US Outlook improves for Indian Pharma but Domestic demand under the Cloud

The Indian pharma sector has seen many ups and downs in recent years, including a drop from a Covid high last year, which added to pricing pressures in its most important market. However, some of the US market pricing pressures are easing in the first quarter of FY24, compensating for the drop in domestic sales. "Q1 FY24 proved to be a tale of two divergent performances, with the US delivering an across-the-board beat while domestic business, particularly acute, saw weakness in June."

"Price erosion in the US was in the high single digits versus the mid-teens last year, reflecting better US revenue growth and profitability," according to a YES Securities report. The US market has suffered in recent years due to a variety of factors, including pricing pressures, supply chain disruptions, and a massive delay in the approval of Abbreviated New Drug Applications (ANDAs), resulting in fewer generic launches in the US. However, the ability to launch a generic version of the cancer drug gRevlimid in the United States alleviated some of the worries. Dr Reddy's generated $125 million in sales from this generic in the first quarter, while Cipla, Zydus, and Sun Pharmaceuticals reported gRevlimid sales of 40-60 million.