US probe will not impact Indian drug firms: Fitch

Chennai, Nov 11 (IANS) The probe by the US Department of Justice into the suspected price cartelization in the pharmaceutical industry will not have a major impact on the Indian drug firms, Fitch Ratings said on Friday.

In a statement Fitch Ratings said: “The ongoing probe by the US Department of Justice (DoJ) into suspected price collusion in the pharmaceutical industry is unlikely to have a significant impact on Indian pharma firms.”

Citing news reports, Fitch said while the probe is likely to include more generic drugs, the situation is still evolving amid the current political environment in the US.

“In any case, we expect the impact to be minimal for Indian pharma, given the already-high price-based competition across most categories over the past few years and the reasonably diversified generic portfolios of Indian pharma companies,” Fitch said.

The antitrust investigations which began about two years ago have attracted investor attention recently, with news of the likely expansion of the investigation into more generic drugs and the first charges being filed possibly by end-2016.

The probe has focused on a few high-priced complex generic drugs so far, which attracted prosecutors’ attention due to considerable price increases amid the ongoing policy focus on limiting healthcare costs in the US.

Indian pharma exports to the US are focused mainly on simple generics, competing with a substantial set of competitors offering similar post-patent products.

Indeed, the high level of direct competition along with channel consolidation has caused downward pressure on prices, leading to deflationary trends in many generic drugs.

“Overall, we expect the regulatory environment in the US to remain supportive for generics-focused pharma,” Fitch added.

This is in light of the underlying policy focus on containing healthcare costs and steps to enhance drug affordability such as faster Abbreviated New Drug Application (ANDA) approvals under Generic Drug User Fee Amendments (GDUFA), which will increase the availability of economically priced generic alternatives, said Fitch.

–IANS

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