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India’s Pharma Industry Expected to See Growth By End of Year

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India's Pharma Industry

Though India’s pharmaceutical manufacturers have had a hard time launching new drugs in the US market, analysts say the second quarter should show substantial growth from sales in North America.

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October 15, 2015 | by Sarah Massey

Market analysts say the Indian pharmaceutical industry should see elevated sales and profits in the last half of the year. The projected growth is attributed to faster US Food and Drug Administration (FDA) approvals of new drugs.

The FDA has recently approved new treatments developed by India-based pharmaceutical manufacturers like Aurobindo Pharma Ltd., Glenmark Pharmaceuticals Ltd., and Lupin Ltd. The newly-approved drugs are expected to see healthy sales in the US, promising better growth in the sector through to March 2016.

Between April and September 2015, the FDA granted 75 new drug approvals for pharmaceuticals developed by Indian companies, according to the Bank of America Merrill Lynch. In the fiscal year ending in March 2015, only 72 FDA approvals were handed out.

“Even though we have seen accelerated approvals from the FDA, that will turn into revenue only in the second half,” said Siddhant Khandekar, analyst at ICICI Securities in Mumbai. “The trend of approvals definitely seems positive.”

Emerging market fluctuations – including currency instabilities in Russia and Latin America, as well as the devaluation of China’s currency in August – have decreased revenues for companies like Dr. Reddy’s Laboratories Ltd. and Glenmark. India’s pharmaceutical market is worth an estimated $15 billion, and they rely heavily on success of products in foreign markets.



Though India’s pharmaceutical manufacturers have had a hard time launching new drugs in the US market, analysts say the second quarter should show substantial growth from sales in North America. Since the FDA updated their generic drugs approval process in 2012, the agency has been slow to approve new drugs.

From March 2012 to March 2014, US sales growth of drugs produced by Indian manufacturers decreased by more than half, according to Edelweiss, a brokerage firm. In the year leading up to March 2015, US sales growth ended at 14 percent.

According to Jefferies analysts, “The recent approvals should improve growth for most companies – especially Dr. Reddy's and Lupin – from the third quarter. But for growth to revert to expected levels, further improvement in approvals is required.”

Compliance issues – including quality control at manufacturing plants – have also been blamed for India’s poor FDA approval rate over the past few years. Several Indian manufacturers – including Sun Pharmaceutical Industries Ltd. – have fallen under the FDA’s scrutiny and are still working to reach compliance.

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