Indian Pharmaceutical Exports to the US to Increase Despite Pricing Pressure

Indian pharmaceutical exports to the United States are expected to increase in 2017-18 as roughly USD 50 billion worth of pharmaceutical drugs become unpatented, allowing manufacturers to produce and sell generic versions for a lower price. The Indian pharmaceutical industry generates around 70% of its revenue from the sales of generic drugs.


Said a new report from Care Ratings, “The Indian pharmaceutical industry is likely to face competition from other countries to get ANDA approval. Apart from this, the Indian pharma companies will continue to witness pricing pressure in the US generics market due to consolidation of distribution channels and increase in competition.”


However, the report added, pharmaceutical export volumes from India to the United States are expected to rise: “This will be backed by about USD 55 billion expected sales gain to generics drugs on account of branded drugs going off patent during 2017-19 which will create an opportunity for CRAMS segment. We expect growth rate for CRAMS to be higher compared to average growth rate of the industry. These factors are likely to support pharma exports from India.”


The Indian pharmaceutical industry generated revenue of more than USD 30 billion in 2016. During 2016-17, the majority of Indian pharmaceutical exports (more than 40%) went to the Americas, followed by Europe, Africa, and Asia. Exports totaled USD 16.8 billion last year. The report says, “The prime reasons for the weak exports were price erosion in the generic market in the USA due to consolidation among customers i.e. The distribution channels, increase in competition, absence of blockbuster drugs going off patent and regulatory issues faced by Indian pharma companies.”


The report also said that as GST becomes implemented in India, there will be no significant changes in the prices of medicines. The government will likely continue to monitor the prices of both controlled and non-controlled drugs.


The current uncertainty surrounding the future of the healthcare system in the United States may also contribute to the demand for generic pharmaceutical drugs. Individuals left uninsured will likely opt for cheaper versions of necessary medications.


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