Pharma Companies to see better volumes due to US drug shortage

Chennai: Drug shortage in the US generic market will help Indian pharma companies see improved volume growth as well as higher returns in FY25. Indian companies also have an opportunity to increase their market share.

The US is facing an active shortage of 233 drugs across 22 therapeutic categories, led mainly by discontinuation of drug production, rising demand and delays in shipments. Generic pharma manufacturing is a competitive industry with low margins. Price erosion on account of purchase concentration, increasing regulatory costs and limited commercial viability in some cases has led to many US-based generic pharma manufacturers to halt the production of financially unsustainable products. Large Indian generic players have exited non-profitable molecules, contributing to increasing shortages.

Further, there has been a consistent decline in the filing of original abbreviated new drug application (ANDAs) on account of increased filing complexities, leading to higher research and development spend per molecule. The median timeline for approval had increased to 26 months which is a six-quarter high, from 21 months. With the reduced ANDA filing intensity, the pricing scenario will improve amid decreasing competition.

Due to drug shortages, now there is an improvement in USFDA approvals and tentative approvals of the original ANDAs filed by pharma companies.

India Ratings finds that US-focused pharma companies will sustain their revenue improvement trend in FY25 on account of heightened drug shortages. This will not only provide potential for volume growth, but also limit price erosion to single digits over the next 12-18 months, leading to improved returns.

Expanding the supply chains and increasing participation from manufacturers across therapeutic categories are ideal long-term solutions to address drug shortage. The agency believes Indian pharma companies with a reasonable track record, recent cost rationalisation and enhanced research and development capabilities can capture a higher market share in many of these therapeutic categories.

Also, given the limited ANDA filings and delays in approvals provided by the USFDA, the drug shortage in the US provides an opportunity for Indian players with necessary approvals to gain market share in a competitive-but-attractive market.

( Source : Deccan Chronicle )
Next Story