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US generic business to face pricing pressure for 12 months: ICRA


US generic business to face pricing pressure for 12 months: ICRA

MUMBAI: Domestic pharma companies are expected to face pricing pressure by 10-12 percent on US generic business which may sustain for the next 12 months, a report said.

This could negatively impact profitability and cash flows before tapering off gradually, rating agency ICRA said.

The US generic business has been a significant contributor to growth and profitability for Indian generic companies over the last decade but is facing a slowdown over the last couple of years.

The industry has registered a decline over three quarters ending September 2017 led by increased competitive intensity resulting in steep pricing pressure, it said.

“The US generic markets are characterized by buying bulk volumes at lower prices and tend to have price erosion historically. However, pricing pressure on the US generic business has intensified over the last 12 months. The yearly price erosion which stood at approximately 5-7 percent during Q2FY2017 has gradually increased to low teens in Q2FY2018 contributed by the consolidation of distribution supply chain (trade partners) and faster ANDA approvals by USFDA post implementation of Generic Drug User Fee Act (GDUFA),” ICRA vice president Gaurav Jain said.

The key consideration impacting generic prices has been faster abbreviated new drug application (ANDA) approval leading to higher competitive intensity.

The pace of ANDA approvals by USFDA has improved significantly from 440 in FY2013 (October-September period) to 651 in FY2016 and 763 in FY2017. Compared to FY2013, 73 percent more ANDAs were approved by USFDA in FY2017 and ICRA expects a similar pace of approvals going forward.

The increase was a result of implementation of Generic Drug User Fee Act (GDUFA) in October 2012. In addition to GDUFA, USFDA (United States Food and Drug Administration) has taken several steps to increase competition in the market for prescription drugs and also facilitate entry of lower-cost alternatives through Drug Competition Action Plan.

FDA has also issued guidelines to promote entry of complex generics such as injectables, peptides, and metered dose inhalers through conducting product development meetings, pre-submission meetings, mid-review cycle meetings and simplifying the scientific evidence required to show bioequivalence.

These steps are likely to reduce regulatory uncertainties, promote higher investments in the development of complex generics and faster approvals, the report said.

While these initiatives will benefit generic players, they are also likely to increase the competition for a similar set of molecules, ICRA said.



Source: PTI
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