Indian drugmakers see price erosion in US revenue

A raft of measures adopted by the US government to enhance the availability of drugs are impacting the margins of Indian companies. While several Indian drugmakers have witnessed a decline in their US generic business on a quarter-on-quarter (QoQ) and year-on-year (YoY) basis, few companies have taken inventory write-offs and also tried to liquidate the high inventory carried by them in the US market, reports The Pharma Letter’s India correspondent.

While the decline on the yearly basis was anticipated given the COVID-19-induced channel filling by wholesalers, the QoQ decline was less expected, players have pointed out, given the tailwinds due to the second COVID-19 wave. Drug manufacturers blame low prescription and double-digit price erosion as key reasons for the decline, and add that the US Food and Drugs Administration also has established new steps to enhance competition and promote access and lower drug prices.

The first quarter of fiscal year 2022 saw most Indian pharmaceutical majors struggling to grow revenues and margins in North America. Companies such as Zydus Cadila, Torrent Pharmaceuticals (NSE: TORNTPHARM), Alembic, and Strides posted a dip in US revenue, while others like Dr Reddy’s Laboratories (NSE: DRREDDY) and Cipla (NSE: CIPLA) notched low single-digit growth. Sun Pharma (NSE: SUNPHARMA), however, posted a gain in the US market, riding on its specialty drugs.

Revenue decline in the USA

Aurobindo Pharma (BSE: 524804) registered a -9% QoQ decline in US revenue performance in first-quarter FY22, and -2% YoY. Dr Reddy's recorded -3% QoQ and 1% YoY decline. Cadila Healthcare was -4% QoQ and -11% YoY, while Lupin clocked a -11% QoQ decline in US revenue during the same period and 10% YoY.