Domestic Pharma Bags 9% More USFDA Nods

Mumbai, 6 May 2019: Domestic pharma companies received 372 approvals to launch generic drugs in the US in fiscal 2019, up 8.6% from 340 in the previous year. The development comes even as India got 15 warning letters in calendar 2018, lower than the US with 19, and China which topped the list with 24 warning letters. As against this, India had the ignominious distinction of topping the list with 9 warning letters in 2015, and has since appeared to have cleaned up its act.

In terms of approvals, Zydus Cadila topped the list with 60, with Indian companies cornering nearly 40% volume share in the highly lucrative $60-billion-plus US generic market — a key driver of growth for the domestic industry. In an indication of having resolved data integrity issues by investing in skill sets, domestic companies grabbed the opportunity by the US Food and Drug Administration (USFDA) to speed up generic competition.

Indian generic filings have been rising year-on-year, unfazed by regulatory pressure from the USFDA, and a spate of warning letters issued to their facilities over the last couple of years. Over 2015-17, Indian companies faced intense regulatory glare from the US, with nearly all top companies having been issued warning letters over manufacturing violations at their plants. This seems to have changed last year with fewer warning letters for Indian companies, compared to other major countries.

Also, USFDA’s erstwhile chief Scott Gottlieb had last year announced a slew of policy measures to strengthen and streamline the generic drug-review process, setting record numbers for generic drug approvals. The objective of ‘GDUFA’ (Generic Drug User Fee Act) process getting streamlined is to show savings on the healthcare budget, through affordable generic approvals.

The US generics market, a key driver of Indian pharma’s growth, has always been a dynamic market. But the pace of change has accelerated in the last few years. Increase in competition and consolidation of distribution channels has led to the US generics business getting commoditised. Price erosion has been at an all-time high and this has impacted operating margins significantly.

“The maturing of the relationship between the USFDA and domestic companies is a big positive development. However, higher number of generic approvals does not necessarily mean higher profitability for domestic companies,” says PwC India leader (pharmaceutical & life sciences) Sujay Shetty.

Analysts expect the US business for most companies to report growth sequentially, based on new key launches in a stabilised price-erosion environment with volume growth in the base portfolio, on account of exit of large pharma companies as they prune their portfolios.

“US sales have been largely stable since the beginning of FY19 with major global generic players citing the easing of pricing pressures, with intensity reducing to mid-single digits. In Q4, we expect US sales recovery, with Dr Reddy’s, Lupin and Torrent to post 14%, 6% and 21% y-o-y increase respectively in their US sales for the quarter. Although the regulatory hurdles and pending USFDA compliance issues will remain a challenge for the drug makers to get approvals. Going ahead, the key monitoring factors to watch will be management commentary on complex product approvals, regulatory compliance, pricing pressure scenario, and future of the US generic landscape,” an IndiaNivesh analyst said in a note.The Times Of India