Pharma: Key variables to track for US Generic pricing

25 Jan 2024 , 10:44 AM

In this report, analysts of IIFL Capital Services present several data-points for the US Generic market that are relevant to track from a generic price erosion perspective for the market. Analysts of IIFL Capital Services note that ANDA approval intensity by USFDA continues to remain high and ANDA withdrawals in FY23 (Sep’23 ending) were significantly below the run-rate over FY18-22, which is slightly contrary to expectations that generic players are rationalising portfolios in the US. USFDA plant inspections have also largely normalised across all markets except China and with active drug shortages in the US being broadly stable for the past 4 quarters, analysts of IIFL Capital Services believe incrementally the supply chain disruptions and product shortages should ease in 2024, which could lead to an acceleration in price erosion trends going forward. Contrary to expectations, Injectables price erosion has continued to remain high over the past 2yr period and was ~10% in H2CY23. While oral solids have seen an improvement in pricing trends in 2023, analysts of IIFL Capital Services believe Revlimid could be masking the base erosion in Oral Solids. Their top picks in the sector are Sun, JB Pharma, Aurobindo and Mankind (in that order, given the current valuations). 

ANDA approval intensity by USFDA continues to remains high 

While USFDA approved a record 935 ANDAs in FY19 following a high number of ANDA filings by the generic players in FY17/18, the ANDA approval intensity by USFDA has moderated 15-20% from peaks over the past four years from FY20-23 (fiscal year ending Sep’23). However, analysts of IIFL Capital Services note that generic product approvals by USFDA still remain fairly high at 750-780 ANDAs p.a. (vs 400-500 ANDAs p.a. over FY13-15), which will continue to put pressure on US generic pricing given the sustained high competitive intensity in the market. Additionally the opportunity available to generic players from FTM (first-to-market) opportunities in the US have also reduced, as the first-time generic drug approvals have moderated from 18-25% of the overall ANDA approvals over FY13-15 to 10-15% over FY20-23.