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B&E This Fortnight
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B&E This Fortnight

Issue Date - 15/09/2011

August 25, 2011, witnessed the end of one of the most extraordinary careers in business history. Steve Jobs, the ‘Minister of Magic’ at Apple Inc. finally stepped down as CEO of the tech giant citing health concerns and his inability to run the company on a day-to-day basis. Surprisingly, the market did not panic and the company’s stock performed better than the NASDAQ and Dow index – an indication that Jobs had succeeded in crafting a brilliant succession plan. Steve Jobs has been one of the most iconic CEOs in business history and his relentless pursuit for perfection and innovation has earned him a fortune. As of today, Jobs holds Apple shares worth $2.2 billion. Additionally, he is also the largest shareholder in Disney where his shareholding amounts to a staggering $4.4 billion. Tim Cook has been named the new CEO. Although Cook has been responsible for the day-to-day operations of the company in Jobs’ absence, he faces the daunting task of stepping into the historic CEO’s shoes. Ever since Jobs came back to Apple in 1997, the company’s stock price has appreciated by 6,754%. If today, Cook were to replicate the same, the stock would be valued at $25,797 and the m-cap would hover around $23.6 trillion! Nevertheless, Jobs would always be remembered as a maverick who inspired an entire generation of entrepreneurs.

Takeda eyeing india
It seems that the Indian government’s decision to allow 100% foreign direct investment (FDI) in the pharmaceuticals sector will strip India of its generic competitive advantage. Japan’s largest pharmaceuticals company Takeda is planning to acquire one of India’s leading pharma companies. Unlike its rival Daiichi Sankyo, Takeda does not have a formidable presence in the Indian market. The Osaka headquartered Takeda has approached Cipla (India’s second largest drug company) and Lupin (fifth largest by market share) to lead their endeavour of making a denting mark in the Indian drug market. For Lupin, the talks have progressed beyond the initial stage wherein Takeda plans to buy its domestic formulations business as well as its research facilities. However, Lupin is precarious over selling off its research facilities and expects a price valued at 17 times Lupin’s revenue, which stood at $1.5 billion in FY2011. On the other hand, Cipla has denied any such developments. Last year, US based Abbott bought Piramal Healthcare’s formulation business for over Rs.170 billion, which made it the country’s biggest pharma player by market share. Similarly in 2009, Daiichi Sankyo purchased Ranbaxy for $3.5-4 billion to become India’s largest pharma player by revenue.

Bad time for japan
The recent downgrade of the US economy by Standard & Poor’s (S&P) resulted in global panic across markets leading to trillions of dollars going down the drain. Now, it is Japan which seems to be facing a similar situation. On August 24, 2011 Moody’s (a credit rating agency) downgraded the sovereign rating of Japan form Aa2 to Aa3 primarily on concerns of mounting debt. Ever since the great recession of 2008, the world’s third largest economy has been struggling with a rising debt-to-GDP ratio. However, investors did not react as dramatically as they did in case of US. Further, a strong Yen is also contributing towards losses to exporters – a major cause of concern. In order to address this issue, the government of Japan has declared a stimulus package worth $100 billion. The funds will be released in the form of foreign exchange reserves to the Japan Bank for International Cooperation (JBIC) for aiding exporters. This might probably bring in some stability.


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