Last Updated on December 31, 2023 by The Health Master
US Drug Shortages
Drug shortages in the United States have reached an unprecedented level, while price erosion has shown signs of stabilization.
Analysts suggest that Indian pharmaceutical companies focusing on the US market could potentially benefit from these trends.
This article explores the insights provided by industry experts regarding the normalization of price erosion and the potential growth prospects for Indian drugmakers in the US market.
Price Erosion Stabilizes, Favoring Indian Pharma Companies
Nuvama Research analysts observe that US price erosion has returned to its previous levels of 6-8 percent, indicating a normalization of the trend.
Furthermore, with the easing of inventory, there is a notable increase in volumes.
An ICICIdirect analyst also confirms the moderation of price erosion intensity to single digits, suggesting that Indian companies stand to gain from the exit of bankrupt generic companies in the US and improved momentum in exclusive products.
Insights from Industry Leaders
During the 2022-23 (FY23) fourth-quarter earnings call, Swami Iyer, CEO of North America at Aurobindo Pharma, highlights the significant price erosion experienced in the first three quarters of FY23.
However, he notes that stability was observed in Q4 and expects this trend to continue.
Similarly, Sharvil Patel, managing director of Zydus Lifesciences, expects single-digit price erosion in FY24, citing the positive impact of obtaining clearance for the Moraiya plant, which enables increased supplies to the US.
Seizing Opportunities
Amid Drug Shortages Indian drugmakers recognize the potential opportunities presented by the drug shortages in the US.
Yugandhar Puvvala, CEO of Eugia Pharma, a subsidiary of Aurobindo, highlights the negligible pricing decline experienced in the last two quarters, positioning the company well for growth.
Puvvala emphasizes that the current record-high drug shortages in the US, coupled with new product launches, will further contribute to business expansion.
US Drug Shortages Raise Concerns
The United States is grappling with one of the most severe shortages of medicines in recent history, particularly affecting cancer medications such as chemotherapy drugs for breast, bladder, and ovarian cancers.
Given the heavy reliance on generics from India and China, the US is scrutinizing its supply chain due to the national security implications arising from these drug shortages.
Factors Influencing Price Erosion and Shortages
According to an industry veteran, the US Food and Drug Administration’s (USFDA) crackdown on domestic and international plants following a two-year pandemic hiatus has hindered drug supplies.
Additionally, the withdrawal of abbreviated new drug applications by certain companies has contributed to the stabilization of price erosion.
Capitalizing on One-Time Purchases
Erez Israeli, CEO of Dr. Reddy’s Laboratories, acknowledges that approximately 10-15 percent of stock-keeping units in the US experience shortages for various reasons, not solely due to USFDA actions.
Israeli suggests that such situations create opportunities for one-time purchases, benefiting companies in the pharmaceutical industry.
Conclusion:
With drug shortages at a critical level in the US and the stabilization of price erosion, Indian pharmaceutical companies specializing in the US market are well-positioned for growth.
The normalization of price erosion, coupled with the opportunity to address the shortages, presents a favorable landscape for Indian drugmakers to expand their presence and contribute to meeting the healthcare needs of the United States.
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