The Hindu Business Line : Price pressure in US cause for concern for drug cos

This could be a cause for concern for companies such as Ranbaxy Laboratories, Dr Reddy's Ltd and Sun Pharmaceuticals, which bet heavily on this region.

According to industry analysts, most of these companies have, so far, managed to ward off revenue declines on price drops by increasing market share.

Ranbaxy, for example, managed to offset pricing pressures on its acne treatment drug, isotretinion, and its anti-bacterial drug, co-amoxyclav, by increased market shares.

Dr Reddy's witnessed a 30-per cent decline in prices on its anti-depressant, fluoxetine, and its multiple sclerosis drug, tizanidine.

There could be further price pressure as US-based Ivax Pharmaceuticals and Ranbaxy recently got approval for fluoxetine.

Also, Sun Pharma's diabetes drug metformin saw a 30-40 per cent price drop in the last three to four months.

Aurobindo Pharma and Israel headquartered- Teva Pharmaceuticals also obtained approvals for metformin and co-axomyclav suspension respectively.

Also, the recent slash in prices of antibiotics - clindamycin (antiparasitic drug) and minocycline - can have some impact on the bottomlines of the large companies.

While top officials in pharma companies did not hazard a guess on the financial impact this would have in the near future, Dr Brian Tempest, CEO and Managing Director, Ranbaxy, said the company would watch how the next few months pan out.

His company has clearly stated, "US market shares have expanded whilst the pricing pressures in the US generic marketplace, which became apparent in July 2004, have intensified through the fourth quarter."

Officials in Sun Pharma attributed these pricing pressures to intense competition and the presence of several new players in every segment.

"A number of mid-sized pharma companies are filing abbreviated new drug approval (ANDA) applications. This will increase competition," said an analyst.

A senior official in Cadila Pharmaceuticals said the company was closely watching the developments in the US market and will go there at a suitable time.

Pressure is also being felt as patent holders are increasingly using the authorised generics route.

"The advantage of the 180-day exclusivity period available after the expiry of the patent to the company first receiving an approval is lost," said the analyst.

Added to this, States such as Connecticut, Vermont and West Virginia have passed Bills legalising the imports of drugs from Canadian mail order pharmacies.

"Several states and municipalities in the US are looking at ways to control expenditure for prescription drugs. Some pilot import projects have also started. Prices of branded drugs from Canada are far lower than those available in the US," said an industry official.

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