Traders build positions in Bafna Pharma

Punters have been building positions in Bafna Pharmaceuticals by spreading talk that the company is close to receiving approvals for over nine drug
formulations over the next few months. Bafna Pharmaceuticals is engaged in molecular research to formulate lifestyle drugs, for ailments like hypertension, heart diseases and cholesterol. If market sources are to be believed, the Chennai-based pharma company is expected to start ‘contract research and manufacturing’ (CRAM) in its new research facility, to be opened in the next fiscal. Company officials were not available for comment. Shares of Bafna Pharma ended 5% higher at Rs 38 on BSE on Friday.

Pharma sector: There is room for value buying

The Indian pharma growth story could not have got a more opportune time to unfold. Impending patent expiries, regulated markets gradually opening their markets for generic products and the US passing the much-awaited Healthcare Bill in order to cut down healthcare costs are turning out to be a boon for generic companies in India. And the proof is the way investors are lapping up pharma stocks on the bourses. While valuations of the sector appear to be strained, there is still room for value buying from the current gamut of stocks of small and large pharma companies. Industry experts have heralded the five-year period between FY10 and FY15 as the golden period for generic companies in view of the patent expiries worth $100-150 billion. Nearly 40 Indian companies are geared up with US FDA approved facilities and Abbreviated New Drug Applications (ANDA) approvals to meet the huge opportunity. The passing of the landmark Healthcare Bill in the US holds a lot of promise for generic companies. With emphasis on increasing the coverage of health insurance and cutting down costs of healthcare, the Bill is likely to provide a big fillip to the usage of low-cost generic drugs. The Bill seeks to bring an additional 40 million Americans under comprehensive medical insurance. This will lead to large incremental demand for drugs and other healthcare goods and services. Bulk of this incremental demand is likely to be captured by generic drug makers. The Bill may also encourage Americas insured population to increase the usage of generic drugs and curtail the use innovative drugs. Indian pharma companies — most of them being exporters of generic drugs and intermediates to the US, the world’s largest drug market — are going to gain by the passage of this Bill. While the impact is long term in the form of increase in procurement of generic drugs by US, it is nevertheless a positive sign. Leading Indian drug makers like Cipla, Dr Reddy’s Labs (DRL), Lupin and Cadila Healthcare have the potential to become leading global generic players. They have healthy para IV pipeline, are geographically well diversified, have lean cost structure and at times have dominance in certain niche segments. However, they are still quite small compared to large global generic players. For instance, Teva, the Israeli generic pharma company with more than one-fourth the share in the US generic market, is more than thrice as big as the combined size of all Indian companies. The growth opportunities for generic pharma companies are shifting from being US centric to other regulated markets like Europe and Japan and emerging markets in Latin America and the Middle East. Countries like Germany and Japan are opening up their markets for generic companies in a bid to cut down the rising healthcare cost. Many Indian companies like DRL and Biocon have established subsidiaries in Germany and are securing contracts of insurance companies. Companies like Lupin have been early entrant in Japan that is registering good growth in its generic pharma market. Pharma stocks have seen a lot of positive action in recent times as market has taken cognisance of the aforementioned factors (see the table). The ET Pharma Index has doubled in the past one year – losing its defensive streak and outperforming the Sensex. As a result, most companies are trading at not-so-attractive valuations. However, investors interested in riding the pharma growth bandwagon can consider companies like DRL, Lupin, Cadila Healthcare, Biocon and Sun Pharma with promising business models and growth track record.

Health Care Reform Bill 101:

"The House of Representatives passed the health care reform bill Sunday night with a 219-to-212 vote. With the Senate already having passed the bill on Christmas Eve, it now stands ready for President Obama to sign into law, perhaps as early as Tuesday. Many challenges remain, though. Attorneys general in 11 states have said they will challenge the constitutionality of the health care bill. Moreover, Democrats still want to make changes to the final bill after the fact. The House has already passed this package of fixes - which would rein in some of the special deals made with senators last year. Now the Senate must pass the same package of fixes before Mr. Obama can sign them into law.

To do that, the Senate will have to turn to the contentious and time-consuming process of reconciliation

What does the deal offers to the fortis???

Fortis Healthcare will spend over Rs 3,000 crore to buy a 23% stake in Singapore-based Parkway Holdings.Citibank has said that post the deal, Fortis Heathcare will make the largest hospital company in India. Parkway is said to have high quality assets with strong growth prospect and the management control explains high valuation. The deal values Parkway at $2.8 billion which is 21 times for calendar year 2011 EV/EBITDA. According to Citi, this deal appears a tad expensive and reflects the intangible upside. The outlay of $683 million is quite high in relation to Fortis.Assuming 1:1 D/E, Fortis will have to raise a significant debt to fund the deal.

Quicktakes

Acquisition $685 mn for 23.9%

stakeValuation Parkway at 4x on revenues

Derived EV $2.8 bn

Fortis Healthcare After acquisition

Hospitals 46 62

Beds 6600 10000

What Fortis gets?

Single-largest shareholde

r4 board seats with Malvinder as Chairman

16 hospitals with 3,400 beds Presence in Singapore, Malaysia, Brunei, India, China

Listed on the Singapore Stock Exchange

39 Parkway Health Patient Assistance Centres

Parkway owns 35.4% stake in Parkway Life REIT

New Fortis deal will have 'stable' impact:

BNP Paribas SA, France's biggest bank, said it expects a ''stable'' impact on its capital from the revised agreement to purchase banking and insurance assets from Belgium's Fortis Bank. ''BNP Paribas group's Tier 1 ratio should remain stable on the day the transaction closes,'' the Paris-based bank said in an e-mailed statement on Sunday. The operation will probably increase earnings by 2010 excluding integration costs, it said.
Total deposits of the combined bank are above 540 billion euros ($683 billion), BNP Paribas said. Total deposits of the combination were 586 billion euros at the end of 2007, the French bank said on 6 October, when it announced the original purchase plan.
On Saturday, the Belgian government and BNP Paribas agreed on revised terms for the break-up of Fortis. The transaction now has to be approved by Fortis shareholders, who had rejected earlier terms on a Fortis break-up, with the debacle leading to the collapse of the previous Belgian government.
Belgium will give BNP Paribas 75 per cent of Fortis Bank in a deal valuing the whole of Fortis Bank at 11 billion euros ($13.9 billion). In exchange, Belgium will get BNP Paribas shares, issued at 68 euros. This would provide Fortis with an 11.4 per cent stake in BNP Paribas.
However, under the new agreement, BNP Paribas will now look to purchase 25 per cent of Fortis' insurance business, Fortis Holding, up from the 10 per cent previously, for 1.38 billion euros.
Furthermore, BNP Paribas will pay 200 euros million into a shell company to hold Fortis' risky assets and bad loans. For its part, Fortis will pay 760 euros million to the company, while the Belgian government is to contribute 740 million euros, as well as guarantee up to 1.5 billion euros on losses of more than 3.5 billion euros on current Fortis loans.
Buying the Fortis assets would make BNP Paribas the eurozone's leading bank in terms of deposits, with roughly the same ranking as rival ING.
BNP said that with the Fortis assets, it would have a deposit base of more than 540 billion euros and a loan to deposit ratio of 120 per cent.
Last month, BNP Paribas said its Tier 1 ratio would go up to 8.4 per cent from 7.8 percent with a second round of French state aid for the country's banks. BNP reported a fourth quarter net loss of 1.37 billion euros in February.
On Monday morning, Fortis shares jumped 20 per cent after the news.
The Belgian-Dutch financial services group was broken up last October as the global financial crisis undermined investor confidence. The Dutch state took over its Dutch assets and Belgium the Belgian banking assets.
The dismantling of Fortis stripped the publicly traded holding company of its main assets, prompting shareholders to launch court action as their shares became next to worthless.
In December, a Brussels appeal court backed their legal challenge, ruling that the minority shareholders should have been consulted first, and appointing a panel to review the operation.
Last month, Fortis shareholders rejected by a slim majority the sale to BNP Paribas as well as the nationalisation of its assets in the Netherlands.

About Chorea Associated with Huntington's Disease

Chorea is the most common symptom of Huntington's disease (HD), a rare neurodegenerative disease that results in uncontrolled movements, emotional disturbances, and mental deterioration. HD affects approximately 30,000 people in the United States.
For Chorea associated with HD is characterized by irregular, abrupt movements of the face, fingers, arms, legs, or body that can appear as constant jerky, twisting, and uncontrollable, dance-like motions.
As the disease progresses, it may interfere with many voluntary movements, making it more difficult to walk, talk or hold things.
Currently, there is no known cure for HD and the disease and prognosis is poor.
To learn more about chorea associated with Huntington's disease, please visit http://www.xenazineusa.com.

Fortis, Bangaluru Amongst Best Hospitals for Medical Tourists:MTQUA

Bangkok- based Medical Travel Quality Alliance (MTQUA), which promotes standards and practices for medical travellers, has recognised Fortis Hospitals, Bangaluru (formerly Wockhardt Hospitals) as the most preferred destination in the world for medical tourists from America. The hospital was ranked number one in the first list of the top 10 world's best hospitals for medical tourists .
"Medical tourism is more than getting good medical care abroad," said MTQUA, Founder, Julie Munro, who has spent many years in the medical travel industry. "Safety and security, international patient operations and protocols, transparency and professional patient facilitation are a key to achieving an excellent medical outcome for international patients who are more important than just the cost of care," he added.
MTQUA released the ranking based on an exhaustive study across patients, hospitals and healthcare travel agencies and all the 10 selected hospitals provide medical treatment and care of the highest quality with the most advanced technology. All hospitals have also developed outstanding local and regional reputations.
According to MTQUA, the top five hospitals are: Fortis Hospitals, Bangaluru, Gleneagles Hospital, Singapore, Prince Court Medical Centre, Kuala Lumpur, Shouldice Hospital, Toronto and Shoen-Kliniken, Munich. MTQUA recognised Fortis Hospitals, Bangaluru on the following criteria: medical quality, international patient management, international patient marketing, value for services, patient safety and security, attention to unique needs of medical traveller and transparency.