India is the largest supplier of generic drugs in the world and more than 30% of its pharmaceutical exports, including branded drugs and generics, by volume are to the US market. However, a series of setbacks for the country’s pharma companies operating in the US, including price fixing allegations, manufacturing quality questions and new EU regulations favoring generic and biosimilar players from member states, could threaten India’s dominance in the US pharmaceutical market where the demand for branded and generic prescription and OTC drugs is expected to reach *US$464bn by 2022, according to GlobalData, a leading data and analytics company.
Sasmitha Sahu, Pharma Analyst at GlobalData comments: “These are serious setbacks for some of India’s generic pharma companies operating in the US market, which could negatively affect the industry’s overall image as well as **payer and physician decisions on the use of their products.”
In May 2019, 44 US states filed an anti-trust class action lawsuit against 20 pharma companies, including the US subsidiaries of seven key Indian generic players, for conspiring with one another to inflate prices of more than 100 different generic drugs which ultimately stifled competition.
In its latest annual report on the state of pharmaceutical quality, the US Food and Drug Administration (USFDA) revealed that the average site inspection score for the Indian manufacturing units was 7.0, which is lower than the average score of 7.5 for all inspected sites in FY2018.
Sahu adds: “The USFDA findings will only intensify the already increased scrutiny of Indian generic companies’ manufacturing capabilities. The number of pharma manufacturing site inspections carried out by the USFDA by country outside the US in 2018 was the highest in India with 13%, followed by China with 9% and Germany with 4%.”
In July 2019, new EU regulations came into effect allowing pharma companies in the EU to manufacture generics for drugs which are still protected under extended patent protection intended for ‘out of the EU’ export purposes and/or stockpiling for non-EU distribution.
Sahu concludes: “This will inevitably lead to more competition in the US market as EU generics manufacturers compete with Indian companies for their share of sales.”
*Source: GlobalData’s latest report: CountryFocus: Healthcare, Regulatory and Reimbursement Landscape – US based on the spending of prescription drugs and sales of over-the-counter (OTC) drugs including generics.
** ‘payer’ in health care, generally refers to entities other than the patient that finance or reimburse the cost of health services e.g. insurance carriers, or health plan sponsors (employers or unions).