Rumours galore over Schering-Plough exit from Fulford India

Anju Ghangurde & Anindita Dey

Mumbai, Aug 21: Widespread market rumours of a possible exit by US conglomerate Schering-Plough Corporation from its Indian affiliate Fulford India has engulfed India Pharma Inc in the recent past.

Market sources say that the overall patent scenario and the Drug Price Control Order’s (DPCO) stranglehold over pricing policies — Fulford’s product portfolio comprises a host of niche products — may be among the reasons for the possible India rethink.

While Fulford India maintained that the “information is incorrect,” a faxed query sent to New Jersey-based Schering-Plough Corporation last week did not elicit any response.

Analysts said that Schering-Plough’s move, if fructifies, may stem from the fact that the company wants to focus on its core markets, even as it has run into trouble with the US Food and Drug Administration on the manufacturing front.

Schering-Plough recently said that it was moving deliberately and methodically to address manufacturing issues and to improve quality systems on a global basis.

In his remarks to the shareholders at the annual general meeting, Richard Jay Kogan, chairman and chief executive officer, said that the company had given itself three benchmarks in addressing these issues: first, to secure the confidence of the US FDA concerning its manufacturing systems and controls; second, to assure that Schering-Plough has a culture and a system that will sustain compliance throughout the organisation; and third, to reward shareholders with results.

On June 22, Schering-Plough reported that the US FDA had completed inspections in May and June at its facilities in Kenilworth and Union, New Jersey, and Las Piedras and Manati, Puerto Rico, and had issued new inspection reports (Form FDA-483) which cited some continuing and some additional deficiencies concerning compliance with current Good Manufacturing Practices (cGMP).

Depending on when the Form FDA-483 was received, Schering-Plough has either responded to or is in the process of responding to these observations and is continuing to discuss these matters with the US FDA.

Analysts also point to the fact that Fulford has been facing allegations of transfer pricing in India. A minority shareholder recently sought clarifications on these allegations and claimed that the company’s import to sales ratio is the highest in the entire pharmaceutical industry.

Meanwhile, the company’s stock price has witnessed inconsistent movements over the past month. While the price has remained range-bound between a high of Rs 128 and a low of Rs 115, there are high volumes traded at the counter.

On the Bombay Stock Exchange, as against usual volumes of 200-300 shares, end of July saw trading of around 3200-3500 shares. While the volumes came down to 300-400, towards mid July, volumes went up to around 1500 level.

Similarly, on the National Stock Exchange, volumes went up to around 2500-3000 shares towards the end of July, and declined to 100-120 shares in mid-August.