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New Delhi: Indian pharmaceuticals industry increased its US business in the first quarter and may further consolidate presence in that market, industry analysts said.
The companies are currently in a sweet spot, said Ambareesh Baliga, independent research analyst. “If you look at the Q1 earnings, most of them have come out with better than expected earnings. And as compared to earlier, most of them are US FDA (Food and Drug Administration) compliant now, and with them spending a decent portion of revenue in R&D (research and development), I believe them to be able to sustain Q1 growth going forward,” Baliga said.
The US market has been facing drug supply shortages due to opaque and interrupted supply chains as quality and financial issues continue to shutter manufacturing plants, while subsidizing inventory built-up during covid subsequently eroded prices.
This has benefited Indian companies as the US pharma industry sees an abatement in price erosion, which is in single digits, say industry analysts.
This has also started to show in sales from India to the US, India’s biggest market rising 6.2% to $7.5 billion last fiscal year, shows government data.
ICICI Securities Ltd, in its Q1FY24 pharma sector preview report, highlighted that growth in Q1FY24 will be driven by volumes in the US market: “Aggregate US sales of coverage universe (companies covered by the firm) is likely to grow… Lesser price erosion in base business and improved supplies on account of few companies vacating the market may drive sequential growth across all the universe companies.”
Subsequently, Indian pharma companies gained share in the US generics market, with companies such as Sun Pharma, Cipla, Lupin, Zydus Lifesciences, and Dr. Reddy’s Laboratories seeing 12% to 79% growth in Q1.
“Some of the companies like Sun Pharma have moved up the value chain and it is doing very well; Lupin is also doing very well. So, we will see the product range upgrading to get moving forward as far as the US market is concerned. We also have to get it to the European market, Chinese market, and Japanese market. So, there is an opportunity and Indian companies should capitalize on it and get moving forward as the US market will aid to the growth,” said Sudarshan Jain, secretary general, Indian Pharmaceutical Association.
Indian companies are also looking to receive final approvals for the launch of abbreviated new drug applications (ANDAs). The approval rate is improving in the US and a higher number of niche product launches such as injectables that face limited competition will aid the margin profile of the companies, feel industry analysts.
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