In line with global trends in the pharma sector the focus of domestic drug firms on acquisitions to consolidate their position will limit deleveraging for the time being, rating agency Fitch has said. “The ongoing focus of the top Indian pharma companies’ on selective acquisitions to limit deleveraging over the short term,” Fitch said in ‘2017 Outlook: Indian Pharmaceuticals’.
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These acquisitions will help the companies to consolidate their positioning, with deleveraging likely only over the medium term as the acquired businesses contribute incremental earnings, it added.
“Many firms (including Sun, Dr Reddy’s, Lupin and Cipla) have actively pursued acquisitions…in order to augment their existing drug portfolios and solidify their presence in both existing and new geographies,” Fitch said.
It pointed out that domestic pharma market would continue to grow on account of higher consumer spending, urbanisation, improving access to medical facilities and health insurance, and the growing prevalence of lifestyle diseases.
As per Fitch, the regulatory compliance remains the key for growth and it “expects pharma companies with a strong regulatory compliance track record to benefit from a faster pace of Abbreviated New Drug Application (ANDA) approvals under GDUFA in the US market.”
“Drug approval by USFDA to Indian drug companies has almost doubled to over 200 in FY15-FY16 over the prior period, and Indian pharma companies now represent about 30 per cent (by volume) and 10 per cent (value) of the USD 70 billion -80 billion US generics market,” Fitch said.
Furthermore, the USFDA aims to implement the GDUFA II framework from October 2017, which gives some guidance on a further reduction in approval timeframes. “This will benefit Indian pharma companies in boosting their presence in the US,” it added.
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