The 13,000 members belonging to the All India Organisation of Chemists & Druggists have formed a joint firm to counter the threat from large players in the drug retail biz
To counter the challenge posed by big players' entry in the drug retail business, countrywide pharmacy owners have formed a company — All India Origin Chemists and Distributors — to foray into organised retail, reports PTI.
"With the entry of large players a challenge is emerging for small traders. To counter that our 13,000 members from across the country have come together to form a joint firm, All India Origin Chemists and Distributors (AIOCD)," association of pharmacy owners All India Organisation of Chemists & Druggists (AIOCD) president J S Shinde told PTI.
He said the members have contributed around Rs13 crore to create the drug retailing firm. The sum would be mostly spent on providing training to members and in purchasing software for standardising the procedures.
"Currently, we are providing training to our members in standardised procedures of organised retail, so that they could also modify their business accordingly to become a partner in the trade," Mr Shinde said.
After getting trained, AIOCD members would rebrand their shops under a single identity to join the retail pharmacy chain.
AIOCD has also announced the launch of its own generic products through a separate division — Java.
The company has launched around 100 products, mostly in chronic, acute and lifestyle disease segment in 15 states. It is eyeing revenue of Rs100 crore in the next financial year through private label products.
"We are getting these medicines produced under contract manufacturing from excise free zones like Uttarakhand and Himachal Pradesh, and these products would be sold at a lower price then existing branded generics," Mr Shinde said.
The All India Organisation of Chemists & Druggists claims it has over 5.5 lakh members from across the country and they account for almost 95% of the overall pharma business in India.
According to 'India PE Report 2010', private equity and venture capital flows are projected to reach $17 billion in India this year, the same as the peak year in 2007
Private equity (PE) and venture capital (VC) investments riding on the strong economic growth in the country are projected to reach $17 billion (around Rs80,000 crore) this year, a level last seen in pre-downturn times, reports PTI.
According to 'India PE Report 2010', released by global consultancy Bain & Company, there is renewed confidence among the leading PE investors about the Indian market.
"Private equity and venture capital flows are projected to reach $17 billion in India this year, the same as the peak year in 2007," reads the report forecast.
The report includes a survey conducted across over 75 leading PE investors globally. The survey revealed number of respondents planning to invest in the range of $200-$500 million in the next two years has risen four-fold to 27% this year.
"The number of PE firms, both foreign and domestic, continues to grow. This increasing population of hungry deal makers is wielding a lot of dry powder and they're eager to put it to work", Bain & Co's head of the private equity practice India Sri Rajan said.
"Our estimate is that current investment reserves are deep enough to finance between two and four years of PE deal making," Mr Rajan added.
The report, prepared in partnership with Indian Venture Capital and Private Equity Association (IVCA), forecasts strong growth for the PE industry in the country over the next three years.
Nearly two-thirds of respondents surveyed said they expected the industry to grow between 10% and 25% into early 2011, the survey revealed.
However, though the macro-economic picture is far rosier today than two years ago, PE fund managers face rising acquisition costs and intense competition to land the best deals.
These factors are increasing pressure on them to become more directly involved in value addition to their portfolio companies over a typical 3-5 year ownership period.
"To succeed, it is not enough for PE investors to just be a source of funds. They must be able to position themselves as providers of expertise, in addition to funding," Mr Rajan said.
You can be successful making money by trading against people who do not understand that the past is simply a rough guide to coming events
Historians would be very familiar with one of the greatest investor myths. Any historian knows that history is just a rough guide to the future and that it does not repeat itself. Yet investors all over the world are desperately dredging up numbers from as long as 80 years ago in an effort to predict the future of markets. It doesn't work.
Let us start with the reason for this process. Despite the hype, all economists, investments advisors, financial analysts, investment bankers and pundits cannot do the one thing that they are promising to do. They cannot predict the future. No algorithm, no economic equation, no political analysis can do this. Yet they continue. The financial business is a lot like Hollywood. They are selling dreams.
Yet dreams must be based on something, in this case history. Take the famous Morningstar ratings. If you buy a five-star rated fund you are safe right? Millions of investors think so. During the carnage of 2008, investors in droves fled to the perceived safety of better-rated funds. Three-star funds lost $111 billion, four-star funds lost $14 billion, but five-star funds enjoyed $67.5 billion of net inflows.
Still it is important to read the fine print. All investment advertisements in the US contain the warning: "Past performance is no guide to future performance". The warning is there for a reason. Morningstar ratings are backward-looking, based on a fund's past performance. A recent study over the past ten years looked at the performance of 248 equity funds with five-star ratings at the start of the period. At the end of the period just four still kept that rank. Worse, almost 90% of the US equity funds with the rating lagged their category averages both for other mutual funds and for their benchmarks. Yet millions of investors - to say nothing of investment professionals from hedge fund managers to pension fund trustees religiously review past performance and project it into the future.
The great economist and Nobel Laureate, Paul Samuelson, noted: "There is some evidence that last year's winners tend to repeat next year. But it is very slight. Mostly the effect comes from the fact that really bad funds stay bad. Their expenses are high, and their choices stay haphazard." So perhaps the stars are elusive, the real donkeys are not.
Another favourite of financial historians is the venerable Dow Theory. This theory which involves analysis of empirical data, namely the price history of markets and securities, was created by Charles Dow, the founder of Dow Jones, the publisher and news agency. The Dow Theory's shining moment came in 1929, when it encouraged investors to sell. For its followers it has all the hallmarks of a true religion including magic and mysterious phrases like 200 day moving averages, head and shoulders and even the terrible 'death cross'. Frightening!
Dow Theory or technical analysis is supposed to help investors time their trades. For example, there have been 43 'sell' signals since 1920, but only 17 have been correct, an average of only 40%, slightly better than chance. But of course, a sell signal only comes after big declines in the averages, which is hardly helpful. Or take the death cross. This occurs when the market's 50-day moving average drops below its 200-day moving average. A death cross is supposed to envision below-average performances and has been very effective until 1990, when its predictive value dropped to statistical insignificance.
The difference in the effectiveness of the death cross does tell you about one of the limits of using historical data to predict the future. According to a professor of finance, one reason the significance of such events like the death cross have lost their value is that too many investors are trying to follow them. The use of personal computers and online databases has allowed millions of investors access to information and strategies that were once available to only a few. This creates its own paradox. The reason why Dow Theory is important is not because it has any value in predicting trends, but that investors believe that it has value.
The idea that historical analysis has value could lead to perhaps a really useful tool for investors. The 'Lex' column in the Financial Times ran a satirical piece about the success of a mythical money manager called Contrarian Partners. The strategy of Contrarian Partners is "to mine the research produced by investment banks every six months to establish consensus trading strategies. Then trade against them." The strategy was remarkably effective. The adage that history never repeats itself then has special meaning because you can be successful making money by trading against people who do not understand that the past is simply a rough guide to coming events. A mere proxy for the possible, not a data point for the inevitable.