The Hindu Business Line : US Bills to serve as tonics for drug cos

FORTUNES of Indian drug makers who are jostling for space in the US market are expected to get a boost when two proposed Bills related to healthcare currently under Senate consideration, becomes law.

The immediate beneficiaries would be domestic pharma majors such as Ranbaxy and Dr Reddy's Labs, which already have established operations in the US, say analysts. Others such as Sun Pharma, Cipla, Aurobindo, Lupin and Wockhardt who have alliances with US generic companies would also stand to gain.

According to reports, one Bill is set to give US consumers, including Medicare (a federal health insurance programme) beneficiaries, swifter access to low-cost copies of branded prescription drugs or generics, thereby, obtaining some relief from the high prices of patented drugs. The other Bill focuses on adding prescription drug benefits into Medicare. Both the Bills are expected to come up for Senate approval shortly.

Indian pharma industry observers say the two Bills could facilitate an increase in the size of the generics part of the pharmaceutical market in the US — the part where most Indian drug companies are currently operating. Mr Vijay Shah, Chief Operating Officer, Nicholas Piramal India Ltd said, ``For Indian companies, who have operations in the US, this could mean a tremendous upside.''

The US market accounts for over 51 per cent of global pharma sales with turnover figures of $203.6 billion in the year 2002, according to IMS Health Web site. Naturally, the stakes will be high if the generics market that accounts for about 50 per cent of the US market is set to increase considerably.

Mr Prashant Nair, Head of Research, Pranav Securities, feels that for these Bills to work, generics have to come in as affordability of medicines seems to be the key issue. ``With this development, there are expectations of a tremendous increase in genericisation of the US drug market. Currently, 51 per cent of the US drug market constitutes generics. This number is expected to go up considerably after these Bill are passed,'' he added.

Indian pharma companies have begun to increase their presence in overseas markets especially in regulated ones such as the US either through setting up of subsidiaries or partnering other generic US companies.

Says a Sun Pharma spokesperson, ``As we understand, these Bills once cleared will increase the size of addressed market (healthcare, hospitals and pharma) at the minimum by $400 billion over 10 years, and one of the areas to benefit will be the generic pharma market.''

According to an industry expert, the core issue is that the Bills will facilitate a US patient's preference for generics to a greater extent. And this, in turn, will bring about a considerable increase in the sale of generics in the US.

The pharma companies that are expected to benefit once the legislations come into force in its present form, according to industry experts, will be those with an established presence in the US markets. ``The Indian pharma companies who would be immediate beneficiaries are Ranbaxy Laboratories and Dr Reddy's Laboratories. But companies such as Sun Pharma, Lupin, Wockhardt and Cipla would benefit but to a lesser extent as it depends upon their portfolio in the US,'' Mr Nair said.

The segments that are expected to see increased activity are anti-infectives, cardiology and diabetics. ``Most certainly the types of medicines that are used more by the senior citizens, such as medication for hypertension, depression, anti-diabetics, cholesterol reducing agents, anti-peptic ulcerants would benefit, as also anti-infectives used for respiratory infections — although at this time the exact quantum would be difficult to state,'' the Sun Pharma spokesperson said.

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