As countries increasingly focus on affordable health care, the Indian pharmaceutical firms are well positioned for global growth, says a report by Global rating agency Standard & Poor’s (S&P).
The report titled “Indian Pharmaceutical Companies Have A Global Opportunity, If They Conquer Compliance Issues,” by S&P Ratings Services published today, however, said failure to comply with the stringent quality requirements in developed markets is a key factor.
“Expansion into developed markets, especially the US, is positive for the credit profiles of Indian pharmaceutical companies. The market’s size and the absence of price controls are likely to support the revenue growth and profitability,” Standard & Poor’s credit analyst Vishal Kulkarni said.
The growth prospects are particularly high for Indian companies in the speciality and complex generic drugs segment in the US, the report said.
However, failure on compliance with regulations could seriously hurt creditworthiness. It could lead to disruptions in production, import bans, remediation costs, and above all reputational and litigation risks, it added.
While the largest 10 Indian pharmaceutical companies are much smaller in terms of revenue than their global generics peers, they make up for it by their robust product pipeline, the report said.
“What the Indian companies lack in size is largely offset by their strong product pipeline, presence in emerging markets, and conservatively maintained financial health,” Kulkarni said in the report.
