Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

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

Risk for Indian Pharma has increased
Wed, 18 Sep Pre-Open

Warning letters and import bans raised by the US drug regulator are unfortunately becoming a regular feature for Indian pharma companies. This has not only tarnished the image of these companies but has also thwarted growth in a market considered to be an important growth driver for generics. It goes without saying that the worst impacted has been Ranbaxy. The company's two manufacturing facilities at Poanta Sahib and Dewas were already under the USFDA scanner. And now one more facility at Mohali has received an import ban. One should note that this facility was developed and received USFDA clearance approximately 1.5 years back. This is unlike the other two which had problems since quite some time. Thus of the four facilities which had approval from the USFDA, three have been imposed by an import ban from the drug regulator.

Ranbaxy is not the only one. In recent times, Wockhardt's Waluj facility also received an import alert. And after that another important facility at Chikalthana received some 483 observations, from the USFDA.

Both the companies have hired consultants to resolve the issues and are working on corrective measures. While the issues at Ranbaxy and Wockhardt are serious, other pharma companies have also been at the receiving end of the US regulator. Indeed, companies such as Sun Pharma, Dr.Reddy's, Aurobindo Pharma and the like have also had problems with the US FDA in terms of maintaining good manufacturing practices (GMP). However, most of them seem to have resolved their respective issues.

That is why the risk of coming under the US FDA scanner has increased for the sector given that the US regulator has also become quite strict in this regard.

Indian pharma must learn a lesson...

In the past, Indian pharma companies had reaped the benefits from the US generics market on the back of many major drugs going off patent. A low cost advantage among others ensured that Indian firms remained competitive. But the spate of plants that have failed to match the standards of the US FDA is worrisome. An interesting, point highlighted in the Mint, says that the Indian companies are building a robust pipeline of drugs. However, if companies fail to comply with the GMP norms than these filings will just be futile.

In our view, it's high time that Indian companies become cautious and take the required steps before hand to ensure that plants are compliant. Else they will soon lose their ground in the US market, which has already become quite competitive. The USFDA is becoming more vigilant and also plans to increase its plant visits. Hence, surprise visits are bound to soon become a regular feature. That is why Indian pharma companies will have to consider this an urgent issue. From a longer term perspective, they will have to build up a system to ensure that the manufacturing facilities are compliant with FDA norms. Even if this entails the occurrence of additional costs.

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


What else is happening in the markets today? Dig in...

Equitymaster requests your view! Post a comment on "Risk for Indian Pharma has increased". Click here!

  

Related Views on News

What's Behind the Rally in Pharma Stocks? (Views On News)

May 11, 2021

The second wave of Covid has given a new lease of life to pharma stocks.

SUN PHARMA Announces Quarterly Results (3QFY21); Net Profit Up 87.4% (Quarterly Result Update)

Feb 1, 2021 | Updated on Feb 1, 2021

For the quarter ended December 2020, SUN PHARMA has posted a net profit of Rs 19 bn (up 87.4% YoY). Sales on the other hand came in at Rs 88 bn (up 8.4% YoY). Read on for a complete analysis of SUN PHARMA's quarterly results.

SUN PHARMA 2019-20 Annual Report Analysis (Annual Result Update)

Dec 11, 2020 | Updated on Dec 11, 2020

Here's an analysis of the annual report of SUN PHARMA for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of SUN PHARMA. Also includes updates on the valuation of SUN PHARMA.

Dr Reddy's Lab Shares Fall As Earnings Miss Estimates. What Next? (Views On News)

May 14, 2021

The company's board recommended a final dividend of Rs 25 for financial year 2020-21.

Why Did Alembic Pharma Shares Fall Today? (Views On News)

May 5, 2021

Covid-led supply disruptions of API fuel Alembic Pharma's global prospects.

More Views on News

Most Popular

Is Intraday Trading For You? (Fast Profits Daily)

May 13, 2021

Do you think you have what it takes to be an intraday trader? Find out in this video.

My Secret to Find Breakthrough Stocks (Fast Profits Daily)

May 7, 2021

I've used this trading technique for many years with great success. I'm sharing it with you today.

Are the Stock Markets Deaf to Covid Agony? (Profit Hunter)

May 6, 2021

Why are markets discounting the economic impact of Covid?

The Key to Profit from India's EV Revolution (Profit Hunter)

May 7, 2021

Stocks you must consider investing in before buying your first electric vehicle.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE HEALTHCARE


May 14, 2021 (Close)

S&P BSE HEALTHCARE 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS