Small and medium-sized generic drug manufacturers in India say that the threat of stricter rules and higher barriers for foreigners in the US healthcare market will force a lot to find a niche or focus their expansion efforts on other countries.
The US drug regulator, the Food and Drug Administration, also banned dozens of Indian drug factories from supplying the US market following inspections that found inadequate quality control practices. Companies have invested significant amounts to raise their quality standards.
Cut-price generics sold by India's small- and medium-sized drugmakers have been critical in bringing down prices there.
A more protectionist position by President Donald Trump, with the prospect of import tariffs and the US boosting local manufacturing of medicines, the operating environment for small generic players will worsen, Indian company executives have declared. "If the challenges continue to increase, competition will be reduced, and this could actually increase prices there," said DG Shah, Secretary General of the Indian Pharmaceutical Association, which represents 20 major Indian pharmaceutical companies.
Companies that want to focus on the US will need to increase investment in higher-margin niche therapies, or products requiring specialized manufacturing, said Mitanshu Shah, senior vice president of finance at Alembic Pharmaceuticals.
J. Jayaseelan, who owns Nuray Chemicals, a manufacturer of pharmaceutical ingredients, said that many Indian companies are reconsidering, or putting on hold, US expansion plans.
US revenues for Indian drugmakers rose 15% in 2016, half the average annual growth rate of 33% between 2011 and 2015, ratings agency ICRA said. It expects the growth rate to fall further this year. Consolidation among US drugs distributors and a federal investigation into drug pricing have also reduced the pricing power of drugsmakers.
