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Indian drug firms to face challenges in US market: ICRA

Indian drug firms to face challenges in US market: ICRA

New Delhi : Indian pharma companies will face a number of challenges in the US market going ahead including reduced number of big products going off patent, increased competition and rise in regulatory scrutiny, ICRA said.

Indian drug firms have registered strong growth over last decade driven mainly by the US market on account of large brands going off patent and sizeable organic and inorganic expansion.

“However, going forward there are challenges, given the relatively moderate proportion of large sized drugs going off patent, increased competition, generic adoption reaching saturation levels in US market along with base effect catching up,” ICRA said in a statement.

ICRA Senior Group Vice President for Corporate Ratings Subrata Ray said the increased regulatory scrutiny as reflected in growing issuance of warning letters/import alerts and consolidation of supply chain in US market resulting in pricing pressures will have an impact on competitiveness of Indian pharmaceutical companies.

However, in lieu of increased R&D expenditure and product pipeline comprising specialty drugs, niche molecules and complex therapies, the growth outlook for Indian pharmaceutical companies remain stable, ICRA said.

“The domestic pharmaceutical industry has gained adequate scale and drug development capabilities over last decade of growth which will keep them in good stead to capture new opportunities in the US market,” it added.

The growth from US market has come down from high double digits to 8-10 per cent given lack of major new launches, regulatory overhang and increased pricing pressures, ICRA said.

“The domestic market growth, though moderating from FY2015 level, remains healthy driven by favorable socio economic factors. The key concern for domestic market relates to continued regulatory interventions in form of expanded list of NLEM along with recent ban on 344 fixed dose combination (FDC) drugs,” it said.

The FDC ban could potentially impact domestic pharma sales of Rs 30-38 billion though given most of the banned FDC drugs have substitutes, sales are expected to shift to other alternatives available to an extent, it added.

Source: PTI
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