Indian Pharma exports to US may increase in 2017-18, Care Ratings

The Dollar Business Bureau

Indian Pharma exports to the US may increase in 2017-18 despite pricing pressure and stiff competition. A report released by Care Ratings said that $50 billion worth of drugs are expected to become 'off-patent' in the current year giving hope to the Indian Pharma export market.

"The pharma export volumes from India to US, however, are expected to rise. This will be backed by about $55 billion expected sales gain to generics drugs on account of branded drugs going off patent during 2017-19 which will create an opportunity for CRAMS segment. We expect growth rate for CRAMS (Contract Research and Manufacturing Services) to be higher compared to average growth rate of the industry. These factors are likely to support pharma exports from India," the Care report said.

This comes as a breather to many Indian pharma companies who are facing stiff competition on mainly two fronts from other countries- firstly to get the US Abbreviated New Drug Application (ANDA) approval and secondly the pricing pressure from competitors in the US generics market.

The Indian Pharmaceutical Industry (IPI) earns around 70% of its revenues from the sale of generic drugs and generates 50% from exports.

In 2016 IPI registered revenue of around $33 billion. Exports formed a major part of the industry's turnover with over 50% of the sales from exports forming a major part of the revenue.

Of the total exports of $16.8 billion during the year 2016-17, the majority of the exports, accounting for 40.6% were to US followed by 19.7% to Europe, 19.1% to Africa and 18.8% to Asia, the report detailed.

"The prime reasons for the weak exports were price erosion in the generic market in the USA due to consolidation among customers i.e. the distribution channels, increase in competition, absence of blockbuster drugs going off patent and regulatory issues faced by Indian pharma companies," it said.

In 2015-16, exports to USA increased by 27.8% to $5.5 billion on a year-on-year basis. However, the export scenario to USA weakened and it grew by a marginal 1.3% to $5.6 billion in 2016-17.

In 2016-17, the Indian pharma industry faced a slew of issues with increased scrutiny of regulatory authorities, increase in competition in generics market of one of its primary export destination, USA. This, in turn, resulted in marginal growth in exports to that country.

Also, stricter enforcement of Drug Price Control Order has impacted the revenue growth rate of the industry in the domestic market, the report said.

The report also said with the implementation of GST, there will be no major change in the prices of medicines and there is an expectation that the government will continue to keep a check on the prices of controlled as well as non-controlled drugs.