With the US government’s move to bring down cost of drugs, Indian companies consider it as a big market opportunity. However, the new healthcare policies of US President Trump’s administration, which is against drug imports along with the new guidelines on H-1B Visa and the one-time high tax on investments outside the US can put a spanner in the works.
This along with preferential treatment for Americans in employment and a new system which enables cheaper medicine for Americans are pointers to the churning taking place in the US market. Yet another makeover is the announcement of the American Health Care Act which could have a body blow on patients and the health of its citizens. The Act which replaces Obamacare will see a fall in health insurance coverage.
According to the American Medical Association, which supported the health system reform legislation in 2010 of Obamacare since it was a significant move to make high quality, affordable health coverage accessible to its population, the American Health Care Act (AHCA) would result in millions of people in the US losing coverage and benefits.
“By replacing income-based premium subsidies with age-based tax credits, the AHCA will also make coverage more expensive, if not out of reach for poor and sick Americans. For these reasons, the AMA cannot support the AHCA,” said Dr. Andrew W. Gurman, President, American Medical Association.
AMA faults AHCA provisions
In January, the American Medical Association released its health system reform objectives which stated that people who currently have insurance should not become uninsured.
On May 8, 2017, the American Medical Association outlined several provisions within the American Health Care Act where the legislation falls short of the objectives articulated by the AMA.
The American Medical Association in a press communiqué said, “ It is a concern that by relating credits to age rather than inversely related to income, the American Health Care Act will result in greater numbers of uninsured Americans. With the proposed roll-back of Medicaid, which has been successful in providing coverage for lower income individuals, the move could limit demand for services, including mental health and substance abuse treatment as a result of the ongoing crisis of opioid abuse and addiction. Therefore, the Association cannot support provisions of the legislation that repeal the Prevention and Public Health Fund or that eliminates the ability of patients to receive their care from qualified providers of their choice.”
“This legislation over the coming days and weeks will be potentially life altering, impacting decisions of Americans who may see their public, individual or even employer-provided health care coverage changed or eliminated,” the AMA said in its communication.
US pharma market opportunities
US is the largest export market for India. Indian pharma industry has the highest number of USFDA approved plants pegged at 546 outside the US. According to an IBEF report, the Indian pharmaceutical industry accounts for the second largest number of Abbreviated New Drug Applications (ANDAs) and is also a world leader in Drug Master Files (DMFs) applications with the US.
Opportunities for pharma companies are expected to grow in next few years, with many drugs going off-patent in the US and other countries, thus increasing competition. Indian generic drugs account for 20 per cent of global exports in terms of volume, making the country the largest provider of generic medicines globally. India’s generics drug market accounts for around 70 per cent of the medicines manufactured and is expected to reach US$ 27.9 billion by 2020.
In FY16, India exported pharmaceuticals worth US$16.89 billion, and this expected to reach US$40 billion by 2020. Indian drugs are exported to more than 200 countries in the world. With the US as the key market, India is the world’s largest provider of generic medicines and the country’s generic drugs account for 20 per cent of global generic drug exports in terms of volumes.
According to a Pharmabiz analysis, higher investments in R&D during last couple of years has started yielding good results in the current year. Indian companies received 55 ANDAs approvals from US FDA and 16 tentative approvals during the first quarter ended March 2017. The US FDA approved total 171 ANDAs and 43 tentative approvals during first quarter and Indian companies secured 32.2 per cent and 37.2 per cent respectively of aggregate approvals. Based on first quarter figures, the US FDA approvals may cross approval for 700 ANDA in 2017, highest in the last decade and growth of over 17 per cent in approvals over the previous year. Indian companies have set to get major portion of these approvals and may step up presence in global highly regulated markets. However, quality problem and related US FDA actions may impact operations of few Indian majors.
Aurobindo Phama remained on top with 13 ANDA approvals and three tentative approvals during first quarter ended March 2017. Lupin and Zydus Pharma Group captured second and third spot with approval of six ANDAs each, and followed by Gland Pharma five, Alkem Laboratories and Macleods Pharma four each and Cipla three ANDAs. The list includes major companies like Dr Reddy's Laboratories, Sun Pharmaceutical, Unichem Laboratories, Wockhardt, Ajanta Pharma, Glenmark Pharma, Jubilant Generic and Panacea Biotec.
In the wake of US President Donald Trump’s policies and the Brexit in the EU, speculations are rife that Indian pharma industry will be affected . However the cost advantage and availability of quality technical talent will boost Indian pharma industry’s growth prospects in the regulated markets of US and EU. We do not see Indian pharma industry to be impacted by such developments and that could mar expansions, said Dilip Surana, Chairman & Managing Director, Micro Labs Limited.