February 02, 2021
The key sensitivity to Icras view remains productivity
The key sensitivity to Icras view remains productivity of R&D expenditure,
increasing competition in the US generics space and operational risk related to
increased level of due diligence by regulatory agencies," said Gaurav Jain, Vice
President and Co-Head, Corporate Ratings of Icra.The pace of ANDA approvals has
increased by 44 per cent over the CY2015-18 period and the pace of official
action post USFDA audit has also increased during the 8 months of CY2019 with 11
warning letters compared to seven in CY2018. Rating agency Icra expects R&D
budgets to remain at 7- 8 per cent in FY20.8 per cent during FY18 and further to
7. With majority control of the supply chain, these consortiums have been
bringing down prices of generic drugs.9 per cent in Q1FY20.Between FY11 and
FY17, several Indian pharma companies have been ramping up their R&D spend,
targeting the US market. R&D spends moderated to 8..This trend reversal is
led by challenging US market conditions characterized by steep pricing
pressures, high competitive intensity led by faster ANDA approvals and lower
than expected revenue growth.However, lower R&D spends has lowered the
pressure on margins to some extent. The aggregate R&D spends of top few
domestic companies further moderated to 6.9 per cent of sales in FY2011 to close Bourdon
Tube Pressure Gauges Factory to 9 per cent in FY2017. Fitch finds that lower
R&D expenditure as a percentage of sales limited deterioration in Glenmarks
Ebitda margin amid continued pricing pressure for generic dermatology products
in the US.Chennai: Research and development (R&D) spends of Indian pharma
companies have been coming down since FY17 and are expected to remain low in
FY20 as well due to challenging market conditions in the US.Consolidation of the
distribution supply chain and the increasing number of abbreviated new drug
application (ANDA) approvals given by US Food and Drug Administration (FDA) has
been increasing the pricing pressure on generics sold in the US market, which
accounts for 35 per cent of Indias pharma exports.8 per cent in FY19. Further,
US FDA has been granting approvals for more number of ANDAs and more number of
ANDAs mean more players competing for the same drug in the market, putting
further pressure on the pricing.In this competitive environment, Indian
companies are exiting product development of easy to manufacture, simple
generics and focusing on complex generics, specialty products and niche
molecules. According to Fitch Ratings, a prudent risk management approach to
R&D should help maintain financial flexibility, especially for smaller
companies.Around 90 per cent of the generic pharma drug purchases are now
controlled by three large buying consortiums.However, the trend started
reversing thereafter. They are also optimising their R&D spend due to the
pricing pressure. The aggregate R&D spends of top few domestic companies had
increased from 5
Posted by: pressurd at
02:14 AM
| No Comments
| Add Comment
Post contains 468 words, total size 3 kb.
11kb generated in CPU 0.0163, elapsed 0.0303 seconds.
33 queries taking 0.0252 seconds, 45 records returned.
Powered by Minx 1.1.6c-pink.
33 queries taking 0.0252 seconds, 45 records returned.
Powered by Minx 1.1.6c-pink.