Pharma companies bag 40% of US generics

MUMBAI: The  volume  share of Indian pharma companies in the US generic market has grown to nearly 40 per cent in August despite regulatory woes and pricing pressures. A steady increase in drug approvals and portfolio rationalisation by  MNCs resulted in India’s volume share rising by 5 per cent over the last few months, though value is still impacted due to price erosion.

The US, the most lucrative generics market valued at around $60 billion, accounts for 40-60 per cent of revenues of most domestic companies — including Sun Pharma, Cipla, Lupin and Aurobindo — with an overall share of around $10 billion.

Over the last couple of years, channel consolidation and deep pricing pressure has hit generic companies, leading to biggies like Teva, Mylan and Sandoz recently rationalising their portfolio. This has given ground for Indian companies to increase their hold in the US market and it can continue to rise as the portfolio rationalisation is far from over since new (domestic) companies are still awaiting approvals in base products, according to an analyst from  DSP Merrill Lynch India.

Planned portfolio exits from large MNC firms have taken India’s volume share up 4 percentage points in the last six months. Around 100 generic drug discontinuations have already been registered with the American regulator  USFDA till now, largely from these MNCs, with their share in the US market plummeting to all-time lows — dropping to the level of Indian generic makers. For example, Mylan’s latest rolling four-week marketshare at 6.1 per cent is already neck and neck with Lupin and Aurobindo, while market leader Teva is at 12.6 per cent share — down 140 basis points y-o-y (100bps = 1 percentage point).

The volume-led upside in certain companies is not well reflected as yet, but will soon drive growth in the near and mid-term, and drive earnings 5-7 per cent higher in FY19-20, the analyst adds. Not only have drug approvals of ‘plain-vanilla’ generics surged in the US, but an increasing number of domestic companies are manufacturing ‘complex first generic’ products.