By Zeba Siddiqui
MUMBAI India's largest drug group Sun Pharmaceutical Industries Ltd said on Friday its U.S. sales might fall this year because of pressure on drug prices, signalling tough market conditions in the United States for generic drugmakers."The U.S. generics industry is facing rapidly changing market dynamics, (and) increased competitive intensity and customer consolidation is leading to pressure on pricing," Sun's Managing Director Dilip Shanghvi said on a call with analysts after the company reported lower than expected fourth-quarter earnings."We may even have a single digit decline in consolidated revenue for full-year 2018 versus full-year 2017."The world's fifth-largest generic drugs maker is the latest to offer a bleak U.S. forecast, echoing recent comments by rivals Dr Reddy's Laboratories Ltd and Lupin Ltd. India's nearly $16 billion drugs industry faces an uncertain future in its largest export market, the United States.
A wave of consolidation between U.S. drug distributors has hit the negotiating power of drugmakers. There is also uncertainty around big healthcare policy changes by U.S. President Donald Trump."For many things there is a new normal that is getting established," Sun's Shanghvi said in response to analysts queries on how the company planned to deal with the increasing challenges. "We are clearly at the level of profitability where we were 12 years back ... we need to execute better." Sun's plan, like that of other large Indian drugmakers, is to make niche products where there's less competition, such as for ophthalmology and dermatology.
Sun has been working on fixing problems at its western India-based Halol plant, where the U.S. Food and Drug Administration has raised concerns about quality control violations.Managing Director Shanghvi said the company was continuing to fix those issues as it awaited another inspection, which it had no visibility on.
It is also partnered with U.S. firm Merck & Co Inc on developing tildrakizumab, a new drug for psoriasis that Shanghvi said might be launched next year. Hit by a 34 percent fall in U.S. sales, Sun's profit for the quarter ended March fell 14 percent to 12.24 billion rupees ($189.94 million), lower than the 15 billion rupees that 21 analysts polled by Thomson Reuters expected, on average. Sales in its second-largest market, India, were up 10 percent, but the business will face a one-time hit from a nationwide tax reform that the government plants to implement July onwards, Shanghvi said.($1 = 64.4400 Indian rupees) (Reporting by Zeba Siddiqui in Mumbai. Editing by Jane Merriman)
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Updated Date: May 26, 2017 23:30:05 IST