Hyderabad: With the drug selling channels in the US set to consolidate furthe, city-based pharma major Dr Reddy’s expect pricing pressure to remain for pharma firms.
In a regulatory filing, the pharma major said its top 10 customers in the US account for about 77 per cent of its revenues from the North America Global Generics. “Consolidation and integration of the drug wholesalers, retail drug chains, private insurers, managed care organisations and other purchasing organisations may continue to adversely affect pharmaceutical manufacturers.
“Such consolidations have resulted in these groups gaining additional purchasing leverage and, consequently, increasing the product pricing pressures facing our business.
“We expect this trend of increased pricing pressures to continue. Such pressures have reduced, and could continue to reduce, our revenue, margins and profitability,” the firm said.
In the US, similar to other pharmaceutical firms, Dr Reddy’s sells its products through wholesale distributors and large retail chains in addition to hospitals, pharmacies and other groups. Additionally, the emergence of large buying groups representing retail pharmacies, and the prevalence and influence of managed care organisations and similar institutions, creates competition among pharma firms to have their products included in the formulary of them.
