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Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
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What's delaying the FDA approvals? 
(Thu, 25 Feb Pre-Open) 
 
The USFDA has been the bane of pharma companies of late. Not complying with good manufacturing practices have landed many of them into trouble notably Ranbaxy and Sun Pharma. These events in many ways relegated into the shadows another equally serious problem dogging the FDA. This has particularly been the delay in product approvals of generic companies. Not just Indian companies but other generics players as well were confounded with this problem in last year itself when sales were slow due to a lower approval rate.

Meanwhile, ANDA applications at the US FDA have piled on. And what is more, this problem may be costing consumers and the federal government hundreds of millions of dollars a year as they continue in some cases to pay for branded drugs even after their patents expires. It is obvious that the US FDA needs to speed up its approval process. But what has really been dogging the US regulator? Limited staff and underfunding seem to be the main culprit. As reported in the New York Times, five years ago, the FDA typically approved a new generic drug within 16.3 months of the application's filing. But by last year, with limited staff to review an increasing number of applications, approvals for new generic drugs were taking 26.7 months.

The importance of generic drugs in the US cannot be undermined. These drugs now account for 70% of the prescriptions filed in the US and have saved US$ 750 bn for consumers over the last decade. And so, Indian generic players can be assured of a ready market for their generic drugs. The fact that there also exists intense competition and pricing pressure is another problem altogether and an important one at that. However, these concerns aside, the next few years will be important for Indian players due to the patent expiry of many branded drugs . And that is why, the US FDA will have to find some way of quickly speeding up its approval process. Luckily for Indian companies, it is not just their interests at stake but also that of the US consumer and the government.

A golden dose for India
India has already garnered the reputation of being the largest consumer of gold. What is more, the country is expected to emerge as a major buyer when the IMF begins selling 191.3 tonnes of the precious metal amid volatility in major currencies. Developed countries of the US and Europe have been severely bogged down by the global financial crisis. In Europe especially, a few countries are on their way to committing sovereign defaults. Little wonder then that the reliability of the two major currencies notably the US dollar and the euro is being increasingly questioned.

And so, the major beneficiary has been gold which has seen its price soar due to its reputation as a safe haven during times of increased volatility. Meanwhile, China, which has about US$ 1.6 trillion in reserves, is a producer of gold. As a result, is unlikely to buy the gold being offered by the IMF. Readers would do well to recall that the RBI has snapped up 200 tonnes of gold from the IMF last year. As reported in a leading business daily, the RBI's gold holdings rose to US$ 18.1 bn (around 6.5% of total reserves) on February 12. While the RBI has not yet given any clear signal of its intention yet, it will hardly be surprising if does end up piling on to its gold booty.

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