Increased USFDA Approvals for Indian Drug Firms Result in Better Sale of Drugs in the US

by Reshma Anand on Oct 13 2015 12:26 PM

Increased USFDA Approvals for Indian Drug Firms Result in Better Sale of Drugs in the US
In the second half of the year, India's pharmaceutical industry is expected to see sales and profit growth accelerate, thanks to a pickup in the pace of U.S. approvals for new drugs, offsetting any downturn in volatile emerging markets.
Analysts expect the period between March 2015 and March 2016 to be much better in terms of earnings for the Indian pharmaceutical industry, which has consistently come under attack over manufacturing compliance issues, than the comparable period last year thanks in large part to more FDA drug approvals.

According to analysts at Bank of America Merrill Lynch, 75 approvals were granted to Indian companies between April and September 2015, compared with 72 in the year to March 2015.

Analyst Siddhant Khandekar at ICICI Securities in Mumbai said: "Even though we have seen accelerated approvals from the FDA, that will turn into revenue only in the second half ... The trend of approvals definitely seems positive."

The impact of China's surprise devaluation in August and currency gyrations in Russia and Latin America, key markets for India's $15 billion pharmaceuticals industry, have eaten into revenues at players like Glenmark and Dr Reddy's Laboratories Ltd so far this year.

Other factors which have contributed to declining revenues include China's currency devaluation in August and currency instability in Russia and Latin America.

"The recent approvals should improve growth for most companies, especially Dr Reddy's and Lupin, from the third quarter," Jefferies analysts wrote in a note last week. "But for growth to revert to expected levels, further improvement in approvals is required."