India's pharma Industry set to Capitalize on Major Opportunities in the US Generics Market

According to a report, Elara Capital, the Indian pharmaceutical industry is ready to capitalise on the substantial opportunity in the "small molecule patented drugs" segment, which will open up for generics through 2023-26. Major firms with exposure to the US market, such as Zydus Lifesciences, Torrent Pharma, Aurobindo Pharma, and Ajanta Pharma, are projected to benefit the most from this upcycle, according to the report. The most recent product upcycle in the US generics market, known as the 'Patent Cliff,' occurred between 2011 and 2015, when generic competition developed for numerous important pharmaceutical goods.

According to the research, a similar situation is developing now, with an expected wave of initial generic competition indicating another patent cliff on the horizon between FY23 and FY28. “This has been a looming threat for the US generics market. Drug patent expiration is notably one of the reasons for the growth of generic drugs and to couple it with the need for reducing healthcare costs, the worldwide demand for generic drugs continues to grow. With India having a robust pipeline of generic drugs, this upcoming cliff will provide a tremendous growth opportunity for Indian pharmaceutical companies,” said Shweta Gupta, Partner, INDUSLAW, a law firm tracking the pharmaceuticals sector. “In addition to pharmaceutical manufacturers, other players in the Indian pharma ecosystem can benefit from the upcoming patent cliff, as a significant number of pharma companies will look to outsource non-core activities to emerging markets,” she said.

“There was significant inventory build-up in the channel during COVID due to apprehension about availability of medicine. However, as COVID subsided, the inventory in the system led to significant price erosion in the US generics segment,” said Tushar Manudhane, research analyst at Motilal Oswal Financial Services Ltd. “This is likely to increase global interest in such companies, thereby opening up investment opportunities for the generic drug sector in India.