It was September in 1952, and heavyweight boxer Rocky Marciano was facing Jersey Joe Walcott in the ring. This was a much anticipated fight with fans waiting to see how this young brawler would take on a skilled veteran. Walcott had dismissed his opponent, growling at a press meet, “If I don’t take him down, take my name off the record books.” The match was going in his favour too, the first 12 rounds, when Marciano was half-blinded, beat and bruised from the sharply placed jabs and the rain of punches. But the game turned in Round 13, when a well-timed right hook took down Walcott and Marciano claimed the title of the world champion that year.
Battered does not mean defeated and Indian pharmaceutical companies would do well to remember that. They have been facing a series of troubles in their biggest export market, the US. First, there were the patent lawsuits, then the steep fall of generic drug prices, then a tough regulator who came visiting way too often and the cherry on top — the recent allegations of cartelisation to manipulate prices. Now that they are in a corner, can Indian pharma companies counter-punch their way back?
Pharma companies had a good run in the market. Each time the cry for more affordable healthcare erupted in Washington DC, Indian firms with their cheap generics raked in the moolah. They were making the best of their low-cost manufacturing model, estimated to be 15-20% lower than what an average US company spent. But, the incessant thrust on lower pricing by the US government couldn’t have kept their business accelerating forever. The fun began to wane with the Ranbaxy investigations that led to a $500 million settlement, in 2013.
It soon deteriorated into a hopeless situation and, around 2016-17, Indian generics companies decided to take that fighting chance. After all, the US is a crucial market that generates annual sales of $10.5 billion, more than half of their revenue globally. Therefore, generics manufacturers began investing more in the money-guzzling complex generics and specialty drugs space.
Complex generics are expensive to develop since there are two or more drugs in a single dosage; specialty drugs are high-cost too, with innovations such as biologics or tra