India Report Predicts U.S. Will Buy India Generics Despite Quality Concerns

May 20, 2014
Does the U.S. value price over quality?

According to a recent Special Report issued by India Ratings & Research (Ind-Ra), the numerous 2013 U.S. FDA import alerts will have no material impact on the existing U.S. exports revenue of Indian pharmaceutical manufacturers.

Not only does the firm believe India's revenue will stay intact, it also predicts 20% growth - mostly fueled by U.S. exports - over the next five years.

Reasons cited include:

• A rapid increase in India product approvals by U.S. FDA (Indian companies accounted for 39% of all Abbreviated New Drug Application approvals in 2013)
• An increasing number of India manufacturing facilities registered with U.S. FDA (523 Indian facilities were registered with USFDA as on March 31, 2014, which is the highest number for any country outside the U.S.)
• India's trend of growth in drug exports
• The "correctable nature" of regulatory actions
• Growing opportunities for generics in the U.S.

Despite the fact that the U.S. FDA issued import alerts against 21 Indian manufacturing facilities during 2013, India accounted for 40% by volume of U.S. generic drug imports in 2013. In 2014 so far, the FDA has issued import alerts against two Indian facilities including Sun Pharmaceutical Industries' plant in Gujarat, India. 

The implementation of the Patient Protection and Affordable Care Act (Obamacare) has increased the demand for generics in the U.S. and provides an opportunity to Indian pharmaceuticals to expand exports. According to an IMS Institute review of the use of medicines in the U.S. in 2013, generic medicines represent 86% of prescriptions.

Ind-Ra cautions that "Indian manufacturers can ill-afford to be on the wrong side of the regulation in view of the tremendous opportunity for growth that Obamacare" and recommends that Indian drugmakers put forth the effort, time and funds required to meet FDA requirements.

The firm suggest that the Indian pharmaceutical industry should be looking to big names such as Ranbaxy and Wockhardt to set good examples for the industry in terms of regulatory compliance.

While the U.S. continues to actively enforce quality standards, Ind-Ra concludes that the U.S. will not discourage its largest source of generic drugs, given the country's focus on reducing the cost of healthcare and the consequential increase in the usage of generic drugs to accomplish this.

About the Author

Karen Langhauser | Digital Content Manager