The growth estimate has been revised down from 10%-12% to 5% for the current fiscal due to increased regulatory actions faced by Indian drug makers
The Dollar Business Bureau
Indian pharmaceuticals exports, embattled with increased global regulations and depreciation of emerging market currencies, are expected to grow at a modest pace of 5% during the financial year 2016-17, a report has said.
The domestic pharmaceutical market is likely to sustain the recently gained momentum of 13%-15% growth rate. “However, the market will remain exposed to any expansion of the price control regime. Overall, sector growth is likely to be about 8%-10% in FY17,” the India Rating and Research (Ind-Ra) said in its latest outlook on the sector.
Pointing towards the recent spurt in regulatory actions by US authorities against Indian companies, the report said that India’s exports to the US will see restricted growth. Besides, “higher depreciation of emerging market currencies is likely to impact export growth to semi-regulated markets”.
Ind-Ra has revised the sector’s outlook for FY17 to ‘stable’ from ‘positive’ and said it expects muted export revenue growth and stable domestic revenue growth during the year.
The muted pharmaceutical export growth witnessed during the past two years continued in the first half of 2015-16. But the growth estimate was revised down from 10%-12% to 5% for the current fiscal due to increased regulatory actions faced by Indian drug manufacturers.
Last year, the United States Food and Drug Administration (USFDA) issued 12 import alerts against manufacturing facilities of eight Indian companies. Also, there has been a significant increase in the issue of warning letters against Indian facilities.
“In 2015, 17 facilities received warnings as against seven in 2014 which is close to 40% of the total warning letters issued in 2015. This is to be viewed in the context of the steady expansion of exports from India to the US and its position as the fourth-largest exporter of pharmaceuticals to the US in 2014 (contributing about 6%),” the agency said.
Warning letters usually take up to 24 months to resolve in the US; and if the warnings are unresolved for a prolonged period, it could lead to import alerts for drugs manufactured at such facilities. This also leads to delay in the launch of new products, disrupting the medium-term export revenue of the manufacturers.
The report attributed India’s muted export growth in the US market in the past three years to the reduction in the generic market of Indian drug makers due to a decline in the value of drugs going off-patent and shrinking market share of Indian companies.
“Weakening of several emerging market currencies against the US dollar has impacted Indian exports to semi-regulated markets including Russia and South Africa,” it added.
India Rating and Research has revised the pharma sector’s outlook for FY17 to ‘stable’ from ‘positive’ and said it expects muted export revenue growth and stable domestic revenue growth during the year
Feburary 08, 2015 | 3:28pm IST.