Ranbaxy and Dr Reddy's Laboratories are currently the best positioned among domestic pharma companies to exploit the US generics market, while Cipla is well set to exploit the bulk drug supply opportunities, according to a research report of a prominent foreign institutional investor.
The strategies adopted by Indian pharma companies to sell generics in the US market assume significant importance at a time when the sector is set to witness accelerating growth as large number of branded drugs go off patent coupled with increased pressure on reducing healthcare costs, the report adds.
According to the research report, Wockhardt and Sun Pharma are potentially serious players, although significant gains are still some time away.
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The report says the US generics market offers an opportunity for select Indian companies to gain size and critical mass rapidly and to achieve above-industry earnings growth over the next three-to-five years.
The US generics segment is estimated to be worth $12 billion at present and comprises eight per cent of the total US pharmaceutical market in dollar terms. The size of the generics market in the US is likely to touch $22 billion by 2005, according to the report.
The report identifies Ranbaxy as the best positioned Indian generics company, as it has the benefit of more than six years of experience in understanding the dynamics of the US market -- from regulatory, legal and marketing angles.
Ranbaxy has built up a basket of 40 approved products in the US. This has enabled the company to have marketing relationships with 14 retail chains and six wholesalers.
Over a period of time, Ranbaxy plans to have a portfolio of branded products. Its sales and net profit from the US market is likely to go up to $158 million and $19 million respectively by 2003 from the current level of $100 million and $8 million.
The report said that Dr Reddy's, in an effort to scale up its presence in the US market rapidly, has consciously chosen to focus its effort on making paragraph IV filings with first-to-file status.
The launch of fluoxetine 40 mg capsules on August 3, 2001, with a 180-day marketing exclusivity is an example of such strategy. Successful paragraph IV filings with market exclusively help negate the disadvantage of not having a basket of products.
According to the report, Cipla has adopted an exclusively drug master file (DMF)-based route and has decided to be a supplier of bulk drugs to leading US generic companies, steering clear of abbreviated new drug applications (ANDA) filings. Omeprazole is an example of Cipla's strategy, wherein Andrx, the first-to-file-company, has a bulk supply agreement with Cipla.
Sun Pharma's near-term strategy is to enter the US generics market in some specialised niche segments rather than attacking the total spectrum, the report said. Its long-term strategy is to become a hybrid generic speciality pharma, with strengths in chronic-disease areas across international markets.
The report observed that Wockhardt's focus is now on generics with some novel drug delivery technologies or complex manufacturing processes -- broadly referred to as super generics. The company currently has five ANDA approvals as part of its initial thrust into the US market, but in the absence of a marketing tie-up, sales are negligible.
The research report found that a strong pipeline and basket of products, legal and regulatory expertise, technological capabilities, strong distribution and marketing set-up and financial resources are the critical success factors for the US generics business.
While the competitive positioning of the Indian companies lies in strong process-chemistry skills, good manufacturing capabilities and low cost manufacturing processes, the report says, the weaknesses are lack of marketing experience, lack of a basket of products. It also says that the Indian companies are yet to exhibit their litigation skills.