in India and otheremerging markets. The 60:20:20 JV between Otsuka, Claris and Mitsui will focus on commonsolutions, anti-infectives, plasma volume expanders and parenteral nutrition therapies, an areaClaris holds expertise in. The JV is likely to benefit enormously from the manufacturing andmarketing backup of Claris, Otsuka’s global expertise in infusion business and Mitsui’s globaltrading network.
  4. 4. Kotak Mahindra Capital and Sumitomo Mitsui Banking Partner to Tap India-Japan M&ADealsKotak Mahindra Capital Company Limited (“KMCC”), investment banking division of KotakMahindra Bank, has formed an exclusive strategic alliance with Sumitomo Mitsui BankingCorporation (SMBC) and SMBC Nikko Securities (SMBC Nikko) to strengthen presence incross-border M&A advisory services between India and Japan. Kotak and SMBC had enteredinto an MoU in 2010 to cooperate on a number of businesses and the exclusive strategic allianceis seen as the next step in the same direction to benefit from the increased participation byJapanese companies in Indian M&As.Hitachi and Panasonic Make India Base for Africa, Middle East and Emerging MarketsTwo of the largest Japanese corporations in India, Hitachi and Panasonic are betting big on Indiafor growth and have plans to make India base for expansion into Africa, Middle East and otheremerging markets.Hitachi has announced its plans to invest INR 4,700 crore (INR 47 billion) to build 5manufacturing plants in India as the company held its first board meeting outside Japan in its 102years history in Delhi. Hitachi’s ‘India Business Strategy 2015’ targets a three-fold jump in itsrevenues to make India one of its largest markets in the world.Similarly, Panasonic has set an ambitious target of becoming the largest appliance maker in Indiaby 2018 as the company has been executing its expansion plans aggressively.Nabtesco Automotive Corporation of Japan forms Joint Venture with UNO MindaLeading Japanese manufacturer of air-brake components has formed 49:51 JV with Indiacompany Uno Minda, part of the $400 Mn NK Minda Group that has 31 manufacturing facilitiesincluding in Indonesia and Vietnam. Tokyo based Nabetesco specialises in transportationequipment business and is a leader in automotive air brake systems and clutch control systems.The JV company will set up a plant in Pantnagar, Uttrakhand which is likely to come intoproduction in 2014 and will engage in the business of designing, manufacturing of air brakeproducts for commercial vehicles and clutch products for passenger vehicles.
  5. 5. SDS Biotech of Japan Acquires Controlling Stake in Sree RamcidesJapanese SDS Biotech KK, engaged in the business of research, development and manufacturingof agricultural chemicals has acquired a controlling stake of 65% in agro input maker SreeRamcides for INR 100 crore (approx Yen 1495 million) in a deal likely to be concluded in byJanuary, 2013.Sree Ramcides is engaged in the business of manufacturing agro inputs such as herbicides,insecticides, fungicides, etc.Dentsu in Expansion Mode in IndiaJapanese advertising giant Dentsu has been agreessively expanding its operations into India andinorganic growth through expansions appears to be the strategy so far. The Japanese company’sIndian arm is reported to be in talks with Network18 to acquire its stake in digitial ad agencyWebchutney in which Network18 holds 70% stake through its financial arms Capital18 Ltd. andCapital18 Fincap.Dentsu was earlier in news for its acquisition of British ad giant Aegis Groupfor $4.9 billion.Mitsui PE Acquires Stake in Guardian Lifecare to have a Bigger Pie of the IndianPharmaceutical MarketJapanese Conglomerate Mitsui Corporation’s PE arm has picked up a minority stake in GuardianLifecare, an eight-year-old retail chain of health and wellness stores. The investment by MitsuiPE in Guardian Lifecare is an interesting transaction from the perspective of Indian ForeignDirect Investment (FDI) Policy since the multi-brand retail FDI requires to undergo prior-permission route and is subject to performance requirements.
  6. 6. Knowledge Center PHARMACEUTICALS: THE NEW INVESTMENT MAGNETThe Indian Pharmaceutical industry currently tops the chart amongst India’s science basedindustries with wide ranging capabilities in the complex field of drug manufacturing andtechnology. India ranks as one of the biggest and technically sophisticated pharmaceuticalmarkets in the developing world. The pharmaceutical industry plays a pivotal role in theeconomic and social development of India by creating employment for a large number ofpeople and providing access to vital drugs to the large population of India at affordable prices.CURRENT STATUS AND OPPORTUNITYThe Indian pharmaceutical industry has shown a solid growth in the recent times. Growing at acompound rate of 10%-11% per annum, the industry has registered growth in key therapy areas,including anti-diabetics, derma and vitamins, according to data compiled by market researchfirm All India Organisation of Chemists and Druggists (AIOCD).The annual turnover of pharmaceutical products contributes about US$ 21 billion to India’sGDP; exports account for approximately 65% of this turnover as India exports to most of themajor countries in the world. The Indian Pharma Industry meets around 70% of country’sdemand for bulk drugs, drug intermediaries, Pharma formulations, chemicals, tablets, capsules,orals and injectibles. The Indian pharmaceutical market is expected to touch US$ 74 billionsales by 2020 from US$ 11 billion at present, according to a PricewaterhouseCoopers (PwC)report.
  7. 7. REGULATIONS FOR ENTERING INDIAN PHARMA MARKETIndian government has been pro-active in promoting investment in India’s pharmaceutical sector.Currently, 100% Foreign Direct Investment (FDI) is allowed under Automatic Route forGreenfield investments and 100% FDI through Government Approval Route for Brownfieldinvestments. The Department of Industrial Policy and Promotion’s Fact Sheet on FDI suggeststhat the foreign investors consider drugs and pharmaceuticals as the 5th most attractive sector forinvestment in India as it has attracted FDI worth US$ 45,516 million during the period of April,2000 to September, 2012.Recently, companies have consolidated their position in India through mergers and acquisitions(M&A). Apart from the preferred consolidation route, companies have also been engaged inexploiting the opportunities through in-licensing deals with local generic companies.Apart from a mandatory Drug License requirement, following are some of the important lawsthat regulate pharmaceutical industry in India:1. Drugs & Cosmetic Rules, 1945 (to regulate the import, manufacture, distribution and sale of drugs)2. Companies Act, 1956 (for registering Business Entity i.e. Company/ Partnership Firms/ Branch office)
  8. 8. 3. Indian Patents Act 1970 (for protecting inventions relating to new drugs)4. Factories Act, 1948 (in relation to license for carrying out manufacturing activities)5. Environment Protection Act, 1986 (all the licenses related to environmental matters including disposal of biomedical wastes, etc and Registration from industrial departments, Pollution Control Board, Boilers Act, Explosive Department’s license)The main regulatory body is the Central Drugs Standard Control Organization (CDSCO), whichfalls under the ambit of Ministry of Health and Family Welfare. Drug Controller General of India(DCGI) is the controlling body for CDSCO and is responsible for approval of new drugs andclinical trials and quality standards. Also, there are State Drug Authorities which grant druglicenses for manufacturing and licenses for retail trading. Also, Government regulates the pricesfor essential drugs through National Pharmaceutical Pricing Authority (NPPA). The Prices foressentials drugs and medicines are defined under Drug Price Control Order (DPCO). However,National Pharmaceutical Pricing Policy, 2012 (NPPP 2012) has been approved by thegovernment on 22nd November, 2012 and notified on 07th December, 2012. Therefore, a newDPCO (Drugs Price Control Order) will be prepared and notified by the government. Theregulation of prices of drugs in the National Pharmaceuticals Pricing Policy 2012 would be onthe basis of regulating the prices of formulations through Market Based Pricing (MBP). Theprices will be revised every five-year or as and when the National List of Essential Medicines(NLEM) is updated/revised. However, if there is a significant change in the market structure of aproduct, the government will revise the Prices even earlier. This is different from the earlierprinciple of regulating the prices through Cost Based Pricing (CBP) under the Drug Policy 1994.The Department of Pharmaceuticals, which came into existence in 2008, works for thedevelopment of Pharma sector in India. It regulates the complex issues related to medicinesconcerning accessibility, availability of the medicines, Research & Development, and protectionof IP Rights related to Pharma industry in India. Clinical Research Organisations (CROs) mayhave specific regulations like 21 CFR 11, HIPAA etc. applicable to it.The 2005 amendment to the Indian patent law has given a major boost to the industry byintroducing pharmaceutical product patents in India for the first time. Since then, patented druglaunches by Indian and foreign companies have been on a rise. The Indian Patent Office is said
  9. 9. to have, as per a KPMG report, granted approximately 3,488 product patents between the periodof 2005 and 2010.The Indian Government has taken a number of initiatives in the direction of promotingpharmaceutical sector which include plans to set up Venture Capital Fund to boost PharmaIndustry Infrastructure, Pharma Vision 2020 and various other initiatives including Taxincentives to encourage end-to-end research, innovation and development in the sector.Moreover, amended patent law, strong growth prospects based on increasing domestic demand,generic exports and outsourcing opportunities add to investment appeal of Indian Pharma sector.
  10. 10. CONTACT USPANKAJ SINGLA MUMBAI:Japan Desk, Corporate Professionals 403-404, Churchgate Chambers, 5 New Marine Lines, Mumbai-400020DELHI (Head Office)D-28, South Extension Part - I, New Tel: +91 22 22624671Delhi – 110049 Fax: +91 22 22655712Tel: +91-11-40622200 Email: info@indiacp.comDir: +91-11-40622293Fax: +91-11-40622201 FARIDABAD (DELHI NCR):Mob:+91-99715-08320 565, Sector-7B, Faridabad, Haryana-121006Email: Tel: +91 129 4061130 Fax: +91 129 2241017 Email: BEDFORD (UK) 2-4 Mill Street, Bedford MK40 3HD U.K. Tel: +44 (0) 2030063240 Fax: +44 (0) 2030063241 Email: info@indiacp.comDISCLAIMER: The entire contents of this document have been developed on the basis of relevant statutory provisions and asper the information available at the time of the preparation. Though the author has made utmost efforts to provide authenticinformation however, the material contained in this document does not constitute/substitute professional advice that may berequired before acting on any matter. The document has been produced only for the informational purposes; the author and thefirm expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, andof consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.