Export-focused domestic pharma companies need to step up regulatory compliance: Report

Mumbai: The US-focused domestic pharma companies need to step up regulatory compliance over the next decade and need to invest in complex generics and innovative play, says a report.

As the operating environment in the US has undergone a shift following a rising competition and increasing buying power of customers, product quality and uninterrupted supply have become focal points for commercial success, an India Ratings report said Wednesday.

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This translates to a robust approach to regulatory compliance for manufacturing facilities, the report added.

"Domestic pharmaceutical companies need to step up their regulatory compliance to secure impeccable reputation as reliable suppliers and provide the targeted return on the ongoing and planned research and development and capital investments over the next decade," the report noted.

From the second half of 2017, the industry has been witnessing a resolution of key manufacturing facilities of large manufacturers under warning letters and import alerts with an average period of 24 to 36 months after regulatory restriction, it noted.

"While this is encouraging, a reduction in resolution times and limited repeat observations would indicate regulatory discipline re-tuning to the industry," it warned.

Input quality risks stemming from high dependence on Chinese players has been an emerging concern in FY19, leading to product recalls initiated by major players. Therefore, securing a supply chain is likely to emerge as a top priority as several complex generics and innovative pipelines will hit the markets in the next decade, it said.

The credit profile and return ratios of companies with regulatory deviations have been adversely impacted attributed to remediation cost and restricted market presence.

"Domestic companies are likely to spend higher capex for upgrading infrastructure for regulatory compliance over FY20-FY30," the report said and expects domestic formulators' product portfolio mix to undergo a structural shift next decade due to moving up the value chain and the resultant doubling of R&D spends.

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