Economy

Drug firms cautious as Trump raises pricing, off-shoring bogey

PT Jyothi Datta Mumbai | Updated on January 12, 2018 Published on January 12, 2017

The lobby-ridden drug industry was shaken out of its seeming complacency with Trump referring to pharmaceutical companies as “getting away with murder”

The US is a magnet for Indian drug companies, being the largest market for pharmaceuticals, including generic drugs (that are chemically similar to innovator medicine)

The US President-elect Donald Trump’s vociferous opposition to Obamacare and the Trans-Pacific Partnership (TPP) agreement comes as no surprise, having featured prominently in his campaign speeches as well.

But the lobby-ridden drug industry was shaken out of its seeming complacency with Trump referring to pharmaceutical companies as “getting away with murder”, raising the all too familiar bogey of high medicine prices and jobs being shipped overseas.

“Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs, but they don’t make them here, to a large extent,” foreign media reports said quoting Trump.

The US is a magnet for Indian drug companies, being the largest market for pharmaceuticals, including generic drugs (that are chemically similar to innovator medicine). India has the highest number of US Food and Drug Administration-approved plants outside the US. Naturally, the direction that Trump’s statement will take in terms of policy has the industry cautious and watchful.

A clutch of Indian drug companies in the US are already facing the regulatory glare on the pricing of their medicines.

“As I understand, Trump’s reference is to American companies getting their products manufactured outside, in Puerto Rico , Mexico, etc, and importing into the US,” said DG Shah, Secretary General, the Indian Pharmaceutical Alliance (IPA), referring to the example of Ford that has announced a US investment, shelving a billion dollar-plus plan for Mexico.

The IPA is a platform for large Indian drug companies. “We aspire to be a trustworthy and reliable partner of the US for access to quality medicines at affordable prices,” said Shah, conveying their message to the new administration.

Amit Mookim, General Manager (South Asia) with healthcare service provider QuintilesIMS, said Indian drug companies operating in the US have already seen much pricing pressure, and that is unlikely to see a major change.

Obamacare (the existing health insurance plan) did hold out opportunities for generic drug companies, and that could go with the plan being scrapped. There will also be no let up on the regulatory front with the USFDA inspections having tripled on Indian manufacturing plants exporting to the US, he added.

However, Mookim does not see any major shift of manufacturing bases, though there could be a high visibility expansion in the US by some of the big companies.

Published on January 12, 2017
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