The Hindu Business Line : Pharma cos facing stiff pricing pressure in US

Voices
Tough competition from China, a main problem for SMEs
US market becoming increasingly competitive day-by-day
Competition from American and European generic companies on the rise

Hyderabad May 19 During the last four to five months, a good number of Indian pharma companies have suffered a 3-10 per cent dip in their export margins due to strengthening of therupee in addition to increasing pricing pressure on various other counts.

If the trend continues for some more time, the small and medium enterprises stand a chance of moving into losses, according to Mr M. Narayana Reddy, President, Bulk Drugs Manufacturers' Association of India. "The US market is becoming increasingly competitive day-by-day and the strengthening of rupee is adding fuel to the fire,'' Mr Reddy told Business Line here.

The main problem for SMEs is the tough competition from China whose currency has been stable for quite some time, he said, adding: "The Government's silence on the issue may be because of the need to tackle inflation and the comfortable forex reserves.''

"We have been requesting the Finance Ministry to look into the issue. This is bringing down the competitiveness of our exports. But it seems we have to wait for natural correction in exchange rate to happen," Mr D.B. Mody, Chairman, Pharmaceutical Export Promotion Council, said during his recent visit here.

Besides strengthening of rupee, there are other factors as well. There has been an increase in the number of players in the US market, according to Mr P. Bhaskara Narayana, Vice-President, Natco Pharma.

"Further, the competition from the American and European generic companies had been on the rise," he said.

Dr M. Sivakumaran, Director, Aurobindo Pharma Ltd, identified the growing competition from China as one of the reasons for pricing pressure. "China is emerging strong in chemicals and intermediaries. It has to be tackled by the industry in the long run," he said.

However, the bigger players such as Dr Reddy's Laboratories Ltd and Wockhardt are not too alarmed. "We see it as a natural phenomenon. While it may be an issue of concern for small firms, we can deal with it in product-driven approach," said Mr G.V. Prasad, Chief Executive Officer, Dr Reddy's.

Mr Habil Khorakiwala, Chairman of Wockhardt Ltd, also echoed a similar view.

"The pricing pressure in generic pharmaceuticals is nothing new. Indian companies, including Wockhardt, are expanding their businesses in the US despite pricing pressure," he said.

"Indeed, pressure on prices is good for us as it makes us more competitive vis-à-vis American and European generic companies,'' he added.

More Stories on : Pharmaceuticals | Trends

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Norms on lending to weaker sections modified: RBI

Gas-based urea units feel squeezed

No immediate plan to merge with IOC: Chennai Petro MD

Ministry sees crude prices dropping to $45 by 2009-10

Pharma cos facing stiff pricing pressure in US

Truck, bus tyres output growth dips

Tyre industry seeks relief from Chinese, Thai dumping

Tata Power eyes coal from Australia, S. Africa

Deyaar, Ansal township may come up in UP

Singapore firm Jurong roped in for Vizag township