Indian pharmaceutical industry is expected to touch $55 billion by 2020 as against the current size of $18 billion but the exports may slow down to grow at a CAGR of 8 per cent in value terms due to tightening of regulatory mechanism in top exports markets of US, Russia and Africa, reveals a joint study.
The consolidation of pharmacy players in North America have resulted in the presence of leading players that hold better bargaining power such as the acquisition of US distributor Celesio by Mckesson’s in 2014, and a joint venture between Cardinal Health and CVS Caremark in 2013, the joint study undertaken by industry body, Assocham and TechSci Research said.
Consolidation of pharmacy players is leading to an increase in pricing pressures for generic companies existing in the US market, which is expected to result in a decline in the year-on-year growth of pharmaceutical exports from India over the next five years, it said.
Further, a steep decline in currency in emerging markets like Africa, Russia, Ukraine and Venezuela, is expected to add woes to drug manufacturing companies that supply pharmaceutical drugs to that region, and are unable to generate high revenues on account of selling their drugs at a low priced currency.
India is the largest supplier of medicine to the US, and pharmaceutical exports from India to the US rose from $3.44 billion in 2013 to $3.76 billion in 2014.
Pharmaceutical exports to the US are rising due to the increasing demand for high quality generic drugs in the market. However, the growth rate for exports of pharmaceutical products from India to the US is declining, due to increasing US Food and Drug Administration (FDA) scrutiny on the quality of pharma products coming from India.
The exchange rate is also affecting the pharmaceuticals market in Russia like the Dr. Reddy’s pharma revenues in Russia dropped 9 per cent in dollar terms despite a rise of 30 per cent in Rubles.
Many Indian companies are operating through the Pharmaceutical Benefits Program (PBP) and hospital tenders, for supplying vital and essential drugs, for which prices are then regulated by the Russian government, the study said.
The exports of pharmaceutical products to Africa are being affected due to port delays and prolonged custom valuation, testing and certification requirements, it highlighted.
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Haider Ali Khan is an alumnus of IIMC. He holds a degree in English Journalism from the prestigious campus. His passion includes Aviation, Technology, Politics and Sports.
