Indian drug firms may lose out as US pharma supply chain consolidates

Monday, March 3, 2014

Consolidation in the pharmaceuticals supply chain in the US will weigh on the bargaining power of Indian drug firms in that market, top Indian players apprehend. A spate of acquisitions and joint ventures — 16 in 2012 and 10 in 2013 — has resulted in fewer suppliers of prescription drugs, which might work against the interests of Indian firms.

Lupin CEO Vinita Gupta acknowledged there will be pricing pressure because of the mergers in the supply chain space. Speaking to analysts after the Q3FY14 results announcement, Gupta observed, “The challenges arising from the consolidation of our customers are significant and there is a lot of pressure on pricing. But the Walgreen consolidation happened well before the CVS-Cardinal (deal) and so far, we have survived it. We’ve been able to manage pretty well.”

Abhijit Mukherjee, president and head of global generics segment, Dr Reddy’s Laboratories, also agreed, on a call with analysts, that there could be some impact of the changes in the US supply chain environment. “There have been some mergers between wholesalers and retailers and depending on how many customers a company has in each segment, there will be an impact,” Mukherjee said, adding that his firm had factored the changes into its plans. “While there will be an impact, it’s a part of the erosion in the generics business,” he said.

Source: The Financial Express (link opens in a new window)

Health Care
supply chains