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MOSL: HEALTHCARE-US generics — what lies ahead for Indian companies? Focus on pace and quality of approvals

Healthcare: US generics — what lies ahead for Indian companies? Focus on pace and quality of approvals

 

• We analyzed the US portfolio of companies under coverage based on the incremental business led by (a) new launches, (b) market size, and (c) competitive dynamics, and on leakage in base business led by (a) price erosion, and/or (b) market share loss in existing molecules due to launches by peers.
• Cipla, Aurobindo Pharma (ARBP), Glenmark Pharma (GNP) and Alembic Pharma (ALPM) are likely to have better incremental gain over FY18.
• Though Cadila Healthcare (CDH) has the maximum approvals, incremental gain is expected to be marginal due to considerable erosion in its base business.
• Incremental gain in case of DRRD is expected to be small on high base of FY18, while Torrent Pharma (TRP) may see marginal increase in the US on lack of approvals.
• The loss in base business is expected to dominate in case of Lupin (LPC) and Sun Pharma (SUNP), thereby resulting in US sales contracting for 9MFY18

 Multiple factors at play in the US generics market

• Prospects for companies focusing on US generics have improved following faster approvals by the USFDA and compliance consistency. However, size of the base business, concentration of portfolio, competitive pressure in potential products, lack of approvals due to ANDA specific issues and/or GMP issues at API/formulation site are counter forces for growth in the US generics business. Against this backdrop, we attempt to analyze additional business for these companies from new approvals over the past one year and look for companies that are best placed after adjusting for the probable business loss in the base portfolio.