Prolonged U.S. Shutdown to Hit Indian Pharmas
Prolonged US shutdown to hit Indian pharma cos [India Business]
MUMBAI: The reverberations of the US government shutdown may reach the domestic pharma industry. If it continues over a couple of weeks, the shutdown could impact revenues of domestic generic companies in the near to medium term. Analysts say consider scenario of the shutdown dim for domestic companies as it would delay approvals of new generics, which are growth drivers of revenue and operating margin in the highly-competitive generic market.
Also, FDA's monitoring as well as progress on actions taken recently - including 483 observations, warning letters, import alerts and consent decrees from companies such as Ranbaxy, Wockhardt and Strides - would be delayed further, impacting the companies' future plans.
"While the scenario of approval timeline post shutdown is yet to be spelt out by the US FDA, we believe this would impact major domestic generic companies' revenues in the near to medium term," Surajit Pal of Prabhudas Lilladher said. At present, average FDA approval for generic drugs is 30 months. With the current stalemate, it will increase to 40 months due to significantly low employee strength at the regulatory agency and an overburdened approval product pipeline.
The US FDA plans to send half of its employees on temporary unpaid leave due to the stalemate on the US government budget for 2014. The regulator will, however, ensure that its activities will continue in handling emergencies, high-risk recalls, civil and criminal investigations, import entry reviews and other critical public health issues.
The agency will reportedly retain over 8,000 FDA staff, of which 578 employees will continue the monitoring of products and manufacturers. The monitoring activities include active inspections, recalls and emergency responses. Another 120 employees will oversee adverse events' reporting, lot release protocols, surveillance, compliance, recalls and emergencies.
Novartis India VC and MD Ranjit Shahani had told TOI earlier, "If the US government shuts down, the fortunes of the domestic drug industry will be impacted as a large number of companies export over 70% to developed markets, of which US is the major buyer." While Dr Reddy's received product approvals, including Vidaza (azacitidine) in FY14, companies such as Lupin and Aurobindo may experience delays (in approvals).
Certain companies like Lupin, Sun Pharma, Ranbaxy and Aurobindo will be impacted more than Dr Reddy's, Glenmark, Zydus Cadila and Cipla due to expectations of approvals of key products in the half year FY14, analysts added.
Posted: October 2013