With the slowdown in the US economy intensifying, Indian generic companies stand to benefit in the US pharma market.
There is consensus on the fact that the overall demand of drug as a commodity being highly inelastic will not be adversely affected as a result of the economic slowdown but a major shift towards more economical and quality product seems highly probable.
According to US International trade commission, Indian companies can manufacture pharmaceuticals for less than half the costs of manufacturing them in the US, conduct clinical trials for around one-tenth the US cost, and conduct R&D for less than one-eighth of the US cost.
This trend will aid Indian generics companies in increasing their market share as they fit the bill of low cost-high quality generics perfectly.
Moreover, Indian companies would benefit from low production cost of the domestic companies, flowing from labour cost advantage.
However, despite of the growth in market share, there may not be remarkable growth in terms of value as profit margins are likely to shrink significantly due to cut throat competition in the US generics market.