November 07, 2008

Generic drug cos await US healthcare policies

Generic drug-makers are keeping their eyes on the President-elect, Mr Barack Obama, and the shape that healthcare policies will take under him, as the US is the world’s biggest market for generic medicines.

A greater use of generic drugs (medicines that are chemically similar to innovative drugs, but much less expensive) on the Government’s healthcare programme, was always on agenda for the Democratic party.

But what the new man at the helm could bring in, are policies to drive a hard bargain on the price of generic drugs through direct negotiations between Government and drug companies, observes Mr Sujay Shetty, Associate Director with consultant firm PricewaterhouseCoopers.

So while generic drug companies can expect their volumes to grow, prices will be under pressure, he observed. The Republicans were not for direct negotiations with drug companies, he added.

Also, the new Government may look favourably at reimportation. That would mean that drugs registered in Canada, for instance, could gain access to the US market, Mr Shetty said. And the regulatory pathway for medicines made from biological sources could see some progress, he added. This has been in the offing for long, and several Indian drug companies, including Dr Reddy’s, Wockhardt, and Intas, are betting big on biologics.

Governments & generics
Healthcare has always been a major player on the US political stage. But Mr Obama had sought to take the message home to voters through his mother’s battle with ovarian cancer and her struggle with getting insurance to cover her medical bills.

The pharma component in healthcare costs is gradually increasing, and so the new Government will be pro-generics to keep prices under check, observes Mr D.S. Brar, Chairman, GVK Biosciences, and former Chief Executive of Ranbaxy, instrumental in internationalising the company several years ago.

Though the US market per se will be pro-choice, the Government will look for generic drug options for its federal healthcare bill to cover more people, he said.

And it is not just the US, but other developed markets in Europe, like Germany and the UK and in Asia, like Japan, are increasingly pushing for generics, says the Indian Pharmaceutical Alliance’s Mr D.G. Shah.

As the financial crisis grips more countries, Governments are looking at generic drugs as a way to control expenditure, he said. Indian drug companies, across the spectrum, have been active in the international markets, helping clock-up pharma exports of over Rs 30,000 crore.

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