The growth in US generic sales of leading Indian pharmaceutical companies moderated in the three months ended August 2023. Total sales of generic drugs in the US declined 0.5% compared to the three months ended July and 1.9% compared to the three months ended May.
Moreover, the annualized number of Abbreviated New Drug Applications (ANDA) filings in FY2023 so far is 724, lower than the 800-900 filings seen in the past five years. This suggests companies are being more selective in filings, given that the number of approvals at 768 is in line with past trends.
“The industry is passing through a phase of normalization, with tailwinds from lower price erosion compared to past two years, lower costs, product specific opportunities and currency,” broker Nomura said in a note. “But structurally the competitive intensity remains high.”
The US generics market is crucial for Indian pharma companies. The trends in ANDA filings, approvals and product launches provide insight into the competitiveness of this sector. While the current situation indicates stabilization, the environment remains challenging.
Zydus Lifesciences saw the biggest decline in sales, with trailing-three-month sales falling $45 million q-q and $41 million m-m in August due to lower gRevlimid sales and erosion in epilepsy drug gTrokendi XR and cholesterol drug atorvastatin tablets.
But Zydus’ Lialda and Asacol HD drugs for ulcerative colitis continue to face limited competition. Asacol HD remains the only generic after 7 years, although Zydus guides competition could emerge in second half of FY2024 which will impact revenues.
Sun Pharma sales were impacted by import alert at Halol and supply disruption from Mohali.
“Generic TRx for Sun is down 46% from Dec 2022. In gPentasa, which is manufactured from Mohali, market share has declined to 36.2% (week ending 15 September 2023) from 59% in April 2023,” the broker noted.
Sun Pharma’s US generics business has been impacted by regulatory issues at its Halol and Mohali manufacturing facilities leading to supply constraints. An import alert at Halol since December 2022 has resulted in a 46% decline in total prescription volume.
In gPentasa (ulcerative colitis), where Mohali is the sole supplier, the market share has dropped to 36.2% in September from 59% in April. However, the specialty portfolio continues to deliver strong growth. Sales of psoriasis drug Ilumya rose $2.9 million q-q in August after increasing $7.5 million in July.
The company expects Ilumya sales to keep growing with market share increasing to 1.5-2% in 2-3 years from 0.4% currently. Dry eye drug Cequa reached an all-time high market share of 7.1% in August. But acne treatment Winlevi has seen stagnating prescriptions after discounts were reduced.
Dr Reddy’s gRevlimid sales were stable m-m in August. Excluding gRevlimid, sales declined $6 million q-q due to seasonal increase for antibiotic gCiprodex. The company expects competitive intensity to increase in major products like gVascepa and gCiprodex over next 12 months.
Dr Reddy’s has gained share in suboxone strips reaching 25% now versus 18.5% in March 2023. It has also launched the generic Nuvaring vaginal ring with 3.7% share. Market share remains volatile for isotretinoin capsules used for acne treatment.
Cipla’s sales rose $12 million m-m in August helped by higher market share in diclofenac gel as competition exited. gRevlimid sales were stable. But albuterol MDI market share has dropped to 12.7% from a peak of 18.2% as rivals gained share.
Cipla recently launched depression drug Vilazodone where it has quickly taken share from competitor Intas. But its market share in lanreotide injection for acromegaly remains at just 14.1% versus expectations of a higher share. The ramp-up in Lupron 22.5mg for prostate cancer is also slow at just 2.3% share, pointed out the broker.
Lupin’s sales increased $7 million m-m in August driven by recent launches like Spiriva respiratory drug where it already has 20% share versus expectations of a slower ramp-up. The company has exclusivity for HIV drug Prezista which contributed to 11% of sales.
But Lupin faces near-term competition in Prezista and bowel prep drug Suprep which will erode revenues. Albuterol MDI market share remains at 12.7% after peaking at 18.2% earlier as rivals gain share. Lupin needs to accelerate growth in India market and launch more complex generics.
Among other companies, Aurobindo Pharma maintained a steady growth driven by formulations like Valcyte, venlafaxine capsules and mirtazapine tablets. Glenmark saw a decline in sales of 6% q-q due to lower contribution from estrogen patch Hailey Fe.
Alembic Pharma’s growth was aided by higher sales of losartan and tadalafil tablets. Torrent Pharma posted a 4% q-q fall as competition intensified in rosuvastatin cholesterol drug.
Product concentration
The Nomura report also highlighted the concentration of sales in top products for Indian companies. For Sun Pharma, the top product contributes 13% of sales, top 3 is 21% and top 5 is 26%. The concentration is higher for Cipla with top product at 16%, top 3 at 43% and top 5 at 58% of sales.
This indicates the risks for revenues as competition inevitably intensifies in top products. Companies have to maintain a robust pipeline and consistently launch new products to offset the erosion in existing products.
Industry sales trends
Analyzing total US generic sales over the past five years, the report shows declining sales for giants Teva, Viatris (formerly Mylan) and Sandoz. Teva’s sales fell by $615 million between Q1FY19 and Q1FY24. Similarly, Viatris declined by $793 million and Sandoz by $528 million.
On the other hand, Indian companies like Zydus Lifesciences, Aurobindo, Dr Reddy’s and Cipla have registered strong growth during this period. For instance, Zydus grew sales by $262 million, Aurobindo by $118 million and Cipla by $120 million over this five year period.
This indicates the robust growth delivered by Indian pharma companies through consistent product launches. However, price erosion due to competition remains a constant threat.
