Indian drugmakers, heavily reliant on the U.S. market, are projected to sustain revenue growth in FY25 due to ongoing drug shortages in the United States, as highlighted by Mumbai-based India Ratings and Research. With companies like Dr. Reddy’s, Cipla, and Sun Pharma dominating the bulk generic drug manufacturing sector, the U.S. and Europe contribute significantly to their revenue streams. Currently, the U.S. faces a notable shortage of drugs, with 233 drugs across 22 therapeutic categories experiencing active shortages as of April, driven primarily by production discontinuations, heightened demand, and shipment delays, as reported by the Utah Drug Information Service and the U.S. Food and Drug Administration.
Director of Corporate Ratings at India Ratings and Research, Mr. Vivek Jain, emphasized the strong financial performance of Indian generic players catering to the U.S. market in FY24, attributed to lower raw material costs and pricing stability. Notably, Dr. Reddy reported a 29% surge in North American sales. In comparison, Cipla witnessed an 11% revenue increase from the region in the most recent quarter. Despite rising regulatory costs leading to production halts and increased complexity in filing new drug applications, Indian companies are expected to expand their supply chains and therapeutic category participation to address the shortages. Furthermore, India Ratings and Research anticipate a decline in price erosion in the U.S. market, potentially improving returns, with prices expected to decrease to single digits over the next 12 to 18 months from double digits in 2022.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.