The coronavirus (Covid-19) outbreak is expected to help Indian companies gain market share. Photo: Shutterstock
Concerns over price erosion in the US market, which has impacted the revenue growth of Indian pharma majors over the last four years, could be reversing. The drug shortages in the US market have increased by 37 per cent since December 2017. Kunal Randeria of Antique Stock Broking says drug shortages are at five-year highs and there is a direct correlation between drug shortage
and prices. This is evident as price erosion peaked in 2017 when shortages were at their lowest levels.
Manufacturing and quality issues remain the single biggest reason for drug shortages, according to the US Federal Drug Administration (FDA), with other reasons being lack of raw materials and discontinuation of the some products by manufacturers. With half of the drug shortages accounted for by injectables, Abhishek Sharma and Rahul Jeewani of IIFL expect companies
with a strong injectable pipeline such Aurobindo Pharma to benefit. They add that drug shortages will continue to provide pockets of opportunity to individual players such as Alembic and Divi's for hypertension drug valsartan. The shortage for the drug was a result of multiple recalls by companies
due to presence of contaminants.
Manufacturers exiting the products or category is attributed as another reason for the shortage. Buyer consolidation, increased intensity of product approvals by the US drug regulator and higher cost of compliance has led to generic industry leaders such as Teva, Mylan and Sandoz rationalising their low value and unprofitable products, according to Sharma and Jeewani of IIFL.
(Covid-19) outbreak is expected to help Indian companies
gain market share. Antique Stock Broking expects Indian generic majors to benefit by supplying more to the US and EU adding that if shortages do increase some companies whose plants are under Warning Letters may also see exemption.
The other key trigger for the sector is the slew of approvals for facilities which were not compliant with US FDA’s procedures on manufacturing. Over the last few weeks, facilities of Aurobindo, Lupin, Biocon and Strides have been approved. Further the US regulator has also given exemption to supplies of Ipca’s anti-malarial medication hydrochloroquine sulphate from import alerts at the company’s facilities. The approvals this month is in contrast to 19 Warning Letters the US FDA had issued last year, the highest number in the last four years. In addition to facilities, the drug regulator has also approved a number of drugs including Cipla’s asthma drug albuterol, as well as drugs of Dr Reddy’s, Cadila and Alkem Laboratories. The launch approval for Cipla’s asthma drugs comes almost a year ahead of the planned launched by the company.