Indian pharmaceutical companies, with a strong presence in the U.S. market, are projected to maintain their revenue growth in fiscal 2025 due to ongoing drug shortages in the United States, according to Mumbai-based India Ratings and Research. As a major hub for bulk generic drug manufacturing, Indian firms such as Dr. Reddy’s, Cipla, and Sun Pharma generate a significant portion of their revenue from markets in both the U.S. and Europe.
The U.S., the largest pharmaceutical market globally, is experiencing its highest level of drug shortages in a decade, as reported by India Ratings and Research, which referenced data from the Utah Drug Information Service. As of April, there were 233 active drug shortages across 22 therapeutic categories, driven primarily by production discontinuations, increased demand, and shipment delays. This information was corroborated by data from the U.S. Food and Drug Administration.
Vivek Jain, Director of Corporate Ratings at India Ratings and Research, noted that Indian generic drug manufacturers serving the U.S. market have had a strong financial performance in FY24, benefiting from lower raw material costs and stable pricing. For instance, Dr. Reddy’s reported a 29% increase in North American sales for the quarter ending March 31, while Cipla saw an 11% rise in revenue from the region. Lupin, a smaller competitor, experienced a 22.6% growth in North American sales during the fourth quarter.
India Ratings and Research highlighted that rising regulatory costs have led several U.S.-based generic pharmaceutical manufacturers to cease production of certain drugs. The complexity of filing applications for new drugs is also contributing to these shortages and reducing market competition. Indian pharmaceutical companies are well-positioned to fill this gap by expanding their supply chains and increasing their participation across various therapeutic categories.
Both Dr. Reddy’s and Cipla announced earlier this month that they are preparing for new product launches in the U.S. Furthermore, price erosion in the U.S. market, which has pressured margins due to intense competition, is expected to decrease to single digits over the next 12 to 18 months from the double-digit levels seen in 2022, potentially enhancing returns for these companies.
