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MOSL: HEALTHCARE-Gauging gains/losses in US generics post recent approvals-Rating companies based on net gain or net loss in US business

Healthcare: Gauging gains/losses in US generics post recent approvals; Rating companies based on net gain or net loss in US business

 

• We have analyzed incremental ANDA approvals over the past six months and the competitive intensity in top products for Indian pharma companies to gauge the net effect on their US generic business, assuming no change in the intensity of bargaining by pharmacy benefit managers (PBMs) and/or distributors.
• For companies like GNP, CIPLA and ARBP, the incremental business from new launches would be higher and erosion in base business would be lower due to marginal increase in the number of manufacturers getting approval for products in their base portfolio.
• DRRD would see an offset in incremental business by loss due to increase in the number of manufacturers getting approval for products in their base portfolio.
• SUNP and CDH would see marginal decline in US sales, as base business erosion would be a tad higher than business gain from new approvals.

More headwinds than tailwinds for US generics in the last 12-18 months: The key drivers for growth in US generics are the pace and quality of filings/subsequent approvals. The key impediments to growth are: (1) increase in the number of manufacturers getting final approvals, resulting in greater competition, and (2) increase in the bargaining power of PBMs/distributors. The growth impediments dominated in FY18, resulting in a contraction in revenue from US generics.