Indian drug firms see fall in US sales on FDA approval delays

Domestic drug firms expect a slowdown in new generic drug approvals by the United States Food and Drug Administration (USFDA) to weigh on sales in their largest market for at least two more quarters, due to an ongoing overhaul of the review process.

The domestic pharmaceutical industry, worth US $15 billion, which has been hit by a spate of regulatory sanctions in the past year due to concerns about production processes, supplies about 40 per cent of generic and over-the-counter drugs to the United States.

The FDA implemented the Generic Drug User Fee Act (GDUFA) programme in October 2012, giving the agency the right to collect fees from manufacturers to expedite the approval for sale of generic drugs.

However, the agency has not made as much progress with clearing the existing backlog of applications for cheap copycat drugs as some domestic manufacturers had hoped, company executives said, which is now beginning to drag on sales in the US markets.

A rise in the number of filings for new generic drugs from the country and elsewhere, and the need to step up inspections of production facilities before giving final approval, is putting pressure on FDA resources, adding to the backlog, analysts said.

While the regulatory agency is hiring more staff and looking to speed up the process, executives of the domestic pharmaceutical industry say the pace of approvals is unlikely to pick up until 2016.

Leading home-grown generic drugmakers Dr Reddy's Laboratories and Glenmark Pharmaceuticals in November posted a drop in their second-quarter US sales, blaming the slowdown in the approval process.

"The US has been challenging in this year because of the significant slowdown in product approvals. The remaining half of this financial year will remain challenging for the industry," Glenmark Managing Director Glenn Saldanha told Reuters.

APPROVAL LAG TAKES TOLL

Sun Pharmaceutical Industries, the country's largest drugmaker by revenue, and Cipla, both due to report their quarterly results on Thursday, are also expected to be affected by the slowing approvals, analysts said.

While Sun Pharma is expected to report a 17 per cent rise in net profit for the second quarter ended September 30, helped by a pick-up in sales in its home market, Cipla is expected to report a 7 per cent drop in its net profit.

"The (FDA approval) process will be streamlined with a lag, and that lag is still taking a toll on most companies," said Siddhant Khandekar, vice-president of research at brokerage ICICI Securities. "The implementation has already started, but we will probably see normalisation only by 2016," Khandekar added.

FDA spokeswoman Sandy Walsh said the agency was on track with the implementation of the GDUFA and was "maintaining pace with historical performance". The FDA approved 45 new drug applications in August and September 2014 each, which was more than the monthly average for 2012 and 2013, Walsh said.

"We remain committed to utilising all available resources to ensure expeditious and complete (new application) reviews," the spokeswoman added.

By 2017, the FDA aims to bring down the review time to 10 months from about 30 months now. For applications submitted in the year starting October 2014, the FDA has set a target to complete review of 60 per cent within 15 months.

Some home-grown generic drug firms are, however, uncertain about the pace of approvals in the near future.

"Our inventory is lined up in the United States in anticipation of approvals, and we expect them to come in by January, if not December. But it is not in our control," Dr Reddy's Chief Financial Officer Saumen Chakraborty said.

(Reuters)