NEW DELHI: Domestic biggies– focused on the US– are expected to sustain the trend of revenue improvement in FY25 on account of heightened drug shortages in the US market. 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, India Ratings and Research (Ind-Ra) says.
Also, given the limited original abbreviated new drug application (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.
It may be pointed out that 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. Expanding the supply chains and increasing participation from manufacturers across therapeutic categories are ideal long-term solutions to address the problem.
Ind-Ra believes Indian pharma companies with a reasonable track record, recent cost rationalisation and enhanced research & development capabilities can capture a higher market share in many of these therapeutic categories.
“The price erosion in the US generics market is expected to remain in single digits in the near future, primarily due to drug shortages. US-catering Indian generic players have seen a strong financial performance during FY24, due to lower raw material cost and stability in pricing. With improving complexity of products and recurring supply chain issues leading to uncertainty, we expect the pricing scenario in the US will remain supportive. High working capital financing requirements continue to be managed by the non-recourse account receivables purchases scheme”, Vivek Jain director, corporate ratings, Ind-Ra said.
