Indian drug cos increase US sales despite slump
New Delhi: Beating a global decline in sales of off-patent drugs on prescription in the 12 months to September, India’s drug makers posted double- and triple-digit growth in the US, the world’s largest generics market.
According to data released by IMS Health Inc., which provides market information to pharma and health care industries, the US generics market, accounting for 42% of global sales, saw a 2.7% decline in sales value to touch $33 billion (Rs1.62 trillion), while sales volumes increased by 5.4% in the 12 months ended September.
The worldwide growth of such drugs dropped drastically to 3.6% for the same period from 11.4% in the previous 12 months, IMS Health said in its global generics perspective report released in December.
Despite this, Wockhardt Ltd, which recently bought Morton Grove Pharmaceuticals Inc., expanded its US portfolio to about 50 products. An expanded US product portfolio contributed to a 156% increase in turnover for Glenmark Pharmaceuticals Ltd’s US generics business, and Dr Reddy’s Laboratories Ltd strengthened its position with the acquisition of BASF SE’s contract manufacturing operation.
“Indian companies have established a strong presence in the US generics market,” Alan Sheppard, global head, generics, IMS Health, said by email.
This means Indian generic drug firms can look at a significant growth in their market share from the current 5%.
Glenmark’s US sales from April to September grew to Rs367 crore from Rs164 crore in the same period in 2007. With 41 generic products already selling there, almost a same number await the US drug regulator’s approval, of which four are potentially first-to-file, a status that earns exclusive marketing for 180 days.
“We have focused on niche product segments where we have inherent strengths. The... segments...not only have a better margin profile but also a good opportunity to capture market share in a short period,” said Terrance Coughlin, chief executive of Glenmark Generics Ltd.
“We will continue to focus on building a differentiated product portfolio. The process of filing Andas will continue at the same pace because that is the key to our growth strategy for the generics business,” he added. Andas are abbreviated new drug applications for marketing generic drugs in the US.
Sun Pharmaceutical Industries Ltd grew 200% in the US market in the two quarters ending September, against 45% in the same quarters in the previous year. Sun has at least 60 products in the US market with 21 getting Anda approvals in 2008 alone.
The picture, however, is not so rosy for Ranbaxy Laboratories Ltd, which is the only company showing slowing sales in the US markets after the US Food and Drug Administration (FDA) banned 30 products.
“Sales for Ranbaxy have declined by almost 45% on most of its products. If you take into account new launches, the aggregate decline would be about 36%,” said Sarabjit Kour Nangra, analyst at Mumbai-based brokerage Angel Broking Ltd.
For Dr Reddy’s, US sales in the three months to June grew 54% over its same quarter the previous year and 62% in the second quarter to September.
“We launched 11 new product families including two OTC (over-the-counter) products in FY08. We also launched our US specialty business, Promius Pharma, to focus on the dermatology market, as part of the growth strategy in the US,” said a company spokesperson.
The company launched its acute migraine drug Sumatriptan, a generic of GlaxoSmithKline’s Imitrex, in the US market in the December quarter, helping it almost quadruple its revenue from North America to $137 million.
Its third quarter US sales growth rate was not immediately available.
Dr Reddy’s posted a net profit of Rs192 crore for its fiscal third quarter ended 31 December, compared with a net loss of Rs121 crore in the year-ago period under the international financial regulatory standards.
“Anda approvals by India as a percentage of the total approvals have increased from a mere 6% in 2001 to over 27% in 2008,” said Hitesh Gajaria, executive director at consultancy firm KPMG India Pvt. Ltd.
Indian companies, with their aggressive strategies, should look at a double-digit growth rate in their combined market share in the US on a year-on-year basis, Gajaria said.
As long as Indian firms hold their competitive pricing, the going would only get better in the US generics market.
“The global generics market has posted double-digit gains in recent years. But in 2008, despite robust volume increases, we are seeing the first significant decline in sales growth as manufacturers increasingly compete in fierce price battles within most of the world’s major markets,” Murray Aitken, senior vice-president, health care insight, at IMS Health said in the December report.
“This trend is very apparent in markets like the US and (the) UK as generics companies contend with aggressive competition and cost-containment measures enforced by both private and government payers.”
Medium-sized Indian pharma firms are also going for a slice of the pie as they realize the emerging need for common drugs.
“There is war over blockbuster drugs but common products are being ignored in the interim. So, a lot of medium companies are getting ready with innovative ways of getting into the US market with products like ibuprofen, analgin and perisulphate in the next two-three years,” said T.S. Jaishankar, chairman of industry lobby group Confederation of Indian Pharmaceutical Industry.
He added that about 40-50 Andas were filed in 2008 by medium-sized companies. “If even 10 get the FDA’s clearance, we are looking at a Rs1,000 crore increase in business,” he said.
January 29, 2009