arma players, the R&D

CAGR has been slower at 2

per cent. This is in sharp
contrast to the trend in the
last 10 years for the same set
of companies, where the
growth in R&D spend was
ahead of sales growth.
Reasons for slowdown
Some of the slowdown can
be attributed to the Covid
outbreak. While the pandemic
was positive for the
topline, bigticket
R&D
spending aimed at clinical
trials slowed in the last two
years. Secondly , companies
also optimised their R&D
spends in this period towards
complex products, diversifying
away from generics
that ha ve a different
development timeline. For
instance, 2030
generics filings
at a cost of $13
million
per product can be turned
around in 12
years, but
complex filings would cost
510
times more and require
23
times more turnaround
time.
For complex filings, the
major cost is absorbed at
the backend of the development
timeline and, hence,
the actual spends may show
up in future.
Sun Pharma has been
waiting for trial participants
to return to clinical
trial centres as the pandemic
restrictions are lifted.
Cipla’s second inhalation
product has scheduled the
study on 1,400 participants
in April2022
and hence can
witness a higher R&D spend.
After a period of trimming
proprietary development,
Dr Reddy’s portfolio of
products under development
can expand along
with the R&D allocation
from here on.
Even if the R&D spends
are slowing for companies,
investors can assess the
flight to value by the number
of complex products in
a company’s R&D pipeline.
Across companies, the common
R&D effort seem to be
on complex injectables or
biosimilars for the American
and European markets.
Adding further value are the
innovator molecules undergoing
clinical trials. Respiratory
products, depot injecjectables
(depot) and transdermals.
A urobindo’s
pneumococcal vaccine is at
an advanced stage of study
and filing. Zydus’ indigenous
DNA vaccine for Covid
and Dr Reddy’s Sputnik
Light (booster dose under
study) are eyeing some traction
from follow up sales
after missing the initial vaccination
opportunity . All
companies also develop regulatory
wise complex
products — 505 B(2) filings
— which in volve both technological
and regulatory innovation,
in challenging existing
patents.
That said, companies
must speed up R&D in vestments
for better growth.
The last five years of slowing
R&D growth was also the
period when the Nifty
Pharma index underperformed
the Nifty; it returned
26 per cent compared
to Nifty 50’s 62 per
cent. Innovation is the only
fallback for the pharmaceutical
industry which otherwise
faces pricing pressure
in almost ever y
geography.
tions and vaccines are also
making inroads into the
R&D plans of companies.
For example, Sun Pharma is
advancing two Phase 3 studies
for its Ilumy a and two
other innovator molecules
are in Phase 2 study.
Value-added pipeline
Cipla and Lupin ha ve made
a strong start in respirator y
products (two approved)
and are preparing the next
set with generic Advair and
generic Symbicort for Cipla.
Lupin has two respirator y
products under review and
six more are in early stages
of development.
Biocon has launched
three biosimilars, three
more are in review from the
first wave and two from the
second wave are in development.
A urobindo, Dr
Reddy’s, Lupin and Zydus
Lifesciences are also developing
their own biosimilars
targeted at developed and
other markets. Under complex
injectables Cipla,
Lupin, Zydus Lifesciences
and Aurobindo are developing
peptides, long acting inPharma
firms’ R&D spend lags topline growth
They are taking up value-added projects, but must step up R&D spends as only
innovation can fight pricing pressures
SHISHIR SINHA
..........................................
New Delhi, July 16
The rupee’s fall against the
dollar has been quite ‘mild’,
government sources said on
Saturday. Compared to the
previous three major occasions
— T aper T antrum of
2013, global financial crisis in
2008 and the Asian financial
crisis of 199798
— this time,
the fall is quite muted, they
said.
These remarks come at a
time when the
rupee has
been dipping,
down to 79.74
a dollar as on
Friday as
against 74.50
at the end of
December.
This means the dollar has
strengthened by about 7 per
cent till date in calendar
2022. On Thursday, the rupee
had breached the psychological
level of 80 during intraday
trade.
$-Re in past crises
During the Asian financial
crisis, between A ugust 1997
and August 1998, the US dollar
had strengthened 22 per
cent against the INR. In 2008
(global financial crisis) , from
February to October , and in
2013 (T aper T antrum), from
May 3 to August 28, the dollar
soared 28 per cent.
Global strengthening
“The strength of the US dollar
against the rupee cannot be
viewed as an isolated case. It
is just part of the strength of
the US dollar globally against
all currencies — developed or
emerging,” a government
source said.
He said the dollar has appreciated
against many
other currencies.
The US
dollar index
has gained 13
per cent this
year against
six major currencies
— the Euro, the British
pound, the Japanese yen, the
Swiss franc, the Canadian dollar
and the Swedish krona.
This is due to the change in
attitude towards risktaking
in financial markets. When
interest rates are low and dollar
supply is ample, investors
take risks and invest in the
stock markets of emerging
economies. India’s stock markets
soared in 2020 and 2021
because of international investors
flocking in.
Rupee’s weakening against
the dollar ‘quite mild’
Govt sources point to US unit firming
up against most major currencies
OUR BUREAU
..........................................
Mumbai, July 16
HDFC Bank reported a 19 per
cent yearonyear
( yoy)
increase
in the first quarter
standalone net profit at
₹9,196 crore against ₹7,730
crore in the yearago
period
on the back of healthy
growth in net interest income
and a decline in loan
loss provisions.
The Net Interest Income
rose about 14.5 per cent to
₹19,481 crore (₹17,009 crore
in the yearago
quarter).
Other income, which includes
commission from
nonfundbased
banking
activities, fees, earnings from
foreign exchange and derivative
transactions, profit/loss
from in vestments, dividends
from subsidiaries, and recoveries
from accounts previously
written off, inched up
1.6 per cent to ₹6,388 crore
(₹6,288.50 crore).
Provisions (other than tax)
and contingencies declined
34 per cent y oy
to ₹3,188
crore (₹4,831 crore). Gross
nonperforming
assets (GNPAs)
increased by ₹1,893 crore
during the quarter to ₹18,034
crore as of Juneend
2022.
GNPAs edged up to 1.28 per
cent of gross advances as at
Juneend
2022 against 1.17 per
cent as at Marchend
2022.
Net NPAs inched up to 0.35
per cent of net advances
against 0.32 per cent.
The bank’s core net interest
margin declined a tad to 4 per
cent of total assets against 4.1
per cent in the yearago
quarter. The total credit cost
ratio was lower at 0.91 per
cent compared to 1.67 per
cent for the quarter ending
June 30, 2021.
Total balance sheet
The total balance sheet size as
of June 30, 2022, was
₹21,09,772 crore up 20.3 per
cent from ₹17,53,941 crore in
June 30, 2021. Total advances
stood at ₹13,95,068 crore, an
increase of 21.6 per cent over
June 30, 2021.
Per the bank’s internal
business classification, retail
loans grew 21.7 per cent, commercial
and rural banking
loans rose 28.9 per cent and
corporate and wholesale
loans were up 15.7 per cent.
Overseas advances constituted
3.5 per cent of total
advances.
Total deposits as of June 30,
2022, stood at ₹16,04,760
crore, an increase of 19.2 per
cent over June 30, 2021. CASA
deposits comprised 45.8 per
cent of total deposits against
45.5 per cent as of June 30,
2021.
HDFC Bank Q1 net up 19% on higher NII
Decline in provisioning too boosts performance
SURESH P. IYENGAR
..........................................
Mumbai, July 16
With SEBI’s threemonth
ban
on launch of New Fund Offers
ending, mutual funds
(MFs) ha ve come out with a
slew of NFOs to shore up
their assets under management.
This is despite the oneyear
return of most equity
schemes slipping into the
red.
Interestingly, fund houses
are going with the in vestor
preference for passive funds
rather than actively managed
ones. With no major
IPOs slated for the next few
months, mutual funds are
hardselling
the NFOs.
In April, SEBI had banned
the launch of NFOs till July 1
so that MFs can set the new
system that stop accepting
money from pooled accounts
of brokers and distributors.
Slew of launches
Motilal Oswal MF has
launched two passive funds
on BSE Financials and Healthcare
while Adity a Birla Sun
Life MF has come out with
Nifty Financial Services ETF .
WhiteOak Capital MF and
Edelweiss MF have launched
a flexicap