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India 39 s pharmaceutical exports likely to slow down study

Tightening of regulatory mechanism in top exports markets of US Russia and Africa is affecting the pharmaceutical exports that may slow down

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Tightening of regulatory mechanism in top exports markets of US, Russia and Africa is affecting the pharmaceutical exports that may slow down to grow at a CAGR of 7.98% in value terms, reveals the joint study.

However, the pharmaceutical industry is expected to touch USD 55 billion by 2020 as against the current size of USD 18 billion.

The joint study undertaken by ASSOCHAM and TechSci Research says, in addition consolidation of pharmacy players in North America have resulted in the presence of leading players that hold better bargaining power. Major instances are the acquisition of the US distributor Celesio by US pharmacy Mckesson’s in 2014, and formation of a joint venture between the US wholesale distributor, Cardinal Health, and CVS Caremark in 2013.

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.

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 USD3.44 billion in 2013 to USD3.76 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 drug manufacturing plants located in India. In order to boost the growth rate of exports to the US, Indian companies will need to leverage their compliance to US FDA regulations.

The exchange rate crisis in the country is affecting the pharmaceuticals market in Russia. For example: Dr. Reddy’s pharma revenues in Russia dropped 9% in dollar terms despite a rise of 30% in Rubles. Hence, stabilization of the currency is of utmost importance in generating revenues through exports.

In addition, 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 exports of pharmaceutical products to Africa are being affected owing to the following barriers port delays and prolonged custom valuation, testing and certification requirements may lead to rejection of products at ports, and the cost of returning consignments to India is huge and registration process for any generic pharmaceutical drug is time consuming. 

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