NEW DELHI: Country’s pharma sector is likely to grow over three-fold to hit USD 55 billion in the next five years, even as the exports from the sector may slow down to grow at a CAGR of 7.98 per cent owing to stricter regulations in markets such as the US, Russia and Africa, says a report.
“Indian pharmaceutical industry is expected to touch USD 55 billion by 2020 as against the current size of USD 18 billion but the exports may slow down to grow at a CAGR of 7.98 per cent in value terms due to tightening of regulatory mechanism in top exports markets of US, Russia and Africa,” a joint report by Assocham and TechSci Research reveals.
Consolidation of pharmacy players in North America has resulted in the presence of leading firms that hold better bargaining power, it added.
The study report cited instances like 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,” it added.
“A steep decline in currency in emerging markets such Africa, Russia, Ukraine and Venezuela may add to woes of drug manufacturers 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,” the report said.
India is the largest supplier of medicine to the US and pharmaceutical exports from India rose from USD 3.44 billion in 2013 to USD 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,” it added.
The report further said the exchange rate issue in the country is affecting the pharmaceuticals market in Russia.
“For example, Dr. Reddy’s pharma revenues in Russia dropped 9 per cent in dollar terms despite a rise of 30 per cent in Rubles. Hence, stabilisation of the currency is of utmost importance in generating revenues through exports,” according to the report.
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, it said.
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