Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / Rosier year-end seen for Indian pharma thanks to faster US approvals
BackBack

Rosier year-end seen for Indian pharma thanks to faster US approvals

Analysts say a jump in approvals by the USFDA for companies such as Lupin Aurobindo Pharma and Glenmark will mean better sales in the US

The FDA has been slow to issue approvals for new drugs since it overhauled the generic drugs review process in 2012. Photo: ReutersPremium
The FDA has been slow to issue approvals for new drugs since it overhauled the generic drugs review process in 2012. Photo: Reuters

Mumbai: India’s pharmaceutical industry is expected to see sales and profit growth accelerate in the second half of the year, thanks to a pickup in the pace of US approvals for new drugs, offsetting any downturn in volatile emerging markets.

Analysts say a jump in approvals by the US Food and Drug Administration (FDA) for companies such as Lupin Ltd, Aurobindo Pharma Ltd and Glenmark Pharmaceuticals Ltd will mean better sales in the United States, and therefore a rosier end to the year through March 2016.

According to analysts at Bank of America Merrill Lynch, 75 approvals were granted to Indian companies between April and September 2015, compared with 72 in the year to March 2015.

Analyst Siddhant Khandekar at ICICI Securities in Mumbai said, “Even though we have seen accelerated approvals from the FDA, that will turn into revenue only in the second half ... The trend of approvals definitely seems positive."

The impact of China’s surprise devaluation in August and currency gyrations in Russia and Latin America, key markets for India’s $15 billion pharmaceuticals industry, have eaten into revenues at players like Glenmark and Dr Reddy’s Laboratories Ltd so far this year.

But some analysts said the second quarter should mark the start of accelerating growth in the United States, where companies have struggled to launch new drugs.

The FDA has been slow to issue approvals for new drugs since it overhauled the generic drugs review process in 2012.

Indian drugmakers’ US sales growth eased to 14% in the year to March 2015, less than half what it was in the year to March 2012, according to brokerage Edelweiss.

“The recent approvals should improve growth for most companies, especially Dr Reddy’s and Lupin, from the third quarter," Jefferies analysts wrote in a note last week. “But for growth to revert to expected levels, further improvement in approvals is required."

Some analysts say compliance issues are at least partly to blame for some drugmakers not receiving FDA approvals.

Several Indian drugmakers have faced FDA sanctions in the last few years, due to quality-control issues at their manufacturing plants, as the agency increased scrutiny of generic companies.

Many, including India’s largest drugmaker Sun Pharmaceutical Industries Ltd, are still struggling to fix issues with their plants. Reuters

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 12 Oct 2015, 05:34 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie