Mumbai: The US Food and Drug Administration (FDA) approved a record 763 generic drugs in the US fiscal year ended 30 September, with Indian companies accounting for nearly 40% of the approvals.
According to the latest Activities Report of the Generic Drug Program of the FDA, 763 generic drugs were approved in fiscal year 2016-17, surpassing last year’s 651, which too was a record. The regulator also gave 174 tentative approvals during 2016-17.
While the FDA’s report did not give country-wise details, a Mint analysis of the monthly company-wise generic drug approvals available on the regulator’s website indicated that Indian companies received a total of 295 product approvals in 2016-17.
Among Indian firms, the pace of drug approvals was strong for Aurobindo Pharma Ltd, Cadila Healthcare Ltd and Lupin Ltd.
Total filings of abbreviated new drug applications (ANDAs) for generic drugs with the US FDA rose to 1,292 in 2016-17 from 852 a year ago, as per the regulator’s report.
The increasing number of product approvals and filings means that competitive intensity in the US, a major market for many Indian companies, will remain high and continue to put pressure on pricing, analysts said.
In a report dated 2 October, ratings agency Icra Ltd said growth of Indian pharmaceutical companies is likely to moderate over the next three years due to pricing pressure and limited first-to-file (FTF) generic drug opportunities in the US market.
The rising number of players targeting the US generics market, a ramp-up in approval rates, consolidation among distributors (top 3 control 90% of the market) in the US and the falling number of products going off-patent over the past few years have driven significant crowding and pricing pressure in the US generics market, brokerage JM Financial said in a report dated 13 September.
Price erosion in the base products business in the US is likely to be in the range of 7-12% for most Indian firms having a large business in that market. To counter the pricing pressure in plain-vanilla generics, companies have been investing in creating a pipeline of complex generics, which have high-value and limited competition.
“We believe the factors responsible for the slowdown are transient in nature and these companies will return to growth. Price erosion is something that generic players have always lived with. The growth avenues for Indian players include building a presence in lower competition areas and building competencies in alternative dosage forms and biologics,” said Vishal Manchanda, analyst at Nirmal Bang Securities.
Meanwhile, the US FDA is taking steps to expedite the entry of more generic drugs in the market in order to bring down overall healthcare costs in the country. While this could lead to faster approvals, it would also increase competition for existing players.
According to a Citi Research report dated 28 June, the US FDA’s action towards faster approvals is a double-edged sword for companies, because while it will accelerate commercialization of pipelines, it would also put pressure on firms that have a high concentration of limited- competition products in the base products business.