Indian Pharma exports to US may increase in 2018, Care Ratings

Drugs worth $50bn are expected to become off-patented this year giving enough room for pharma exports to get a boost, a report by Care Ratings revealed.

The Dollar Business Bureau 

Despite many hurdles, pricing pressures and competition from other major pharma producing countries, India’s pharma exports to the US will in all likelihood increase in 2017-18.

Drugs worth $50bn are expected to become off-patented this year giving enough room for pharma exports to get a boost, a report by Care Ratings revealed. 

The Indian Pharma industry is likely to face stiff competition from other countries to get Abbreviated New Drug Application(ANDA) approval. Other than this the pricing pressure is likely to increase in the generics market due to the consolidation of distribution channels and increase in competition the report detailed. However due to gain in the sales of generics drugs with branded drugs going off patent during 2017-19, will create an opportunity for Contract Research and Manufacturing Services (CRAMS) segment, Care said. 

"The pharma export volumes from India to the US, however, are expected to rise. This will be backed by about $55 billion expected sales gain to generics drugs on account of branded drugs going off patent during 2017-19 which will create an opportunity for CRAMS segment. We expect growth rate for CRAMS to be higher compared to average growth rate of the industry. These factors are likely to support pharma exports from India," the report specified. 

India’s pharmaceuticals industry earns more than 70% of its revenues with the sale of generic drugs and more than 50% of its revenues come from exports. According to IPI (Indian Pharmaceuticals Industry), pharma exports registered around $33 billion in revenues in 2016, of which a huge chunk of 50% was due to exports alone. 

Of the total pharma exports of $16.8bn during 2016-17, exports to the US commanded 40.6%, exports to Europe was 19.7%, Africa 19.1% and 18.8% was taken up by Asia. 

In 2015-16, exports to USA surged by 27.8 per cent to $5.5 billion on a year-on-year basis. However, the export scenario to USA weakened and it grew by a marginal 1.3 per cent to $5.6 billion in 2016-17. 

In 2016-17, the industry faced a slew of issues with increased scrutiny of regulatory authorities, increase in competition in generics market of one of its primary export destination, USA. This, in turn, resulted in marginal growth in exports to that country. 

Also, stricter enforcement of Drug Price Control Order has impacted revenue growth rate of the industry in the domestic market, the report said. 

The report also said with the implementation of GST, there will be no major change in the prices of medicines and there is an expectation that the government will continue to keep a check on the prices of controlled as well as non-controlled drugs.

The Dollar Business Bureau - Aug 30, 2017 12:00 IST