Obama's health policy may give a booster dose to Indian generics
NEW DELHI: US President-elect Barack Obama's aggressive agenda on healthcare may prove to be a growth pill for the Indian generic industry. Under Obama, the proposed healthcare reforms include plans to lower drug costs by allowing import of safe medicines from other developed countries (into US), increasing the use of generic drugs in public programmes and taking on drug companies that block cheaper generic medicines from the market.
These proposals when implemented could prove to give a further push to India's pharma industry, particularly generics. The main challenge before the Obama government would be to cut rising costs while providing affordable accessible healthcare for all Americans.
The proposed reforms propose to save a typical American family costs up to $2,500 per year under their existing health insurance.
Hitesh Gajaria, head pharmaceutical sector, KPMG says, "India's pharma companies are an essential part of Big Pharma's global value chain and will only do better by focusing on getting out high quality generics drugs out at competitive prices, thanks to their huge infrastructure of 75 US FDA approved facilities in India. US healthcare costs are rising and eventually it will be the generic companies which will be encouraged by the new administration if the healthcare budget of the US government is sought to be kept in check". In 2006-07, about 16% of India's total drugs and pharmaceuticals exports were to the US, while sales of Indian generics in the US market are estimated to be Rs 8000 crore.
Dilip Shanghvi chairman and managing director Sun Pharma, which earns over 40% of its revenue from US operations, says: President Obama's win is a strong positive for the generic industry since he has indicated universal heathcare as one of the important priorities for his administration".
Any cut in the US healthcare budget will give a big push to more affordable medicines, and in turn to the domestic generic industry.
Industry expert and MD ChrysCapital, Sanjiv Kaul says "Export of generics will continue to flourish because of India's strong and proven competences in this field. US will continue to depend on India for export of quality generics at affordable prices. However, Democrats are typically perceived to be in favour of covering a greater number of people in US under insurance and this would directly favour greater usage of generics in order to keep health costs in check and budgets under control. India as a major source of generics will be a beneficiary".
November 14, 2008