Focus on affordable healthcare boosts Indian pharma
But quality issues puts growth in developed markets at risk, says report
Growth for Indian pharmaceutical companies is likely to get a boost as countries are increasingly focusing on affordable healthcare. However, failure to comply with stringent quality requirements in developed markets is a key risk, according to a report from Standard & Poor's Ratings Services.
'Expansion into developed markets, especially the US, is positive for the credit profiles of Indian pharmaceutical companies. The market's size and the absence of price controls are likely to support the revenue growth and profitability,' said Standard & Poor's credit analyst Vishal Kulkarni.
Growth prospects are particularly high for Indian companies in the speciality and complex generic drugs segment in the US, but he added that most of these companies have a limited presence in this segment, although they are expected to gradually move up the value chain.
Compliance with regulations is a key requirement for Indian pharmaceutical companies to realise their growth potential, the report added. Failure on this front would seriously hurt creditworthiness. It could lead to disruptions in production, import bans, remediation costs, and reputational and litigation risks.
The report added that the largest 10 Indian pharmaceutical companies are much smaller in terms of revenue than their global generics peers. 'What the Indian companies lack in size is largely offset by their strong product pipeline, presence in emerging markets, and conservatively maintained financial health,' said Kulkarni.
