Indian Pharma Companies Do Well With Generic Boom

The recent boom in the US pharmaceutical business has been very healthy for the Indian companies, many of which have been launching generics in the US markets. The question that comes to mind is whether the generics boom in the US market is sustainable. Most of the Indian pharma companies now have a decent pipeline for the abbreviated new drug applications (ANDAs) meant for the US market. In fact some of the giant Indian pharma companies have a very robust pipeline of ANDA.

The newspaper DNA has reported that the market of generic medicines of which the patents are expired would grow by about 12-15 per cent. It has also said that drugs worth USD 59 billion are going off-patent in the US markets. The report also states that the overall US pharma market will grow by 21-22 per cent by 2015. This cites a good opportunity for the generic drug manufacturers across the world. Indian drug manufacturers are set to cut a bigger piece of the pie in the US markets as they have an extremely good pipeline of ANDA approvals.

Recent news also indicates that India holds more healthcare patents whereas in developed countries the trend is to research on technology. This means that sustainable growth is assured by the healthcare and pharmaceutical sectors even for the future. Led by this generic opportunity, the financial performance of the Indian companies has been very impressive. One can see that Sun Pharma reported 33 per cent rise in its topline and 31 per cent rise in net profit for the first nine months of the last fiscal (9MFY12). The US business of Sun Pharma alone grew by nearly 30 per cent.

Ranbaxy has also witnessed a 27 per cent jump in the US business for the calendar year 2011. Dr Reddy’s Lab, which will replace DLF in the Sensex by June 2012, also reported a very healthy 29 per cent rise in its topline with an even better 41 per cent jump in its net profit in 9MFY12. Thanks to the launch of the generic Caudet and Zyprexa, Lupin has also witnessed growth in double digits in the US market. Glenmark, another Indian pharma company has also posted growth in excess of 30 per cent for 9MFY12. 

From the table below one can see that Sun Pharma has the maximum number of drugs in its ANDA pipeline. This is followed by Aurobindo Pharma and Ranbaxy. Even though there is news that the regulatory authority USFDA is set to hike the fees on ANDA filings, it will still be beneficial as the money earned would be used for the approval process and hence the ANDA approvals will rise in numbers. As a result, an increasing number of Indian pharma companies will challenge the patents of innovative drugs in the US.