Thursday, March 28, 2013

How IP can help or Hurt The Indian IT and Pharma Sector

Safir Anand, Senior Partner, Anand & Anand

Do the tools of Intellectual property (IP) like trade secretes, patent law, trade marks hurt or help the technical and industrial innovations in Indian IT and Pharma sector?

To understand the impact it is necessary to know what exactly IP is. Intellectual property right grants the owners exclusive rights to variety of assets.

IP is unequivocally important for the Pharma and IT sectors. For Pharmaceutical companies, Intellectual Property (IP) laws are critical for both defensive and aggressive purposes. On an aggressive front, IP aids in protecting the brand names and ensures a safe distance from identical and deceptively similar names that can mislead consumers. Similarly, patents allow the ability to look and protect the processes so that their R&D activities are duly rewarded. It is unfair utilise the labour and of others for personal benefits. To implement the law successfully, the intellectual right focused on product packaging.

Product packaging falls within the ambit of trade dress and allows pharmaceutical companies the ability to monitor identical or look-alike packaging. This occasionally also involves the law of copyright including color combination, layout and arrangement of features as may be original. Legal actions will be taken to the companies who copy the packaging style of the products of other companies. The provisions of recordal of IP before the Custom Authorities can be useful for tackling counterfeiting drugs from entering the country through the import route.

However, companies are not very comfortable with the government’s initiative of making it mandatory to register a trademark for the product before putting it to use in the pharma sector. Protection of IP is also significant for companies when they look at future commercial transactions. For example, Wockhardt was recently subjected to heavy due diligence on account of issues relating to inter alia ownership of IP. An IP portfolio that is well protected and enforced not only has a higher value for the company itself but also a higher transactable commercial value.

In case of IT, IP involves documentation relating to trade secrets and confidential information. Hardware is effectively protected under the law of patents including when it is embedded with software. However, business methods are currently not protected directly under the Statute but can be protected through a combination of contracts, essentially focusing on trade secrets, non-disclosures and indemnity provisions. Of course, brands can be protected as trademarks but greater focus is on patents and copyright. Copyright plays an important role in the look and feel of the product.

Domain names which are critical of IT operations also falls within the combination of copyright law and in some cases, involve protection through contractual law. There are some specific names such as Infosys that also spill over to company’s law in order to prevent mis-appropriation.

Case studies reveal that the highest value ascribed to software companies has been attributed to intangibles comprised in IP, both protected and secured.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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Monday, March 18, 2013

Is it too Little... and Too Late?

Reforms in Coal Sector, on which India’s Power Generation is heavily Dependent, have seen a faint light on The Distant horizon courtesy Reform Proposals in This Budget. B&E’s Anchal Gupta argues that The Steps may be too small considering The Delay and a lot more needs to be done, Quickly

“Not a penny off the pay, not a second on the day.” This blunt reply by the Miners’ Federation of Great Britain (MFGB), the national union of mine workers to coal mine owners was a spark that ignited the chain reaction culminating in the famous 1926 General Strike in the United Kingdom. Mine owners, under the veil of a soaring pound, hurting exports and low productivity of mines decided on wage cuts to normalise profits. Despite massive subsidies to the coal mine owners, the wage cuts were implemented. The strike began on May 3, 1926, and lasted for 10 days. In the aftermath, coal mining was forever transformed in UK with the extra labour being sucked out and productivity rocketing from below 100 tonne per miner per annum to over 300 tonne by the World War II.

Swivel back to the present and India’s coal mining output still hovers at less than 200 tonne for some of its mines while the average productivity is less than one tenth of mining giants in US and Australia. And despite a new glimmer of hope in the form of proposals to reform the sector in this years’ budget, the pertinent question remains: Is it too little... too late? But for all the hype surrounding renewable energy and efficient usage, India stands tall among the planet’s most inefficient energy users (read massive wasters). And till date, more than 53% of our electricity is generated in power plants fuelled by the black treasure hidden deep below our rocky terrains. Estimates suggest that by 2012, India will stare at more than 100 million metric tonnes (MMT) of coal shortage and around 250 MMT by 2025. Ironically, we have the world’s largest coal miner Coal India Ltd. (CIL), a Navratna PSU. The repercussions are perilous.

According to Girish Solanki, Energy Analyst, Religare, “The coal mined in India has not been enough to meet the demand. The shortage has resulted in loss of electricity generation in power plants. The power companies in India imported coal in FY2009 to keep the plants running. Coal India, for the first time in history, resorted to import of coal in FY2009. Further the calorific value of coal mined in India is at 4,000-5,000 kcal/kg substantially lower than the coal mined in countries like Indonesia which have calorific value in excess of 6,500 kcal/kg.” The impending entry of mining giant, Trimex, to strike long term coal supply contracts with Indian power producers is just the beginning of the dark tunnel. Courtesy archaic laws and divided authority over every link of the value chain, much of the coal remains buried and much of India remains dark.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles


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Tuesday, March 12, 2013

French Toast to India’s Defence

While Sarkozy and his Aides may claim that The Much Awaited India Visit is more of a Leisure Trip than the Usual Strategic Trip of Premiers, One cannot refute France’s Hawk-Like Attempt to do an Obamanomics as far as Business is Concerned. And India Should Support That, Anyway!

There is a lot in common between US President Barack Obama and the French President Nicolas Sarkozy as far as their state visit to India is concerned. Both of them are apparently at their career’s ebb. While Obama is struggling with approval rating below 50%, and has suffered a major set back in the mid-term election, the case of French premier is no different. Sarkozy’s current popularity rating is at a record low (as per Ifop opinion polls for Journal da Dimanche, Sarkozy has equalled his predecessor Jacques Chirac for the most unpopular president since 1958) and if the latest reports are any indicator, then he is currently embroiled in a potentially career ending corruption scandal. All these after having pushed through the pension reform in the teeth of furious street opposition – much akin to his American counterpart who managed to push through his signature healthcare bill ObamaCare. And of course, both Obama and Sarkozy are dear friends. By design or by default, India happens to be their soul searching destination amidst all the trying circumstances back home. ‘Soul-searching destination’ only for the layman; the fact is that in a hyper-competitive and economically integrated world, neither the US nor France would like to miss out on opportunities of profiting that India has to offer – a whopping $112 billion (India’s budget for military procurement) over the next 6 years.

The economic environments prevailing in both the countries make the respective state visit to India all the more important. The national debt of France is projected to be equal to 84.2% of its GDP (the French GDP is approximately $2.55 trillion) and its industrial production is already in the negative terrain, unemployment is currently pegged at 9.8% – these statistic coupled with the fact that Sarkozy would like to get himself re-elected in 2012 and be in command of the Élysée Palace (much like Barack Obama would like to remain in total control of the White House post 2012 presidential elections) make it all the more imperative for the unpopular Sarkozy to attempt to re-brand his government. What better an opportunity than India (Chindia, if we’re permitted – as per Chinese President Hu Jintao’s recent visit to France wherein contracts worth $20 billion were signed, it is but apparent that both the countries have buried the hatchet and have definitely patched up their erstwhile strained relations) which aims to increase its defence budget from 2% to 3% of GDP, and thereby grab a pie of this huge investment and present it to the almost moribund French industrial sector.

Read  more.....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles
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Thursday, March 07, 2013

Bowled Over!

As his last flick Did you hear about the Morgans, failed to impress the critics, Hugh Grant is regretting turning down the role of George VI in The King’s Speech. The British actor, who was recently in China, said he was smitten by the country and particularly the women there. He admitted falling in love four times within 24 hours of his stay! Well, Chinese women have every reason to be proud!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles
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Wednesday, March 06, 2013

CARRIER INDIA: GOING GREEN

Though Carrier was one of the early entrants into the residential AC segment in the country, it somehow got overshadowed when rivals arrived. However, it’s clawed its way back into the sweepstakes by sheer market tactics. B&E does a walkthrough across Carrier’s strategic plants and plans
We point out, and creditably, Pandya accepts that the industry has far more potential. But he says Carrier has a killer app, as they say, “If you look at the size of the market in India, it’s huge. But the key difference between other markets and India is that what we term ‘green activity’, Westerners call sustainability. This change in India is being bought about at a very fast rate, which offers us a much bigger opportunity in the future.” Carrier is basing its complete strategic focus on the bet that India would move the environmental route faster than competitors would expect. And to that extent, Carrier has been preparing the battleground rules much in advance. Not many know that for the past two years (2008 and 2009), Carrier was awarded the top rank in the nation in the National Energy Conservation Awards. That’s the reason Carrier India has been working closely with Bureau of Energy Efficiency. The 5-star AC segment is expected to account for over 25% of AC sales in the coming years. In fact, Carrier’s products like variable speed chillers, which have the capability to cut operational AC expenditure by almost 40%, are lynchpins in this key leadership competitive warfare that Pandya is planning.

But Carrier is up against tough consumer buying behaviour. While all the other manufacturers are planning to drop down their prices further to ensure market spamming, Carrier’s ACs are in general priced at 10-15% above competitors’ products. “We don’t want to sell the cheapest product. Our target segment is pretty much evolved and is not particularly the first time buyers. Instead, we cater to customers who are looking for a repeat purchase,” explains Pandya. That leaves a paradoxical question unanswered, as Pandya himself accepts that the market penetration of ACs in China is ten times more than that in the Indian market, which still stands at a minuscule 3%. This leaves an immense scope for the company to expand its market share, both in residential as well as commercial segments.

But somehow, Carrier is addressing the issue. Though the company currently manufactures its full range of residential products in India, 50-60% of its commercial range is still imported from its factories in US, China and other parts of the world, one reason for the upper marked pricing. The company is now planning to localise its offerings in India to control costs. They already have a sustainable design centre in India and are planning to take it forward to a higher level, particularly with respect to localised products. But Carrier will still need to work a way to fight the sheer behemothic dealership size and investment might of competitors like LG, which not only has 2,200 dealers and 22,000 sub-dealers across the country selling its various products, but also is investing close to Rs.450 crores directly and through its business partners to increase production. And LG itself has brilliant environmental friendly 5 star ACs selling like hot pancakes. How do you compete with such a competitor?

A long time ago, the invention of air conditioners by Carrier was the reason cinema halls in the US started showing movies during summers too. Pandya believes he can recreate history... For now, we believe him...


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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Monday, March 04, 2013

‘‘Indian companies take over foreign companies for very different reasons than do companies in developed” economies

Robert Schipper, Executive Director, Netherlands Foreign Investment Agency talks to deepak ranjan patra about how the Dutch changed the rules of the economic engine

B&E: Despite the economic crisis, foreign investment in the Netherlands increased in 2009...
Robert Schipper (RS): Trade and foreign direct investment have not only driven our economy in the past but have now also proven to be the way out of the financial crisis for the Dutch economy. Foreign companies and international trade take care of an important part of our economic growth: 4% of our companies are foreign-owned, these foreign-owned companies generate 15% of employment in the Netherlands, they generate 24% of the added value and contribute 30% to the total turnover! The slowdown has proven to be a good time for many strategic investments for foreign companies that have maintained steady balance sheets during the crisis by giving them a cost advantage and the opportunity to seize future markets with recovery on the anvil.

B&E: Considering the fact that conditions in Europe have deteriorated further as compared to 2009, do you think it’s a right time for Indian companies to foray into the European market?
RS: While the general investment mood anywhere in the world today is cautious, we have seen a steady rise in the risk appetite of Indian companies towards M&A activity. There has been a distinct change in the outlook of India-based companies that are now truly looking at a global playing field rather than considering the United States as the primary market. With more experience in overseas M&A markets and largely successful attempts to integrate overseas acquisitions into their businesses, Indian companies are more open to exploring Europe this year. The recent announcement by Infosys on realigning their market focus to increase activity in Europe is indicative of this mood. In my view, Indian companies will specifically eye distressed assets and niche technology and design centres in sectors like oil and gas, metals and minerals, technology and telecom. With European markets experiencing further consolidation, Indian companies would have opportunities for strategic acquisitions in EU countries.

B&E: What is your outlook for Europe, especially for the major economies like the UK, France, Germany, Italy and Netherlands?
RS: The countries of northwestern Europe – UK, France, Germany, the Benelux and Scandinavian especially – are completely sound and entering a period of steady economic recovery. As the world market picks up, these nations will naturally benefit from growth in world trade.

B&E: Do you think M&As could play a major role this year in shaping out the global business environment for the days to come?
RS: As the economic recovery continues, companies in many industries will use mergers and acquisitions (M&As) to help drive revenue growth and bottom-line performance. With a rebound in global markets, Indian companies are also back with an appetite to go for ambitious overseas acquisitions. However, Indian companies take over foreign companies for very different reasons from companies in developed economies. It’s not simply about growth and consolidation. Indian companies acquire international companies to gain market access, to access technology and gain new capabilities as part of a global expansion strategy.

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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