Fitch Says Growth In India Helping Drugmakers Offset Pricing Pressure In U.S.
Rising revenues in the domestic market has helped Indian pharmaceutical companies counterbalance the ongoing pricing pressure on generic drugs in the U.S. in the March-ended year, Fitch Ratings said.
The U.S. and India are the two key markets served by Indian pharmaceutical companies, which sell predominantly generic drugs, the rating agency said in a statement.
Many of the leading pharmaceutical companies reported double-digit growth in their domestic sales which in turn supported overall industry growth of 11 percent during financial year 2019, it added.
“By contrast, growth in the U.S. market remained subdued for many Indian drug makers, as consolidation of pharma distributors and a faster pace of approvals of new generic drugs by the U.S. Food and Drug Administration has resulted in continued pressure on generic drug pricing over the last few years,” the statement said.
Fitch expects companies with an appropriate Current Good Manufacturing Practice compliance record to be better placed to mitigate the effect of pricing pressure in the US, it added.
“We believe Indian drugmakers' efforts to expand their presence in specialty and novel drugs will help to reduce their dependence on the intensely competitive generic business. However, we do not expect a meaningful shift away from generics during FY20,” the statement said.
Fitch said it expects continued growth in the domestic market, supported by the government’s focus on enhancing access to healthcare to economically weaker sections of the society.
“This will help to support overall revenue growth for Indian pharmaceutical companies despite our expectations of continued pricing pressure in the U.S. We expect margins to trend lower, with the active pursuit of specialty focused research and development programmes,” the statement said.