Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Will US budget aid Indian pharma?
Thu, 25 Apr Pre-Open

Recently, Barack Obama - the US president had presented the budget for fiscal 2014. It's a known fact that Indian pharma companies have a sizeable presence in the US pharma market. Among various proposals, one of the proposal states that the USFDA should strengthen the safety of drugs especially the ones imported in United States. So what does it mean for Indian pharma companies?

As per the budget the United States Food and Drug Administration (USFDA) have been allocated US$ 4.7 bn. This amount also includes US$10 m to hire new resources in order to improve the safety of food and medical products, which are imported in the United States. The amount should be utilized to take various measures where FDA has higher presence especially in countries like China. This proposal is positive and negative for Indian companies

  • Positive - Speed up drug approval process. Last year the USFDA, had imposed Generic drug user fees amendment (GDUFA). As per this regulation, a generic company will have to provide user fees to supplement the costs of reviewing generic drug applications and inspecting facilities. This will also ensure timely review of applications for generic drugs. Due to this action, though the costs pertaining to research and development of the companies have increased a bit, the approval process is expected to be faster than earlier. The budget proposal to add new resources will seemingly further speed-up the approval process.

  • Negative - Strict regulatory control. Though the budget explicitly says that the imports should be under strict regulatory control especially from China, it does not mean that Indian drug companies will be overlooked? Greater focus on Chinese imports looks like good news, but at the same time Indian firms cannot be deemed to be safe. Even Indian companies would come under stricter scrutiny. One should note that many Indian companies have witnessed several warning letters and also drug recalls. With a greater USFDA presence, Indian companies will have to remain more cautious in following the GMP (Good manufacturing practices) norms.
Thus, the way things will eventually shape up looks difficult to predict right now, we believe the positive in the form of faster approval is likely to outweigh most of the other negatives.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "Will US budget aid Indian pharma?". Click here!


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Feb 19, 2018 03:37 PM