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Rating agency ICRA in its latest report has said that Indian pharmaceutical firms are likely to witness muted revenue growth from the US generics market in FY23 due to price erosion pressure. It said the US has always been a key market for Indian pharmaceutical companies but over the past few years, the revenues from there have grown at a relatively modest pace due to consistent pricing pressure, lack of major generic product launches, increased regulatory scrutiny.

According to the report, in FY22, the revenues from the US pharmaceutical market for its sample of eight leading Indian pharmaceutical companies declined marginally by 0.2 percent owing to high single-digit to low-teens price erosion. On the outlook, it expects mid to high single-digit price erosion to continue to exert pressure over the near term, resulting in muted revenue growth for the Indian pharmaceutical companies from the US generics market in FY23. Further, it said the impact of elevated raw material prices and packaging costs in addition to relatively higher freight rates and the impact of supply chain disruptions on their margins will remain key monitorable.

The report further said the COVID-19 pandemic had impacted the pace of approvals of Abbreviated New Drug Applications (ANDA) and revenue growth for companies in FY21, while pricing pressures impacted growth in FY22. With the USFDA unable to conduct physical inspections due to the pandemic-induced restrictions, both the pace of ANDA approvals and the issuance of warning letters to Indian pharmaceutical companies were lower over the past two years. However, it said the same is likely to pick up over the medium term as inspections gain traction.