The Indian drug firms have registered strong growth over last decade driven mainly by the US market.

NEW DELHI: Indian drug industry will see moderation in growth due to slowing of business in the US market with reduction in the number of large size drugs going off patent, increased competition and generic adoption reaching saturation levels, Icra said today.

The Indian drug firms have registered strong growth over last decade driven mainly by the US market.

"However growth from the US has come down to 15 per cent in FY2016 and going forward the growth momentum is likely to face further pressure," rating agency Icra said in a statement.

Increased regulatory scrutiny as reflected in increased issuance of warning letters/import alerts and consolidation of supply chain in the US market resulting in pricing pressures will have an impact on profitability of Indian pharmaceutical companies, it said.

However, in spite of these ongoing challenges, several Indian pharma companies are increasing their R&D spend, targeting pipeline of specialty drugs, niche molecules and complex therapies, Icra noted.

Commenting on the domestic market, it said continued regulatory interventions are expected to put some pressure in near term though long term growth prospects for domestic drug market remain healthy given increasing penetration, accessibility and continued new launches.

"The key concern for domestic market relates to continued regulatory interventions in form of expanded list of National List of Essential Medicines (NLEM) along with recent ban on 344 fixed dose combination (FDC) drugs," it said.