US exports may drive top Indian pharma companies to grow 20% in 2013
"We believe that top players of the sector will continue to grow strongly in 2013 (over 20 per cent per annum), primarily led by exports.
"Of the export markets, Indian pharma will focus on the US market which presents significant opportunities for the next two years for generics, due to patent cliffs and recent changes in healthcare policies," said the India Ratings report on outlook for Indian pharmaceuticals for 2013.
Patent expiry opportunities, coupled with efforts to contain healthcare spends, are likely to drive the generic market in developed countries. Affordability and availability will make a case for generics usage in the branded generic developing markets.
As per IMS Health, global generic spending is expected to increase to USD 430 billion by 2016 from USD 242 billion in 2011.
India Ratings said R&D spends may continue to increase in 2013 as well as Indian players have started targeting complex chemistry products.
R&D spends have increased over the last few years as pharma players have built robust portfolios of products approved by USFDA. Most companies also have a strong pipeline of products awaiting approval, it said.
Robust new product pipelines may bear fruit in 2013 on commercialisation. Incremental capex requirements, however, are likely to remain modest in the year as many companies benefit from existing infrastructure which would be sufficient for expected increase in operations, according to the agency.
Observing that the growth drivers for domestic pharma market would remain intact, India Ratings said the decision of National Pharmaceutical Pricing Policy (NPPP) 2011 to increase the number of drugs under price control will not have any
major impact on the sector's profitability.
The pharma industry has also performed well on exports front, too, with exports having been increased from Rs 386 billion in 2008 to Rs 775 billion in 2012.
A rise in demand for generics in developed markets will be led by patent expiries and an expansion of generics usage due to efforts taken to control healthcare costs by governments, according to the report.
Rising income levels and increasing access to healthcare facilities will continue to drive demand for generics in 'pharmerging' markets like China, Brazil, India, Russia,
Mexico, Turkey, Poland, Venezuela, Argentina, Indonesia, South Africa, Thailand, Romania, Egypt, Ukraine, Pakistan and Vietnam, the report said.
India Ratings believes that earnings for the export- oriented and generic-focused Indian pharma sector will continue to rise with strong growth prospects in global
On the back of increasing demand for generics, exports from India, which contribute 60 per cent of the pharma sector revenue, have grown at a CAGR of 19 per cent over 2008-2012. In January to October 2012, exports were Rs 620 billion,
up about 28 per cent year-on-year. "We expect this trend to continue," India Ratings said.
It believes that the US market will remain the Indian pharma sector's main focus area in the short to medium term.
"This is mainly driven by the sheer size of generic opportunities in the US market. The US generic market size is about USD 100 billion and may grow at a CAGR of 8-9 per cent in the medium term on account of patent expiries coupled with
pro-generic healthcare policies," the agency said.
During 2013-2015, opportunities on account of patent expiries will amount to around USD 125 billion. Indian players with robust product portfolio, filings and necessary
manufacturing infrastructure are well placed to capitalise on this upcoming opportunity.
The R&D spends of Indian pharma companies have been increasing year-on-year.
"On the back of large investments, the companies have built a strong pipeline of products to be sold in the US. During 2011, Indian pharma companies' filings were 51 per cent of the total ANDA (abbreviated new drug applications) filings compared with 49 per cent in 2010 and 45% in 2009.
"Also, Indian companies' share of ANDA approvals increased in 2012 at 37 per cent (33 per cent in FY11). Total ANDAs of Indian companies approved by USFDA in 2012 was 178 (out of a total of 476) versus 144 (431)in 2011, according to India
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