INDIAN NEWS & TIMES

Monday, January 30, 2023

During Q2 FY2023, the sample set registered a YoY growth of 7.0% in revenues in Q2 FY2023, supported by 11.4% growth from the US market and 6.2% in the domestic market. The same was offset by 7.6% contraction in revenues from the European markets. Commenting on the headwinds in the European market, Ms. Mythri Macherla, Assistant Vice President & Sector Head, ICRA said, “Revenues of ICRA’s sample set from Europe continue to witness headwinds such as muted demand, the depreciation of the EUR against the INR, and pricing pressures due to increasing competition. Some companies are thus exiting non-profitable markets and/or products to protect their margins as the ongoing inflationary pressures are also impacting the cost of imports from Europe.

The market conditions in Europe are expected to remain challenging, given the ongoing macroeconomic issues, even as the same is expected to be mitigated for some companies to a certain extent by expansion in product offerings and market share gains in existing products. Overall, revenues for the sample set from the Europe market are expected to contract marginally in FY2023.” For the domestic market, the sample set is expected to witness a growth of 5-7% in FY2023. This will largely be supported by the WPI-linked price hike for NLEM products, sustained healthy volumes across both chronic and acute segments, new product introductions, and annual price hikes for non-NLEM products.

Steps being taken by sample set companies towards new product introductions and enhancement in the field force are expected to support their growth going forward. However, increasing competition in some therapeutic areas and large base will impact growth to a certain extent. As for the US market, in line with the trends in the recent past, mid-to-high single digit pricing pressure is expected to continue over the near term for generics, with some normalisation expected only after a few quarters. That said, during Q2 FY2023, the sample set reported a 11.4% YoY revenue growth against 4.2% YoY growth in Q1 FY2023. The growth was primarily propelled by the launch of Lenalidomide, a generic therapeutic equivalent of Bristol Myers Squibb’s (Celgene) cancer drug – Revlimid, under eligibility for 180-day exclusivity with the first-to-market opportunity. Growth was also aided by good performance of some specialty products and partly due to the base effect. Moreover, 7.0% depreciation of the INR against the USD also supported growth to some extent.

Commenting on the recent pick-up in inspections by the United States Food & Drug Administration (USFDA), Mr. Deepak Jotwani, Assistant Vice President & Sector Head, ICRA, said, “With the USFDA re-commencing physical inspections of manufacturing facilities and some companies receiving form 483s and warning letters, regulatory risks remain a key monitorable.

Any adverse outcome in the form of warning letters or import alerts for key facilities could impact the companies’ business prospects.” Most major Indian pharmaceutical companies continue to focus on emerging markets to fuel their growth, given that they continue to face pricing pressure in the US and the European markets. The growth in emerging markets also continues to be driven by new product launches, strong demand, and depreciation of the INR against certain currencies