 "Regulatory issues, exchange rate crisis hurting pharma exports: Study")
Tightening of regulatory mechanism (both in developed and developing countries), exchange rate crisis and consolidation of pharmacy players in North America are expected to hurt exports of pharmaceutical products from India, according to a study jointly undertaken by Assocham and TechSci Research.
While Indian pharmaceutical industry is expected to reach $ 55 billion by 2020 from the current $ 18 billion, the exports may slow down to grow at a CAGR of 7.98 percent in value terms due to tightening of regulatory mechanism in top exports markets of US, Russia and Africa, cautions the study.
In addition, the study says, consolidation of pharmacy players in North America have resulted in the presence of leading players that hold better bargaining power. Major instances are the acquisition of the US distributor Celesio by US pharmacy Mckesson’s in 2014, and formation of a joint venture between the US wholesale distributor, Cardinal Health, and CVS Caremark in 2013.
Consolidation of pharmacy players is leading to an increase in pricing pressures for generic companies existing in the US market, which is expected to result in a decline in the year-on-year growth of pharmaceutical exports from India over the next five years.
Further, a steep decline in currency in emerging markets like Africa, Russia, Ukraine and Venezuela, is expected to add woes to drug manufacturing companies that supply pharmaceutical drugs to that region, and are unable to generate high revenues on account of selling their drugs at a low priced currency.
India is the largest supplier of medicine to the US, and pharmaceutical exports from India to the US rose from $ 3.44 billion in 2013 to $ 3.76 billion in 2014.
Pharmaceutical exports to the US are rising due to the increasing demand for high quality generic drugs in the market. However, the growth rate for exports of pharmaceutical products from India to the US is declining, due to increasing US Food and Drug Administration (FDA) scrutiny on the quality of pharma products coming from drug manufacturing plants located in India. In order to boost the growth rate of exports to the US, Indian companies will need to leverage their compliance to US FDA regulations.
The exchange rate crisis in the country is affecting the pharmaceuticals market in Russia. For example, Dr Reddy’s pharma revenues in Russia dropped 9 percent in dollar terms despite a rise of 30 percent in Rubles. Hence, stabilisation of the currency is of utmost importance in generating revenues through exports.
In addition, many Indian companies are operating through the Pharmaceutical Benefits Program (PBP) and hospital tenders, for supplying vital and essential drugs, for which prices are then regulated by the Russian government.
The exports of pharmaceutical products to Africa are being affected owing to the following barriers port delays and prolonged custom valuation, testing and certification requirements may lead to rejection of products at ports, and the cost of returning consignments to India is huge and registration process for any generic pharmaceutical drug is time consuming.
While Indian pharmaceutical industry is expected to reach $ 55 billion by 2020 from the current $ 18 billion, the exports may slow down to grow at a CAGR of 7.98 percent in value terms due to tightening of regulatory mechanism in top exports markets of US, Russia and Africa, cautions the study.
In addition, the study says, consolidation of pharmacy players in North America have resulted in the presence of leading players that hold better bargaining power. Major instances are the acquisition of the US distributor Celesio by US pharmacy Mckesson’s in 2014, and formation of a joint venture between the US wholesale distributor, Cardinal Health, and CVS Caremark in 2013.
Consolidation of pharmacy players is leading to an increase in pricing pressures for generic companies existing in the US market, which is expected to result in a decline in the year-on-year growth of pharmaceutical exports from India over the next five years.
Further, a steep decline in currency in emerging markets like Africa, Russia, Ukraine and Venezuela, is expected to add woes to drug manufacturing companies that supply pharmaceutical drugs to that region, and are unable to generate high revenues on account of selling their drugs at a low priced currency.
India is the largest supplier of medicine to the US, and pharmaceutical exports from India to the US rose from $ 3.44 billion in 2013 to $ 3.76 billion in 2014.
Pharmaceutical exports to the US are rising due to the increasing demand for high quality generic drugs in the market. However, the growth rate for exports of pharmaceutical products from India to the US is declining, due to increasing US Food and Drug Administration (FDA) scrutiny on the quality of pharma products coming from drug manufacturing plants located in India. In order to boost the growth rate of exports to the US, Indian companies will need to leverage their compliance to US FDA regulations.
The exchange rate crisis in the country is affecting the pharmaceuticals market in Russia. For example, Dr Reddy’s pharma revenues in Russia dropped 9 percent in dollar terms despite a rise of 30 percent in Rubles. Hence, stabilisation of the currency is of utmost importance in generating revenues through exports.
In addition, many Indian companies are operating through the Pharmaceutical Benefits Program (PBP) and hospital tenders, for supplying vital and essential drugs, for which prices are then regulated by the Russian government.
The exports of pharmaceutical products to Africa are being affected owing to the following barriers port delays and prolonged custom valuation, testing and certification requirements may lead to rejection of products at ports, and the cost of returning consignments to India is huge and registration process for any generic pharmaceutical drug is time consuming.
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